The moderating effect of Psychological Capital on the relationship between Leadership Approaches and Employee Creativity

Leadership styles and their inspiration for employee creativity play a fundamental role in organisational success by motivating innovation in the apparel industry. However, the nuanced role of psychological capital in moderating this relationship remains under-explored. This research undertaking to reveal the impact of three leadership styles democratic, autocratic, and liberal on employee creativity and to interpret the moderating role of psychological capital within these dynamics concerning the apparel industry in Sri Lanka. Adopting a deductive approach, data was obtained from a sample of 335 employees in the apparel sector using a structured questionnaire. Regression analysis was the basis of the data analysis process. Findings revealed that while all three leadership styles had a direct influence on employee creativity, psychological capital specifically moderated the effects of democratic and autocratic leadership on creativity. This research highlights the importance of recognizing the intertwined relationships between leadership, employee creativity, and psychological capital, especially for decision-makers in the apparel sector. The insights provide a foundation for nurturing an environment encouraging innovation, suggesting tailored leadership approaches considering the psychological capital of the workforce.