“The Power of Ethical Leader”: The Influence of Job Insecurity on Organizational Performance, the Mediating Effect of Organizational Trust and Moderating Effect of Ethical Leadership

Abstract

Purpose - The current paper not only investigates the intermediating process of the association between job insecurity and organizational performance, but also tries to find a factor which mitigates the negative influence of job insecurity. Design/methodology/approach By conducting structural equation modeling(SEM) analysis with survey data from 351 employees, this study tried to identify the mediating effect of organizational trust, as well as the moderating influence of ethical leadership in the job insecurity-organizational trust link. This paper built hypotheses that job insecurity decreases the level of employee’s organizational trust, then the level of the employee’s organizational trust would influence organizational performance. In addition, ethical leadership would function as a buffering factor between the association between job insecurity and organizational trust. Findings - This paper found that job insecurity had a negative influence on employee’s organizational trust, and the employee’s organizational trust had a positive influence on organizational performance. The ethical leadership mitigated the negative impact of job insecurity on organizational trust. Research implications or Originality By empirically delving into the importance of ethical leadership and organizational trust to increase organizational performance, this paper may provide top management and leaders in an organization with important insights that they should adequately monitor and manage the level of ethical leadership and organizational trust.