Participative Leadership and Employee Job Satisfaction: The Mediating Effects of Psychological Empowerment and Work Engagement
| 24 oct 2023
Publicado en línea: 24 oct 2023
Páginas: 161 - 176
DOI: https://doi.org/10.2478/fman-2023-0012
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© 2023 Olawale Fatoki, published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Small, medium and micro enterprises (SMMEs) contribute significantly to the economies of both developed and developing countries (World Bank, 2021). In countries that belong to the Organisation for Economic Cooperation and Development (OECD), SMMEs account for between 60 and 70% of jobs (OECD, 2021). Formal SMMEs account for 40% of the gross domestic product (GDP) of developing countries. The contribution of SMMEs to GDP is considerably higher when informal businesses are included (World Bank, 2021). SMMEs account for the vast majority of formal, registered businesses in South Africa (approx. 91%) and contribute about 60% of all jobs and 34% of GDP (Banking Association of South Africa, 2021).
McKinsey (2020) remarks that although SMMEs are vital to the economy of South Africa, they are also the most at risk firms. The small business sector suffers from weak performance and a high failure rate (Sitharam and Hoque, 2016). Over 70% of SMMES in South Africa fail within the first 5 to 7 years of operation. This negatively affects the contribution of SMMEs to employment, poverty alleviation and economic growth (Bushe, 2019). The weak performance and high failure rate of SMMEs can be attributed to internal and external challenges such as limited financial and managerial resources, high level of competition and a contracting economy (McKinsey, 2020).
Employees are of great importance to the operation of an organisation and their satisfaction is vital to organisational success (Smolarek and Sułkowski, 2020). Employee job satisfaction can be defined as the combination of physiological, psychological and environmental circumstances that cause an employee to be satisfied with a job (Hoppock, 1935). Employee job satisfaction is a strong predictor employee and organisational performance (Harper, et al., 2015; Kessler, et al., 2020).
Leadership described as the act of leading people to achieve certain goals is needed by SMMEs to manage internal and external challenges, motivate and manage employees and improve performance in a highly dynamic business environment (Anju and Mathew, 2017; Garcia-Vidal, et al., 2019). Leadership style (style of leadership) is the way that a leader influences the behaviour of followers or employees. Leadership styles include servant, ethical, transformational, autocratic and participative (Gemeda and Lee, 2020). There is no consensus about the leadership style that is the most efficient in achieving organisational goals (Bhatti, et al., 2019).
However, one of the styles of leadership that has received the attention of researchers and has been shown by some studies to positively impact on employee performance is the participative leadership (PAL) style (Chan, 2019; Bhatti, et al., 2019). PAL is a leadership style in which leaders and followers come together to solve problems and make decisions (Sagnak, 2016). The literature is inconclusive about the effect of PAL on employee outcomes (Ni, 2020). A body of research finds that PAL can stimulate employee intrinsic motivation, innovation behaviour, work performance and job satisfaction (Chan, 2019; Usman, et al., 2021). Another stream research finds negative effects of PAL on employees and organisations. The process of involving followers in the decision-making process under participate leadership can be time intensive. In a group, certain personalities tend to dominate others in discussions and decision making and this can negatively affect employee satisfaction (Halaychik, 2016).
In addition, studies on the mechanism through which PAL can affect employee job satisfaction are sparse (Chan, 2019; Usman, et al., 2021). It is important for researchers not only to examine the direct relationship between variables but also the indirect variables (Namazi and Namazi, 2015). The inclusion of mediating variables has the potential to increase the quantity of information obtained from outcome studies by creating practical information regarding interventions and testing theories (MacKinnon, 2011; Namazi and Namazi, 2015). Therefore, it is important to understand the variables that can intervene in the relationship between PAL and employee job satisfaction. This study draws on psychological empowerment and work engagement as mediating variables. Psychological empowerment can be defined as employee perception of the extent of their competence, influence and autonomy in a work environment (Preitzer, 1995). Work engagement is a fulfilling, work-related state of mind of an individual that can be explained by vigour, dedication and absorption (Schaufeli, et al., 2002). This suggests that psychological empowerment and work engagement can affect the effectiveness of a participative leader in shaping employee job satisfaction.
Based on the theoretical grounding of the social exchange theory (SET), the study proposes that psychological empowerment and work engagement as intervening variables that can link PAL to employee job satisfaction. The research is premised on the following objectives: (1) To investigate the relationship between PAL and employee job satisfaction in small firms; (2) to examine if psychological empowerment mediates the relationship between PAL and employee job satisfaction; (3) to investigate if work engagement mediates the relationship between PAL and employee job satisfaction.
