Leadership quality in SMEs: linking innovation climate to employee commitment, communication, and collaboration under varying levels of remote work

Purpose This study examines how leadership quality relates to employee outcomes in small and medium-sized enterprises (SMEs) under contemporary work conditions characterized by increasing remote work. Specifically, the study investigates whether innovation climate mediates the relationship between leadership quality and employee outcomes (commitment, communication and collaboration), and whether the proportion of remote work moderates these relationships. Design/methodology/approach A two-wave longitudinal survey design was used with white-collar employees from 16 Swedish SMEs at baseline (T1, N = 489) and 14 SMEs at follow-up (T2, N = 276). Structural equation modeling (SEM) was applied to test cross-sectional and longitudinal mediation and moderated mediation models. Innovation climate was examined as a mediator between leadership quality and employee outcomes, while remote work was modeled as a contextual moderator. Findings Leadership quality was positively associated with innovation climate across cross-sectional and longitudinal models. Innovation climate mediated the relationship between leadership quality and employee commitment, communication and collaboration. Remote work strengthened the relationship between leadership quality and innovation climate and consequently intensified the indirect effects of leadership on employee outcomes via innovation climate. Practical implications The findings highlight the importance of leadership capabilities that foster innovation-supportive climates, particularly in remote settings where informal interaction is reduced. Originality/value This study advances workplace health management research by showing how leadership quality may contribute to psychosocially sustainable work environments in SMEs through innovation-supportive climates that strengthen employee commitment, communication, and collaboration, particularly under higher levels of remote work.