Effect of Ethical Leadership on Employee Performance and Innovation with Internal Motivation as Intervening Variable

Leadership is a mechanism to support or motivate a group of people to work towards a common goal, which can direct employees and workers with strategies to achieve a vision.In a company, in addition to having a leader, of course there are also employees.Employee performance is one indicator that keeps the company productive in running its business.Incremental innovation is also very important for the development of components in a company because with the development of the times there must also be a desire to develop products by adding each new innovation.Someone in work must also have motivation.Internal motivation or internal motivation is something that must be owned by individuals in the company.Internal motivation is an urge that comes from within a person to do something.Leaders must also have ethics because leaders must be role models for their subordinates.This study aims to analyze the effect of ethical leadership on employee performance and incremental innovation with internal motivation as an intervening variable.The population in this study is the Small and Medium Industry (IKM) in Klaten Regency with a sample of 192 respondents.In accordance with the theoretical framework that was built, the analytical tool used is Smart PLS. the results of this study, among others.Ethical leadership has a positive and significant effect on employee performance.Ethical leadership has a positive and significant effect on incremental innovation.Ethical leadership has a significant effect on internal motivation.Internal motivation has a positive and significant effect on employee performance.Internal motivation has a positive and significant effect on incremental innovation.Internal motivation can mediate positively and significantly between leadership ethics on employee performance.Internal motivation can mediate positively and significantly between ethical leadership and incremental innovation.The limitation of this research is that it only uses 2 dependent variables so that the scope of the research is not wide enough.Future researchers are expected to be able to use other variables such as radical innovation which will add to the varied research results and find out changes in innovation on a large scale in a company.Internal motivation can mediate positively and significantly between ethical leadership and incremental innovation.The limitation of this research is that it only uses 2 dependent variables so that the scope of the research is not wide enough.Future researchers are expected to be able to use other variables such as radical innovation which will add to the varied research results and find out changes in innovation on a large scale in a company.Internal motivation can mediate positively and significantly between ethical leadership and incremental innovation.The limitation of this research is that it only uses 2 dependent variables so that the scope of the research is not wide enough.Future researchers are expected to be able to use other variables such as radical innovation which will add to the varied research results and find out changes in innovation on a large scale in a company.