**1. Introduction**

In order to satisfy human needs, organizations develop innovative products and services which may grant them sustainable competitive advantage. To achieve long-term goals, firms use a wide range of resources, including human skills and potential to satisfy the individuals' demands by adhering to basic social standards Shahzad et al. (2018).

Employee performance creates the antagonistic advantage of the organization in current fierce competition and strengthens its long-standing prosperity. If a firm encourages own employees entirely by monetary contract, it will not be able to maximize the workforce productivity. Therefore, a promising social and psychological support is needed Bartlett et al. (2012); Cascio (2003).

There is evidence in existing scientific literature that leaders' high expectations shape individuals' task performance. When perceived by employees, leader expectations (LE) drive employee performance. The definition of leader expectation draws on the individual beliefs of employees about the expectations of leaders regarding their assigned duties with respect to engagement in a particular job. The expectation of occurrence is high when workers behave to favor a particular event to happen—in other words, people perform willingly when they expect something to happen Tierney and Farmer (2004). When leaders show these high expectations, employees are likely to try to meet their expectations in the context of intentions to perform tasks, maintain quality, or work harder.

The reciprocity of social exchange underpins the association between the leader and their follower. The role of the leader is able to enhance reciprocity and to improve relationships, and this effect tends to get stronger over time Emerson (1976). However, expectations

**Citation:** Khan, Naveed Ahmad, Silke Michalk, Kirill Sarachuk, and Hafiz Ali Javed. 2022. If You Aim Higher Than You Expect, You Could Reach Higher Than You Dream: Leadership and Employee Performance. *Economies* 10: 123. https://doi.org/10.3390/ economies10060123

Academic Editors: María del Carmen Valls Martínez, José-María Montero and Pedro Antonio Martín Cervantes

Received: 1 April 2022 Accepted: 9 May 2022 Published: 25 May 2022

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**Copyright:** © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

between leader and follower in the context of behavior may differ, resulting in misunderstandings and generating uncertainty. Hence, an enlightenment of the workplace is critical in meeting the expectations of both leaders and followers. Despite the fact that employees are well informed about what they are expected to do—either through written instruction or verbal—most organizations are unaware about the real workload and the enthusiasm of employees Van Hemmen et al. (2015). As observed, when leader performs his business position actively and reaps valued customers, the leaders' high expectations boost staff service performance. On the other hand, leaders' high expectations of their followers play an essential role in shaping their identity Likert (1967).

Furthermore, a leader that establishes high expectations sets high targets and encourages their people to generate higher levels of productivity. The acknowledgment and encouragement from that leader will push them to provide high-quality service Livingston (1969). Still, employees responsible for a high quality of work are more conscious and are often seeking a solution to a current problem. Thus, considerable support is required from leadership due to the sensitivity and vulnerability of this work. In order to communicate their own ideas and assure high performance, individuals require high quality associations or relationships Cole et al. (2002). High quality relationships between followers and leaders must be established as a way to boost work performance: within such interactions leaders provide opportunities and essential resources to employees, thus creating a favorable working milieu Farh et al. (2017).

The literature shows a variety of antecedents of performance such as organizational commitment Rigtering and Weitzel (2013), leader-member exchange (LMX) Woo (2018); Farrukh et al. (2017), and culture Rahmah and Fatmah (2018), to name a few. However, research regarding the process through which different contextual factors affect employee performance is underdeveloped Sinha and Srivastava (2013). Additionally, high quality relationships between leaders and employees play a vital role in shaping high working standards and increasing labor task performance. The successful delegation of individual tasks, information and resource support to employees is able to enhance their motivation, and develop and promote their performance Scott and Bruce (1994).

Therefore, in this study, we integrate leader expectations and leader-member exchange as antecedents of employee performance. Generally, high-quality LMX encourages employees to participate in decision-making and commit to a greater extent to their job; they experience fewer task-related challenges, demonstrate loyalty, responsible attitude, and readiness for more responsibility De Jong et al. (2011). Furthermore, high-quality LMX even aspire to go beyond their agreed-upon job duties, to be more flexible and voluntary in their activities, to build a good work atmosphere and to perform better. On the other hand, employee productivity may be influenced by leaders directly, so more attention should be devoted to the leader-employee interaction in order to develop a better knowledge of service quality Grošelj et al. (2020); Lenka and Gupta (2019).

One further aspect, the organizational commitment, suggests employees are more excited when their sense of commitment to the organization is triggered, so organizational commitment is seen as an antecedent to proactivity. Individuals' creative contribution and passionate actions in performing tasks in teams are the examples of proactivity as a result of their commitment to an organization. Strauss et al. (2009) observed that effective commitment can benefit organizations by directing employees' attachment to a company; there is a strong link between organizational commitment and organizational member proactivity. Employees' commitment to a particular organization can lead to proactive behavior and contribute to that organization's success, so energetic behavior within organizations is becoming increasingly important. However, few studies have investigated this problem so far.

