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Review

Role of Ethical Leadership in Improving Employee Outcomes through the Work Environment, Work-Life Quality and ICT Skills: A Setting of China-Pakistan Economic Corridor

by
Maria Khan
1,
Asif Mahmood
2,* and
Muhammad Shoaib
3
1
Institute of Business & Management, University of Engineering and Technology, Lahore 54000, Pakistan
2
Department of Innovation and Technology Management, College of Graduate Studies, Arabian Gulf University, Manama 293, Bahrain
3
Department of Computer Science, University of Engineering and Technology, Lahore 54000, Pakistan
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(17), 11055; https://doi.org/10.3390/su141711055
Submission received: 22 June 2022 / Revised: 6 August 2022 / Accepted: 26 August 2022 / Published: 5 September 2022
(This article belongs to the Special Issue Managing Sustainable Megaprojects along China's New Silk Roads)
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Abstract

:
The China–Pakistan Economic Corridor (CPEC) is a multi-billion transformative project. It is expected that the CPEC will cause a massive change in every sphere of life in Pakistan, especially in business organizations. The successful accomplishment of such a huge project depends upon the sustainable performance of the organizations associated with the project, and the sustainable performance of the organizations largely depends upon their work environment and quality of work life. As most of the organizations associated with CPEC employ a workforce from both countries, i.e., China and Pakistan, creating a work environment fit in such a cross-cultural setting is quite challenging. In this context, this study investigates the role of ethical leadership, workplace environment, quality of work-life and ICT skills (as a moderator) on job-related outcomes, such as job satisfaction, organizational commitment, and team spirit. The data were collected employing the snowball sampling technique from 609 upper and middle-level employees working in organizations connected with CPEC projects. Obtained results were subsequently analyzed using the structural equation modeling technique with the help of AMOS. The results uncover the positive association between variables as represented in the model, and further revealed that ethical leadership positively enhances the work environment dimensions: relationships, personal growth, and system maintenance and change. Furthermore, these factors are also considered vital in developing the quality of work-life, which eventually raises the employee’s job outcomes. Moreover, the study provides empirical justification for managers that ICT skill development is an important catalytic factor that enhances employee job outcomes. The study is invaluable for managers and policymakers in understanding the enablers of productivity for organizations operating in the context of the megaproject (CPEC).

1. Introduction

In 2013, China and Pakistan declared plans to develop a passage to link Kashgar in China’s Xinjiang Uygur Autonomous Region with the southwestern Pakistani port of Gwadar [1]. The project was named “China-Pakistan Economic Corridor (CPEC)” and had a planned original value of $47 billion, and later it was raised to $62 billion [2]. The project is expected to be a source of economic, strategic, and other benefits across the regions [3]. As the economic stakes linked with this mega project are high, the sustainability of the organizations working on the project is crucial.
In CPEC, most multinational organizations employ Chinese and Pakistani employees, making it a cross-cultural/multi-cultural experience for the workforce. The differences in ethical, work, and cultural values may potentially impact the employees’ organizational performance outcomes. Particularly, for developing countries like Pakistan, unethical practices like corruption, discrimination, favoritism, and harmful financial activities may lead to adverse outcomes, e.g., lower commitment and reduced performance [4]. Therefore, a working environment with discriminant ethical and work values may negatively impact employee job-related outcomes. Here, it is argued that in the scenario of multinational organizations, ethical leadership that promotes healthy values, is crucial for better work-life quality and performance outcomes for employees as well as the organization. This has derived the need for the study, and we contend that it is pertinent to investigate the underlying mechanisms through which ethical institutionalization (ethical leadership as a driving force) impacts employee work outcomes, i.e., job satisfaction, commitment, and team spirit through the intervention of work environment and quality of work life.
A work environment is a surrounding around an employee where all of the work activities are carried out, and work environment conditions may bring positive or negative employee job outcomes. If a work environment is not suitable in any aspect, e.g., physically, psychologically, or socially, the job outcomes of employees may be affected negatively. In contrast, a desirable, employee-oriented, and supportive work environment can yield positive job outcomes. Previously, much research has discussed the role of the work environment on job outcomes, e.g., job satisfaction, employee performance, burnout, and work engagement [5,6]. However, there is a lack of research on the predictors of a work environment. Discussing the predictors of work environment, Priarso and Diatmono [7] argued that besides work environment, “a person” by himself or herself can influence the work tasks. Here, it can be inferred that “a person” is referred to as a leader, and it is argued that leadership influences the work environment, subsequently affecting job outcomes. In earlier studies, the direct role of leadership has been considered by scholars [7,8]. However, how leadership impacts job outcomes indirectly by influencing a work environment is yet to be investigated.
Thus, the current study investigates the role of ethical leadership through the work environment under the lens of its three dimensions (relationships, personal development, and system maintenance and system change) devised by Moos [9]. He contends that how an environment is perceived, determines how individuals will behave. In an organizational context, it can be argued that the environment where employees work significantly impacts their behaviors and attitudes. The approach by Holahan and Moos [10] and Moos [9] regarding psychosocial work environment factors have been intensely studied in relation to the outcomes [11,12,13,14]. However, previously, the majority of the research work was carried out in hospitals, schools, and universities. Further, studies have considered generational differences [11], differences in levels of employment (e.g., worker, subordinate, and higher management) [15], and multiple departmental levels in a single organization [16]. However, the contextual differences in multi-culture and cross-culture organizational settings have been ignored by scholars. Furthermore, work environment dimensions (relationship, personal growth, and system maintenance and change) were never considered to explain the underlying mechanisms of the relationships between ethical leadership, quality of work life, and employee outcomes (job satisfaction, commitment, and team spirit).
Over the last two years, where the COVID-19 pandemic negatively affected all industries around the globe, it also accelerated progress toward a more creative, innovative, and advanced economy. The post-pandemic era has given a new direction to the Pakistani workforce in using information and communication technologies. Furthermore, due to the cross-cultural nature of CPEC-based organizations, Chinese employees are arguably more advanced in ICT skills. Such collaborations between Chinese and Pakistani employees create psychological resources and learning opportunities that result in better organizational performance [17,18].
Hence, this study bridges earlier highlighted research gaps, and contributes to the existing knowledge by empirically investigating the role of ethical leadership as a predictor of work environment dimensions and quality of work-life in the contextual setting of organizations working under the CPEC mega projects. Furthermore, this study investigates work environment dimensions and quality of work-life as the underlying mechanisms to explain the indirect effects of ethical leadership on job satisfaction, employee organizational commitment, and team spirit. In the end, this study analyzes the moderating impact of ICT skills in the relationship between quality of work-life and job satisfaction, commitment, and team spirit.
Based on the discussion, we formulated a mediated-moderated theoretical framework to investigate the underlying mechanisms and moderating effects of ICT skills. In the end, the theoretical and practical significance of the study results are discussed, and pathways for future research are paved.