The study will be significant in the following ways. First, the findings of empirical research is inconclusive about the effect of PAL on employee outcomes. Therefore, this study will add to the body of literature on how PAL can affect job satisfaction in the context of small firms in developing countries with sparse literature. Second, while several researchers have investigated the direct effect of PAL on job satisfaction, studies that have examined the factors that can intervene in the relationship are sparse. The study intends to test a theoretical model that incorporates psychological empowerment and work engagement as mediators in the relationship between PAL and job satisfaction. This will lead to a better understanding of the mechanisms through which PAL can affect job satisfaction. Third, the findings of the study will help small business owners to understand how PAL can improve job satisfaction. This will help the owners of SMMEs to understand the leadership style to adopt in order to satisfy employees and improve performance.
This article will have the following structure. Section 2 will review the theoretical and empirical literature and develop hypotheses. Section 3 will explain the methodology. The results of the empirical study will be presented in Section 4. Sections 5 and 6 will focus on the discussion and conclusion, respectively. Section 2 will define the constructs of the study, explain the theoretical background and develop the hypotheses.
There are qualitative and quantitative descriptions of SMMEs in South Africa. The qualitative description shows that to be described as small business, the firm should be a distinct and separate body operated by one or more owners. There is also a schedule that clarifies the sector and uses the number of employees and annual turnover to quantitatively classify small firms into micro, small and medium (Government Gazette, 2019). For instance, SMMEs in the retail sectors are defined as follows. Number of employees: Micro (1–10), small (11–50) and medium (51–250). Turnover: Micro (equal or less than 7.5 million Rand), small (equal or less than 25 million Rand) and medium (equal or less than 80 million Rand) (Government Gazette, 2019).
Huang, et al. (2010) point out that a theory widely used to explain the effect of the PAL behaviour on employee work performance is the SET. The theory argues that employees reciprocate leaders’ behaviour towards them with their own matched behaviour on-the basis of mutual reciprocity (Blau, 1964). PAL helps employees to develop a long-term relationship with leaders and obtain trust and socio-economic input and this leads to social exchange as employees reciprocate by performing beneficial work related behaviour (Wang, et al., 2020). The SET contends that when a participative leader provides an employee with autonomy, support and decision-making, such employee is likely to reciprocate with a positive attitude and behaviour. This suggests that a PAL style can positively affect employee work performance and job satisfaction (Usman, et al., 2021).
PAL can be defined as a leader’s non-authoritative behaviour that receives input from employees and allows them to participate in the decision-making process (Bhatti, et al., 2019). PAL involves subordinates and leaders making decision together (Sagnak, 2016). Miao, et al. (2014) define PAL as a leadership style in which problem-solving is shared by a leader through consultation with subordinates before a decision is taken. PAL has been associated with many positive organisational and individual outcomes. PAL style tends to create the most engaged workforce and allowing the involvement of subordinates in decision making creates a diversity of ideas. In addition, followers are most likely to accept changes to policies and procedures that they have participated in creating (Halaychik, 2016). PAL has weaknesses in terms of time taken to make decisions. The involvement of subordinates in the decision-making process can lead to role ambiguity and stress (Benoliel and Somech, 2010; Halaychik, 2016).
Spector (1997) defines employee job satisfaction as an individual’s satisfaction with his/her job. Employee job satisfaction measures an individual’s connectedness with a job and is an assessment of work experience (Gu, et al., 2019). Job satisfaction depicts a positive emotional or pleasurable stage that is a result of an individual’s work experiences (Gu, et al., 2019). The positive outcomes of employee job satisfaction include an increase in productivity and improved organisational performance (Gu, et al., 2019; Kessler, et al., 2020).
Psychological empowerment can be defined as intrinsic task motivation that reflects a sense of self-control in relation to an individual’s work (Seibert, et al., 2011). Psychological empowerment includes four cognitions that depict a personal orientation: these are competence, meaning, self-determination and impact (SPreitzer, 1995). Competence is associated with an employee work-related self-efficacy. Employees with a perception of high meaning identify with the goals of their work. Self-determination describes the level of choice to initiate and regulate one’s action at work. Impact describes the belief of having the power to influence operational, administrative and strategic work goals (Spreitzer, 2008). Psychological empowerment strengthens employees personally, interactively, and behaviourally within an organisation. This results in employee self-efficacy and intrinsic motivation coming into prominence, leading to improved competitive advantage for an organisation (Muqadas, et al., 2017).
