The Impact of Perceived Ethical Leadership on Job Satisfaction in Saudi Arabian Technological Firms: The Moderating Role of Perceived Vision 2030 Initiative

There are theoretical grounds to anticipate the moderating effect of institutional reform initiatives on the relationship between ethical leadership and job satisfaction. According to the Social Exchange Theory, employees’ perceptions of ethical leadership depend on their perceptions of the leader’s actions in terms of fairness, trustworthiness, and support (Al-Hareri & Nassani, 2025). However, Institutional Theory suggests that leadership behaviour interpretations occur within a wider framework of norms and regulations (Katou & Kafetzopoulos, 2025). Ethical leadership could be seen as more legitimate and aligned with national transformation goals in organisations that are considered Vision 2030 champions which could lead to more positive responses from employees. On the other hand, low organisational alignment with Vision 2030 might lead to a lack of agreement in the perception of ethical leadership as a team trait rather than a policy of the entire organisation. This implies a lower reciprocal response from employees. This is because the interaction between exchange processes and the institutional context is the theoretical basis for expecting a moderating effect.

H2: Perceived Vision 2030 Initiatives significantly and positively moderates the relationship between perceived ethical leadership and job satisfaction in Saudi Arabian technological firms.

3. METHODOLOGY

3.1. Research Design and Data Collection

The current study adopted a primary quantitative research design suitable for investigating the predictive relationship between variables and testing hypotheses in organisations. The respondents were surveyed using a structured questionnaire on a five-point Likert scale ranging from strongly disagree to strongly agree, a common method for measuring perceptual variables in behavioural research, as suggested by Russo et al., (2021). To ensure the specific measurement of constructs and clarity, the questionnaire was split into the study’s major constructs: Job Satisfaction, Perceived Ethical Leadership, and Perceived Vision 2030 initiatives. To ensure construct validity, items were extracted from the established scales (Appendix A). The items of ethical leadership were adapted from Brown et al., (2005), where example items were specified as “Listens to what employees have to say” and “Disciplines employees who violate ethical standards”. Similarly, items of job satisfaction were adopted from Spector, (2022), for instance, “I feel I am being paid a fair amount for the work I do”, “When I do a good job, I receive the recognition for it that I should receive”.

3.2. Construct Designing and Measurement

The Perceived Vision 2030 Initiatives construct was designed based on employees’ perceptions of how much the goal of Saudi Vision 2030 is represented in their organisational environment. The construct was designed to represent the understanding of the impact of national reform initiatives on practices within organisations and leadership behaviour. The institutional change framework was followed by item generation based on the literature on institutional change and organisational adaptation, as well as the Vision 2030 framework. Three instruments were created to evaluate employees’ perceptions of how Vision 2030 impacts organisational practices, their perceptions of leadership practices and the goals of Vision 2030, and the promotion of ethical and responsible leadership. The construct was defined as reflective, that is, the observed items reflected the perceived sense of alignment of the organisations with national reform efforts.

The use of three items to measure the Perceived Vision 2030 Initiatives is consistent with literature studies which suggest using fewer items when constructs have a conceptual focus and measurement efficiency is desired. When short scales measure the key conceptual domain of the construct and show acceptable psychometric characteristics, as proposed by Louangrath (2018), they effectively capture this construct. In a similar vein, Taherdoost (2019) states that there is no limit on the number of reflective indicators used, but only if reliability and validity are achieved. The construct was focused, and satisfactory inter-item correlations were found in this study; therefore, a three-item measure was considered appropriate and parsimonious. Future studies should validate this newly developed construct using confirmatory factor analysis in independent samples to develop its factorial stability, alongside convergent and discriminant validity, and generalisation within diverse organisational contexts. This kind of validation tends to reinforce confidence in the psychometric properties of the new construct and improve its application in future studies assessing employees’ perceptions of national reform initiatives and outcomes in the workplace.

Such validation would strengthen confidence in the construct’s psychometric properties and enhance its applicability in future research examining employees’ perceptions of national reform initiatives and workplace outcomes.

