Virtuous leadership and individual performance among Indian bank employees: a parallel mediation model

Purpose - This study aims to empirically explore the effect of virtuous leadership on the individual performance of an employee in light of “institutional theory”, considering work engagement and subjective happiness as parallel mediators with specific reference to the banking sector in India. Design/methodology/approach - The data were gathered through a survey questionnaire from bank workers employed in branches across central India. After the survey, 453 responses were accepted for analysis after excluding incomplete returns. Structural equation modelling (SEM) was used to test the hypotheses and validation of the proposed model. Findings - The results revealed the integrated association of virtuous leadership and individual performance in relation to the Indian banking sector. This study also found a significant parallel mediating function of work engagement and subjective happiness in the positive relationship between virtuous leadership and self-assessed individual performance. Research limitations/implications - Individual performance was assessed using respondents' perceptions of their own performance. Though appropriate care was made to avoid procedural and statistical common method bias, the possibility of an exaggerated relationship between constructs and single-source could not be excluded. Practical implications - The findings indicate that banks may benefit from a greater emphasis on virtuous leadership in both staff selection and leadership development programmes. According to the present research, employees who believe in the virtuous character of their leader feel more engaged and happier and exhibit better performance; this can help the efficiency of Indian banks. Originality/value - The study significantly bridges the gap in current literature by explaining the mechanism of the effect of virtuous leadership on individual performance in the Indian banking sector. The study has also addressed the gaps in individual performance literature and has empirically established the layered connection.