Leadership style and employee performance in China’s fast moving consumer goods industry

Abstract

The purpose of this study is to investigate the effect of various leadership styles on employee performance in the Fast-Moving Consumer Goods (FMCG) industry in China. The unexpected global spread of the coronavirus pandemic and its complicated issues have created a substantial amount of uncertainty in consumer demand worldwide which has motivated this research and highlighted the crucial role that the FMCG industry's marketing relationship plays in determining enterprise profit. There is a growing concern among enterprise managers, academics and policymakers about employee performance and its overarching impact on the organization. The study is underpinned by social exchange theory and employs a cross-sectional design. An online survey was conducted with 384 employees from the FMCG industry to measure the impact of three independent variables: authentic leadership style, servant leadership style and ethical leadership style. The findings reveal that authentic, servant and ethical leadership all significantly affect employee performance in the Chinese FMCG industry. Among these, ethical leadership is found to have the extreme effect. The implications of this study are of practical relevance to FMCG companies. FMCG companies can potentially navigate through the uncertainty in global consumer demand more effectively by reconfiguring their leadership styles to enhance employee performance. The study provides insights that can be used by FMCG companies to increase employee performance which is directly linked to enterprise profit.