Under the weight of nepotism: unraveling the emotional and psychological strain in the banking industry

Purpose Using the job demands-resources model, the study aims to explore how nepotism affects psychological withdrawal (PW) among employees, analyzing the underlying mechanisms and contextual factors that shape this association. It particularly examines the mediating mechanisms of emotional exhaustion, interpersonal conflict (IPC) and psychological contract violations (PCVs) in linking nepotism to PW. Furthermore, the study examines the moderating effect of friendship prevalence (FP) on the relationships among emotional exhaustion, IPC, PCV and PW. Design/methodology/approach A 2-wave study comprising 204 bank employees was performed using variance-based SmartPLS to examine the hypothesized relationships. Findings Nepotism was positively linked to PW. Emotional exhaustion, IPC and PCV functions as significant mediators. However, FP did not act as a significant moderator. Practical implications The study offers a comprehensive understanding of how nepotism drives employee behavior and well-being, aiding organizations to alleviate its adverse effects through targeted strategies. Moreover, it highlights the importance of cultivating positive workplace relationships, which can shield against stressors, foster a healthier work environment and boost employee retention. Originality/value The current research makes a novel contribution to the extant literature on the mediating mechanism of the nepotism–outcome relationship by examining emotional exhaustion, IPC and PCV as mediators in the association between nepotism and PW. Further, analyzing the FP as a moderator is an essential facet of the present study.