Effect of dark side leadership and leader-member exchange on corporate performance: Mediating role of employee engagement

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Optimized corporate performance assumes that financial and non-financial performance can be achieved through effective collaboration between leaders and employees. This study analyzes the mediation of employee engagement on the connection between dark side leadership and leader-member exchange on corporate performance in Indonesia. This study used a mixed methods approach by distributing questionnaires to 1,013 respondents consisting of supervisors and managers and conducting intensive interviews with 20 respondents with more than 25 years of work experience to strengthen the perception of answers. The paper uses multiple linear regression analysis. The regression results show that dark side leadership (β = –0.228, ρ = 0.000) and leader-member exchange (β = 0.424, ρ = 0.000) affect employee engagement. Next, leader-member exchange (β = 0.176, ρ = 0.008) and employee engagement (β = 0.391, ρ = 0.000) affect corporate performance, while dark side leadership has no effect (β = 0.020, ρ = 0.400). Finally, employee engagement mediates the effect of dark side leadership and leader-member exchange on corporate performance. This finding indicates that the comfort level of employees at work will decrease if a leader demonstrates a dark side behavior that can affect his/her performance, which later impacts corporate performance. Furthermore, the novelty contribution of dark side leadership measurements on the cultural and emotional dimensions can impact employee turnover intention. This study offers implications for practitioners to conduct selective assessments at the beginning of leader recruitment and control internal leader assessments to create effective organizational behavior.

Acknowledgment
This paper is not supported by grants or scholarship and is free from conflict of interest.

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    • Figure 1. Conceptual framework
    • Table 1. Descriptive statistics
    • Table 2. Multiple linear regression (Model 1)
    • Table 3. Multiple linear regression (Model 2)
    • Table 4. Multiple linear regression: Testing mediation effect of employee engagement
    • Table 5. Expansion test of the emotional and cultural dimensions’ effect on employee engagement
    • Table 6. Expansion test of the emotional and cultural dimensions’ effect on corporate performance
    • Table 7. Sensitivity test of earlier measurements compared to new measurements (Novelty) in model 1
    • Table 8. Sensitivity test of earlier measurements compared to new measurements (Novelty) in model 2
    • Conceptualization
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Data curation
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Formal Analysis
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Investigation
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Methodology
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Project administration
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Validation
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Visualization
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Writing – original draft
      Sunanta Wiguna
    • Writing – review & editing
      Sunanta Wiguna, Etty Murwaningsari, Yvonne Augustine Sudibyo
    • Supervision
      Etty Murwaningsari, Yvonne Augustine Sudibyo