2. Literature Review and Hypotheses Development

2.1. Ethical Leadership and Work Environment

In early times, people used to think that ethics had nothing to do with how an organization reached its goals. However, business norms changed, and businesses became more concerned about addressing ethical issues to preserve the organizational reputation. Because over the past, frequent corporate scandals revolving around the business management/leadership rosed questions about the integrity of the organizations [19]. Therefore, ethical leadership emerged as an integral construct for reinforcing the ethical climate and promoting moral values and behaviors among employees. Leaders are a crucial source of ethical guidance for employees and, at the same time, are responsible for an organization’s moral development. The literature suggests that leaders’ behaviors are disseminated throughout the organization [20]. Hence, their behavioral standards are crucial for an organization’s overall working environment.
Ethical leadership was conceptualized by Brown and Treviño [21]. They suggested that if a person exhibits integrity, observes ethical standards, and treats his or her subordinates fairly, he is believed to be equipped with norms of ethical leadership. Trevino and Brown [22] explained that ethical leaders promote ethical norms throughout the organization by practicing ethical conduct and, also, by managing ethics in the workplace. They are believed to be responsible for the overall moral image of an organization [23]. As scholars suggest, leadership has two key ethical responsibilities: to make and incorporate ethical decisions throughout the organization and to foster ethical conduct among employees by developing an ethics-oriented organizational climate [24]. This led us to formulate that ethical leadership influences an organization’s work environment and, in this study, we have hypothesized the relationships between ethical leadership and three work environment dimensions under the lens of organizational learning theory [25,26] and the concepts of ethical leadership values and behaviors [27].
Similarly, the work environment can simply be explained as the surroundings of employees where they perform their job activities. As explained earlier, a work environment has a positive or negative influence on employee job outcomes. Therefore, creating an ideal work environment is crucial for organizations. Past studies have presented that a leader’s ethical conduct has a significant influence on developing an ideal work environment [8]. However, less is known about the effect on dimensional aspects of the work environment. This study considers three general dimensions of the work environment, as presented by Moos [9]. He studied different work environments, including schools, hospitals, prisons, universities, and other work settings. He concluded that a work environment constitutes psychosocial characteristics that can be characterized by three individual domains or dimensions. (1) Relationship: it indicates the intensity and nature of relationships working in an environment, and it also assesses to which extent individuals are engaged in an environment and to what degree they support each other. (2) Personal growth: it assesses; to what extent an environment is focused on individuals’ personal growth, autonomy, and self-enhancement. (3) System maintenance and change: it refers to what extent an environment has clarity and order, maintains control, and is adaptive to change.
This study draws on social learning theory [25,26] to explain the impact of ethical leadership. Social learning theory suggests that an individual learns appropriate behaviors by making someone a role model and by observing his or her behavior. Individuals seek morally attractive and credible role models in the persuasion of adopting appropriate behaviors. Leaders are often deemed legitimate figures to be considered role models subjected to their positions in an organization. Furthermore, in addition to employees’ own observations, ethical leaders can influence employees’ ethical conduct through rewards and punishments. An ethical leader rewards ethical behaviors and punishes unethical behaviors [21]. Therefore, they are said to be capable of promoting desirable ethical behaviors among employees. Furthermore, in contrast to direct influence, social learning theory also highlights that, in addition to learning from role modeling, rewards and punishments, individuals learn indirectly by observing other members in a group setting [25,26]. It is argued that when leaders observe ethical conduct, highlight the importance of ethics, and encourage ethical behaviors, norms of a group for desirable behaviors are formed [28]. This holds an atmospheric impact on the relationships among employees.
Yukl and Mahsud [27] explained the values and behaviors of ethical leadership through an example. They suggested that ethical leaders are very supportive and are always helpful when someone encounters a problem, distribute benefits and rewards fairly, are honest in communicating with employees, make sacrifices to provide benefits to others, highlight the importance of organizational values, set ethical standards, and reinforce organization’s ethical values. Here, it is contended that these attributes/behaviors are employee-oriented and support them in their personal growth. Furthermore, clear communication, perception of fair treatment, and clarity of organizational values tend to reduce the perceived uncertainty associated with an organizational change.
Based on the above arguments, we hypothesize that,
H1a: 
Ethical leadership is positively related to the work environment dimension “relationships”.
H1b: 
Ethical leadership is positively related to the work environment dimension “Personal growth”.
H1c: 
Ethical leadership is positively related to the work environment dimension “system maintenance and change”.