Work engagement refers to a positive and fulfilling, work-related state of mind that has the characteristics of vigour, dedication and absorption (Schaufeli, et al., 2002). Vigour refers to a high level of mental resilience at work. Dedication describes an individual that is strongly involved in their work. Absorption refers to concentration at work (Schaufeli, et al., 2002). Work engagement is positively related to individual and organisational outcomes. Engaged employees tend to suffer less from stress and depression, have a lower level of sick-absenteeism and a higher level of innovation and productivity compared to less engaged workers. Engaged workers provide better service to customers leading to better customer satisfaction and profitability for the organisation (Schaufeli, 2012).
Chan (2019) investigates the effect of PAL on job satisfaction of employees of a retail firm in Hong Kong. The findings indicate that PAL has a significant positive relationship with job satisfaction. Kim (2002) explores the relationship between participative management and job satisfaction of government employees. The results indicate that participative management style is positively related to job satisfaction. The study by Sinani (2016) examines the effect of PAL on job satisfaction among highly skilled virtual teams in the global software industry. The findings of the study show that employee job satisfaction is positively related to a PAL style. Mwaisaka, et al. (2019) find that PAL is positively related to employee job satisfaction in the commercial banking industry in Kenya. Participative leaders share power and involve employees in decision making. When employees perceive that they are carrying out meaningful tasks that contribute to the performance of their organisations, they experience a high level of motivation to work and this positively affects job satisfaction (Chan, 2019): it is hypothesised that
Huang, et al. (2006) use a dataset of 173 employees in two state-owned enterprises in China to investigate the relationship between PAL and psychological empowerment. The results indicate that PAL is positively associated with the competence dimension (but not with meaning, self-determination and impact dimensions) of psychological empowerment. Amundsen and Martinsen (2015) remark that empowering leadership is a strong antecedent of psychological empowerment. Empowering leaders promote the participation of subordinates in decision making by listening to their opinions, ideas and suggestions. A participative leader listens to employees and empowers them to engage in the decision-making processes. The meta-analytic review by Seibert, et al. (2011) find that positive leadership, styles such as empowering and PAL are strongly related to psychological empowerment. Schermuly, et al. (2022), in a meta-analysis that focused on how different leadership styles affect psychological empowerment, find that empowering leadership is positively related to psychological empowerment. PAL involves employees in decision making. Therefore, subordinates may perceive PAL as a way to psychologically empower (Huang, et al., 2010). It is hypothesised that
Dhladhla (2011) points out that the perception of empowerment can positively affect the value of work for an employee and increase job satisfaction. The findings of the study by Dhladhla (2011) indicate a significant positive relationship between psychological empowerment and job satisfaction. These findings are consistent with the results of a study by Spreitzer, et al. (1997) that positively linked all the four dimensions of psychological empowerment to job satisfaction, Li, et al. (2018) and Mathew and Nair (2021) in a meta-analysis of studies on the relationship between psychological empowerment and job satisfaction find a strong positive correlation between the two constructs. The findings of the study by Abduallah, et al. (2015) indicate that the self-determination and impact dimensions of psychological empowerment are positively related to intrinsic and extrinsic job satisfaction of secondary school teachers in Malaysia. It is hypothesised that
Decuypere and Schaufeli (2019) remark that different positive leadership styles have been found to be related to employee work engagement. Cai, et al. (2018) point out that based on the importance of work engagement to positive outcomes such as psychological health and fewer psychosomatic complaints, it is important to understand its antecedents. Among the predictors of work engagement, leadership is important as organisations are increasingly structured as teams. Recent studies on how different leadership styles affect work engagement have focused on transformational leadership, servant leadership, authentic leadership and charismatic leadership (Alok and Israel, 2012; Aryee, et al., 2012; Jorge Correia de Sousa and van Dierendonck, 2014). The study by Cai, et al. (2018) focused on the relationship between empowering leadership and work engagement and finds a significant positive relationship. Sigwela (2020) in a study that focused on medium and large organisations find a significant positive relationship between authentic leadership and work engagement. Sarti (2014) finds that PAL has a positive impact on three dimensions of work engagement (vigour, dedication and absorption). PAL involves joint decision making and attempts to increase the development and participation of employees. This can lead to better engagement at work (Chan, 2019). It is hypothesised that
