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

1. INTRODUCTION

The rapid digitalization across the entire Middle East has greatly transformed organizational practices, especially in the technology sector. According to (Ahmed et al., 2025; and Alansi et al., 2026), Saudi Arabia has become one of the most active economies in the region in investing in information and communication technologies, artificial intelligence, and digital entrepreneurship to diversify its oil-dependent economy. As per (Al-Roubaie, 2025; and Alayed, 2023), the government policy efforts have boosted the growth of information technology companies and information infrastructure in the Kingdom. (Kazinform International News Agency, 2025) estimates that the digital economy contributes 19% of the GDP of Saudi Arabia by 2030 and that the number of people working within the information and communication technology sector has surged by over 15% in the past five years (Canales, Regardless of this growth, technological organisations have increasingly become confronted with the problem of employee retention, job satisfaction and effectiveness of leadership in highly competitive knowledge intensive setting supported by the findings of (Hauer et al., 2021; and Venkat et al., 2023) as well. (Steil et al., 2022) show that dissatisfaction and turnover remain significant issues in technology sectors worldwide, with close to 40% of technology workers planning to switch jobs due to poor leadership practises and a lack of organizational support. Researchers such as (Pujianto et al., 2025; and Xu & Loang, 2024) thus stress that it is critical to adopt leadership styles that foster equity, transparency, and ethics to sustain employee satisfaction and organizational performance.

One of the key aims of Saudi Arabia’s national development agenda, as outlined in the national vision 2030, is to improve the technological sector and establish a knowledge-based economy, and the power of innovation ecosystems is also suggested by (Alhamad et al., 2024; and Alam et al., 2023). Nevertheless, the high rate of industrial change puts pressure on the organization to ensure that its productivity and employee welfare are upheld. Ethical leadership has been identified as playing a significant role in shaping employees’ perceptions of the workplace. According to (Nejati et al., 2021), ethical leaders are role models who exemplify integrity, fairness, and accountability in decision-making.

In a similar vein, according to (Sun et al., 2023), ethical leadership results in a positive perception of organizational justice and employee trust in the workplace. (Tufan et al., 2023) found that employees with ethical leaders report much higher levels of job satisfaction and organizational commitment. However, the issue of leadership still persists in emergent technology industries, where the pace of organizational development can easily outpace leadership development. According to (Adekanmbi & Ukpere, 2022), a lack of knowledge about leadership mechanisms for reshaping the economy means organizations lack the potential to enhance employee welfare and work satisfaction.

Recent research, such as (Saad, 2021), also shows that employees’ perceptions of expanded institutional reforms may affect how they interpret leadership behaviors. Scholars of institutional and organisational behaviour argue that employees consider leadership practices within the wider socio-economic environment that defines organizational priorities. The national transformation plans, such as Vision 2030, may thus be related to employee attitudes by emphasizing the demands of ethical administration and responsible leadership (Al-Dossary, 2022). Nevertheless, the available literature (Ebrahim & Mohamed, 2024) on the analysis of ethical leadership and job satisfaction is mostly in Western or East Asian contexts and still lacks empirical data in Gulf economies, especially in Saudi Arabia’s fast-growing technological field. To address these gaps, this study examines how perceived ethical leadership relates to employees’ job satisfaction in Saudi technology companies and explores how perceived Vision 2030 initiatives moderate this relationship. This study is novel in contributing to the literature by investigating the relationship between leadership and employee job satisfaction through employees’ perceptions of macro-level policy changes in their organizational setting. The study does not introduce Vision 2030 as an environmental condition, but rather examines the psychological internalization of the national transformation initiatives by employees and how these perceptions influence the effectiveness of ethical leadership. By examining the perceived Vision 2030 initiatives as a moderating factor, the study identifies the translation of macro-policy narratives into micro-level workplace attitudes and provides a contextually oriented outlook of the technological industry in Saudi Arabia. Empirically, it offers contextual evidence in the Saudi Arabian technological sector, where leadership has not been sufficiently researched, and presents its findings to managers and policymakers who are expected to support leadership practices aligned with Vision 2030 and enhance employee satisfaction and organizational sustainability.