2.2. Work Environment and Quality of Work-Life

In literature, quality of work-life has been explained as favorability of working conditions or a favorable working climate, e.g., supportive, rewarding, growth-oriented, secure (in terms of job security), and satisfactory (in terms of job satisfaction) [29]. Hackman [30] argued that a work environment that takes care of employees’ personal needs, triggers a positive employee-organization interaction which ultimately leads to improving the quality of work-life. An environment that fulfills employees’ growth and career needs, offers rewards and better working conditions (quality of work-life), significantly impacts employee job outcomes [29]. Here, this study argues that a positive work environment (personal growth domain) enhances the employees’ quality of work-life. Studies further suggest that relevant elements of an employee’s quality of work-life are, but are not limited to, task-oriented environment, physical work environment, social environment of the organization, relationships (organization-employee, superior-subordinates, and group members), and administrative systems. Chan et al. [31] argued that an employee’s quality of work-life is reflected by the nature of their relationships with other members of the organization and their level of on-job effectiveness [29]. Hence, it can be argued that a positive work environment in terms of the relationship domain improves the quality of employee work-life because a better and more supportive nature of the relationships has a positive psychological effect on individuals. Furthermore, “system maintenance and change” refers to the administrative control and change management aspect of a work environment. Hence, it is argued that a workplace environment characterized by administratively strong attributes can help in managing change, by reducing negative perceptions and uncertainty associated with change. It has been argued that, during the times of change implementation, reducing negative attitudes among employees, through creating a supportive climate [32], can assure good quality for employees’ work-life.
Furthermore, the work environment as a whole was viewed as an organization’s set of values and assumptions that provide guidelines to the employees about job work. Accordingly, scholars have suggested that organizational culture is considered a glue, which means organizations can succeed by sticking with their cultural or environmental values [33]. A study was conducted by Dasgupta and Gupta to uncover the importance of a flexible and supportive organizational structure regarding innovative and e-business adoption, and it was found that a more supportive environment positively impacts the development of business and goal achievement [34].
Accordingly, the work environment also helps employees by letting them understand what type of behaviors an organization expects from them as employees. The standards made by organizations always have a significant impact on the behavior of the employees [35]. Here, it is argued that organizations always intend to create the best working environment with the intention to harness positive employee outcomes. Therefore, it can be said that an organization’s supportive work environment is a major factor that determines work-life quality. Thus,
H2a: 
Work environment dimension “relationship” is positively associated with a high quality of work life.
H2b: 
Work environment dimension “personal growth” is positively associated with a high quality of work life.
H2c: 
The work environment dimension “system maintenance and change” is positively associated with the high quality of work life.

2.3. Ethical Leadership and Quality of Work-Life

Quality of work-life is described as the perceived favorability of a work environment or work setting conditions faced inside an organization. Work-life quality has been extensively discussed in the literature, which is an organization’s efforts to ultimately create employee-oriented work conditions to enhance employee job-related behavioral outcomes [36]. Furthermore, the literature also supports that higher work-life quality is positively related to employees’ job satisfaction level, lesser stress or conflicts, and eventually lesser intention to leave the organization [37,38]. The quality of work-life is also positively associated with employees’ well-being, especially in the context of financial institutions [39,40,41]. Avey and Reichard [42] discovered a positive relationship between work ethics and various employees’ job-related outcomes. In another recent study, the scholar identified the positive relationship between ethical working conditions and organizational identification in the context of leadership [43].
While considering the role of ethical leadership, many scholars have suggested a significantly positive relationship between ethical leadership and employees’ identification of their organization, organizational commitment, and performance [44,45,46,47,48]. Based on these arguments, we propose:
H3: 
Ethical leadership is positively related to the high quality of work-life.

2.4. Quality of Work-Life and Job-Related Outcomes

As discussed previously, work-life quality is employees’ perceptions about whether their work environment is favorable or unfavorable. Work-life quality is embedded with different aspects in literature and found to be related to organizational support and work environment, which eventually leads to employee job satisfaction [36]. The literature also supports that improved work-life quality is directly related to employees’ higher satisfaction, lesser stress, and eventually lesser intention to switch [37,38].
Furthermore, the scholars have discussed that the new employees, who adjust themselves to the environment of the organization, show a high level of commitment and job satisfaction [49,50,51]. The literature suggests that employee-organization relationships could be enhanced by allowing employees to express their innovative ideas for the workplace [52]. Ahmad and Zafar [53] also showed that perceived organizational support, as a quality measure for work-life, could also be used as mediation. Furthermore, a study has shown that organizational support for employees’ mindsets will be positively associated with leader’s relations and provide employees with a push to think of innovative ideas [53].
The influence of the organizational environment on employees’ job satisfaction levels is substantial. If the organizational environment is employee-oriented, and fulfills the demands of an employee, the higher will be the employee’s job satisfaction. Job satisfaction is significantly affected by the work-life quality or work environment. Recently, an Indonesian researcher explored that quality of work life is a key factor that enhances employees’ job satisfaction [54]. Furthermore, it has also been contended that work-life quality is an important factor in building organizational commitment [55,56]. Another research work also corroborates these findings by providing empirical evidence to elaborate that positive change in the quality of work-life can enhance organizational commitment and positive behavior toward organization and team-building [57]. Here, it is evident that team spirit is also affected by work-life quality. Well-aligned work environment could be an essential factor for building team spirit in employees [58]. Building on the arguments discussed above, the current study hypothesizes that:
H4a: 
The high quality of work-life is positively related to job satisfaction.
H4b: 
The high quality of work-life is positively related to an employee’s organizational commitment.
H4c: 
The high quality of work-life is positively related to team spirit.

