Ethical Leadership in The Digital Era: Unlocking Employee Potential through Trust and Inner Peace

Abstract

In the digital era, the Information Technology (IT) sector plays a pivotal role in driving global innovation and economic growth. As organizations navigate technological disruptions and dynamic work environments, ethical leadership emerges as a fundamental leadership style that fosters integrity, accountability, and long-term success. This study explores the impact of ethical leadership on employee job performance, emphasizing the critical roles of trust and inner peace as potential mediators. Trust is essential for building strong leader-employee relationships, fostering collaboration, and enhancing workplace commitment, while inner peace contributes to employee well-being and psychological resilience. Data were collected from 282 IT sector employees in the Delhi/NCR region using a structured self-reported questionnaire. Utilizing Partial Least Squares Structural Equation Modeling (PLS-SEM), the study confirms that ethical leadership significantly enhances employee job performance, with trust acting as a crucial partial mediator. However, inner peace does not demonstrate a significant mediating effect. These findings underscore the importance of cultivating trust within organizations and exploring inner peace as an emerging factor in workplace dynamics. The study offers valuable insights for IT organizations seeking to develop leadership strategies that enhance employee engagement, well-being, and overall organizational success.