The questionnaire scale was carefully and systematically constructed. The initial items were generated based on the literature on institutional change and the goals of such policies. The draft items were then reviewed by a panel of three academics with expertise in organisational behaviour and public policy to evaluate their clarity, relevance and content validity. Some minor wording changes were made in response to the reviewers’ suggestions. The revised questionnaire was then pilot-tested with 75 employees from Saudi technological companies to check for item comprehensibility and preliminary reliability. Prior to data collection, the internal consistency of the instrument was tested through the pilot testing which showed strong internal consistency with Cronbach’s alpha of 0.896, Table 1, before collecting data at full-scale.

3.3. Participants and Sampling

The participants were selected from various Saudi Arabian technological companies in software development, information technology services, telecommunications services, digital solutions, and technology-enabled business services with an employee size between 250 and 1000, operating in major cities such as Jeddah, Riyadh, and Dammam. Organisations were identified through their accessible social media and professional networks. The recruitment approach was to recruit from a range of organisations and different sizes and scopes of operations to gain input from various sections of the technology industry. Participants were recruited online through social media platforms such as Instagram, Twitter, and the official Facebook pages of technology firms, which allowed us to gather a non-homogeneous, geographically dispersed sample. Social media platforms have been employed as hiring tools because of their convenient reach to staff of geographically spread-out technological companies in Saudi Arabia. The social media pages that were contacted were operated by the company to maximise the chances of respondents working at the target company at the time of the study. However, it could have favoured those who were more active in digital interactions in the workplace and were more engaged with workplace communication platforms.

As suggested by Andrade (2021), purposive sampling was applied, as it enabled the researcher to select respondents with relevant knowledge and experience with the variables of this study. This method is particularly appropriate when a study requires information-rich cases from a particular industry. Although purposive sampling was used to ensure that only respondents with relevant experience and knowledge of the variables under study were included, it also introduced selection bias and constrained the generalisability of the results to the target population of the study.

Although this method is suitable for recruiting participants with a greater understanding of the research problem and topic, it may not adequately reflect the diversity of the broader workforce. Thus, the outcomes are explained and evaluated within the chosen sample of workers in the technology companies. As recommended by Kang (2021), the sample size was determined using G*Power analysis. In the case of a medium effect size (f² = 0.15), power of 0.95, and three predictors, the minimum required sample size was approximately 119. Nevertheless, the study’s statistical robustness increases with the sample size, which is why the targeted sample size was 450. Eight hundred questionnaires were sent, of which 470 were returned, yielding a response rate of 58.75%. After screening for missing values and outliers, 20 responses were eliminated, leaving 450 responses for analysis. Purposive sampling was used to ensure that the respondents had relevant organisational experience; however, the research was unable to eliminate self-selection bias completely because participation was voluntary. Those who were more engaged in organisational activities or were more aware of Vision 2030 activities might have been more inclined to engage. Additionally, there was a relatively high proportion of respondents in senior management (29.33%), which might be indicative of the social media-based recruitment process and could have affected perceptions of leadership and organisational alignment with Vision 2030. Therefore, the results do not necessarily reflect the opinions of lower-level employees in an organisation.

3.4. Addressing Biases

Non-response bias was examined by comparing early respondents (n1 = 30) with late respondents (n2 = 30) on the study variables (PEL, PV, and JS) using independent-sample t-tests. There were no statistically significant differences in the tests; therefore, there was no concern that non-response bias would affect the findings of this study (p > 0.05). In addition, Common Method Bias (CMB) was assessed using Harman’s single-factor test. The exploratory factor analysis of all measurement items indicated that the variance was not explained by a single factor, and the first factor accounted for less than 50% of the total variance. This implies that the CMB was not a concern in this study. In addition, CMB was assessed using the full collinearity Variance Inflation Factor (VIF), as shown in Table 2. The results showed that none of the VIF values surpassed the threshold value of 3.3 which ruled out the issue of CMB in this study. Although Harman’s single-factor test results indicated that common method bias was not a major concern, Podsakoff et al., (2003) suggested that no single statistical test could completely rule out CMB. Consequently, as in all studies, caution should be exercised when interpreting the findings, despite the procedural and statistical corrections used.