2.5. Moderating Effect of ICT Skills

Discussion regarding ICT (information, communication, and technologies) skills has gained attention in this era of technology innovativeness and adaptability. Innovative work behavior is considered a key factor for organizational success. Technology innovativeness is an emerging phenomenon among organizations. The research seeks and uncovers the understanding of E-business over organizational learning and knowledge management. Literature regarding technology innovativeness has different impacts on large-scale organizations and small and medium-sized enterprises [59]. Further, studies also investigated the board methods as significant foundations of mechanical development, especially given that an information resource must be uncommon and one of a kind to turn into a wellspring of the upper hand.
Technology innovativeness frameworks shape the mechanical advancement forms. The fruitful reception of a mind-boggling innovation requires alterations in business forms. Despite the inescapability of IT in current working environments, there is developing proof of the inability to completely acknowledge authoritative adequacy because of poor worker acknowledgment of new advances [60]. Preparing accessibility and the abnormal state of specialized ability have been recognized as a fundamental part of the association’s new specialized appropriation [61].
Several studies have been conducted on technology innovativeness and adoption, and various specialists have contemplated ICT frameworks reception. For instance, writing analyzed effects on the four web-based business exercises (e.g., web-based banking, web-based shopping, web-based contributing, and electronic installment) reception, and found that all dispersion attributions (saw accommodation and money-related advantages, chance, past utilization of the phone for a similar reason, self-adequacy, and web use) essentially impact the appropriation forms. The hypothesis of Rogers [62] explores a relative bit of leeway, similarity, and trial-ability elements influencing the appropriation of internet business by small and medium-sized enterprises (SMEs). It was also researched whether the initiative attributes required for e-business varied from those needed by customary blocks and mortar associations [63].
The discussion above clarifies that job satisfaction and employee commitment have been widely studied. Abundant studies related to predictors of job satisfaction and organizational commitment can be found in the literature. However, very little research has explicitly investigated the role of the application of digital technologies in relation to employee job-related outcomes [64]. In an American-based study, the author has investigated that technological transformations in an organization have not only uplifted employees’ working skills and wage levels but also impacted their job-related behaviors, e.g., job satisfaction, happiness, lower work stress, and meaning at work [65]. This phenomenon occurs because making job-related information available, taking care of communication standards, and training employees for the new and advanced technology, give them confidence by making their work easy, engaging and productive. Therefore, it can be argued that ICT skills augment the quality of work-life to ultimately impact employees’ job satisfaction, organizational commitment, and team spirit.
H5a: 
ICT Skills moderate the relationship between work-life quality and job satisfaction in a manner that ICT skills augment the relationship by improving the quality of work-life and its ultimate impact on job satisfaction.
H5b: 
ICT Skills moderate the relationship between work-life quality and organizational commitment in a manner that ICT skills augment the relationship by improving the quality of work-life and its ultimate impact on organizational commitment.
H5c: 
ICT Skills moderate the relationship between work-life quality and team spirit in a manner that ICT skills augment the relationship by improving the quality of work-life and its ultimate impact on team spirit.
The hypothesized relationships have been depicted in Figure 1.

3. Research Methodology

3.1. Sample and Procedure

Quantitative research was conducted to achieve both the co-relational and analytical objectives of the study.
Since the sampling frame was not given in this context, the non-probability sampling method was used. A purposive sampling technique aided by the snowball sampling technique was used to collect the data. Collecting data on sensitive topics like ethics is tough since people hesitate to reveal their opinions. To counter these challenges, the snowball sampling technique was preferred to collect data, as recommended by researchers [66].
A total of 609 respondents were taken from upper-level and middle-level management working on ongoing mega-industrial projects between China and Pakistan. The effective response rate of the survey was 55% after discarding the incomplete questionnaires. Based on the approaches obtained from the ethics studies [67], the selected sample is considered enough for data analysis, especially for generalization purposes. Research data were collected by visiting business organizations working on the mega industrial projects of CPEC under the collaboration of China and Pakistan.
Table 1 represents the results of the demographic section of the instrument. The results revealed that out of a total of 609 valid responses, 65% were male, whereas the remaining 35% were females, which shows more male-dominant data. Next marital status shows that 20.7% were unmarried and 79.3% were married. The third was about age in five age slots with an interval of 10 years covering ages from 21 to above 61, and the result shows that the majority of respondents are from age slots of 31–40 years, with 53% of respondents in that age. The qualification revealed that respondents were well educated because 56.2% had a master’s degree whereas 20.4% had an M.Phil. Cumulatively, this shows that around 76% of respondents had qualifications above masters. Lastly, regarding their income, results uncover that people earn well through these projects and that most respondents had income above 50 thousand rupees.
Furthermore, common method variance (CMV) was examined in accordance with the study by Podsakoff and MacKenzie [68]. The data succumb to CMV when collected through a consolidated questionnaire and at a single point in time, as well as when the relationship between any two constructs is exaggerated arose out of the complexity of the model, placement of items scale, etc. Thus, a methodological covariance dominates rather than genuine interitem correlations. Consequently, convergent validity and reliability estimates become invalid due to tempered correlations values. In this study, both preventive (procedural) and post hoc statistical tests were employed to cope with CMV. During the questionnaire design phase, the authors adopted procedural measures by minimizing similarities between predictor and criterion variables. After that, post hoc Harman’s one-factor test was used to determine CMV. The test resulted in 26.5% variance through a sole exploratory unrotated factor analysis. Thus, the test value less than the popular threshold of 50% eliminates the presence of CMV.

