The Impact of Ethical Leadership and Communication Transparency on Employee Performance: The Mediating Role of Employee Engagement

Liew, Qian Ying (2026) The Impact of Ethical Leadership and Communication Transparency on Employee Performance: The Mediating Role of Employee Engagement. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study examines the impact of ethical leadership and communication transparency on employee performance, with employee engagement acting as a mediating variable. In the context of Malaysian organisations, employee performance remains a critical concern despite improvements in labour market indicators, as issues such as low engagement, high turnover intentions, and declining productivity continue to persist. Drawing on Social Exchange Theory and Social Learning Theory, this research proposes that ethical leadership and transparent communication foster a positive organisational environment that enhances employee engagement, which in turn improves performance outcomes. A quantitative research approach was employed, using a cross-sectional survey design. Primary data were collected through structured questionnaires distributed to employees across various industries in Malaysia. The data were analysed using Statistical Package for the Social Sciences (SPSS) to examine both direct and mediating relationships among the variables. The findings are expected to demonstrate that ethical leadership and communication transparency have significant positive effects on employee performance, both directly and indirectly through employee engagement. Employee engagement is anticipated to play a crucial mediating role, strengthening the relationship between leadership practices, communication processes, and performance outcomes. This study contributes to the existing literature by integrating ethical leadership and communication transparency within a governance-related framework, providing a more comprehensive understanding of their combined influence on employee performance. Practically, the findings offer valuable insights for organisations seeking to enhance workforce productivity, strengthen engagement, and improve governance practices. The study highlights the importance of embedding ethical values and transparent communication within organisational systems to achieve sustainable performance outcomes.