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Servant Leadership Influencing Store-Level Profit: The Mediating Effect of Employee Flourishing

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Abstract

Servant leadership and other ethical and moral approaches to leadership have been criticized for focusing on followers to the potential detriment of other stakeholders, specifically shareholders. With individual data collected from 485 respondents nested in 55 similar stores in a single company, within a large metropolitan area in France, we tested a multilevel model whereby servant leadership relates positively to business-unit performance measured by profit growth—a key indicator for shareholders—through the mediation of employee flourishing and revenue growth. With financial performance data collected approximately 15 months after servant leadership was measured, results supported the hypothesized relationships. At the individual level, this study also showed the association of servant leadership and employee flourishing to be negatively moderated by individual perceptions of power distance orientation: the weaker the power distance orientation, the stronger the influence of servant leadership on employee flourishing. Improving on prior studies that relied on data aggregated at the group level and proximal indicators of performance, this multilevel study sheds light on how servant leadership, a prominent form of ethically conscious leadership, may resolve the fundamental tension leaders face vis-à-vis the potentially diverging interests of their stakeholders.

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Notes

  1. Peterson and colleagues (2012), measured financial performance by corporate return on assets, which may depend on organizational choices independent from the leader-followers relationship.

  2. Seligman (2011) refers to this conceptualization as the perma model of flourishing, with flow reworded as engagement.

  3. Building on Rosso et al.’ (2010) remarks on the confusion of meaning and meaningfulness of work, we use here the definition of meaningfulness.

  4. Initially, power distance had been defined at a national level to describe the degree to which people perceive that it is appropriate for power to be distributed unequally (Daniels and Greguras 2014; Hofstede et al. 2010; House et al. 1999).

  5. The dispersion in revenue growth was high, as indicated by the standard deviation in Table 2. Suspecting that outliers may have a disproportionate influence, we tested our model without the stores with extreme values. The results were not different.

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  1. Strategy Department, EMLYON Business School, 23 avenue Guy de Collongue, CS 40203, 69134, Ecully Cedex, France

    Vincent J. Giolito

  2. University of Illinois at Chicago, 601 S. Morgan, Room Number 2232, MC 243, Chicago, IL, 60607, USA

    Robert C. Liden

  3. Rotterdam School of Management, Erasmus University, Burgemeester Oudlaan 50, 3062 PA, Rotterdam, The Netherlands

    Dirk van Dierendonck

  4. Department of Management and International Business, The University of Auckland, 12 Grafton Rd, Private Bag 92019, Auckland, 1142, New Zealand

    Gordon W. Cheung

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Giolito, V.J., Liden, R.C., van Dierendonck, D. et al. Servant Leadership Influencing Store-Level Profit: The Mediating Effect of Employee Flourishing. J Bus Ethics 172, 503–524 (2021). https://doi.org/10.1007/s10551-020-04509-1

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