Abstract
This study's main purpose is to determine whether "psychological capital" functions as a mediator in the effect of ethical leadership, which is a positive leadership behavior, on service innovation behavior. In this context, the research tries to answer the question, "does psychological capital have an intermediary role in the effect of ethical leadership on service innovation." The research has been designed according to the quantitative research method. Research data were collected from hotel business employees in Nevşehir (n=170) using a simple random sampling technique. To test the research hypotheses, the data were analyzed with the SmartPLS program. According to the research data analysis findings, the positive effects of ethical leadership on service innovation and psychological capital were determined. Besides, it has been determined that psychological capital has a mediating effect on ethical leadership's effect on service innovation. Service innovation also increases in organizations with high ethical leadership, and service innovation strengthens psychological empowerment in this interaction. These results show that service innovation, psychological capital, and ethical leadership are positive situations that feed each other.
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