Agile practices and performance: Examining the role of psychological empowerment

•This study introduced and empirically tested psychological empowerment as the explanatory mechanism for the relationship between agile practices and performance.•Empirical support was found for the psychological empowerment mediated relationships between team autonomy and innovative behaviour and agile communication and innovative behaviour. Innovative behaviour also affected project performance.•Agile practices of team diversity and incremental and iterative development were not found to have a valid relationship with psychological empowerment.•The empirical validation of agile practices as a source of empowerment and motivation for agile teams is a new finding in the literature which has strong implications for both the theory and practice.•This research has also established that the difference between motivated and amotivated project teams lies in the communication and team autonomy constructs.