Effect of dark side leadership and leader-member exchange on corporate performance: Mediating role of employee engagement
-
Author(s)Sunanta WigunaLink to ORCID Index: https://orcid.org/0000-0002-6684-2978
,
Etty MurwaningsariLink to ORCID Index: https://orcid.org/0000-0002-9720-6392
,
Yvonne Augustine SudibyoLink to ORCID Index: https://orcid.org/0009-0004-6344-962X
-
DOIhttp://dx.doi.org/10.21511/ppm.21(2).2023.28
-
Article InfoVolume 21 2023, Issue #2, pp. 267-279
- Cited by
- 957 Views
-
273 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Optimized corporate performance assumes that financial and non-financial performance can be achieved through effective collaboration between leaders and employees. This study analyzes the mediation of employee engagement on the connection between dark side leadership and leader-member exchange on corporate performance in Indonesia. This study used a mixed methods approach by distributing questionnaires to 1,013 respondents consisting of supervisors and managers and conducting intensive interviews with 20 respondents with more than 25 years of work experience to strengthen the perception of answers. The paper uses multiple linear regression analysis. The regression results show that dark side leadership (β = –0.228, ρ = 0.000) and leader-member exchange (β = 0.424, ρ = 0.000) affect employee engagement. Next, leader-member exchange (β = 0.176, ρ = 0.008) and employee engagement (β = 0.391, ρ = 0.000) affect corporate performance, while dark side leadership has no effect (β = 0.020, ρ = 0.400). Finally, employee engagement mediates the effect of dark side leadership and leader-member exchange on corporate performance. This finding indicates that the comfort level of employees at work will decrease if a leader demonstrates a dark side behavior that can affect his/her performance, which later impacts corporate performance. Furthermore, the novelty contribution of dark side leadership measurements on the cultural and emotional dimensions can impact employee turnover intention. This study offers implications for practitioners to conduct selective assessments at the beginning of leader recruitment and control internal leader assessments to create effective organizational behavior.
Acknowledgment
This paper is not supported by grants or scholarship and is free from conflict of interest.
- Keywords
-
JEL Classification (Paper profile tab)D22, D91, M41
-
References50
-
Tables8
-
Figures1
-
- Figure 1. Conceptual framework
-
- Table 1. Descriptive statistics
- Table 2. Multiple linear regression (Model 1)
- Table 3. Multiple linear regression (Model 2)
- Table 4. Multiple linear regression: Testing mediation effect of employee engagement
- Table 5. Expansion test of the emotional and cultural dimensions’ effect on employee engagement
- Table 6. Expansion test of the emotional and cultural dimensions’ effect on corporate performance
- Table 7. Sensitivity test of earlier measurements compared to new measurements (Novelty) in model 1
- Table 8. Sensitivity test of earlier measurements compared to new measurements (Novelty) in model 2
-
- Andersen, I., Buch, R., & Kuvaas, B. (2020). A literature review of social and economic leader-member exchange. Frontiers in Psychology, 11.
- Augustine, Y., & Muslimah, S. (2016). Effect of servant leadership, job satisfaction, and policy governance to nonprofit organizations performance in Indonesia. OIDA International Journal of Sustainable Development, 9(12), 15-32.
- Barbuto, J. E. (2005). Motivation and transactional, charismatic, and transformational leadership: A test of antecedents. Journal of Leadership & Organizational Studies, 11(4), 26-40.
- Becker, G. K. (2020). Paying the price: Lessons from the Volkswagen emissions scandal for moral leadership. The Journal of the Macau Ricci Institute.
- Cresswell, J. W. (2016). Research design, pendekatan metode kualitatif, kuantitatif dan campuran [Research design, qualitative, quantitative and mixed methods approaches]. Yogyakarta: Pustaka Pelajar. (In Indonesian).
- Creswell, J. W., & Creswell, J. D. (2018). Research design qualitative, quantitative and mixed method approaches (5th ed.). London: Sage Publication.
- Crook, N., Alakavuklar, O. N., & Bathurst, R. (2021). Leader, “know yourself”: Bringing back self-awareness, trust and feedback with a theory O perspective. Journal of Organizational Change Management, 34(2), 350-365.
- De Hoogh, A. H. B., & Den Hartog, D. N. (2008). Ethical and despotic leadership, relationships with leader’s social responsibility, top management team effectiveness and subordinates’ optimism: A multi-method study. The Leadership Quarterly, 19(3), 297-311.