The findings of the study by Jones (2018) that focused on accountants in New York indicate a significant positive association between employee work engagement and job satisfaction. Yeh (2013) using data that was gathered from frontline employees of international hotels in Taiwan finds that work engagement and job satisfaction are significantly positively related. Raza and Nadeem (2019) find a significant positive relationship between work engagement and job satisfaction in a study that focused on five organisations in Islamabad, Pakistan. Engaged employees tend to experience a positive state of mind and emotions at work and this can be beneficial to work outcomes. Engaged employees normally have access to sufficient job resources and this can reduce the stress associated with job demands leading to job satisfaction (Yeh, 2013). It is hypothesised that
Psychological empowerment has been explored by researchers as a mediator between leadership styles and employee or organisational outcomes. Huang et al. (2006) investigate whether psychological empowerment mediates the relationship between PAL and organisational commitment of employees in state-owned enterprises in China. Based on the data collected from 173 employees, the study finds that the interactive effect of PAL behaviour and organisational tenure and competence (one of the dimensions of PE is statistically significant. Lee, et al. (2017) find that at the team level, psychological empowerment mediates the effect of empowering leadership on team performance. Mufti, et al. (2019) in a study that focused on the employees of non-governmental organisations in Pakistan find that psychological empowerment partially mediates the relationship between transformational leadership and job satisfaction. Empowered employees tend to show a high level of persistence and resourcefulness with positive effects on work productivity and job satisfaction. PAL can affect the job satisfaction of employees through psychological empowerment (Safrizal, et al., 2020). Aydogmus, et al. (2018) investigate the effect of psychological empowerment in the relationship between transformational leadership and job satisfaction of employees in Information Technology organisations. The findings indicate that psychological empowerment mediates the relationship between transformational leadership and employee job satisfaction. The findings suggest that when employees perceive their leader as transformational, they feel psychologically empowered and this positively affects their job satisfaction. Namasivayam, et al. (2013) find that psychological empowerment mediates the relationship between empowering leadership and employee job satisfaction. Participative leaders support the skill development of employees through mentoring, consulting and inspiring. This can result in the feeling of empowerment by employees with a positive impact on job satisfaction (Huang, et al., 2010). It is hypothesised that
Work engagement has been found by studies to mediate the relationship between leadership and employee outcomes. Vincent-Hoper, et al. (2012) find that work engagement partially mediates the relationship between transformational leadership and employee subjective occupational success. The findings of the study by Salanova, et al. (2011) indicate that the effect of transformational leadership on extra role performance of nurses is fully mediated by work engagement. Gemeda and Lee (2020) investigate if work engagement mediates the relationships among leadership styles (transformational, transactional, laissez faire) and work outcomes as measured by innovative work behaviour and task performance among information and communication technology professionals in Ethiopia and South Korea. The findings indicate that work engagement partly mediates the relationship between leadership styles and work outcomes in both samples. Chan (2019) finds that work engagement mediates the relationship between PAL and job satisfaction in Hong Kong. Employees with greater workplace engagement are more likely to be motivated by leader’s role modelling and if they are engaged by a participative leader. A leader with a participating leadership style includes employees in decision making and this can positively affect their perception of work engagement and job satisfaction (Chan, 2019). It is hypothesised that
Figure 1 shows the conceptual framework of the study. The framework links participating leadership to employee job satisfaction. In addition, the frameworks uses two constructs (psychological empowerment and work engagement) as mediating variables. The next section will focus on the research methodology.
Figure 1.
Conceptual model.
(
The quantitative research approach was adopted for the study. The cross-sectional survey method was used to collect data from the respondents. Data was collected through the self-administered questionnaire method. The sample population was all employees working for SMMEs in retail, wholesale and accommodation sectors in South Africa. The survey was conducted in the Capricorn and Waterberg District Municipalities in the Limpopo Province of South Africa. The convenience and snowball sampling methods were used to identify the survey participants. This is because of the difficulty in obtaining a formal sampling frame of SMMEs in the study areas. The participating SMMEs were in the retail, wholesale and accommodation sectors. First, the participating SMMEs were identified through convenience and snowball sampling methods. The owners and managers of the identified SMMEs were contacted through personal meetings to explain the purpose of the research and seek the permission to contact their employees. After the first process, the employees were contacted to request their participation in the survey.
The cell phone numbers and/or the e-mail addresses of the employees were obtained after the delivery of the questionnaire. Each participant was given two weeks to complete the questionnaire. If the questionnaire is completed, it is then collected.
