| Summary: | Purpose: Different leadership styles are used to make innovations in organizations. So, a sound system of social exchanges has always been a need in this dynamic and technological world to challenge organizational problems. Drawing on the social exchange theory, this study aims to empirically investigate the mediating relationship of a set of social exchanges, e.g. leader-member exchange (L.M.X.), knowledge sharing behavior (K.S.B.) and voice behavior (V.B.), between transformational leadership (T.L) and innovative work behavior (I.W.B). Particularly, it explores the best social exchange behavior between T.L and I.W.B that plays a highly constructive role in the innovativeness of the hospitality industry in Pakistan. Design/methodology/approach: The study targeted 403 frontline employees from hotels situated near Swat Valley, Pakistan. The study used a quantitative approach by using a convenient sampling technique. Structural equation modeling was run by using Smart partial least square 3.3.3 to test the proposed model. Findings: The research supported that T.L significantly influenced I.W.B via a L.M.X., K.S.B. and V.B. T.L did not directly and significantly influence I.W.B so, there were full mediations between T.L and I.W.B. Specifically, knowledge-sharing behavior played a highly constructive role in innovativeness. Research limitations/implications: The study targeted frontline employees from one place, Swat valley; however, data collection from different tourist places may generalize the results based on social exchanges and innovative behavior. A dyadic interaction between top-level and middle-level management may closely trace the innovative ideas among the employees. Practical implications: The study found knowledge sharing to be a highly effective mechanism that supports employee innovation more than a L.M.X. and V.B. As a result, the managers should establish a sound system of knowledge sharing, which means a knowledge economy so that employees innovativeness can be boosted and promoted. Originality/value: The present study was the first study in the hotel industry of Pakistan that reveals a highly effective mediating mechanism: K.S.B., which exists with T.L to increase workers’ innovativeness highly. © 2021, Emerald Publishing Limited.
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