- Devie, D., Liman, L. P., Tarigan, J., & Jie, F. (2020). Corporate social responsibility, financial performance and risk in Indonesian natural resources industry. Social Responsibility Journal, 16(1), 73-90.
- Erdogan, B., & Bauer, T. N. (2015). Leader-member exchange theory. In J. D. Wright (Ed.), International Encyclopedia of the Social & Behavioral Sciences (2nd ed.) (pp. 641-647). Elsevier.
- Fatima, T., & Elbanna, S. (2020). Balanced scorecard in the hospitality and tourism industry: Past, present and future. International Journal of Hospitality Management, 91, 102656.
- Gardner, W. L., Cogliser, C. C., Davis, K. M., & Dickens, M. P. (2011). Authentic leadership: A review of the literature and research agenda. The Leadership Quarterly, 22(6), 1120-1145.
- Gardner, W. L., Karam, E. P., Alvesson, M., & Einola, K. (2021). Authentic leadership theory: The case for and against. The Leadership Quarterly, 22(6), 101495.
- Gil, F., Rico, R., Alcover, C. M., & Barrasa, A. (2005). Change-oriented leadership, satisfaction and performance in work groups: Effects of team climate and group potency. Journal of Managerial Psychology, 20(3/4), 312-328.
- Gupta, N., & Sharma, V. (2018). Relationship between leader member exchange (LMX), high-involvement HRP and employee resilience on extra-role performance mediating role of employee engagement. Journal of Indian Business Research, 10(2), 126-150.
- Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2018). Multivariate data analysis (8th ed.). UK: Cengage.
- Halim, A., Tjahjono, A., & Husein, M. F. (2009). Sistem pengendalian manajemen edisi revisi [Management control system revised edition]. Yogyakarta: UPP STIM YKPN. (In Indonesian).
- Hamza, K. A., Alshaabani, A., Salameh, N., & Rudnak, I. (2022). Impact of transformational leadership on employees’ reactions to change and mediating role of organizational trust: Evidence from service companies in Hungary. Problems and Perspectives in Management, 20(2), 522-535.
- Harter, J. K., Hayes, T. L., & Schmidt, F. L. (2002). Business-unit-level relationship between employee satisfaction, employee engagement, and business outcomes: A meta-analysis. Journal of Applied Psychology, 87(2), 268-279.
- Hobfoll, S. E. (1989). Conservation of resources: A new attempt at conceptualizing stress. American Psychologist, 44(3), 513-524.
- Hobfoll, S. E., & Ford, J. S. (2007). Conservation of resources theory. In G. Fink (Ed.), Encyclopedia of Stress (2nd ed.) (pp. 519-525). Academic Press.
- Islami, X., Mulolli, E., & Mustafa, N. (2018). Using management by objectives as a performance appraisal tool for employee satisfaction. Future Business Journal, 4(1), 94-108.
- Ismail, H. N., Iqbal, A., & Nasr, L. (2019). Employee engagement and job performance in Lebanon: The mediating role of creativity. International Journal of Productivity and Performance Management, 68(3), 506-523.
- Jabeen, R., & Rahim, N. (2021). Exploring the effects of despotic leadership on employee engagement, employee trust and task performance. Management Science Letters, 11, 223-232.
- Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard measures that drive performance. Harvard Business Review.
- Korac-Kakabadse, N., Korac-Kakabadse, A., & Kouzmin, A. (2001). Leadership renewal: Towards the philosophy of wisdom. International Review of Administrative Sciences, 67(2), 207-227.
- Kumar, A., Kapoor, S., & Gupta, S. K. (2022). Do the qualities of transformational leadership influence employees’ job engagement? A survey of the Indian power sector. Problems and Perspectives in Management, 20(4), 614-625.
- Laub, J. (2005). From paternalism to the servant organization: Expanding the organizational leadership assessment (OLA) model. The International Journal of Servant-Leadership, 1(1), 155-186.
- Mackey, J. D., Ellen III, B. P., McAllister, C. P., & Alexander, K. C. (2021). The dark side of leadership: A systematic literature review and meta-analysis of destructive leadership research. Journal of Business Research, 132, 705-718.
