Laissez-Faire leaders and organizations: how does Laissez-Faire leader erode the trust in organizations

Abstract

Supervisors are known to play significant role in instilling trust within the organizations. Following this corollary, the aim of this study is to investigate the effect of laissez-faire leadership on employees’ trust in their organizations. Known as “absence of leadership”, laissez-faire leadership is one of the ineffective and destructive leadership styles, which is assumed to erode the trust both in supervisors and organizations. Data were collected mostly from engineers (sample size =129) working in a public organization, conducting scientific and technological research on mineral exploration and geology. The finding including both correlation coefficients and results of structural equation modeling revealed that the experience of laissez-faire leadership by an immediate supervisor was strongly associated with reduced level of trust in organizations. More specifically, when a supervisor fails to satisfy to the expectations of subordinates by lack of presence and involvement, those behaviors seem to erode the employees' feelings of trust toward their organizations. This finding could be explained with the premises of psychological contract breach. Employees perceiving their supervisors reluctant or incompetent to satisfy their needs seem to lose their confidence that the organization would abide by the initial promises had been made, which wears away the trust in organization as time passes. Key Words: Trust, organizational trust, leadership, laissez-faire leadership, ineffective leadership. JEL Classification: M10, M12, M54.