3.2. Measures

This study adopted a self-administered close-ended Likert scale questionnaire to measure all the respective variables. Ethical leadership was measured with the help of a 15-items scale developed by Yukland Mahsud [27]. The sample item is “Shows a strong concern for ethical and moral values”. Three dimensions of work environment, i.e., (i) relationship, (ii) personal growth, and (iii) system maintenance and change, were measured by 10 item scale adopted from Moos [9]; the sample item is “The extent to which employees are concerned and committed to their jobs”. The quality of work-life was measured through 14 items adopted from Sirgy, Efraty [69]; the sample item for this “I feel physically safe at work”. ICT skill was measured through seven questions; the sample question is “I can adjust the resolution of my monitor”. To measure Job satisfaction, the study adopted five items scale by Dubinsky and Hartley [70].The sample item is “Generally speaking, I am very satisfied with this job”. Similarly, organizational commitment was measured through a 15-item scale from Porter and Steers [71]. A sample item is “I am willing to put a great deal of effort beyond that normally expected in order to help the organization be successful”. Lastly, team spirit was measured through a seven-item scale adopted from Jaworski and Kohli [72]; the sample item for this is “People in this business unit are genuinely concerned about the needs and problems of each other”.

4. Statistical Data Analysis and Results

4.1. Descriptive Analysis

Descriptive analysis is the first statistical analysis to evaluate the normality of collected data; the results of all descriptive variables are shown in Table 2 by presenting the Mean, Standard Deviation, Coefficient of Variance, Skewness and Kurtosis. The mean value for ethical leadership is 3.54 with a standard deviation of 845, the next mean value for relationships is 3.34, and the standard deviation was 911. All these values imply that the coefficient of variation is not so huge and not diversified or spread. Lastly, the skewness and kurtosis show the normality of distribution; the criteria for these stipulate that value should be less than 10. In the present research, all values are sufficient for the goodness of normality.
The present study utilized the structural equation model technique (SEM) through AMOS software to evaluate the structural measurement model. AMOS is the statistical software package most suitable for the present model to provide clear empirical findings, quality diagrams, numeric statistics, and a user-friendly graphical interface [73]. The confirmatory factor analysis (CFA) is depicted in Figure 2.

4.2. Validity and Reliability Analysis

Validity shows the extent to which a construct’s items jointly measure what they are supposed to measure. Sarstedt and Ringle [74] define validity as the assurance that the variable’s items measure well what they are supposed to measure. It is measured through two criteria, convergent and discriminant validity. Convergent validity dictates that the items and variables are theoretically correlated to a limited extent. The average variance extracted is a considerable measure to ensure convergent validity. Next, the degree to which the pointers of numerous latent variables (constructs) are distinct from each other is called discriminant validity [75]. It is simply defined as that items and constructs are thematically different and have their own concept [73]. It is measured through the Fornell–Larcker criteria and HTMT criteria [76]. Next, the reliability measures the internal consistency of variables and how closely related a set of measurement elements are as a group. The value for Cronbach’s alpha should be greater than 0.7 [74].
Table 3 shows the values of reliability and validity analysis, and reliability was measured through Cronbach’s alpha to check the internal consistency of the data. The table shows the reliability statistics of all constructs. Here, Cronbach’s statistics strongly support the reliability of the research data. Next, convergent validity is confirmed through AVE values which are also higher than 0.5 as recommended criteria. The results in the table also establish the discriminant validity, as per the Fornell–Larcker criterion, revealing that square roots of AVE values in the diagonal are greater than the inter-construction relations.
The heterotrait-monotrait ratio of correlations (HTMT) is an alternative approach grounded on the multi trait-multi method matrix to evaluate discriminant validity [73]. This ratio has been used to assess the discriminant validity values for this should be less than 0.9, especially the upper diagonal values. Table 4 shows the value lying in the criteria, and the discriminant validity between each of the two reflective constructs has been established. All the values in the heterotrait-monotrait ratio (HTMT) meet the criteria.

4.3. Goodness of Fit

Mainly, model fit is measured by SRMR, RMR, GFI, and AGFI [73]. The RMR criterion holds that the value should be less than 0.08; next, for GFI and AGFI criteria, the value should be near 1 and higher than 0.7, which is acceptable, and higher than 0.8 is considered good [77], as shown in Table 5.
Table 5 shows the results of goodness by demonstrating the values of four main criteria, and the results revealed that all the values of the present model are considered suitable for being acceptable for goodness.