- Murwaningsari, E. N., & Ramdan, Z. (2009). The relationship between the balanced scorecard and the performance of large companies is several factors that influence. Journal of Tax Information, Accounting and Public Finance, 4(1).
- Murwaningsari, E., Basaria, M. G., & Rachmawaty, S. (2009). Faktor-faktor yang mempengaruhi kinerja kualitas, kinerja keuangan dan kepuasan pelanggan [Factors that affect quality performance, financial performance and customer satisfaction]. Journal of Management Applications, 7(3), 2302-6332. (In Indonesian).
- Mustafa, R. M. (2020). Case analysis: Enron; ethics, social responsibility, and ethical accounting as inferior goods? (MPRA Paper No. 98441).
- Nauman, S., Zheng, C., & Basit, A. A. (2021). How despotic leadership jeopardizes employees’ performance: The roles of quality of work life and work withdrawal. Leadership & Organization Development Journal, 42(1), 1-16.
- Ouakouak, M. L., Zaitouni, M. G., & Arya, B. (2020). Ethical leadership, emotional leadership, and quitting intentions in public organizations: Does employee motivation play a role? Leadership & Organization Development Journal, 41(2), 257-279.
- Padilla, A., Hogan, R., & Kaiser, R. B. (2007). The toxic triangle: Destructive leaders, susceptible followers, and conducive environments. The Leadership Quarterly, 18(3), 176-194.
- Raval, S. J., Kant, R., & Shankar, R. (2019). Bench marking the lean six sigma performance measures: A balanced score card approach. Benchmarking: An International Journal, 26(6), 1921-1947.
- Saeidi, P., Robles, L. A. A., Saeidi, S. P., & Zamora, M. I. V. (2021). How does organizational leadership contribute to the firm performance through social responsibility strategies? Heliyon, 7(7), e07672.
- Spain, S. M., Harms, P. D., & Wood, D. (2016). Stress, well-being and the dark side of the leadership. In The Role of Leadership in Occupational Stress Research in Occupational Stress and Well Being (pp. 33-59). Bingley: Emerald Group Publishing Limited.
- Syahridlo, A., Hasiholan, L. B., & Fathoni, A. (2020). The effect of leader member exchange, change oriented leadership and management by objective on BSC-based performance measurement with employee engagement as variables mediation (case study at PT Serasi Autoraya Semarang branch). Journal of Management, 6(1).
- Tepper, B. J. (2000). Consequences of abusive supervision. The Academy of Management Journal, 43(2), 178-190.
- Thompson, G., & Glaso, L. (2018). Situational leadership theory: A test from a leader-follower congruence approach. Leadership & Organization Development, 39(5), 574-591.
- Thrasher, G., Dickson, M., Biermeier-Hanson, B., & Najor-Durack, A. (2020). Social identity theory and leader-member exchange: Individual, dyadic and situational factors affecting the relationship between leader-member exchange and job performance. Organization Management Journal, 17(3), 133-152.
- Ton, A. D., Hammerl, L., Weber, D., Kremer, O., & Szabo-Szentgroti, G. (2022). Why leaders are important for cross-functional teams: Moderating role of supportive leadership on knowledge hiding. Problems and Perspectives in Management, 20(3), 178-191.
- Tran, Q. H. N. (2021). Organizational culture, leadership behavior and job satisfaction in the Vietnam context. International Journal of Organizational Analysis, 29(1), 136-154.
- Upadhyay, A., & Palo, D. S. (2013). Engaging employees through balanced scorecard implementation. Strategic HR Review, 12(6), 302-307.
- Utari, D., Purwanti, A., & Prawironegoro, D. (2016). Management accounting (practical approach). Jakarta: Media Discourse Partners.
- Wanta, D., & Augustine, Y. (2021). The effect of servant leadership, job satisfaction and organizational culture on employee performance moderated by good governance in women’s cooperative institution. Technium Sustainability, 1(2), 45-58.
- Widyaningsih, R. U., & Saptoto, R. (2019). Peran leader-member exchange (LMX) dan occupational stress untuk memprediksi intensi turnover [The role of leader-member exchange (LMX) and occupational stress in predicting turnover intention]. Gadjah Mada Journal of Psychology, 5(1), 7-17.
- Wiguna, S., & Augustine, Y. (2022). The mediation of employee engagement to the relationship of leadership style and corporate performance. Technium Social Sciences Journal, 28(1), 376-388.
