International Journal of Hospitality Management 102 (2022) 103153 Available online 10 January 2022 0278-4319/© 2022 Elsevier Ltd. All rights reserved. Ethical leadership, trust in organization and their impacts on critical hotel employee outcomes Kayode K. Eluwole a , Osman M. Karatepe b,c,* , Turgay Avci b a School of Tourism and Hotel Management, Bahcesehir Cyprus University, Bedrettin Demirel Cad., BAU Tower, Lefkosa via Mersin 10 99010, Turkey b Faculty of Tourism, Eastern Mediterranean University, TRNC, Via Mersin 10, Gazimagusa 99628, Turkey c Faculty of Finance and Management in Wrocław, WSB University in Wrocław, Wrocław, Poland ARTICLE INFO Keywords: Absenteeism Ethical leadership Hotel employees Trust in organization Service recovery performance Social loafing behavior ABSTRACT Drawing on social exchange, social learning, and reformulation of attitude theories, our paper proposes a research model and empirically tests the interrelationships of ethical leadership, trust in organization, absen- teeism, social loafing behavior, and service recovery performance. Data collected from hotel customer-contact employees two weeks apart and their direct supervisors in Nigeria were utilized to test the aforesaid linkages via structural equation modeling. The findings reveal that ethical leadership fosters employees’ trust in orga- nization and service recovery performance, while it mitigates their absenteeism. In addition, trust in organization triggers service recovery performance, while it is a panacea to absenteeism and social loafing behavior. The abovementioned findings implicitly suggest that trust in organization mediates the influence of ethical leadership on absenteeism, social loafing behavior, and service recovery performance. The findings emphasize the need for ethical leadership, which fosters trust in organization and service recovery performance and alleviates absenteeism. 1. Introduction At a time of strict competition and continuously evolving customer demands, hotel managers now realize that customer-contact employees (CCEs) are among the most important actors in the effective imple- mentation of organizational responses to customer complaints, achievement of positive customer service experiences, and enhancement of customer retention rates (e.g., Dimitriou and Schwepker, 2019; Wang et al., 2021). However, if CCEs have unfavorable perceptions of lead- ership practices, they may display ineffective task performance and poor service recovery (Dimitriou and Schwepker, 2019; Ozturk et al., 2021). Employees may consider leaders’ destructive behaviors (e.g., intimida- tion and humiliation) as shocks and exhibit nonattendance behavior to minimize direct contact with the supervisor/manager. As a result, this activates their propensity to leave the company (cf. Albashiti et al., 2021). Ethical leadership (ETL), which refers to“...the demonstration of normatively appropriate conduct through personal actions and inter- personal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making” (Brown et al., 2005, p. 120), is one of the major leadership styles that boosts positive attitudes and behaviors (Kim and Brymer, 2011; Qin et al., 2014; Walumbwa et al., 2011; Wang and Xu, 2021). Such a leadership style is important in an organization where customer satis- faction and loyalty are accomplished via successful complaint-handling and service delivery processes. Employees who perceive that ETL is implemented effectively in the workplace develop trust in organization (TiO) (Xu et al., 2016). Trust denotes “...a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another” (Rousseau et al., 1998, p. 395). TiO, which fosters employees’ attitudinal and behavioral outcomes (Aryee et al., 2002), can be considered one of the immediate consequences of ETL (cf. Xu et al., 2016), as is the case with servant leadership (Ilkhanizadeh and Karatepe, 2018). If TiO is one of the proximal outcomes to ETL, then employees are expected to exhibit positive affective and performance consequences. 1.1. Purpose Against this background, the current study develops a research model where TiO mediates the impact of ETL on absenteeism, social * Corresponding author at: Faculty of Tourism, Eastern Mediterranean University, TRNC, Via Mersin 10, Gazimagusa 99628, Turkey. E-mail addresses:
[email protected] (K.K. Eluwole),
[email protected] (O.M. Karatepe),
[email protected] (T. Avci). Contents lists available at ScienceDirect International Journal of Hospitality Management journal homepage: www.elsevier.com/locate/ijhm https://doi.org/10.1016/j.ijhm.2022.103153 Received 9 May 2021; Received in revised form 19 December 2021; Accepted 4 January 2022
