Accelerating Values In Shaping Ethical Leadership And It’s Effect On Organisational Performance

Abstract

Modern society has abandoned much of the existing local wisdom resulting in a decline in community morale. Morality is necessary for managing a business organization so that it can become a sustainable business. Therefore, the values of local wisdom are essential in managing a business. Local wisdom can encourage a business to perform well when organizational performance is as challenging as it is today. This research fills the research gap in the management literature by analyzing the role of values on ethical leadership and organizational performance. The research population was LPD employees and administrators in Bali. This study uses the Slovin formula to determine the sample, which is 158 employees. Data collection was done through questionnaires, and data analysis was done using SEM-PLS. The results of the study show that values do not have a significant effect on organizational performance; however, values have a significant effect on ethical leadership. Finally, ethical leadership has a significant effect on organizational performance. The research results indicate that there is full mediation of ethical leadership in the influence of values on organizational performance. This implies the impact of ethical leadership formed by values that will continue to exist and enhance organizational performance. Besides, culture becomes an essential tool in an organization, especially in Bali, which has a very strong local culture. Future research is expected to explore local culture and leadership transformation in state and private organizations.