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In response to the dynamic demands of the contemporary business landscape, this study critically examines the pivotal role of ethical leadership in shaping employee’s innovative behavior within organizations. Our research delves into the nuanced interplay between ethical leadership, psychological well-being and innovative work behavior. Drawing from the principles of social exchange theory, our study addresses a critical gap in the literature by exploring the mediating role of psychological well-being in the relationship between ethical leadership and employees' innovative work behavior.

In this quantitative research, data were collected from 384 employees and their direct supervisors in Pakistan’s IT sector using “Google Forms” through a convenience sampling method facilitated by the “LinkedIn” platform. Additionally, the study applied a two-stage structural equation modeling approach, first to assess the uni-dimensionality, and subsequently, to evaluate the proposed hypotheses.

The research results unveiled a robust and positive impact of ethical leadership on innovative work behavior, operating through both direct and indirect pathways mediated by psychological well-being. Intriguingly, the moderating role of perceived organizational support adds depth to our understanding, revealing nuanced conditions under which ethical leadership influences employees' well-being and, subsequently, their innovative contributions.

Beyond theoretical contributions, our study provides practical insights for managers seeking to leverage employees' innovative work behavior for organizational success. By emphasizing ethical leadership as a catalyst, we advocate for its integration into HRM practices. However, recognizing the contextual nature of organizational support, our findings underscore the importance of adaptable leadership strategies to maximize positive outcomes.

Grounded in the principles of social exchange theory, this research marks a pioneering effort to shed light on the link between ethical leadership and innovative work behavior through the mediation of psychological well-being. Additionally, this study makes a valuable contribution to the current body of knowledge by investigating the contingent influence of perceived organizational support on the relationship between ethical leadership and employees' psychological well-being.

The recent COVID-19 pandemic caused a severe economic downturn. Employees working in these organisations face employment uncertainty. The pandemic disrupted their daily routines, and it added a layer of complexity to the already resource-constrained environment. During these times, employees would conserve their resources to maintain competitiveness, one of which is knowledge hiding. While economic activities are resuming, the appearance of new variants could mean the transition towards endemicity could be put on hold. Hence, there is a need to rethink the behaviour of employees as they would have elevated levels of anxiety towards resuming daily work activities. Therefore, this study aims to address the question of understanding employees’ perspectives toward knowledge sharing and knowledge hiding.

Drawing on the conservation of resources theory, social learning theory and the social exchange theory (SET), a conceptual framework involving ethical leadership was developed to examine if knowledge hiding or knowledge sharing behaviour is a resource for employees during these times. The partial least squares method of structural equation modelling was used to analyse results from 271 white-collar employees from Singapore.

The results show that ethical leadership encourages knowledge sharing but does not reduce knowledge hiding. At the same time, knowledge hiding, not knowledge sharing, improves one’s perception of work performance. Additionally, psychological safety is the key construct that reduces knowledge hiding and encourages sharing behaviour.

Overall, this study extends the theories, demonstrating that, first and foremost, knowledge hiding is a form of resource that provides employees with an added advantage in work performance during the endemic. At the same time, we provide a new perspective that ethical leaders’ demonstration of integrity, honesty and altruism alone is insufficient to encourage knowledge sharing or reduce knowledge hiding. It must lead to a psychologically safe environment.