International Journal of Hospitality Management 102 (2022) 103153 2 loafing behavior, and service recovery performance (SRP). That is, our paper assesses (a) the impact of ETL on TiO, absenteeism, social loafing behavior, and SRP; (b) the effect of TiO on absenteeism, social loafing behavior, and SRP; and (c) TiO as a mediator in the aforementioned linkages. SRP, which denotes “...frontline service employees’ perceptions of their own abilities and actions to resolve a service failure to the satis- faction of the customer” (Babakus et al., 2003, p. 274), is considered one of the performance outcomes of ETL and TiO. This is important because SRP is an important tool to convert aggrieved customers into a state of satisfaction and a valuable source of positive word-of-mouth commu- nication (Babakus et al., 2003). Absenteeism is one of the nonattendance behaviors eroding service workers’ morale and hindering effective ser- vice delivery (Chang et al., 2020; Ozturk and Karatepe, 2019). Social loafing behavior, which is defined as “... the tendency for individuals to expend less effort when working collectively than when working indi- vidually” (Karau and Williams, 1993, p. 681), is a non-role performance outcome. Employees are more inclined to exhibit social loafing behavior as a result of their dissatisfaction with managerial practices in the or- ganization (Luo et al., 2013). 1.2. Contribution The present study seeks to address at least three gaps by developing and empirically testing a research model of ETL and employee reactions. First, hospitality managerial or non-managerial employees often exhibit unethical behaviors (Teng et al., 2020). Giving unfair treatment to customers, overcharging customers, providing misleading information, engaging in food fraud, and showing service sabotage are among these behaviors (Dimitriou and Schwepker, 2019; Schwepker and Dimitriou, 2021; Yan et al., 2021). ETL which enables leaders to create an envi- ronment where employees are expected to display appropriate behavior can be a remedy to the prevention of said behaviors. In such an envi- ronment, leaders do not only emphasize more directive and normative behavior but also cares for their followers, shows integrity, and serves the good of the whole (Van Dierendonck, 2011). It has been reported that ETL mitigates hotel employees’ ethical ambiguity (Schwepker and Dimitriou, 2021). Though ETL has been linked to several behavioral consequences such as organizational citizenship behavior, counterpro- ductive work behavior, and task performance, Ng and Feldman’s (2015) and Bedi et al. (2016) meta-analytic studies as well as empirical in- vestigations in the extant literature do not delineate any evidence regarding the association between ETL and three critical employee outcomes such as absenteeism, social loafing behavior, and SRP. The abovementioned gap is apparent in the current hospitality and tourism research, which delineates empirical studies about ETL (e.g., Dimitriou and Schwepker, 2019; Garba et al., 2018; Wang and Xu, 2021). Such void has also been denoted in Myung’s (2018) review. Lack of evidence regarding the impact of ETL on employees’ performance and non-role performance outcomes and absenteeism is surprising because the customer service experience is highly influenced by the ethical values and CCEs’ behaviors (Dimitriou and Schwepker, 2019; Yesiltas and Tuna, 2018). With this realization, the current paper tests absen- teeism, social loafing behavior, and SRP as the three critical outcomes of ETL (e.g., Dai et al., 2020; Hewagama et al., 2019; Liden et al., 2004). In a workplace where hotel managers have begun to pay particular atten- tion to employees’ ethical behaviors and beliefs (Teng and Cheng, 2021), testing the abovementioned relationships is relevant and significant. Second, recent studies investigated the mediating role of trust in leader (TIL) in the association between ETL and behavioral conse- quences (e.g., Javed et al., 2018; Mo and Shi, 2017; Mary and Ozturen, 2019). To the best of authors’ knowledge, there is only one empirical paper that has examined the direct effect of ETL on TiO so far. Specif- ically, Xu et al. (2016) disclosed that TiO partly mediated the influence of ETL on procedural and distributive justice. As argued by Xu et al. (2016), ethical leaders’ actions should provide a base for fostering TiO if they are the unique moral agents of the company. In addition, Wood et al. (2021) indicated that corporate social responsibility completely mediated the association between ETL and organizational trust. Considering the abovementioned dearth of evidence, this paper uses TiO as the mediating construct relating ETL to absenteeism, social loafing behavior, and SRP. Third, the relevant literature delineates a number of leaderships styles such as servant, authentic, transformational, empathetic and engaging leadership (Gui et al., 2020; Kaya and Karatepe, 2020; Kock et al., 2019; Schaufeli, 2021). Servant and authentic leadership are among the promising leadership styles (Brownell, 2010; Kaya and Kar- atepe, 2020). However, we focus on ETL and its consequences in a country, which has been suffering from unethical practices for years. Specifically, it is well-documented that the global hospitality industry is beset with a number of unethical practices such as service sabotage, sexual harassment, and over charging (Dimitriou and Schwepker, 2019; Teng et al., 2020). As a developing sub-Saharan African country, Nigeria is plagued with a number of problems such as corruption and political instability (Karatepe and Magaji, 2008). This is also evident in the cor- ruption