Leadership Dynamics in Government Institutions: The Paradox of Performance and Innovation under Bureaucratic Structures

Abstract

This paper explores the effect of transformational leadership on employee performance (EP) and innovative work behavior (IWB) within government institutions. Using a quantitative, cross-sectional approach, data from 259 government employees in North Sumatera were analyzed via Partial Least Squares Structural Equation Modeling (PLS-SEM). The results reveal a significant positive impact of transformational leadership on EP, highlighting its role in motivating employees to exceed performance expectations. However, transformational leadership did not significantly affect IWB, suggesting that bureaucratic structures may limit employee autonomy, which is crucial for innovation. While IWB positively influenced EP, the mediating role of IWB between transformational leadership and EP was not supported, indicating that the direct relationship between leadership and performance may not depend on innovation in bureaucratic settings. These findings suggest that leadership strategies in government institutions need to overcome institutional constraints to foster innovation. The study also emphasizes the importance of leadership development programs tailored to bureaucratic environments. Limitations include the cross-sectional design and reliance on self-reported data, which may restrict generalizability. Future research should explore alternative leadership styles to enhance IWB in bureaucratic contexts and use longitudinal methods to assess the long-term effects of transformational leadership on employee outcomes.