Leveraging Employee Engagement to Translate Non-Financial Rewards into Innovative Work Behaviour: Comparative Insights Across Cultures

This study examines the impact of non-financial rewards on employee innovation in two South African municipalities, the City of Johannesburg Metropolitan Municipality (Gauteng) and Nkangala District Municipality (Mpumalanga), with a focus on the mediating role of employee engagement and the moderating influence of individualistic and collectivist cultural orientations. A quantitative, cross-sectional survey design was employed, drawing on a stratified random sample of 278 respondents (out of 300 distributed questionnaires; 92% response rate) across both municipalities. Data were analysed using Structural Equation Modelling (SEM) via AMOS, including Confirmatory Factor Analysis (CFA) and assessment of model fit indices (CMIN/DF = 4.319; CFI = .714; RMSEA = .109). Non-financial rewards positively and significantly predict employee engagement (β = .255, p < .001), which fully mediates the relationship between rewards and innovation (β = .207, p < .001). Collectivist culture demonstrates the strongest association with engagement (β = .787), while individualistic culture also exerts a positive influence (β = .244). Theoretically, this study extends the Job Demands-Resources (JD-R) model and Self-Determination Theory (SDT) to a cross-cultural African public-sector context, establishing employee engagement as the psychological bridge through which non-financial rewards translate into innovative behaviour. Practically, findings demonstrate that South African municipal managers can significantly enhance innovation by implementing recognition systems aligned with Ubuntu values, transparent career development pathways, and culturally sensitive reward structures that honour both individualistic achievement and collectivist group harmony. Jel Classification code: M52, O31, M12, M14, H83