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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.