Authentic leadership, innovative climate, and employee innovation in community-based financial institutions

Innovative work behavior (IWB) is central to how community-based financial institutions adapt and support micro-, small, and medium-sized enterprises (MSMEs). Drawing on social cognitive theory (SCT) and an Ubuntu-informed view of authentic leadership, we test whether an innovative climate conditions the effect of authentic leadership on IWB among employees of Ghana’s rural and community banks. Using a cross-sectional survey of 225 employees and ordinary least squares regression, we find that authentic leadership is positively associated with IWB, whereas innovative climate alone is not. However, innovative climate significantly strengthens the authentic leadership–IWB relationship, suggesting that leadership cues translate into innovation when the work environment legitimizes learning, voice, and experimentation. Theoretically, we extend SCT by recasting climate as an enabling amplifier rather than a direct predictor and use Ubuntu to reframe leadership and climate as relationally and morally constituted within community-embedded MSME support institutions.