3.5. Data Analysis Technique

First, the measurement model was assessed using SmartPLS 4.0, which can be used to carry out a confirmatory assessment of reflective constructs through Partial Least Squares Structural Equation Modelling (PLS-SEM). To check the reliability of the indicators, internal consistency reliability (Composite Reliability and Cronbach’s alpha) and convergent validity (Average Variance Extracted and Heterotrait–monotrait) criteria were used in this software. Further, SPSS was used to analyse the data, and a moderation analysis was performed using the Preacher and Hayes PROCESS Macro, which allows robust testing of the interaction with bootstrapped confidence intervals, as recommended by Clement and Bradley-Garcia (2022).

3.6. Ethical Considerations

Ethical guidelines for studies involving human subjects were followed throughout the study. There was complete voluntary participation, and informed consent was obtained from all respondents prior to completing the questionnaire. Participants were informed of the purpose of the study, that the responses would be anonymous, that the responses would be kept confidential, and they could withdraw from the study without any consequences at any point in time. No personal identifiable data were collected, and the data were only analysed for academic research in accordance with the ethical guidelines of social and management sciences research.

4. RESULTS

4.1. Demographics Analysis

The results shown in Table 3 specify the demographic characteristics of the study participants in the sample (n = 450). Among the total participants, 55.56% were male and 41.11% were female, while 3.33% preferred not to answer. Further, regarding age group, 30.00% and 32.22%, were found in the age brackets of 25-34 years and 35-44 years, respectively. Among the total participants, 38.89% and 28.89% held bachelor’s and master’s degrees, respectively, whereas 30.22% served at Team Leader or Supervisory levels, 24.44% at managerial levels, and 29.33% at Senior Management levels. Lastly, among the total participants, 23.33% had 3-5 years of industry experience, 31.11% had 6-10 years, and 26.67% had more than 10 years.

4.2. Reliability Analysis

The internal consistency and reliability of the model were examined using Cronbach’s alpha, with a standard value of 0.7. The results are presented in Table 4.

The results in Table 4 show that Cronbach’s alpha for all the constructs of the measurement model of the study is (α > 0.7). This indicates that all three constructs have internal consistency and reliability.

4.3. Measurement Model Assessment

The results in Table 5 show high factor loadings ranging between (0.636 and 0.953), indicating that all observed items are strongly correlated with the underlying latent constructs. On the other hand, reliability is also established as all the constructs are found with Cronbach’s Alpha and Composite Reliability values exceeding 0.7 (α > 0.7). Finally, convergent validity was attained with Average Variance Explained (AVE) values higher than the standard value of 0.5. Furthermore, despite having the lowest standardised loading (0.636), well below the recommended minimum of 1.0, JS3 had a positive contribution to the construct’s Composite Reliability and Average Variance Extracted which were both above the recommended thresholds. This item was therefore retained, since the exclusion did not significantly enhance the total psychometric characteristics of the model, but compromised the conceptual width of the job satisfaction construct, and thus the consistency of the tools used to measure it.

4.4. Discriminant Validity

The Heterotrait–Monotrait (HTMT) criterion was used to evaluate discriminant validity (Table 6). The HTMT ratios of Perceived Ethical Leadership-Job Satisfaction, Perceived Ethical Leadership-Perceived Vision 2030, and Perceived Vision 2030-Job Satisfaction were found to be 0.541, 0.515, and 0.423, respectively. The values of all are well below 0.85 which provides satisfactory discriminant validity and, therefore, evidence of the three constructs being empirically distinct.

4.5. Correlations

The correlation analysis (Table 7) shows that all variables in this study have statistically significant positive relationships. Job Satisfaction is positively correlated with Perceived Ethical Leadership (r = 0.661, p = 0.01), indicating that greater perceptions of ethical leadership are associated with higher employee satisfaction. Similarly, the Perceived Vision 2030 Initiatives showed a moderate correlation with Perceived Ethical Leadership (r = .0539, p < 0.01) and moderately high correlation with Job Satisfaction (r = 0.629, p < 0.01). These findings imply that employees with a positive outlook on national initiatives report high levels of satisfaction and positive perceptions of their leadership.

