Why perceived organizational virtue matters: a psychological mechanism

Objective: This study investigates the mechanism linking employees' perceived organizational virtue, leader-member exchange (LMX), and job performance. Specifically, this study examines the mediating role of LMX and the moderated mediation role of positive psychological capital (PsyCap) within this relationship. Methods: Structural equation modeling (SEM) and the PROCESS Macro were employed to test the proposed hypotheses. The analyses were conducted using a sample of employees in South Korea. Results: The results showed that organizational virtue was positively related to LMX, and that LMX, in turn, is positively associated with job performance. Furthermore, LMX mediated the positive relationship between organizational virtue and job performance. PsyCap moderated the mediated relationship between organizational virtue and job performance via LMX, operating as a moderator that strengthens the effect of LMX on job performance. Specifically, the mediating effect of LMX on the link between organizational virtue and job performance was stronger for employees with higher levels of PsyCap. Conclusion: These findings provide important theoretical implications by demonstrating that LMX and PsyCap jointly strengthen the positive relationship between organizational virtue and job performance. This study also provides practical implications by emphasizing that cultivating a virtuous organizational culture and developing employees' PsyCap are vital for enhancing relational dynamics and employees' job performance.