The participants were reminded every two weeks through phone calls or e-mail messages to complete the questionnaire. This process was repeated for eight weeks. If the questionnaire is not completed after eight weeks, it is considered as non-response. Before actual data collection, a pilot study was done with ten SMMEs and thirty employees following the same process. The SMMEs or the employees that participated in the pilot study were not involved in the actual survey. The results of the pilot study led to minor adjustments to the questionnaire. In addition, the questionnaire was examined by two experts in the area of leadership and SMMEs, and their comments were incorporated in developing the final questionnaire. Three trained field agents assisted in the data collection process. The partial least square structural equation modelling (PLS SEM) using the Smart software was used for data analysis. The question items were developed from previous studies and all the items to measure the constructs of the study were anchored on the five-point Likert scale ranging from ‘1 strongly disagree to 5 strongly agree’. The Cronbach’s alpha was used as a measure of reliability. The participants in the survey were assured of anonymity and confidentiality.
PAL was measured by a six-item scale adapted from Arnold, et al. (2000). Items include ‘the owner/manager of my firm listens to my work group’s ideas and suggestions’, and ‘the owner/manager of my firm uses my work group’s suggestions in making decisions that affect us’. The PAL scale by Arnold, et al. (2020) was chosen for the study for the following reasons. First, the original scale by Arnold, et al. (2020) is reliable with a Cronbach’s alpha coefficient of 0.91. Second, the reliability of the scale has been confirmed by other studies. Chan (2019) used the scale in a study on PAL and job satisfaction and obtained a Cronbach’s alpha coefficient of 0.88. Usman, et al. (2021) used the scale in a study on PAL and employee outcomes and obtained a Cronbach’s alpha coefficient of 0.94. This study obtained a Cronbach’s alpha of 0.82. This confirms the reliability of the scale used to measure PAL.
Job satisfaction was measured by a three-item scale adopted from Seashore, et al. (1983). This scale is a short version of the Michigan Organisational Assessment Questionnaire (MOAS) and termed MOAS Job Satisfaction Subscale (MOAQ-JSS). Items to measure job satisfaction was measured using a three-item scale. Items include ‘I like working for my firm’ and ‘All in all, I am satisfied with my job’. The scale was chosen for the study because of these reasons. Chan and Mak (2016) used the scale and obtained a Cronbach’s alpha coefficient of 0.90. Chan (2019) used the scale and obtained a Cronbach’s alpha of 0.86. This study obtained a Cronbach’s alpha coefficient of 0.82. This confirms the reliability of the scale used to measure job satisfaction.
Psychological empowerment was measured by a twelve-item scale adopted from Spreitzer (1995). The scale has four subscales (meaning, competence, self-determination and impact). Items include ‘the work that I do in my firm is very important to me’ and ‘I have confidence in my ability to do the work that I do in my firm’. The scale was chosen for the study because of these reasons. The overall Cronbach’s alpha coefficient of the Spreitzer (1995) scale is 0.72. Jordan, et al. (2015) used the scale and obtained a Cronbach’s alpha coefficient of 0.88. Marof, et al. (2021) obtained a Cronbach’s alpha coefficient of 0.80. This study obtained a Cronbach’s alpha of 0.80. This confirms the reliability of the scale used to measure psychological empowerment.
Work engagement was measured by a nine-point scale adopted from Schanfeli, et al. (2006). Items include ‘I feel that I am full of energy at work’ and ‘I feel strong and vigorous while I am doing my job’.
The Schanfeli, et al. (2006) scale has a Cronbach’s alpha coefficient of 0.92. Gong, et al. (2020) used the scale and obtained a Cronbach’s alpha coefficient of 0.89. Jiang, et al. (2021) used the scale and obtained a Cronbach’s alpha coefficient of 0.90. This study obtained a Cronbach’s alpha coefficient of 0.78. This confirms the reliability of the work engagement scale.
Seven hundred questionnaires were distributed and three hundred and ten were returned. Eight questionnaires were not used because the respondents did complete some important parts of the questionnaire. Three hundred and two questionnaires were usable. In determining the appropriate sample size, the study utilised the 10 times rule, which assumes that when PLS SEM is used, the sample size should be greater than ten times the maximum number of inner or outer model links that point to a given latent variable in a model (Hair, et al., 2011). The biographical details of the respondents are: Gender: 178 females and 124 males. Age: 21–30 years (104 respondents), 31–40 years (106 respondents), 41–50 years, (65 respondents) and 51–60 years (27 respondents). Educational qualifications: 172 with Matric qualification and 130 with post-Matric qualification.