Note: *** indicates significance at 1%, ** indicates significance at 5%, * indicates significance at 10%

4.6. Process Model-Preacher and Hayes

According to the Process-Macro results (Table 8), the model has moderate predictive power and accounts for a significant percentage of the variance in job satisfaction (R2 = 0.546, F = 179.053, p < 0.001). Perceived Ethical Leadership (PEL) has a positive, statistically significant direct relationship with Job Satisfaction (β = 0.262, t = 2.130, p = 0.033), confirming its importance as an essential predictor. The Perceived Vision 2030 initiative (PV) also showed a significant relationship with job satisfaction (β = 0.081, t = 2.076, p = 0.047). The interaction term (PEL × PV) was positive and significant (β = 0.072, t = 2.250, p = 0.029), indicating a significant moderating effect. The interaction changes in the explained variance (ΔR² = 0.0049, F = 4.777, p = 0.029) indicate a small moderating effect of Perceived Vision 2030. The conditional effects also indicate that the relationship between PEL and JS is slightly enhanced with increased levels of PV, with the relationship starting with (β = 0.478) at low levels and (β = 0.613) at high levels. These results confirm the direct and interaction effects of these variables on the dependent variables. In addition, the f² values indicate that job satisfaction is moderately related to Perceived Ethical Leadership (f² = 0.320) and moderately associated with Perceived Vision 2030 Initiatives (f² = 0.247), which shows significant practical contributions. However, there is a lack of practical significance in that the interaction effect is small (f² = 0.010), which is below Cohen’s limit of small effect size, and not that much to be revealed by its statistical significance.

Note: *** indicates significance at 1%, ** indicates significance at 5%, * indicates significance at 10%

It should be noted that the conditional effects differ from the direct effect coefficient (β = 0.262) as the effects are estimated at specific levels of the moderator, that is Perceived Vision 2030 initiatives. The difference between the direct and conditional effects reflects the average and changes in the effect of ethical leadership on job satisfaction when the Perceived Vision 2030 scores were low, medium, or high. The higher the coefficients across each moderator level, the more evidence there is that the Perceived Vision 2030 initiatives have a moderating effect.

5. DISCUSSION

The findings support H1, which posits a positive relationship between perceived ethical leadership and job satisfaction, as supported by previous studies (Guo, 2022); Torlak et al., (2021). However, it is not only confirmatory; it is also possible to regard that in a range of situations, certain basic aspects of ethical leadership, such as fairness and transparency, can be effective in enhancing employee creativity. Work-life balance in this study is, however, not as prominently projected as in Udin et al., (2023) because the study managed and observed work-life balance as a direct mediator, and this study demonstrates its direct relationship, presumably due to the nature of technological companies, where leaders tend to focus on short-term support rather than long-term well-being procedures. Similarly, Uluturk et al., (2023) focused on organisational support, and the direct influence can be considered strong because of the relatively dynamic and non-formalised organisational structure of privately operated technological enterprises in Saudi Arabia. Such variations suggest that ethical leadership cues are more significant to employees in this industry regarding how they handle uncertainty, underscoring the role of leadership integrity in maintaining employee job satisfaction.

The consistency in the findings is explained by the applicability of ethical leadership behaviours across cultures or economies similar to Saudi Arabia. However, variations become apparent in the Saudi context, where corporate hierarchies and the speed of sector growth can increase employees’ dependence on leadership signals to find a stable work environment. In contrast to the Western environment, where institutional structures are more developed, employees in emerging economies emphasise leadership ethics to a greater extent as an alternative to formalised organisational structures. From the perspective of Social Exchange Theory (SET), the findings reinforce the idea that fair and ethical treatment is reciprocated by employees through positive attitudes (job satisfaction). Ethical leaders signal organisational support, strengthen psychological contracts, and boost employee well-being. In the case of Saudi technological companies, the findings indicate that leadership development programs grounded in ethical behaviour are essential for maintaining high levels of employee satisfaction in extremely competitive, innovation-driven environments.