4.4. Path Measurement Model Analysis

After reliability and goodness fit analysis, the next task is to measure model structural analysis to explore the relationships of exogenous and endogenous latent variables. The structural model measurement provides the direct and indirect linkage between constructs through coefficient analysis or beta values for the inner model. Secondly, this also uncovered the outer model by showing factor loadings of each item with its owning construct. Figure 3 elaborates the results of both inner and outer models.
The path diagram shown in Figure 3 represents the hypothesized association between the variables. Structural equation modeling (SEM) evaluation is the most critical process for evaluating the relationship between the constructs. Therefore, the structural measurement model exhibits the details of the linkage between exogenous and endogenous latent variables. These results also provide ground regarding how theory supports the empirical data, and secondly, it enables researchers to confirm theory empirically. Table 6 also seconds these findings, providing the results of significant testing of path modeling. For this estimation, beta β and p-values are considered to approve each proposed path’s significance in the theoretical model.
Table 6 shows the result of the proposed hypotheses from H1 until H5c; here estimate shows that the coefficient value and p-value should be less than 0.05 for the significance of the path. The coefficient for ethical leadership and relationship is β = 0.717 *** establishing a significant relationship. Next, all have less than 0.001 p-values except H3 having 0.031 p and β = 0.118 coefficient value, the weakest impact in the model, but it is still significant because its p-value is less than 0.05. Summing up the results, all the tested hypotheses were approved, which shows the significant association between ethical leadership and various work outcomes, but the strength of relationships varies. Table 6 also explains the significance test results for three proposed hypothesized moderations regarding the relationship between quality of work-life and three jobs related outcomes. Starting from job satisfaction, with an R-value of 0.231. Here, the p-value is also acceptable, with less than 0.05 showing that ICT skills positively moderate the relationship between quality of work-life and job satisfaction by 0.231 units. Besides the other two significant moderations, this relationship seemed to have the strongest moderating role.

4.5. Specific Indirect Path Analysis

Table 7 presents values of specific indirect paths from ethical leadership to employee outcomes (job satisfaction, organizational commitment, and team spirit) through work environment dimensions (relationship, system maintenance and change) and quality of work life. For indirect effects evaluation, this study utilizes the approach by Preacher and Hayes [78] as it does not require the strict assumption of distribution.
The path coefficient values for the indirect paths suggest that all indirect paths from ethical leadership to employee outcomes (job satisfaction, organizational commitment, team spirit) are sequentially mediated by work environment dimensions (1. relationship, 2. personal growth, 3. and system maintenance and change) and quality of work-life. However, the significant strength of the path, EL --> SMC --> QWL --> OC is relatively less than the other indirect paths.

5. Findings and Discussion

The proposed research model testifies and provides various empirical findings to elaborate the indirect relationship between ethical leadership and employee job satisfaction, commitment, and team spirit through work environment dimensions and quality of work-life. Firstly, the present study discusses a well-grounded model as well as the concepts based on a thorough review of the literature. Research problems and gaps were identified. Then the research has advanced towards survey and analysis of data. The empirical results obtained represent the acceptance of proposed hypotheses, starting from H1(a,b,c), which is about the influence of ethical leadership on the work environment; the results show the significance of this relationship. This finding conforms to the previous literature [43,49].
Next, work environment dimensions are found to be associated with the quality of work-life of employees (H2). This suggests that the work environment significantly impacts employees’ quality of work-life in a diverse cross-cultural organizational setting. This phenomenon is also supported by existing literature which discusses that the work environment is considered a vital element. In the wake of creating an employee-oriented workplace environment, organizations are taking care of their employee’s goals intending to improve their performance [79]. Moreover, earlier studies also found a strong positive relationship between multiple dimensions of the work environment, which are associated positively with the success of the project [80]. The third one is the direct linkage of ethical leadership and quality of work-life H3 here, results are also positively significant, but the relationship is weaker than indirect impacts. This relationship has also been supported by existing literature [38,43,81].
Next, the results of the study present the relationships between quality of work-life and three employee-side organizational outcomes: job satisfaction, organizational commitment, and team spirit under hypotheses (H4a–H4c). These hypotheses were also testified through structural modeling. The results have revealed that quality of work life is an antecedent of building employee job satisfaction and commitment. Furthermore, it is suggested as a vital source for team spirit building but, comparatively, less than job satisfaction and organizational commitment. These findings are also converged by previous empirical studies [36,38].
Lastly, the results present moderating role of ICT skills on the relationships between quality of work-life and employee job-related outcomes under the hypothesis (H5a–H5c). These moderations have explained that ICT skills are vital in strengthening relationships. The results suggest that ICT skills development is an important factor for enhancing or boosting the relationships of quality of work-life and employee outcomes.
By elaborating empirical findings of the present research model, the study contributes to existing literature to fill the theoretical gap of the paucity of a compiled theoretical conceptualization of ethical leadership, work-life-related variables, and organizational outcomes. Research also provides a guideline for practitioners regarding ethical aspects at the workplace to boost positive organizational and employee-level outcomes. As the study provides significant findings regarding ethical leadership, it directs managers to achieve organizational goals. One must treat employees ethically and offer them well-established relationships and personal growth opportunities. Likewise, results also uncover the importance of a positive and cooperative work environment to ensure the quality of work life. This directs the managers to incorporate these strategic elements necessary to support quality aspects of work-life, which eventually raise employee and organizational level outcomes, i.e., employee satisfaction and organizational commitment. Lastly, skill development can also be a vital motivator for positive employee outcomes, which eventually benefit the organization.

