The Moderating Role of Financial Self-Efficacy in the Relationship between Emotional Intelligence and Financial Effectiveness.

Abstract

Purpose - This study aims to examine the effects of emotional intelligence on organizational financial effectiveness, with the moderating effect of financial self-efficacy. Study Design/methodology/approach - To examine how financial self-efficacy moderates the relationship between emotional intelligence and financial effectiveness, data were collected from a sample of 272 managers in Pakistani organizations using a 7-point Likert scale questionnaire. SPSS and the graphical application AMOS were used to evaluate the collected data and structural equation modeling (SEM) techniques were used to evaluate the hypothesis. Findings- The results reveal that emotional intelligence significantly affects an organization’s financial effectiveness. Emotional intelligence includes key components such as self-awareness, self-management, motivation, empathy, and social skills, all of which contribute significantly to an organization’s financial effectiveness. Results show that it is important for organizations to measure managers’ emotional intelligence before employing them. Moreover, research shows that the association between organizational financial effectiveness and emotional intelligence is significantly moderated by financial self-efficacy. Research Practical Implications- The study has limitations, such as focusing solely on individual emotional intelligence (EI) and financial effectiveness rather than considering team-level EI or qualitative aspects of EI. However, it confirms a link between EI and financial effectiveness, particularly when moderated by financial self-efficacy. These findings underscore the importance of EI and financial self-efficacy, suggesting avenues for future research. Originality/value- Examination of non-linearity between ESG and firm-specific factors has not been performed holistically. Additionally, a direct comparison between the developed and developing markets is also lacking in the current literature. This study attempts to address these gaps.