Sustainable Leadership, Knowledge Sharing, and Frugal Innovation: The Moderating Role of Organizational Innovation Climate

Abstract

The present study aims to investigate the relationship between sustainable leadership styles and frugal innovation in SMEs in the Chinese context. We also investigate the role of knowledge sharing as a mediator in the relationship between SL-FI. Furthermore, this study introduces the situational variable organizational innovation climate to explore its moderating role between KS-FI. The data were collected from corporate employees of SMEs in China’s manufacturing and service industries, with a 67.7% response rate on the questionnaire. The hypotheses were tested in this study using SmartPLS 4.0.8.7, and the empirical findings of this study revealed that sustainable leadership positively affects frugal innovation, with the knowledge-sharing process serving as a partial mediating effect. In addition, the results revealed that a higher level of organizational innovation climate will result in a higher effect of knowledge sharing on frugal innovation. The results of the current study provide insights and empirical evidence on the importance of frugal innovation in emerging markets and the ability to improve firms’ frugal innovation through leadership practices and knowledge resources. The current study provides a new contribution as it links sustainable leadership, knowledge sharing, and frugal innovation in the context of China as an emerging country. The research findings contribute to expanding the literature in the area of leadership styles and innovation, and provide practical insights for policymakers, entrepreneurs, and others in developing countries and emerging market SMEs.