Previous research examines exchange relationships in isolation (Buch, 2015), thus largely disregarding the fact that employees are involved in multiple relationships at work, including employee-organization, employee-team and employee-supervisor relationships Bordia et al. (2010). To advance social exchange theory, it has been advocated recently

that the linkages between different relationships should be incorporated into analysis Bordia et al. (2017). Hence, we acknowledge that the LMX exists with other formal and informal organizational relationships simultaneously and that LMX should not be studied in isolation.

Furthermore, Graen (1976) mentions that the relationships that employees have with their coworkers and supervisors represent two key social relationships at work. However, several unproven ideas still exist in the literature with respect to the problem of whether exchange relationships with supervisors are interconnected Cole et al. (2002), thus suggesting the need to investigate whether the interaction between exchange relationships with leaders is able to boost employees' task productivity.

This study finds that LE (Pygmalion effect) and LMX are positively linked to employees' high performance; moreover, the organizational commitment for performance mediates these linkages. Our contribution to the literature is threefold. First, this study attempts to investigate the effect of LE (Pygmalion effect) and LMX on employees' high performance. The literature in this field is scarce and the theoretical development is weak because traditional collaborative leadership approaches are more relevant to the performance Scott and Bruce (1994). Second, this paper contributes to the literature on the quality of work and may also help practitioners in formulating interventions to foster innovations in organizations that will ultimately lead to better task performance. Finally, most of the past studies have been conducted in western developed countries, while our research contributes to the literature and practice by gathering survey data from a population of middle-level managers in the banking sector of Pakistan, a developing and very diverse country with its own social, economic and environmental peculiarities. Although this study does not include any cultural aspects, we imply that there might be some differences in responses to survey questions because of the cultural background. To our knowledge, this is the first paper studying a link between LE and LMX with the mediation of organizational commitment in a non-western country.

Section 2 briefly explains the concepts examined in this paper and describes literature background and hypotheses. Section 3 presents the data and methodology. Findings are presented in Section 4 and then discussed in the following Section 5. Finally, Section 6 concludes our research with limitations.

#### **2. Literature Background and Hypotheses**

#### *2.1. Leader Expectations (Pygmalion Effect)*

When we behave in a way that favors the occurrence of a specific event, we perform willingly when that event is expected to occur. On the other hand, leaders' high expectations from their followers play an important role in defining their role identity.

Historically, there was a belief that individual's expectations might influence the behavior of others. This psychological phenomenon, or so called Pygmalion effect, was first coined by Merton in 1948 to describe someone's proclivity to meet other people's expectations Tierney and Farmer (2004). To put it another way, the Pygmalion effect describes a situation in which other people's expectations of a specific person influence other individuals' performance. This effect has been primarily observed in the educational context (classrooms), with the findings indicating that teachers' expectations influence students' academic performance Chang (2011); Friedrich et al. (2015).

At all levels leaders have a dominating influence on employees Dhamija et al. (2019). The adoption of proactive leadership skills can assist in molding staff behaviors in order to attain the required high level of performance. Employee performance is impacted by a leader's activities because a leader communicates their expectations to their followers, and employees fight to reach these standards Suliman (2002).

If we consider the Pygmalion effect relevant for employee performance, a question formulated by Eden becomes relevant Eden (1984) *if raising teacher expectations improves pupil performance, wouldn't raising manager expectations improve subordinate productivity?* Existing literature confirms the significance of the expectations of leaders: the leader who

expects more assumed a higher-level of performance. However, this statement goes back to general knowledge and very few scholars investigated this theory to study how leaders' expectations affect process and can be used to enhance the output of an organization. In contrast to these assumptions, various Pygmalion mechanism theorists have focused on measuring the productivity level of a firm and the increased effort of individuals in accomplishing work tasks.

Still, appraisal of internal working procedures and the impact of the Pygmalion process are significant. Leaders should be aware of the consequences of their expectations for their staff since these high expectations may have a significant impact on employee performance Goddard (1985). According to existing concepts, a so called Galatea effect is one of the fundamentals of the Pygmalion process. Hence, to reach higher levels of productivity supervisors and managers design improved leadership styles and behaviors for subordinates. As a result of the high expectations and unique leadership attention they are receiving, their employee performs better: whether the majority of performance improvements are driven by the leader's high expectations, it is regarded a significant variable within the Pygmalion process. Thus, the Pygmalion effect, with its emphasis on high expectations and impact on behavior, may provide a strong and valuable framework for investigating important concepts such as employee performance. We believe that the Pygmalion effect phenomenon can play an important role in increasing productivity.
