Authentic Leadership and Openness to Change in Pakistani Service Industry: The Mediating Role of Trust and Transparent Communication

Abstract

Organizations to engage in strategic change initiatives to remain competitive. Leadership is the top determinant of successful change. This study investigated the factor affecting the employee’s openness to change during the process of change and how leadership affects that. We proposed a theoretical framework, modifying Yue et. al. (2019) by incorporating Authentic in place of transformational Leadership. We hypothesized that authentic leadership affects organizational trust during change both directly, as well as by inducing transparent communication. Trust would in turn positively affect openness to change. Authentic leadership included 1. Self-Awareness, 2. Relational Transparency, 3. Balanced Processing, and 4. Internalized Moral Perspective, dimensions. Whereas, transparent communication consisted of 1. Participation, 2. Substantiality, 3. Accountability, Factors. Empirical validity was established by conducting a survey using a close-ended questionnaire. Data was collected from 310 employees working across different service industries in Karachi and analyzed using confirmatory factor analysis and structured equation modeling. The finding revealed that transparent communication and authentic leadership have significant direct and indirect relationships with employees’ openness to change. Organizational trust has a significant relationship with employees’ openness to change during the change process. However Authentic leader has a weak direct relation with transparent communication and there is no significant relationship between authentic leadership and trust with the mediating role of transparent communication. However, trust significantly mediate all the factors of authentic leadership except Self-Awareness, and Openness to Change. Similarly, trust also mediated Substantiality, and Accountability factors of communication, and openness. Lastly, substantiality also offered a partial mediatory role between authentic leadership and trust.