Furthermore, this study considers Vision 2030 as a psychological construct, operationalized in comparison with other external macro-level variables in previous studies, such as (Asfahani et al., 2025; and Uluturk et al., 2023), which treated national reform initiatives as exogenous variables for policy alignment in the organizational context of employees. This provides a detailed analysis of how the institutional forces are micro-internalized and transformed into employee attitudes and behavior. The research gives a greater understanding of the impact of national reform discourse on leadership performance by focusing on perceptions of people, but not structural policy. Therefore, it takes Institutional Theory beyond its traditional macro-centrism and demonstrates how the expanded policy frames intermingle with leadership practices to impact employee job satisfaction within the organizational setting, in particular, a fast-evolving technological environment.

2. LITERATURE REVIEW

2.1. Theoretical Framework

The theoretical framework of the study is founded on the Social Exchange Theory (SET) and the Institutional Theory, which are integrated with an aim to examine and analyse the mechanisms between the perceived ethical leadership (PEL) and the employee job satisfaction (JS) in Saudi technological firms. In many companies, in accordance with the SET, leaders treat employees with fairness, transparency, and integrity, and positively about their job behaviors (Ruwanika & Massyn, 2024). As reported by (Jamal et al., 2023), ethical leaders also serve as role models, and this fosters trust, normative expectations, and, therefore, contributes to employee satisfaction. Similarly, (Rahman et al., 2025) state that the ethical behavior of the leaders is internalized by the employees to a certain degree that the employees feel organizational support, which, consequently, raises their engagement and turnover intentions. While (Nazarian et al., 2024) argue that when perceived congruence between leader behavior and organizational values exists, employees’ psychological contracts are strengthened, thereby increasing satisfaction.

In addition, the Institutional Theory provides the same insight from a complementary perspective, capturing broader socio-economic and policy environments that affect the organization’s behavior, as (Katou & Kafetzopoulos, 2025) also suggested. According to (Balzano et al., 2025), national programs such as Vision 2030 generate institutional pressures that inform employees about what ethical leadership entails, thereby increasing its perceived importance. (Pham et al., 2023) also suggest that contextual factors must be incorporated for effective leadership in transforming economies. Collectively, SET is used to explain the reciprocity mechanism, and Institutional Theory is used to explain the contextual framing, which makes the model strong in explaining the relationship between PEL and JS and the moderation of this relationship by the Vision 2030 initiatives.

While the reciprocity mechanism, in which employees reciprocate ethical leadership by holding positive attitudes toward their leadership, such as job satisfaction, is explained by the Social Exchange Theory (SET), the macro-level legitimacy framework that guides the interpretation of such leadership behaviors is offered by the Institutional Theory. Collectively, these theoretical perspectives imply that employees’ reactions to ethical leadership are not simply the result of direct interactions but are also influenced by broader institutional indicators, thereby contributing to the commonality in explaining the moderated relationship.

2.2. Hypotheses Development

Positive employee outcomes, especially job satisfaction (JS), have been consistently associated with ethical leadership (EL), though the mechanisms of action and contextual conditions are subtle in the literature. In this perspective, (Torlak et al., 2021) found that EL has a positive association with JS and affective commitment (AC) and a negative relationship with turnover intention (TI) in a survey of 153 accountants in Istanbul, conducted using structural equation modeling (SEM). They point out the direct and indirect advantages of EL, and, according to the Social Exchange Theory (SET), employees repay leaders’ fairness and ethical behavior by being more satisfied and committed. Nevertheless, this research is confined by its sector-specificity and a limited study sample, which limits generalizability. Moreover, from a similar perspective, (Guo, 2022) found that EL and employee satisfaction in Macau’s service industry were positively associated, and media richness and perceived organizational transparency mediated this association. These findings are supported by SET, which proposes that employees view ethical leaders as transparent and organizational supporters, and react positively, as argued by (Ahmed et al., 2025; and Al-Roubaie, 2025). Though convenience sampling was used in the study, it introduces selection bias and limits external validity.

(Udin et al., 2023) extended the EL-JS association by showing that it depended on work-life balance (not work stress) among 110 workers in Indonesian privately owned hospitals. This highlights how organizational and personal resources are involved in the reciprocity between leaders and employees as part of the mechanism of response to supportive leadership through rewards, as well as the mechanism of SET. (Uluturk et al., 2023) also confirm a positive relationship between EL-JS among Turkish street-level bureaucrats, with the key mediating variables being the motivation to provide to the community and perceived organizational support. The longitudinal data show that job resources are much more important than job demands, a finding consistent with the SET principle, which states that employees are more responsive to positive resources than to constraints. Nevertheless, the emphasis on the public sector restricts the application directly to the technological private companies.