The requirements for the analysis of PLS SEM such as the factor loading average variance extracted, Cronbach’s alpha and composite reliability were followed. The requirements were met by the study by Hair, et al. (2019). Table 1 depicts the measurement model. Tables 2 and 3 show the discriminant validity.
Measurement model (
| Construct | Measurement items | Loading | Cronbach’s alpha | Composite reliability | AVE |
|---|---|---|---|---|---|
| Participative leadership (PAL) (Mean 4.25) (Standard deviation 1.01) | PAL1 | 0.810 | 0.818 | 0.901 | 0.602 |
| - | PAL2 | 0.825 | - | - | - |
| - | PAL3 | 0.752 | - | - | - |
| - | PAL4 | 0.729 | - | - | - |
| - | PAL5 | 0.735 | - | - | - |
| - | PAL6 | 0.800 | - | - | - |
| Psychological empowerment (PYE) (Mean 3.78 Standard deviation 0.95) | POE 1 | 0.741 | 0.802 | 0.946 | 0.596 |
| - | POE2 | 0.748 | - | - | - |
| - | POE3 | 0.772 | - | - | - |
| - | POE4 | 0. 0.801 | - | - | - |
| - | POE5 | 0.829 | - | - | - |
| - | POE6 | 0.737 | - | - | - |
| - | POE7 | 0.758 | - | - | - |
| - | POE8 | 0.805 | - | - | - |
| - | POE9 | 0.728 | - | - | - |
| - | POE10 | 0.783 | - | - | - |
| - | POE11 | 0.746 | - | - | - |
| - | POE12 | 0.805 | - | - | - |
| Work engagement (WOE) (Mean 4.02, Standard deviation 1.03) | WOE1 | 0.801 | 0.782 | 0.927 | 0.581 |
| - | WOE2 | 0.759 | - | - | - |
| - | WOE3 | 0.732 | - | - | - |
| - | WOE4 | 0.783 | - | - | - |
| - | WOE5 | 0.736 | - | - | - |
| - | WOE6 | 0.805 | - | - | - |
| - | WOE7 | 0.777 | - | - | - |
| - | WOE8 | 0.739 | - | - | - |
| - | WOE9 | 0.726 | - | - | - |
| Job satisfaction (Mean 4.20, Standard deviation 0.99) | JOS1 | 0.800 | 0.815 | 0.808 | 0.583 |
| - | JOS2 | 0.759 | - | - | - |
| - | JOS3 | 0.731 | - | - | - |
Discriminant validity (
| CON | PAL | POE | WOE | JOS |
|---|---|---|---|---|
| PAL | - | - | - | |
| POE | 0.626 | - | - | |
| WOE | 0.585 | 0.608 | - | |
| JOS | 0.604 | 0.583 | 0.612 |
Diagonals in bold signify the square root of the AVE, while the other figures depict the correlations.
HTMT
(
| CON | PAL | POE | WOE | JOE |
|---|---|---|---|---|
| PAL | - | - | - | - |
| POE | 0.431 | - | - | - |
| WOE | 0.551 | 0.579 | - | - |
| JOE | 0.599 | 0.542 | 0.677 | - |
Hair, et al. (2019) point out that the assessment of the structural model should include the analysis of the common method bias (CMB), the R2, the Q2 and the evaluation of the path coefficients. The variance inflation factor (VIF) values range from 1.48 to 2.22 and below 3.3. This suggests that the model is free of CMB. In addition, the values of the GOF range from 0 to 1 with 0.10 (small), 0.25 (medium) and 0.36 (large). The GOF obtained by the study is 0.433, which is higher than the 0.36 standard for good model fit. This suggests that the empirical data satisfactorily fits the model. The Q2 > 0.5 is considered a predictive model. The Q2 obtained in the study ranges from 0.127 to 0.222. These figures are greater than zero and indicate the cross validity of the model. The effect size (f2) shows the effect of one construct on another construct and values are 0.02 (small), 0.15 (medium) and 0.35 (large). The effect sizes obtained in the study range from 0.270 to 0.282. The standardised root mean square residual (SRMR) was used to measure the model fit. SRMR has values from 0 to 1. The SRMR obtained in the study is 0.04.
