Inclusive Leadership-6% AI

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Mohammad Rubel
Inclusive Leadership
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Inclusive leadership and service behaviors of bank employees: Mediating effect of

psychological well-being and workplace happiness
Abstract
The focus of the current study is to examine the influence of inclusive leadership (IL) on
employee service behaviors with the mediating effects of both psychological well-being (PW)
and workplace happiness (WH) in private commercial banking organizations (PCBs) in
Bangladesh. The research analyzes the perceptions of 533 front-line employees (FLEs), using
Partial Least Square- Structural Equation Modeling (PLS-SEM 3.2.7). The study finds
significant positive influence of IL on both PW and WH and on both in-role service behavior
(IRSB) and extra-role service behavior (ERSB) of employees. Both PW and WH show
significant influences on two dimensions of employee service behaviors. Last, PW and WH
significantly mediate the relationship between IL and employee service behaviors. The study
presents a unique insight of IL practices in the banking organizations in developing country
context like Bangladesh. The study includes theoretical and practical implications, limitations as
well as directions for future research as well.
Key words: Inclusive leadership, psychological well-being, workplace happiness, employee

service behaviors, banking organizations in Bangladesh.
1. Introduction
Workforce diversity is considered a strategic imperative in dynamic, complex, and competitive

organizational contexts, as it enables organizations to capitalize on the valuable contributions of
their diversified employees (Jiang et al., 2020). Consequently, there is an increasing focus among
practitioners and scholars on the concept of organizational inclusiveness, which aims to create an
environment where individuals from diverse backgrounds may openly express themselves and
contribute as respected members of the company (Shore et al., 2018). As the leader-follower
connection has a big impact on how an organization runs, leaders’ acceptance of diversified
people and the way they treat their staff are essential to building a truly inclusive workplace
(Randel et al. 2018) and thus, academic attention has shifted to the field of new dimension of
1
leadership which indicates inclusive leadership (IL). Scholars who notably focused on IL, such
as Nembhard & Edmondson (2006), defined IL as the words and actions shown by a leader or
leaders that indicate openness and regard for the contributions of others. According to Carmeli et
al. (2010), IL is a kind of relational leadership. The authors described IL as the behavior of
leaders who demonstrate 'openness,' 'accessibility,' and 'availability' in their interactions with
their followers. To exemplify a strong commitment to be an inclusive leader, one is inclined to
exhibit behaviors that actively encourage and recognize the opinions of others while also
including them in meaningful discussions and decision-making processes.
A few research have investigated the aspects that are influenced by IL. Several workplace
outcomes on employees’ behavioral and psychological level have been proven to be enhanced by
IL. The influence of IL has positive consequences for both 'in-role' and 'extra-role' activities,
including creative and ingenious actions (Radel et al., 2016), the capacity to support other
individuals (Javed et al., 2018), and team-based performance (Qi, Liu, 2017). The
implementation of IL has been shown to influence the psychological well-being of workers,
specifically in terms of psychological safety (Nembhard & Edmondson, 2006), job involvement
(Choi et al., 2015), and overall well-being (Choi et al., 2017). To contribute to this line of
outcomes, the current research assesses the influence of IL on employees' service behaviors
(ESB) based on the conception of the social exchange theory (SET).
In service organizations, ESB includes performing formal service behavior as well as exhibiting
voluntary helping behavior to meet or exceed customer expectations (Raub & Liao, 2012; Rubel
et al., 2020). These behaviors are employees’ usual service performance requirements which are
the primary contributors to service organizational profit and growth (Cheng & Chen, 2017; Yang
et al., 2018). Hence, it is critical to understand the factors that influence ESB in the service
organizations. Because the service context is so unpredictable and intangible (Liao, Toya, Lepak
and Hong, 2009), earlier research exhibit that service leaders could effectively manage
employee’s both job specific and voluntary service behavior (Zhang et al., 2018; Yang et al.,
2018); authentic leadership could influence service employee performances (Hadian Nasab &
Afshari, 2019); servant leadership has impact on hospitality employees’ customer service
behaviors (Ye et al., 2019). This current research intends to explore how IL relates to ESB.
The present study selects private commercial banks (PCBs) in Bangladesh as the research
context. The fundamental reason for selecting banking service organizations is attributed to the
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significant contribution of the banking industry in bolstering the economy of Bangladesh

