Relationship between internal legal compliance culture, leadership style, organizational trust, and employee engagement in Vietnam’s banking sector

This study was conducted to explore and measure the relationship between leadership style, internal legal compliance culture, organizational trust, and employee engagement in the banking sector from the perspective of managerial perceptions. Data were collected through a survey of 386 managers currently working at 35 commercial banks in Vietnam. The results of the two-stage partial least squares structural equation modeling (PLS-SEM) analysis indicate that managers’ leadership styles have a positive impact on the implementation of internal legal compliance culture and enhance employee engagement. Additionally, the enforcement of internal legal compliance culture positively increases organizational trust, which in turn influences employee engagement in the banking industry. The study’s findings provide empirical evidence on the influence of leadership style and the implementation of internal legal compliance culture on promoting stability and sustainable development in the banking sector of emerging economies. At the same time, the study emphasizes that a strong internal legal compliance culture not only ensures regulatory adherence but also fosters a work environment where employees feel valued and secure. When employees perceive that their organization operates ethically and transparently, they are more likely to develop a sense of engagement, thereby strengthening their overall involvement. This heightened engagement can lead to improved job performance, lower turnover rates, and greater organizational efficiency in the banking sector. AcknowledgmentThe authors would like to thank the Editor-in-Chief and a reviewer for their helpful comments that, in our view, have helped to improve the quality of the manuscript significantly. Besides, this study is the result of collaboration between researchers from the University of Law, Hue University, and School of Business and Economics, Duy Tan University. The authors would like to thank both institutions for their support and facilitation in the publication of this research.