The impact of inclusive leadership on employee engagement: the mediator of psychological capital and the moderator of job embeddedness

Abstract

Employee engagement has been identified as a key driver for increasing organizational productivity and performance. Previous studies indicate the significance of leadership to employee engagement, but little is known about the relationships between inclusive leadership and employee engagement. This research aims to demonstrate this relationship by investigating the impact of inclusive leadership on employee engagement, and the mediating effect of psychological capital. Simultaneously, the moderating role of job embeddedness on the relationship between psychological capital and employee engagement was also examined.

A quantitative survey was adopted. Population of this study is the financial intermediation employees in southwest China. This research selected 400 respondents with proportionate stratified sampling and a convenience sampling method in data collection from Chongqing, Sichuan, Guizhou Yunnan and Tibet through self-administered questionnaire. SPSS was used for the internal consistency of the research instrument. Furthermore, the structural equation modeling techniques was conducted to test the validity of the instrument. Hypotheses were analyzed via structural equation model and regression analysis.

The results of this empirical research show that: inclusive leadership is a positive predictor of employee engagement; inclusive leadership is positively related to psychological capital; psychological capital is positively related to employee engagement; and the relationship between inclusive leadership and employee engagement is mediated by psychological capital. This study also found that the relationship between psychological capital and employee engagement is moderated by job embeddedness. In specific，the higher employee job embeddedness, the lower the positive impact of psychological capital towards employee engagement; the lower employee job embeddedness, the higher the positive impact of psychological capital towards employee engagement.

This research has implications that inclusive leadership can enhanced employee engagement through psychological capital of employee. Therefore, the organization should pay sufficient attention to the creation of an inclusive leadership, especially when the human resources are turning more diverse. On the other hand, the organization should pay attention to the employees’ psychological capital in employee selection and training. Finally, the engagement of employees with a high job embeddedness is less impacted by the psychological capital as an intrinsic motivation than that of those with a low job embeddedness. To deepen the employees' embeddedness in the organization, a series of soft incentive measures shall be implemented more diligently. In addition, this study further discussed the limitations and future research directions about inclusive leadership and employee engagement.