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

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.