perception index (Transparency International, 2021). As Mar- quette (2012) states, “...regardless of religion, people who live in highly corrupt countries tend to condemn corruption. However, they also may feel that their own corrupt behavior is justified given the systemic nature of the corruption.” (p. 15). Accordingly, it is of great importance to ascertaining the potential outcomes of ETL in a global hospitality market environment where there are unethical practices, and in a country (i.e., Nigeria) where corruption is one of the major problems facing the so- ciety. By doing so, the findings of our paper would provide a number of implications how ETL can be injected in the company and TiO can be established. In short, our paper enhances current knowledge by assess- ing the previously mentioned linkages via data collected from hotel CCEs in Nigeria. 2. Research model and hypotheses 2.1. Research model Ethical behavior is a crucial component in different leadership styles (servant, authentic and transformational leadership) (Yang and Wei, 2018). In a company where ETL is practiced effectively, there is a concern for people and a fair treatment of employees (Brown et al., 2005). Leaders known for their ethical behaviors and practices are trustworthy and honest (Brown and Trevino, ˇ 2006). This fosters TIL and organizational trust (Kalshoven and Den Hartog, 2009; Xu et al., 2016). Employees and their managers often display unethical behaviors, which erode the hotel’s image and hinder the company’s competitiveness (cf. Teng et al., 2020). This highlights the need for an effective imple- mentation of ETL in an organization, which promotes code of ethics, ethical and moral values. Despite this recognition, the hospitality and tourism literature lacks evidence about the consequences of ETL (e.g., social loafing behavior and SRP) among hotel employees (Myung, 2018). For instance, Javed et al. (2017a) reported that the impact of ETL on creativity was partly mediated by psychological empowerment. Dimitriou and Schwepker’s (2019) research disclosed that ETL boosted commitment to service quality. Trust is one of the key components of organizational culture and sends signals to employees about the successful implementation of the relevant leadership style (Joseph and Winston, 2005). Yet, surprisingly, the preponderance of the studies has linked servant/authentic leader- ship to TIL. For example, Qiu et al. (2019) found that effective imple- mentation of authentic leadership positively influenced employees’ TIL. Jaiswal and Dhar (2017) demonstrated that servant leadership posi- tively affected TIL, which in turn led to creative behaviors (e.g., pro- posing new ways of doing work). Mary and Ozturen’s (2019) work documented that employees displayed higher affective commitment and K.K. Eluwole et al.
International Journal of Hospitality Management 102 (2022) 103153 3 reduced organizational deviance as a result of their TIL surfacing from effective ETL practices. It is apparent that knowledge of scholars about the influence of ETL on TiO and TiO as a mediator of the effect of ETL on workplace outcomes (e.g., social loafing behavior and SRP) is in its in- fancy stage. Our paper addresses the call for ETL by proposing a research model that tests empirically the interrelationships of ETL, TiO, absenteeism, social loafing behavior, and SRP. The research model shown in Fig. 1 contends that ETL has a positive influence on TiO and SRP, while it mitigates absenteeism and social loafing behavior. TiO also fosters SRP but alleviates absenteeism and social loafing behavior. These relation- ships implicitly propose that TiO mediates the influence of ETL on absenteeism, social loafing behavior, and SRP. In agreement with evi- dence in the extant literature, organizational tenure and gender are used as controls since they may give rise to potential statistical confounding impacts (e.g., Dai et al., 2020; Ozturk and Karatepe, 2019; Tang et al., 2015). 2.2. Hypotheses development 2.2.1. Ethical leadership, trust in organization, and job outcomes Ethical leaders are fair, trustworthy, honest, and follow an ethical decision-making process (Ko et al., 2018). They practice moral man- agement and encourage their followers to act morally (Brown and Trevino, ˇ 2006). These leaders have concern for just reward and maintain positive relationships with their followers (Brown and Trevino, ˇ 2006). Honorable actions and creditable communication by ethical leaders initiate employees’ trust in the company (Xu et al., 2016). Since leaders represent the organization, their effective ETL practices engender em- ployees’ organizational trust. This is supported by social exchange the- ory. Specifically, social exchange theory contends that employees establish relationships with individuals in the workplace (Cropanzano et al., 2003). Social exchange relationships “...involve the exchange of socioemotional benefits. They are associated with close personal at- tachments and open-ended obligations” (Cropanzano et al., 2003, p. 161). When individuals receive these benefits from the company, they feel obligated to reciprocate (Cropanzano and Mitchell, 