In times of digital transformation, the voice and participation of employees become increasingly important since employees and the knowledge they provide are recognised to be the main asset of every firm, driving innovation. Hereby, digital technologies can have a strong impact on employee empowerment as new means of engagement become feasible, triggering digital innovation. Despite this development, we observe a lack of research on the mutual interaction of employee empowerment and digital innovation. The reason for this is that prior studies predominately focus on one efficient direction: either digital technologies affecting empowerment or employees affecting the innovation process in the course of employee-driven innovation (EDI). This study, therefore, aims to contribute to an understanding of the interface between the two above-mentioned directions. To investigate the research topic, the Adapted Structuration Theory (AST) of DeSanctis and Poole is used as a theoretical lens. We conduct a structured literature review, followed by an in-depth case study of an employee-initiated augmented reality / virtual reality (AR/VR) sales tool. The findings emphasize the strong mutual interaction between employee empowerment and digital innovation on the different levels of employee, management and organisation. The study holds contributions to theory and practice by extending the adapted AST and by offering guidance on how to facilitate employee empowerment in the digital age.