- Yukl, G. (2012). Effective leadership behavior: What we know and what questions need more attention. Academy of Management Perspectives, 26(4), 66-85.
-
Perceived health risk, online retail ethics, and consumer behavior within online shopping during the COVID-19 pandemic
Yuniarti Fihartini ,
Arief Helmi ,
Meydia Hassan ,
Yevis Marty Oesman
doi: http://dx.doi.org/10.21511/im.17(3).2021.02
Innovative Marketing Volume 17, 2021 Issue #3 pp. 17-29 Views: 4524 Downloads: 1730 TO CITE АНОТАЦІЯThe risk of virus contracting during the COVID-19 pandemic has changed consumer preference for online shopping to meet their daily needs than shopping in brick-and-mortar stores. Online shopping presents a different environment, atmosphere, and experience. The possibility of ethical violations is higher during online than face-to-face transactions. Therefore, this study was conducted to investigate the influence of perceived health risk and customer perception of online retail ethics on consumer online shopping behavior during the COVID-19 pandemic, involving seven variables, namely perceived health risk, security, privacy, non-deception, reliability fulfillment, service recovery, and online shopping behavior. The data were collected through an online survey by employing the purposive sampling technique to a consumer who has shopped online during the COVID-19 pandemic in Indonesia. 315 valid responses were obtained and analyzed through quantitative method using SEM-Amos. The results showed that perceived health risk and four variables of online retail ethics including security, privacy, reliability fulfillment, and service recovery affected online shopping behavior. Meanwhile, non-deception was found to have an insignificant effect. The coefficient value proved perceived health risk to be more dominant in influencing online shopping behavior than the variables of online retail ethics. Thus, consumers pay more concern for their health during online shopping. However, positive consumer perceptions of the behavior of online retail websites in providing services also can encourage consumers to shop online during this pandemic.
-
Human resource management in promoting innovation and organizational performance
I Gede Riana ,
Gede Suparna ,
I Gusti Made Suwandana ,
Sebastian Kot ,
Ismi Rajiani
doi: http://dx.doi.org/10.21511/ppm.18(1).2020.10
Problems and Perspectives in Management Volume 18, 2020 Issue #1 pp. 107-118 Views: 3570 Downloads: 852 TO CITE АНОТАЦІЯHuman resource management (HRM) is one of the elements enabling an organization to remain competitive in turbulence conditions. The effective practice of HRM makes competent and innovative employees contributing to the achievement of organizational objectives. This study aims to analyze HRM practices in creating innovation and organizational performance. The questionnaire was used to measure the respondents’ perceptions of variables used by a Likert scale. A survey of 126 manager samples and middle managers at export-oriented short and medium enterprises (SMEs) in Bali, Indonesia, was conducted to test the model. The analysis has shown that the proposed model was proven to be compliant with the research hypotheses. HRM significantly affects organizational performance and innovation, and it was found out that innovation can improve organizational performance. However, in the process of simultaneous testing, it was found out that innovation cannot improve organizational performance. The lack of attention to investments in human resources became one of the barriers to SMEs in creating innovation.
-
Positive contribution of the good corporate governance rating to stability and performance: evidence from Indonesia
RR. Iramani , Muazaroh Muazaroh , Abdul Mongid
doi: http://dx.doi.org/10.21511/ppm.16(2).2018.01
Problems and Perspectives in Management Volume 16, 2018 Issue #2 pp. 1-11 Views: 3221 Downloads: 314 TO CITE АНОТАЦІЯThis paper aims to examine the impact of Good Corporate Governance (GCG) practice on bank stability and performance. Governance is measured using the GCG rating that covers eleven aspects. The authors apply instrumental regression to link governance to performance and stability. The study covers a sample of 150 banks. The result shows that bank stability can mediate bank governance and bank performance. On the determinant of bank performance, it can be concluded that the GCG rating is positive and directly influences bank performance. Bank stability is also positive for bank performance indicating the indirect contribution of the GCG rating to bank performance. NPL, LDR, CAR and bank’s size (LASSET) are all negative and significant. The aim of this paper is to provide strong empirical evidence on the importance of governance and stability for performance. The limitations of this paper are the size of the sample and that it only covers public banks which are theoretically required to apply better governance in all aspects of their business by the Capital Market Authority.