2005). Accordingly, we surmise that CCEs who perceive ETL practices favor- ably within the hotel repay the employer by displaying high levels of organizational trust. This suggests that TiO is one of the direct upshots of successful ETL practices in the company. There is evidence denoting that ETL enhances TIL (Javed et al., 2018; Mary and Ozturen, 2019). However, it appears that one study has assessed the direct impact of ETL on TiO so far (Xu et al., 2016). Hence, it is advanced: H1. ETL positively relates to TiO. ETL gives rise to a number of positive outcomes. In the present paper, we advance that ETL in a company leads to lower absenteeism and social loafing behavior. Social learning theory is utilized to develop these hypotheses (Bandura and Walters, 1977). According to social learning theory, people learn by considering and imitating the attitudes and be- haviors of credible role models within the company (Brown et al., 2005). For CCEs, their ethical leaders are sources of these desired behaviors and attitudes (Brown and Trevino, ˇ 2006). Social learning theory also pro- poses that individuals can take advantage of vicarious learning in a work environment (Brown et al., 2005). They can observe what is conven- tional or what is not within the company and what is rewarded or punished. Ethical leaders maintain ethical standards for themselves and their followers (Byun et al., 2018). Based on their observation, followers can regulate their own behavior (Brown and Trevino, ˇ 2006). On the basis of social learning theory, we surmise that ethical leaders do not display social loafing behavior and are unlikely to be absent from work if there is no urgency. Ethical leaders whose actions and decisions are guided by policies and ethical standards foster a healthy workplace and find social loafing behavior and unexcused or unauthorized absen- teeism unethical. When CCEs imitate these behaviors, they exhibit diminished absenteeism and social loafing behavior. Social loafing behavior, by its nature, contradicts ethical standards because it pro- motes non-role performance practices when working in groups rather Fig. 1. Research model on the mediating role of trust in organization between ethical leadership and critical employee outcomes. K.K. Eluwole et al.
International Journal of Hospitality Management 102 (2022) 103153 4 than as individuals (Byun et al., 2018; Karau and Williams, 1993). The potential of social loafing behavior to hinder team performance and business productivity is contrary to the ability of ETL in the promotion of behaviors that focuses on the accomplishment of organizational goals. In empirical terms, it seems that there is limited evidence about the linkage between ETL and absenteeism. For example, Hassan et al. (2014) showed that ETL reduced public workers’ absenteeism. However, to our knowledge, no empirical study has tested the impact of ETL on social loafing behavior so far. Lack or absence of evidence about the aforesaid relationships is obvious in Myung’s (2018) review and Hoch et al.’s (2018) meta-analytic investigation. Therefore: H2. ETL negatively relates to absenteeism. H3. ETL negatively relates to social loafing behavior. As social exchange theory contends, employees often feel the re- sponsibility to repay the company via affirmative behaviors when they observe that they obtain socioemotional resources from the company (Cropanzano et al., 2003). Based on social exchange theory, we opine that CCEs who perceive that their leader is honest, trustworthy, and makes fair decisions reciprocate through elevated levels of SRP. That is, they spend considerable time responding to customer requests and problems and do not let them leave the hotel dissatisfied with the service delivery process. As argued by Nguyen et al. (2021), leaders engaging in ethical behaviors and communicating well encourage employees to reciprocate via enhanced job performance. Evidence suggests that ETL engenders positive behaviors such as innovative work behavior, task performance, creativity, and employee commitment to service quality (Dimitriou and Schwepker, 2019; Javed et al., 2017b, 2018; Ko et al., 2018). Recent evidence also indicates that ethical leadership fosters tour salespeople’s service-oriented organiza- tional citizenship behaviors (Tuan and Ngan, 2021). However, our un- derstanding of the extant literature presents no evidence about the influence of ETL on SRP. Thus, we predict the following: H4. ETL positively relates to SRP. 2.2.2. Trust in organization and job outcomes Absenteeism and social loafing behavior are negative work behaviors that may surface from CCEs’ lack of TiO. Social exchange theory pre- sents guidance about the development of these relationships. Broadly speaking, CCEs who find that management keeps its promises given to the staff and develops and maintains quality connections with them feel obliged to repay the company (Cropanzano et al., 2003). Since CCEs and the employer adhere to the rules of exchange and have a trusting rela- tionship, these CCEs feel indebted to their organization and will strive to reciprocate (Cropanzano and Mitchell, 2005). This repayment can be in