Theoretical and Practical Implications

The findings of this study offer significant theoretical contributions, which add to the existing literature regarding ethical leadership, work environment dimensions and other work-related outcomes in a cross-cultural organizational setting. Current research has advanced the literature by identifying the research gaps and developed a comprehensive mediated-moderated theoretical framework to empirically investigate the sequential indirect impact of work environment dimensions and work-life quality between the relationship between ethical leadership and (i) job satisfaction, (ii) organizational commitment, and (ii) team spirit. Furthermore, this study analyzes the moderating role of ICT skills on the relationship between quality of work-life and three job-related outcomes mentioned earlier. As per the findings of current research, it can be observed that the satisfaction of employees with quality of work-life can be enhanced by ICT skills development. In a cross-cultural setting, ethical leadership style plays a vital role in shaping the work environment to enhance the quality of work experience for the employees. This will ultimately improve all the three vital aspects of employee outcomes, e.g., job satisfaction, organizational commitment, and team spirit. However, the path: ethical leadership → system maintenance and change → quality of work-life → organizational commitment, is relatively less significant. These empirical findings are vital for academicians and practitioners in terms of making strategies to improve employee performance outcomes. Lastly, this study outcomes will also help scholars to improve their knowledge regarding underlying mechanisms that explain relationships between ethical leadership and job-related outcomes.
The study provides significant findings regarding ethical leadership, and it suggests that managers must treat their employees ethically and provide them with well-established work facilities and infrastructure to achieve organizational goals. Secondly, equipping the employees with information, communication, and information technology can dramatically enhance their confidence and make them more satisfied with their job, vitalize their commitment levels, and indulge them in teamwork.

6. Conclusions

The present study explores the path model by elaborating on the influence of ethical leadership on (1) job satisfaction, (2) organizational commitment, and (3) team spirit through work environment dimensions, and quality of work life. Afterward, the research interrogated the moderating role of ICT skills on the relationship between QWL and job satisfaction, organizational commitment, and team spirit. This model was tested on mega industrial organizations associated with CPEC Pakistan, and model estimation was undertaken through CB-SEM with the help of AMOS software. Results disclosed a positive trend between hypothesized theoretical concepts and also showed that ICT skill development could be beneficial for raising employee job outcomes. The results also elaborate that quality of work-life has a strong impact on job satisfaction and organizational commitment rather than team spirit. These results align with existing literature that theoretically supports the results’ grounds.

Limitations and Future Research

Limitations are the key identifiers for future researchers, which they can use as directions to explore novel studies. A single study cannot fulfill the whole scenario means each study has some limitations, which could be methodological, contextual, or theoretical. Building grounds on the current study, future researchers can use contextual limitations to explore the model in diverse cultural organizations or conduct comparative studies between various organizations or countries. Furthermore, the scholars are encouraged to develop the underlying mechanisms to explain how a work environment can be manipulated in a positive way to deal with employees’ negative workplace attitudes, i.e., resistance to change, counterproductive work behaviors, and deviant workplace behaviors. Lastly, future researchers are suggested to extend the current model to include organizational level factors, e.g., organizations’ overall performance and sustainable organizational performance.

Author Contributions

M.K. contributed to the conception and design of the study. A.M. organized the database. M.S. performed the statistical analysis. M.K. wrote the first draft of the manuscript. M.K., A.M. and M.S. wrote sections of the manuscript. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

The studies involving human participants were reviewed and approved by the Ethical Review Committee of Namal University, Mianwali, Pakistan, Ref: NML-ERC/2021-018.

Informed Consent Statement

To engage in this study, the patients/participants gave their written informed consent.

Data Availability Statement

The authors will make the raw data that supports the results of this article available without any undue reservation.

Conflicts of Interest

The authors declare no conflict of interest.

