The Effect of Ethical Leadership on Employees Well Being: A Sectorial Analysis from Pakistan with the Mediatory Role of Trust in Supervisor, Goal Congruence and Psychological Capital

Abstract

The supervisor-trainee relationship is built upon mutual trust and goal congruence between the leader and the subordinate. It is also influenced by positive psychology among the two. We proposed a theoretical framework by combining and models that explained how ethical leadership complements the supervisor-trainee relationship to achieve mutually benefiting outcomes for both employees and businesses in terms of better work engagement as well as preventing the emotional exhaustion of employees. This is established through trust and harmony in goals as well as through a strong and positive personality of an ethical leader. To establish its validity, constructive evidence has been built upon by targeting specific sectors that include service and manufacturing through a survey based on a close-ended questionnaire. Data was collected from a sample of 200 employees from Karachi, Pakistan and was analyzed using confirmatory factor analysis (CFA) and structured equation modeling (SEM) through the software SmartPLS3. The results suggested that ethical leadership does affect employees' wellbeing, however, overall, the mediating effects were mostly insignificant. It did assert all the hypotheses that had a direct connection with ethical leadership but it showed anomic behavior in branched connections, especially in psychological capital and goal congruence branching. Hence the findings imply that ethical leadership shouldn’t be taken not as a unidirectional concept but needs to be unfolded under distinct ethical dimensions of leadership. This research encourages a deeper analysis of the first and second-order factors and their interrelated connections for future studies.

Keywords: Ethical Leadership, Trust in Supervisor, Psychological Capital, Goal Congruence, Vigour, Dedication, Absorption, Emotional Exhaustion, CFA, SEM, SmartPLS