From leadership to luminescence: Illuminating the avenues of creativity in China's small and medium enterprise sector

Exploring the dynamics of employee creativity in the small and medium enterprise (SME) sector is crucial for contemporary organizational studies, especially in the context of the Chinese culture. In this study we investigated the complex relationships among inclusive leadership, employees’ happiness, personal values like altruism, and creativity within China’s SMEs. The objective was to understand how inclusive leadership combined with happiness and altruism of the employees impact creative outcomes. Data were collected from 408 employees and leaders in the SME sector using a self-administered survey. We applied structural equation modeling using SMARTPLS software for analysis. We found that inclusive leadership significantly enhanced employee creativity, and this relationship was mediated by employee happiness. Employees’ altruism was a key moderator, intensifying the effects of inclusive leadership on employee creativity. Theoretically, this research fills gaps in understanding leadership, employees’ happiness, personal values, and creativity in an SME context. Practically, our findings emphasize the importance of nurturing inclusive leadership and focusing on employee well-being in guiding SMEs toward innovation and sustainable growth amidst evolving challenges.