Hotels often ask frontline employees to create memorable guest experiences, solve problems quickly and find better ways to deliver service. A new study suggests that leadership matters for this kind of innovation, but much of its value may depend on what happens between managers and employees rather than on leadership alone.
Research published on 6 October 2026 in Humanities and Social Sciences Communications surveyed 492 frontline employees working in Indian hotels and resorts. The researchers found that transformational leadership was associated with stronger service innovation performance through two pathways: employees sharing knowledge and the organisation developing a culture that supports innovation. Of the two, knowledge sharing emerged as the stronger conduit.
The study also produced a more complicated finding about psychological safety. A safer interpersonal climate strengthened the direct relationship between transformational leadership and service innovation once a minimum safety threshold was reached, but it simultaneously weakened the indirect pathways running through knowledge sharing and innovation culture. The authors argue that when employees already feel safe enough to act, they may rely less heavily on leader-driven mechanisms to translate ideas into service improvements.
Why service innovation depends on frontline employees
Innovation in hospitality is not limited to new buildings, booking systems or major technology investments. Much of it happens at the point where employees interact with guests. A staff member may find a better way to respond to a recurring request, coordinate information between departments or adapt a service process to make an experience smoother.
These changes can be small individually but commercially important in aggregate. Hotels sell experiences as much as rooms, which means employees’ willingness to exchange information, experiment and act on ideas can shape service quality and differentiation.
The researchers focused on transformational leadership, a leadership approach built around articulating a compelling direction, encouraging employees to rethink established practices, supporting individual development and motivating people to contribute beyond routine requirements.
Rather than assuming that this leadership style automatically produces innovation, the study asked how its influence might travel through an organisation.
492 hotel and resort employees took part
The analysis used survey responses from 492 frontline employees in Indian hotels and resorts. The researchers developed a conditional process model connecting five constructs: transformational leadership, knowledge sharing, innovation culture, psychological safety and service innovation performance.
Knowledge sharing represented the behavioural route. It captured the exchange of experience and useful information that can help employees solve service problems and develop ideas. Innovation culture represented the deeper organisational route, reflecting norms that make experimentation and new approaches more acceptable.
Psychological safety was treated differently. Rather than being another simple mediator, it was examined as a contextual resource that could change the strength of the relationships in the model.
The researchers analysed the measurement and structural relationships using covariance-based structural equation modelling in AMOS 29. They then used bootstrapped conditional process analysis in SPSS 29 to test indirect effects and how those effects changed across levels of psychological safety.
This combination matters because a simple correlation between leadership and innovation would not distinguish whether employees innovate because of the leader directly, because leadership encourages information exchange, because it shapes organisational norms, or because these relationships depend on the climate in which employees work.
Knowledge sharing was the stronger pathway
The results supported both proposed mechanisms. Transformational leadership was linked to service innovation performance through its relationship with knowledge sharing and through innovation culture.
But the two routes were not equally prominent. Knowledge sharing emerged as the stronger conduit between transformational leadership and service innovation performance.
That finding gives the leadership result a practical interpretation. A manager can encourage employees to think differently, but new ideas still need information to move through the organisation. Frontline workers often hold fragmented pieces of knowledge about guests, recurring service failures and operational constraints. When those pieces remain isolated, an employee may recognise a problem without having the information or coordination needed to solve it.
A knowledge-sharing environment can therefore convert leadership signals into something more actionable. Employees can compare experiences, learn what has already been tried and combine information from different parts of the service process.
The innovation-culture pathway was also supported. This suggests that leadership may shape innovation not only through immediate employee behaviour but also by contributing to norms about whether experimentation, learning and service improvement are expected and accepted.
Psychological safety did not simply make every pathway stronger
One of the most useful findings is that psychological safety did not behave like a universal amplifier.
Psychological safety describes an environment in which people believe they can speak up, ask questions, offer ideas or acknowledge mistakes without an excessive interpersonal penalty. In a hotel, that could affect whether an employee flags a broken process, proposes a different way of serving a guest or shares knowledge that challenges an established routine.
The conditional analysis indicated that psychological safety strengthened the direct transformational leadership to service innovation relationship once a minimum safety threshold was reached. In other words, leadership translated more effectively into innovative service behaviour when the interpersonal environment was sufficiently safe.
At the same time, higher psychological safety attenuated the indirect pathways running from transformational leadership through knowledge sharing and innovation culture to service innovation performance.
