The mediating role of knowledge process capability on the relationship between ethical leadership and administrative innovation in banking industry: A structural equation modelling approach

Abstract

This study was investigated to examine the effects of ethical leadership on administrative innovation through the mediating role of knowledge process capability in Commercial Bank of Ethiopia. An explanatory design with deductive approach and quantitative method was employed. A self-administered questionnaire surveys were used to collect data from 266 employees (followers and managers) of Commercial Bank of Ethiopia in 93 branches. The structural equation modelling (SEM) approach with AMOS 23.0 was deployed to test the research hypotheses. The results of this investigation revealed that ethical leadership has a positive effect on administrative innovation and knowledge process capability. Knowledge process capability also influences administrative innovation positively. Moreover, knowledge process capability has a partial mediation role in the relationship between ethical leadership and administrative innovation. In order to solve the limitation of this study, the author recommended future researchers to include the moderating roles of employees’ self-efficacy between ethical leadership and administrative innovation. The mediated mechanism of knowledge process capability between ethical leadership and administrative innovation is entirely new contribution for this investigation. Theoretical and practical implications are discussed in light of these findings.