Table 4 depicts the results of the structural model. The results (β 0.197, T 6.208, p < 0.01) show a significant positive relationship between PAL and JOS. Hypothesis 1 is supported. The results (β 0.244, T 3.295, p < 0.05) depict a significant positive relationship between PAL and POE. Hypothesis 2 is supported. The results (β 0.183, T 3.339, p < 0.05) show a significant positive relationship between POE and JOS. Hypothesis 3 is supported. The results (β 0.224, T 5.804, p < 0.01) show a significant positive relationship between PAL and WOE. Hypothesis 4 is supported. The results (β 0.272, T 2.904, p < 0.05) show a significant positive relationship between WOE and JOS. Hypothesis 5 is supported.
Path coefficient and T-statistics
(
| Hypothesised path | Path coefficient | T-statistics | Decision |
|---|---|---|---|
| H1 PAL→JOS | 0.197 | 6.208 * | Supported |
| H2 PAL→POE | 0.244 | 3.295 ** | Supported |
| H3 POE→JOS | 0.183 | 3.339** | Supported |
| H4 PAL→WOE | 0.224 | 5.804* | Supported |
| H5 WOE→JOS | 0.272 | 2.904** | Supported |
Table 5 depicts the results of mediation. To confirm mediation, the indirect effects have to be significant. Also, the variance accounted factor (VAF) value bigger than 80% represents full mediation, a VAF value of between 20 and 80% means a partial mediation, while a value below 20% means no mediation. In addition, for complementary mediation, the indirect effect and the direct effect are significant and point in the same direction. For competitive mediation, the indirect effect and the direct effect are significant but point in opposite directions while for indirect-only mediation, the indirect effect is significant, but not the direct effect (Hair, et al., 2019). The results indicate that the indirect path between PAL, POE and JOS is positive and significant. Also, the VAF is above 80% (80.78%). Thus, a complementary full mediation partial is confirmed. Thus, Hypotheses 6 is supported. In addition, the indirect path between PAL, WOE and JOS is positive and significant. The VAF is below 80% (49.83%) and a complementary partial mediation partial is confirmed. Hypothesis 7 is supported.
Mediation results (
| Mediation path | Indirect effect | Total effectandT-statistics | Confidence interval bias (corrected) | Decision | VAF | |
|---|---|---|---|---|---|---|
| - | - | - | LL | UL | - | - |
| H6 |
0.185* | 0.229* |
0.058 | 0.217 | Accepted (full mediation) | 80.78% |
| H7 ESI→ENJ→ENE | 0.146** | 0.293** |
0.061 | 0.188 | Accepted (partial mediation) | 49.83% |
The study examined the relationship between PAL and job satisfaction of employees of small firms. In addition, the study investigated whether psychological empowerment and work engagement mediate the relationship between PAL and job satisfaction.
The findings indicated a significant positive relationship between PAL and employee job satisfaction. The findings suggest that when employees perceive a PAL style that involves them in decision making, they experience a high level of motivation to work and this positively affects job satisfaction. The findings are consistent with the results of previous empirical studies. Chan (2019) finds that PAL has a significant positive relationship with job satisfaction in Hong Kong. The results of the study by Kim (2002) indicate that participative management style is positively related to high levels of employee job satisfaction. Mwaisaka, et al. (2019) find that PAL is positively related to employee job satisfaction in the commercial banking industry in Kenya.
The findings indicated a significant positive relation between PAL and psychological empowerment of employees. The results suggest that when a participative leader involves employees in decision making, they may perceive such behaviour as a way to empower them. The findings are consistent with previous empirical studies. Huang, et al. (2006) find that PAL is positively associated with the competence dimension (but not with meaning, self-determination and impact dimensions) of psychological empowerment. Seibert, et al. (2011) find that PAL is strongly related to psychological empowerment.
The findings indicated that psychological empowerment and job satisfaction are significantly positively related. The findings suggest that the perception of empowerment can positively affect the value of work for an employee and increase job satisfaction. The findings are consistent with previous empirical studies. Dhladhla (2011) using a sample of military personnel finds a significant positive relationship between psychological empowerment and job satisfaction. Spreitzer, et al. (1997) find positive relationships between all four dimensions of psychological empowerment and job satisfaction. Li, et al. (2018) and Mathew and Nair (2021) in a review of studies on the relationship between psychological empowerment and job satisfaction find a strong positive correlation between the two constructs. Abduallah, et al. (2015) find that the self-determination and impact dimensions of psychological empowerment are positively related to intrinsic and extrinsic job satisfaction of secondary school teachers in Malaysia.
