Effect of CEO transformational leadership on organizational ethical culture and firm performance: the moderating effect of competitive intensity

Abstract

Purpose The purpose of this study is to adopt the upper echelon theory to analyze the effect of chief executive officer (CEO) transformational leadership on organizational ethical culture and its subsequent impact on firm performance. The study also integrates the knowledge from the structure–conduct–performance paradigm to test whether the high degree of competitive intensity that firms experience could weaken the effect of organizational ethical culture on firm performance. Design/methodology/approach Online survey data were obtained from firms in Thailand that were randomly selected from the directory provided by the Department of Business Development (n = 200). Partial least squares structural equation modeling was used to analyze the data. Findings Organizational ethical culture significantly meditates the effect of CEO transformational leadership on firm performance. Moreover, the moderating effect analysis illustrates that the positive effect of organizational ethical culture on firm performance tends to be lower when firms have a high level of competitive intensity in the market. Originality/value Overall, this study adds new knowledge to the literature by showing that, although ethical culture created by transformational leaders can lead to high firm performance, the market environment in terms of competitive intensity could mitigate this benefit.

How transformational leadership, workplace spirituality and resilience enhance the service recovery performance of FLEs: a theoretical integration of COR theory and SDT

“…They are confident, exhibit self-belief and are willing to identify with these characteristics; they are also willing to forego self-interest in favor of higher group objectives (Bastari et al ., 2020; Buil et al ., 2019; Khan et al . 2020; Lamsam and Charoensukmongkol, 2022; Lai et al . 2020).…”

“…2021). Transformational leadership is an advanced form of leadership that allows its practitioners to persuade their subordinates to adopt new ways of thinking about the world and their place in it by emphasizing the importance of desired outcomes, thus creating a shared sense of meaning and inspiring them to look beyond their own interests (Lamsam and Charoensukmongkol, 2022; Islam et al ., 2020). Notably, TFL as viewed through the lens of SDT theory may be a critical precursor to the satisfaction of three basic psychological needs for employees-the need for autonomy, competence and relatedness, each of which emerge in workplace spirituality.…”

“…2020; Stock et al . 2022; Lamsam and Charoensukmongkol, 2022). In the present study, we focus on FLE's service recovery performance.…”

“…TFL theory continues to be one of the most widely studied leadership concepts (Stock et al 2022;Siangchokyoo et al, 2020). TFL refers to a leadership strategy in which leaders inspire followers to identify with organizational goals/ interests and exceed expectations in their performance (Buil et al, 2019;Bass, 1985;Lamsam and Charoensukmongkol, 2022). In addition, transformational leaders have been documented as more beneficial and helpful since they can recognize and enhance a follower's potential to perform a task (Khan et al 2020).…”

Why Do We Need to Examine Leadership Concepts and Styles in Finance? Literature Overview

“…Through the mechanism of sharing common values and a vision of the future, the transformational leader also aligns themselves with the improvement of the company's ethical culture, which also leads to enhanced performance [72].…”