How and when CEO servant leaders fuel firm innovation: the role of social capital and knowledge absorptive capacity

Firm innovation is a characteristic of firms with a robust entrepreneurial orientation that wish to have a strong competitive position in their sector. Drawing on the theories of servant leadership and upper echelons, this study aims to highlight the mechanisms through which CEO servant leadership enhances firm innovation. This paper examines (1) knowledge absorptive capacity as a mediator in the CEO servant leadership–firm innovation relationship, and (2) the moderating role of social capital (internal and external) in this relationship. Original data from 176 large and medium-sized hotels in the Canary and Balearic Islands (Spain) were used to test the hypotheses, and a partial least squares (PLS) analysis using Smart PLS 4 revealed that CEO servant leadership was positive for firm innovation, which was, in turn, mediated by firm knowledge absorptive capacity. Furthermore, the relationship between CEO servant leadership and firm knowledge absorptive capacity was found to grow stronger as internal social capital increased, while external social capital strengthened the positive link between firm knowledge absorptive capacity and firm innovation. New light is therefore shed on how and when CEO servant leadership is most effective in fostering firm innovation. Additionally, our firm-level findings contribute to the servant leadership literature, which is dominated by individual and group-level research, and expand the mounting evidence for the positive impact of CEO servant leadership on firm-level outcomes.