Innovative work practices and disruptive innovation: the roles of dynamic capabilities, innovation culture and transformational leadership
This study aims to examine how innovation-oriented management practices are associated with disruptive innovation (DI) outcomes in the financial services sector. It investigates how innovative work practices (IWP), dynamic capabilities (DC), innovation culture (IC) and transformational leadership (TL) jointly operate within a contingency framework to shape DI in regulated service environments. A quantitative design using survey data from 396 managers in Pakistan’s banking industry was used. Partial least squares structural equation modeling tested a moderated mediation model grounded in contingency theory, examining the direct and indirect effects of IWP on DI through DC and IC, with TL as a moderating variable. Results demonstrate that IWP positively affects DI, with DC and IC partially mediating this effect. TL significantly strengthens the IWP–DI link and indirectly enhances DI via DC. The findings suggest that disruptive outcomes in regulated service contexts depend on the alignment between innovation-oriented work practices, adaptive capability development and supportive leadership conditions. This study focuses on a single-country, cross-sectional banking context. Future research should adopt longitudinal and multisectoral approaches to validate and generalize these mechanisms. Managers should emphasize IWP to stimulate DI and cultivate environments that support DC, IC and TL. The findings offer actionable insights for leaders navigating disruption in financial organizations. Innovation practices alone may be insufficient unless supported by enabling organizational contingencies. Grounded in contingency theory, this study advances prior research by specifying a process-oriented moderated mediation model in which IWP functions as an innovation stimulus, DC and IC operate as parallel conversion mechanisms and TL acts as a contextual boundary condition shaping DI within an emerging-market, regulated banking context.