The ethics of influence: organizational culture as a moderator of leadership style in agile projects

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Abstract: This research investigates the moderating role of organizational culture (OC) in shaping the relationship between leadership style and project performance (PP), with a specific focus on despotic and transformational leadership. Through a dual study model the data was collected from a convenient sample of 750 employees working in project-based IT organizations located in Pakistan. The questionnaires were distributed online, and analysis was conducted using JASP. In study 1, results demonstrate that despotic leadership has a significant negative effect on project performance; however, this effect is attenuated in the presence of a strong organizational culture. At higher levels of Organizational Culture, the negative impact of despotic leadership becomes statistically non-significant, suggesting that strong cultures can neutralize destructive leadership. In study 2, transformational leadership is shown to significantly enhance project performance, yet this positive effect diminishes at higher levels of Organizational Culture, again indicating that mature ethical culture can substitute for leadership influence. Together, the findings provide theoretical and practical insights into how organizations, particularly those operating with temporary, project-based teams, can reduce dependency on individual leaders by cultivating ethical cultures that regulate behavior and sustain performance. This research contributes to an emerging discourse in business ethics that calls for a shift from leader-centric models toward systematic, institutionalized approaches to ethical functioning. The findings demonstrate that ethical organizational culture can function as a self-regulatory mechanism that sustains ethical behavior and performance regardless of leadership variability, especially in agile projects, where leaders are serving as facilitators and teams are bound to give performance.

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