The influence of ethical leadership on innovative performance: modeling the mediating role of intellectual capital Irfan Ullah and Bilal Mirza Business Administration, Iqra University-Islamabad Campus, Islamabad, Pakistan, and Amber Jamil Management Sciences, International Islamic University, Islamabad, Pakistan Abstract Purpose – Recent research studies have increasingly suggested leadership as a major antecedent to encourage innovative work behavior among business employees. Empirical studies which investigated the influence of various leadership aspects such as style and ethics on employees’ innovative performance and unraveled the mechanism through which leadership exerts its impact on employees’ innovative work behavior were restricted. Thus, the purpose of this research was to investigate the relationship between ethical leadership and employees’ innovative performance by focusing on the mediating role of two forms of the intellectual capital (IC), i.e. human capital and social capital. Design/methodology/approach – Data for present research were collected through in person administered questionnaire-based survey from the managerial level employees of the targeted sample of the manufacturing firms. Furthermore, due consideration was given while selecting the individuals from R&D departments of these organizations, who were typically involved in knowledge-intensive jobs and where application of intellectual assets was needed. Findings – Ethical leadership was observed as to positively influencing employees’ innovative performance. Two forms of IC, i.e. human capital and social capital were observed as playing mediating role in the ethical leadership – employees’ innovative performance relationship. Originality/value – The contemporary research study adds value in the literature of the ethical leadership. The most imperative theoretical contribution of the present research study underlines the psychological process, i.e. IC by which ethical leaders encourage innovative behavior among employees. Keywords Ethical leadership, Human capital, Social capital, Intellectual capital, Innovative performance Paper type Research paper 1. Introduction The classical and the neo-classical paradigms, pertaining toward the impression of governance have diversified. Recent changes within the domain of organizational working as well as changes toward the competitiveness of an employee, organizational performance oriented working temperaments and market structures have led to pursue the propositions, which urge more emerging professional practices excelling contemporary organizational performances. Consequently, ethical leadership (Freire and Bettencourt, 2020; Garba et al., 2018) and intellectual capital (IC) ( € Ozer et al., 2015) have become an important trait of business, and the knowledge economy disseminates the creation of innovative propositions and along with valid ideas about tangible products, services, procedures or practices, has become progressively imperative in today’s businesses (Migdadi, 2021; Shafique et al., 2019). Recent research has claimed that innovation is an effective competitive tool for firms and have stressed that promoting employees’ innovative performance is a major goal and objective for leaders in the 21st century (Ghosh et al., 2017). In this context, this study pursued and investigated the propositions among the variables, i.e. the ethical leadership and its outcomes pertaining to employees’ innovative performance. Ethical leadership and innovative performance 273 The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/0262-1711.htm Received 29 August 2020 Revised 12 October 2020 Accepted 22 October 2020 Journal of Management Development Vol. 40 No. 4, 2021 pp. 273-292 © Emerald Publishing Limited 0262-1711 DOI 10.1108/JMD-08-2020-0277