Compared with these studies, it can be observed that EL positively influences JS improvement in a variety of ways, including affective commitment, organizational support, and psychological resources, which can be explained by the reciprocity concept proposed by SET. Methodologically, cross-sectional surveys, sector-specific samples, and small datasets limit generalisability and causal inference. These limitations in Saudi technological companies signify a gap: the EL-JS relationship has not been tested in the realm of innovation in Saudi Arabia’s technological sector. Based on the findings emerging from the above literature and identified literature gaps, the study claims:

H1: There is a statistically significant and positive relationship between perceived ethical leadership and job satisfaction in the context of Saudi Arabian technological firms.

The moderating role of large-scale national transformation initiatives in shaping organisational behaviour has attracted growing scholarly interest, particularly in emerging economies currently experiencing rapid institutional change. Although no direct empirical evidence is available on Vision 2030, other studies related to it offer some understanding of how the institutional context shaped by the policies contributes to leadership-employee relations. According to (Arous et al., 2025), institutional settings shape employees’ perceptions of leadership behaviors, and thus policies aimed at reform can reinforce the perceived legitimacy of ethical leadership. Similarly, (Alotaibi & Campbell, 2022) believe that organizations within robust institutional structures harmonize internal practises to meet external expectations, thus boosting employee trust and satisfaction. In terms of Social Exchange Theory (SET), such alignment is an indicator of organizational support, and employees tend to reciprocate by displaying a positive attitude towards the organization, including job satisfaction, as (Omar & Badawy, 2025) also support. Moreover, according to (Uluturk et al., 2023), the Perceived Vision 2030 initiatives are conceptualized as employees’ cognitive assessments of the correspondence between national reform goals and organizational behaviors, particularly in innovation, governance, and economic change. The construct indicates how employees perceive broader policy indicators in their work environment, as implied by (Asfahani et al., 2025) as well. Using the Institutional Theory, these perceptions inform individuals’ sense-making of leadership behaviors and organizational priorities, thereby affecting attitudinal outcomes, including job satisfaction, through the contextual framing of expectations focused on reforms.

In comparison, research on national reform efforts in the Gulf and Asian regions indicates that policy-based change improves employee engagement when leadership practices align with it. (Asfahani et al., 2025) note that the reforms of the public sector in Oman were positively associated with employee satisfaction, due to a strengthening of the sense of fairness and transparency. Nevertheless, the causal inference is restricted by their use of cross-sectional survey data. Conversely, (Al-Hareri & Nassani, 2025) found that transformational organizational contexts enhance the association between leadership and employee job satisfaction and turnover intentions; however, their study relied on Western samples, and the generalizability of the results remains a major concern. The existence of conflicting research is also visible in studies such as (Arous et al., 2025), which assumes that there is no meaningful relationship between macro-level attempts in cases where employees believe that there is no relationship between the policy rhetoric and the organizational practice, which focuses on the perspective that institutional structures improve the influence of leadership, across the board.

Majority of these studies use self-reporting survey designs and a single industry sample that limits external validity besides increasing shared-method bias. However, the absence of longitudinal designs prevents the scope of knowledge regarding changes of the institutional reforms over time and their impact on the perception of employees. Nevertheless, as it may appear, as stated in the Institutional Theory, (Al-Hareri & Nassan, 2025) believe that the national efforts like Vision 2030 bring about normative and regulative pressures that shape organisational behaviour and employee expectations. On the other hand, when the employees notice the alignment of the goals of ethical leadership with Vision 2030, SET recommends the strengthened reciprocity mechanism that enhances job satisfaction. However, the current studies do not provide empirical evidence of the Vision 2030 as a moderator variable of privately owned technological firms within Saudi Arabia. It can be considered as a major gap, considering the fact that the industry is fast changing. In order to overcome this weakness and realize any gaps in the literature, the current study suggests the following hypothesis and conceptual framework expressed in Fig. (1).

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