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Figure 1. Theoretical Framework.
Figure 1. Theoretical Framework.
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Figure 2. Confirmatory Factor Analysis.
Figure 2. Confirmatory Factor Analysis.
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Figure 3. The Path Analysis.
Figure 3. The Path Analysis.
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Table
Table 1. Demographics of Respondents.
Table 1. Demographics of Respondents.
FrequencyPercentValid PercentCumulative Percent
GenderMale39665.065.065.0
Female21335.035.0100.0
Total609100.0100.0
Marital StatusSingle12620.720.720.7
Married48379.379.3100.0
Total609100.0100.0
Age (Years)21–3018430.230.230.2
31–4032353.053.083.3
41–507913.013.096.2
51–60142.32.398.5
61 & above91.51.5100.0
Total609100.0100.0
Education LevelBachelors9315.315.315.3
Masters34256.256.271.4
M.Phil.12420.420.491.8
Ph.D.437.17.198.9
Others71.11.1100.0
Total609100.0100.0
Monthly Income
(In Thousand PKR)		20–5017228.228.228.2
51–8013221.721.749.9
81–11020433.533.583.4
111–1409415.415.498.9
141 & above71.11.1100.0
Total609100.0100.0
Table
Table 2. Descriptive Statistics.
Table 2. Descriptive Statistics.
NMinimumMaximumMeanStd. Dev.Coef. Var.Skewness Kurtosis
EL6091.005.003.54800.845864.1945−1.1911.026
REL6091.005.003.34370.911513.6683−0.419−0.339
SMC6091.005.003.64890.854054.2725−1.6902.514
QWL6091.004.923.40680.743054.5849−1.4822.891
ICT6091.505.003.67700.886434.1481−0.7400.134
JS6092.005.004.16980.533387.8177−0.3110.689
OC6092.005.003.83330.671835.7058−0.2990.015
TS6091.005.003.64800.701815.1980−0.4430.639
Note: Std. Dev. = Standard Deviation, Coef. Var. = Coefficient of Variance.
Table
Table 3. Reliability and Convergent Validity Analysis.
Table 3. Reliability and Convergent Validity Analysis.
α ValuesAVEMSVMaxR(H)QWLELOCTSICTJSRELPGSMC
QWL0.7720.6510.4810.9620.807
EL0.8700.6150.5100.9610.694 ***0.784
OC0.8290.7680.3540.9810.588 ***0.500 ***0.877
TS0.7590.7160.3120.9530.429 ***0.356 ***0.492 ***0.846
ICT0.7360.7520.3790.9490.615 ***0.447 ***0.465 ***0.395 ***0.867
JS0.8100.8620.4180.9740.646 ***0.526 ***0.570 ***0.558 ***0.583 ***0.928
REL0.7440.7910.4800.9500.693 ***0.685 ***0.529 ***0.406 ***0.562 ***0.581 ***0.890
PG0.8140.7080.4550.8800.624 ***0.675 ***0.409 ***0.345 ***0.414 ***0.394 ***0.600 ***0.842
SMC0.7920.8110.5100.9320.693 ***0.714 ***0.595 ***0.400 ***0.471 ***0.566 ***0.620 ***0.501 ***0.900
Note: α Values = Cronbach’s Alpha, QWL = Quality of Work-life, EL = Ethical leadership, OC = Organizational Commitment, TS = Team Spirit, ICT = ICT Skills, JS = Job Satisfaction, REL = Relationship, PG = Personal Growth, SMC = System Maintenance & Change. The bold values in the diagonal represent the square roots of AVE values. *** p < 0.001
Table
Table 4. HTMT Criteria.
Table 4. HTMT Criteria.
ELOCTSICTJSRELPGSMC
QWL
EL 0.705
OC 0.5810.497
TS 0.4030.3430.469
ICT 0.6190.4510.4610.394
JS 0.6420.5260.5520.5390.591
REL 0.7010.7080.5270.4010.5650.587
PG 0.6190.6730.4040.3330.4150.3920.608
SMC 0.6970.7310.5860.3880.4730.5570.6330.507
Table
Table 5. Model Goodness of Fit.
Table 5. Model Goodness of Fit.
ModelRMRGFIAGFIPGFI
Default model0.0380.7570.7380.702
Saturated model0.0001.000
Independence model0.4260.0660.0390.065
Table
Table 6. Hypotheses Significance Testing.
Table 6. Hypotheses Significance Testing.
Sr. No.HypothesesEstimateS.E.C.R.p
H1aRel <--- EL0.7170.04615.593***
H1bPG <--- EL0.8320.04817.349***
H1cSMC <--- EL0.7280.04217.428***
H2aQWL <--- Rel0.1790.0374.819***
H2bQWL <--- PG0.2830.0358.102***
H2cQWL <--- SMC0.2840.0367.888***
H3QWL <--- EL0.1180.0552.1550.031
H4aJS <--- QWL0.5590.03317.122***
H4bOC <--- QWL0.5350.03614.827***
H4cTS <--- QWL0.3720.03510.492***
PathRR-sqMSEF
H5aICT.Skil. Mod Job.Sat.0.23140.05360.270611.4106
H5bICT.Skil. Mod Org.Comm.0.16380.02680.44145.5605
H5cICT.Skil. Mod Team Spir.0.16400.02690.48175.5729
Note: *** shows p-Value Less than 0.001.
Table
Table 7. Specific indirect paths.
Table 7. Specific indirect paths.
Indirect PathUnstandardized
Estimate		LowerUpperp-ValueStandardized
Estimate
EL --> Rel --> QWL --> JS0.0720.0460.1020.0010.134 ***
EL --> Rel --> QWL --> OC0.0690.0440.0970.0010.134 ***
EL --> Rel --> QWL --> TS0.0480.0300.0710.0000.134 ***
EL --> PG --> QWL --> JS0.1320.0880.1830.0010.246 ***
EL --> PG --> QWL --> OC0.1260.0880.1750.0000.246 ***
EL --> PG --> QWL --> TS0.0880.0590.1250.0000.246 ***
EL --> SMC --> QWL --> JS0.1150.0770.1600.0010.216 ***
EL --> SMC --> QWL --> OC0.1100.0740.1510.0010.216 **
EL --> SMC --> QWL --> TS0.0770.0520.1110.0010.216 ***
** p < 0.01, *** p < 0.001.
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Khan, M.; Mahmood, A.; Shoaib, M. Role of Ethical Leadership in Improving Employee Outcomes through the Work Environment, Work-Life Quality and ICT Skills: A Setting of China-Pakistan Economic Corridor. Sustainability 2022, 14, 11055. https://doi.org/10.3390/su141711055

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Khan M, Mahmood A, Shoaib M. Role of Ethical Leadership in Improving Employee Outcomes through the Work Environment, Work-Life Quality and ICT Skills: A Setting of China-Pakistan Economic Corridor. Sustainability. 2022; 14(17):11055. https://doi.org/10.3390/su141711055

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Khan, Maria, Asif Mahmood, and Muhammad Shoaib. 2022. "Role of Ethical Leadership in Improving Employee Outcomes through the Work Environment, Work-Life Quality and ICT Skills: A Setting of China-Pakistan Economic Corridor" Sustainability 14, no. 17: 11055. https://doi.org/10.3390/su141711055

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