The findings support H2, which states that perceived Vision 2030 initiatives have a positive moderating role in the relationship between ethical leadership and job satisfaction, although they are context-specific rather than universal. Although the outcomes of this study are consistent with those of Al-Hareri and Nassani (2025), who suggested that the role of leadership behaviours is interpreted in the context of institutional environments, the stronger moderating effect in this study could be attributed to the high visibility and strategic value of Vision 2030 in the Saudi context. Unlike Alotaibi and Campbell (2022), who argues that macro-level efforts do not affect employees’ job satisfaction in the case of weak organisational alignment, the current evidence suggests that workers in Saudi technological organisations perceive greater alignment between policy discourses and work practices. This implies that institutional legitimacy enhances the effectiveness of ethical leadership when employees adopt national reform objectives, underscoring the importance of situating organisational activities within a wider policy context.

This degree of association could be explained by the fact that Vision 2030 has become one of the cohesive national agendas and has strengthened expectations of responsible governance and organisational accountability. Workers who feel that leadership practices are consistent with the Vision 2030 objectives are likely to give ethical leadership behaviour greater credibility and meaning. Vision 2030 can be viewed through the lens of Institutional Theory as a normative and regulative process that creates organisational values and expectations for employees. This congruence enhances the performance of ethical leadership by situating it within a broader socioeconomic context. The results also indicate that Vision 2030 could be a perceptual signal rather than merely an institutional context for employees. Sensemaking, according to (Van Den Heuvel et al., 2020), this is an ongoing process whereby employees make sense of larger environmental shifts and make meanings of organisational moves and actions. Organisational practices and leadership behaviours congruent with Vision the 2030 goals can create a stronger sense of ethical leadership among employees. Similarly, a national reform process is projected through signalling theory to be a vehicle for sending priorities and values to employees, thus decreasing uncertainty about the organisational direction of the ministry. This means that employees may consider ethical leadership behaviour in a larger “transformation and legitimation” process.

Although the interaction between perceived ethical leadership and Vision 2030 initiatives was statistically significant, the variance explained by this interaction was relatively small. The moderating role has been drawn from this and should be considered with caution with respect to its practical significance. Employees’ positive perception of Vision 2030 seems to reinforce the link between ethical leadership and job satisfaction, but it does not significantly impact the magnitude of this relationship. Thus, the study results indicate that the perception of Vision 2030 is not the most important factor contributing to employee satisfaction. However, the outcome of this study has theoretical relevance, as it offers preliminary findings that suggest that understanding national reform processes among employees can impact their perceptions of leadership behaviours. Perceived Vision 2030 activities can be viewed as a low-level boundary condition that only has a significant impact when it interacts with organisational leadership practices.

Another possibility for these findings is related to social desirability bias. However, with Vision 2030 being a prominent part of Saudi Arabia’s national development agenda, employees tend to express positive perceptions of initiatives related to Vision 2030, even if they are not implemented yet. Thus, positive appraisals of Vision 2030, training, and leadership approaches could also reflect, in part, expectations at the societal level rather than workplace experiences. Procedural remedies were used, but future studies may benefit from the use of multi-source or longitudinal data to investigate this association further.

The results did not show a strong connection between perceived ethical leadership and perceived Vision 2030 initiatives, as they were statistically significant, but the effect of that link was relatively small. Therefore, the results should be examined cautiously because the perceptions of Vision 2030 only slightly boosted the relationship between ethical leadership and job satisfaction, instead of changing it drastically. The statistical significance is, at least in part, due to the rather large sample size thus moderation cannot be interpreted as an explanatory mechanism. However, its result is still theoretically significant as it implies that the influence of ethical leadership on job satisfaction is slightly greater as a contextual factor of the national reform initiatives that employees experience, lending incremental support to the adoption of the context of the national reform initiatives for job satisfaction into the study of leadership.