Ethical Leadership and Sustainable Performance: Moderating Role of Culture and Mediating Role of Identification and Emotional States

Abstract

Prior study has demonstrated that ethical leadership influences organizational performance and its effectiveness. This research has examined the association between ethical leadership and sustainable performance in project-based organizations in Lahore, Pakistan. It also investigated the conditional impact of organizational culture, the mediating effect of organizational identity, and the positive emotional states of the employees. Data has been collected by distributing a questionnaire to the employees and staff members of the project-based organizations in the area of Lahore. The necessary sample size for the accuracy of results was 290 and 315 responses were received. Smart PLS4 software utilizing the structural Equation modeling has been operationalized for the data analysis. The study found a noteworthy influence of ethical leadership on the sustainable performance of the organization. The analysis also revealed that Ethical Leadership impacts sustainable performance through organizational identification and employees’ positive emotional states. The findings also indicated that organizational culture doesn’t moderate the association between ethical leadership and sustainable performances research contributes to the reservoir of information on ethical leadership and business ethics. The proposed model is being reinforced using multiple theories such as social identity, situational, and resource-based view theories. The lack of research on ethical leadership contributes to the research's relevance, while research on the influence of leadership as an explanatory variable of organizational identification, and employees’ emotional states are scarce. Furthermore, there is a dearth of studies on the effects of organizational culture on organizational performance. This is one of the initial attempts to look at the connections between ethical leadership, organizational identity, and culture, as well as the positive emotional states of employees.