the form of low levels of absences from work and social loafing behavior as well as effective SRP. When CCEs trust their organization, they develop a sense of responsibility, accountability and appreciation, which will preclude them from loafing when working in teams (Dai et al., 2020). Such employees’ absenteeism will decrease and their ser- vice recovery efforts will be more effective. There are empirical pieces that have explored the impact of TiO on quitting intentions and job performance (e.g., Cho and Song, 2017; Ozyilmaz et al., 2018). However, a search made in the extant service literature delineates limited studies appertaining to the impact of TiO on absenteeism and SRP. Specifically, a study of hotel employees in Russia documented that TiO diminished absenteeism (Ozturk and Karatepe, 2019), while TiO positively influenced SRP among bank employees in Russia (Karatepe et al., 2019). Surprisingly, we are not aware of any empirical study that has explored the effect of TiO on social loafing behavior so far. Hence, we predict the following: H5. TiO negatively relates to absenteeism. H6. TiO negatively relates to social loafing behavior. H7. TiO positively relates to SRP. 2.2.3. Trust in organization as a mediator Ethical leaders support and promote the ethical principles within the organization, act as role model by adhering to ethical conduct, and communicate ethical principles to their followers (Wood et al., 2021). In this environment, employees develop trust in the company (Xu et al., 2016). Such employees also exhibit positive behavioral outcomes (e.g., Dimitriou and Schwepker, 2019; Mary and Ozturen, 2019). Employees high on organizational trust focus on their work-related responsibilities and are effective service recovery performers (Karatepe et al., 2019). The abovementioned discussion highlights TiO as a potential mediator in the relationship between ELT and employee outcomes. However, there are limited studies about the mechanism linking ETL to affective and behavioral outcomes in the hospitality and tourism knowledge base (Dhar, 2016; Dimitriou and Schwepker, 2019). We posit that TiO me- diates the impact of ETL on CCEs’ absenteeism, social loafing behavior, and SRP. Garba et al.’s (2018) work also highlights the importance of trust as a mediator between ETL and employee outcomes. Reformulation of attitude theory is used for the ETL → TiO → absenteeism, social loafing behavior, and SRP linkages (Bagozzi, 1992). Specifically, our conceptualization of TiO is affect-based trust, which refers to “...the emotional bonds between partners” and highlights that “...partners have formed a social emotional bond that goes beyond a regular business or professional relationship; goodwill has expanded to extra-role tasks and other nontask relational activities” (Chen et al., 1998, p. 294). This is also in line with Aryee et al.’s (2002) conceptu- alization of trust. According to reformulation of theory, CCEs’ cognitive evaluations of events or situations (ETL) pave the way for emotional reactions (TiO) and these reactions determine their behaviors (absen- teeism, social loafing behavior, and SRP). That is, CCEs’ evaluations of ETL practices lead to emotional responses such as TiO. Feelings of CCEs’ TiO in turn ascertain their absenteeism, social loafing behavior, and SRP. On the basis of this reasoning, we predict the following: H8. TiO mediates the effect of ETL on absenteeism. H9. TiO mediates the effect of ETL on social loafing behavior. H10. TiO mediates the effect of ETL on SRP. 3. Method 3.1. Sample and data collection Data for this study were solicited from CCEs such as concierges, bartenders, bell attendants, front desk agents, receptionists, and guest relations representatives who were in close contact with customers. They were full-time employees in the four- and five-star hotels in Lagos, Nigeria. Lagos is the fourth most populous city in the world and tourism is a major source of revenue for the city (Fattah and Fasinro, 2017). At the time of this study, the Lagos State Ministry of Arts and Culture stated that there were 22 four-stars and 14 five-star hotels in Lagos. Using personal and professional networks (vial email and in person), the researcher contacted management of these hotels to obtain permission for data collection. Only 14 hotels agreed to participate in our research. Data were collected between February-March in 2019. Several procedural solutions were implemented to curtail the po- tential risk of common method variance (Podsakoff et al., 2003). First, data were obtained in three waves and a two-week time separation was allowed between each wave. Employees’ social loafing behavior and SRP were assessed by their direct supervisors. The importance of such rigorous data collection to mitigate common method variance was also underscored in Min et al.’s (2016) and other studies (Luu, 2021; Ozturk and Karatepe, 2019). The data collection process was completed via the assistance received from representatives assigned by hotel managers. Second, response-enhancing techniques were followed for the study. For K.K. Eluwole et al.
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