That may initially appear contradictory. The authors interpret it as evidence that psychological safety can change what employees need from leaders. When safety is low, leader-driven knowledge sharing and cultural signals may be especially important for turning leadership into innovation. When employees already feel sufficiently safe to contribute and experiment, innovation can become less dependent on those leader-mediated routes.
The result is therefore closer to a substitution or contextual-ceiling effect than a simple claim that more of every positive workplace factor will always produce a larger effect.
The study combines three theoretical explanations
The researchers drew on social exchange theory, organisational learning theory and the job demands-resources model.
Social exchange theory helps explain why supportive leadership can encourage employees to reciprocate through constructive behaviour. Organisational learning theory provides the logic for knowledge sharing: innovation depends on information moving, being combined and becoming usable. The job demands-resources perspective treats psychological safety as a resource that can alter how employees respond to workplace demands and opportunities.
Bringing these perspectives together allowed the researchers to test a more realistic proposition than “good leadership causes innovation.” The model instead asks whether leadership works through distinct behavioural and cultural mechanisms, and whether the surrounding climate changes the importance of those mechanisms.
What hotel managers can take from the findings
The study suggests that leadership development by itself may be an incomplete innovation strategy.
If knowledge sharing is the stronger pathway, hotels may gain more from pairing leadership initiatives with practical systems that help frontline employees exchange experience. That could include structured handovers, cross-department problem-solving, short post-shift learning sessions or accessible channels for recording recurring guest problems and successful solutions.
Innovation culture operates on a different timescale. Employees need repeated evidence that useful experimentation is supported rather than punished whenever an idea fails. Recognition, manager responses to suggestions and the way mistakes are discussed can all signal whether innovation is genuinely encouraged.
Psychological safety adds another layer. The study suggests managers should not assume that leadership techniques will have identical effects in every team. Where employees are reluctant to speak up, building interpersonal safety may be a prerequisite for leadership to translate directly into innovation. In already safe teams, managers may be able to rely less on themselves as the central trigger for knowledge exchange.
What the study cannot prove
The research has important limitations. Most importantly, the data are observational survey data. Structural equation modelling can test whether the observed relationships fit a theoretically specified model, but it cannot by itself prove that transformational leadership caused later service innovation.
Reverse or reciprocal relationships are possible. Innovative teams may evaluate their leaders more favourably, and successful knowledge-sharing environments may influence both leadership perceptions and innovation ratings.
The sample was also drawn from a specific hospitality context in India. Organisational hierarchy, labour conditions, guest expectations and cultural norms can differ substantially across countries and hotel segments, so the strength of the relationships should not automatically be generalised to every service business.
Because several constructs were measured through employee reports, common-method influences are another consideration. The use of established measurement and structural modelling helps assess construct quality, but it does not turn self-reported perceptions into objective measures of commercial innovation performance.
Finally, the psychological-safety result should not be interpreted as evidence that high safety is undesirable. The attenuation occurred in particular indirect statistical pathways while psychological safety strengthened the direct leadership-innovation relationship after a threshold. The finding concerns how mechanisms interact, not whether organisations should make employees feel less safe.
A more useful way to think about innovative leadership
The study’s main contribution is to move the discussion away from treating leadership as a standalone input.
Among 492 hotel and resort employees, transformational leadership was linked with service innovation through both knowledge sharing and innovation culture, with knowledge sharing emerging as the stronger route. Psychological safety then changed how those relationships operated, strengthening the direct leadership-innovation link above a minimum level while reducing dependence on the two indirect pathways.
For businesses that depend on frontline service, the implication is practical. Innovation is not only about hiring creative employees or training inspirational managers. It also depends on whether useful knowledge moves between people, whether the organisation treats experimentation as legitimate and whether employees feel safe enough to act without waiting for a leader to make innovation possible.
Source Information
Study: Pal, S. & Rao, M.K. “Transformational leadership and service innovation performance: the role of knowledge sharing and innovation culture in the hospitality sector employees.”
Journal: Humanities and Social Sciences Communications.
Published: 6 October 2026.
DOI: 10.1057/s41599-026-09275-5
Sample and methods: Survey data from 492 frontline employees in Indian hotels and resorts, analysed using covariance-based structural equation modelling in AMOS 29 and bootstrapped conditional process analysis in SPSS 29.
Research context: The study was approved by the Institutional Ethics Committee of the Sponsored Research and Industrial Consultancy division at the Indian Institute of Technology Kharagpur. The authors reported no competing interests and no specific external funding.