The findings indicated that PAL and work engagement are significantly positively related. The findings suggest that PAL involves joint decision making between the leader and employees leading to better engagement at work. Sarti (2014) finds a significant positive relationship between PAL and work engagement. Other leadership styles that empowers employees have also been positively linked by researchers to work engagement. Cai, et al. (2018) find a significant positive relationship between empowering leadership and work engagement. Sigwela (2020) finds a significant positive relationship between authentic leadership and work engagement.
The findings of the study indicated a significant positive relationship between work engagement and job satisfaction. The findings suggest that engaged employees tend to experience a positive state of mind and emotions at work and this can be beneficial to job satisfaction. Jones (2018) finds a significant positive association between employee work engagement and job satisfaction. Yeh (2013) finds that work engagement and job satisfaction are significantly positively related. Raza and Nadeem (2019) find a significant positive relationship between work engagement and job satisfaction in Pakistan.
The findings showed that psychological empowerment mediates the relationship between PAL and job satisfaction. The findings suggest that when participative leaders support the skill development of employees through mentoring, consulting and inspiring. This can result in the feeling of empowerment by employees with a positive impact on job satisfaction. The findings are consistent with previous empirical studies on PAL and positive employee outcomes. Huang, et al. (2006) find that the interactive effect of PAL behaviour and organisational tenure and competence (one of the dimensions of PE is statistically significant. Lee, et al. (2017) find that psychological empowerment mediates the effects of empowering leadership on team performance. Namasivayam, et al. (2013) find that psychological empowerment mediates the relationship between empowering leadership and employee job satisfaction.
The findings indicated that work engagement mediates the relationship between PAL and job satisfaction. The findings suggest that a leader with a participating leadership style includes employees in decision making and this can positively affect their perception of work engagement and job satisfaction. Chan (2019) finds that work engagement mediates the relationship between PAL and job satisfaction in Hong Kong. Apart from the PAL style, other studies have focused on how work engagement mediates the relationship between other leadership styles and positive employee outcomes. Vincent-Hoper, et al. (2012) find that work engagement partially mediates the relationship between transformational leadership and employee subjective occupational success. The findings of the study by Salanova, et al. (2011) indicate that the effect of transformational leadership on extra role performance of nurses is fully mediated by work engagement.
The study examined the relationship between PAL and employee job satisfaction in small firms. The PLS SEM was used to analyse data and test the hypotheses.
The findings indicated a significant positive relationship between PAL and job satisfaction. The mediating effects of psychological empowerment and work engagement are significant.
Theoretically, the study developed and tested a model that shows that psychological empowerment and work engagement are mechanisms through which PAL can affect job satisfaction. In addition, the study extends the literature by showing that PAL, psychological empowerment and work engagement can lead to employee job satisfaction. The findings can be linked to the SET The SET suggests that when a participative leader provides an employee support and decision making, such employee is likely to reciprocate with a positive attitude and work performance, which in turn leads to job satisfaction.
The findings of the research has some important practical implications for owners and managers of small firms. The findings show the importance of PAL in improving job satisfaction of the employees of small firms. Therefore, it is important for managers/owners of small firms to adopt a PAL style that involves employees in decision making. This will help to create empowered, engaged and satisfied employees. Owners and managers should attend training on leadership so that they can better understand the various styles with their advantages and disadvantages and incorporate a participative approach into their management style. Organisations that support small businesses should create awareness for small business owners about the various leadership styles that can be adopted to run a business.
The study has some limitations. First, data was collected from employees of small firms in two municipalities in one Province in South Africa and this may limit the generalisability of the results. Other studies can improve the generalisability of the findings by including employees in other provinces of South Africa. An international comparative study will help to improve the generalisability of the findings. Second, the study focused on small firms in the retail, wholesale and accommodation sectors. Thus care should be exercised in generalising the findings of the study to all SMMEs in South Africa. Other studies can include SMMEs in other sectors as detailed by the National Small Business Act to improve the generalisability of the findings. Third, the study depended on self-reported data of employees rather than objective observations. This may lead to social desirability bias. Other studies can obtain responses from managers of small firms about their employees. Fourth, the study used a cross-sectional research design and this limits cause and effect relationship because data was only collected at a point in time. Other studies can adopt a longitudinal research design to improve cause and effect. Fifth, the study did not include moderating factors that can affect the relationship between PAL and job satisfaction. Other studies should include factors such as meaningful work and happiness at work as moderators. Sixth, the study focused only on two mediators in the relationship between PAL and job satisfaction. Other studies can examine the mediating effect of trust in the manager. In addition, PAL can be linked to other employee outcomes such as organisational citizenship behaviour and intention to stay or quit an organisation.