throughout the last twenty years. Banks, which hold 95% of all the country's assets, are the
foundation of Bangladesh's organized financial sector (Bangladesh Bank, 2012). Even compared
to its neighboring countries, Bangladesh's banking sector is among the fastest growing sectors,
contributing to 26.54% of the country's GDP (Habib, 2019). Moreover, this sector is operating in
an extremely competitive environment referring that this growing industry requires highly
qualified manpower to take on a wide range of customer service-related tasks (Rubel et al.,
2018). Though this sector is experiencing operational expansions in a highly competitive
environment, yet it is facing some challenges related to operational efficiencies and soundness
for which experts have suggested to improve corporate governance and leadership in this service
sector (Habib, 2019).
As recognized that in today's volatile and competitive banking world, astute leaders know that
the attitudes and behavior of bank employees can have a big impact on the bank performance
(Islam et al., 2021). As expected, such employee groups act as a vital link between the company
and its consumers, working hard to meet their needs, resolving issues fairly, and making
suggestions for how the organization may enhance its services (Karatepe et al., 2019). To
develop a pool of employees capable of positively impacting the organization through service
outcomes, banking organization must provide appropriate leadership styles for example, servant
leadership (Karatepe et al., 2019), transformational leadership (Islam et al., 2021), transactional
leadership (Akhigbe et al., 2014), and ethical leadership (Tseng, & Wu, 2017) under which
employees may enhance service performance. Although these few existing studies have
emphasized practicing different leadership styles in banking organizations, bankers’ perceptions
regarding IL style and its influence on ESB remain largely unexplored. To the author's
knowledge, no research has been done in Bangladesh on how IL affects bank workers' service
performances.
This study examines the specific effects of IL on the assigned roles and extra-role service
performances of staff members. By doing so, we want to provide a more thorough understanding
of the influence of IL. The concept of in-role service pertains to an employee fulfilling their job
description by serving and assisting clients. On the other hand, extra-role service performance
refers to an employee's discretionary actions in interacting with customers that extend beyond
their mandated obligations (Bettencourt & Brown, 1997). Considering that both in-role service
3
behavior (IRSB) and extra-role service behavior (ERSB) influence the external factors such as
customer loyalty and economic circumstances (Hong et al., 2013; Netemeyer et al., 2005), it is
imperative and prudent to explore the potential impact of internal factors, such as leadership
practices or the role of leaders, on fostering these behaviors. Based on the rationale mentioned
above, the present research aspires to contribute to the extant body of literature by examining the
association between IL and the in-role and extra-role behaviors of banking service workers
which could eventually justify exchange process in an organization. This investigation focuses
on the mediating roles of psychological well-being (PW) and workplace happiness (WH) as well.
PW was found as a mediator between psychological empowerment and job performance (Ahmed
& Malik, 2019), work-life balance and job performance (Haider et al., 2018), psychological
capital and performance (Polatci, & Akdogan, 2014). WH was found as a mediator between
numerous variables in earlier research such as, training and performance (Bhat & Rainayee,
2019)), talent management and employee outcome (Mensah & Bawole, 2020), transformational
leadership and job engagement (Bui et al., 2017), transformational leadership and affective
commitment (Abdullah et al., 2016), job demands and organizational outcomes (Thompson, &
Bruk-Lee, 2021), IL and employee engagement (Choi et al., 2017). Whereas a gap is found in the
earlier research in which both PW and WH act as mediators between IL and ESB.
Finally, the current research employs Partial Least Squares (PLS) path modeling with IL to
assess its suitability as a hierarchical reflective model because of its theoretical simplicity and
parsimony (Hair et al., 2019), which may be considered a significant addition. The present
research uses PLS path modeling to examine the potential mediating role of PW and WH in the
relationship between the hierarchical concept of IL and staff service behaviors. To the best of our
knowledge, there has been very limited scholarly investigation into using IL as a higher-order
method, including the mediating influence of PW and WH. Consequently, the present study
additionally presents a valuable contribution to this area of investigation.
Hence, in the following methods, this study tries to close the research gap. Firstly, it depicts the
nature of IL and bank ESB relationship in a new country context, Bangladesh. Secondly, this
study examines service behaviors from both the prescribed job responsibilities, i.e., in-role and
out-of-box responsibilities indicating extra-role. Thirdly, this research addresses the role of PW
and WH as mediators in the relationship between IL and employee service behaviors. Fourthly,
the research evaluates bank workers' attitudes toward IL and their influences on those results.
4
Thus, this research aims to address the following two research questions to accomplish its
objectives:
(1) What are bank employees’ perceptions of IL and its impact on their outcomes?
(2) How does IL influence employee outcomes?
Hence, this study differs in at least three keyways from previous works of literature. First, the
study describes the importance of leadership role to influence service employees’ job outcomes
in an exchange relationship even in the context of a developing country like Bangladesh as
suggested by local researchers (Habib, 2019; Islam et al., 2021). Second, both dimensions of
service behaviors such as in-role and extra-role are important for assessing service employee’s
performances since service employees need to meet job specific duties to serve customers as well
as to do something extra for getting happy customers (Zhao et al., 2018), exploring both
dimensions of service behaviors is one of the motives of the current study. Third, this research
creates a hierarchical model of IL to fully understand its effects on ESB directly and indirectly
via PW and WH. Figure 1 depicts the current study's proposed framework showing the
connection between IL and employee IRSB and ERSB with the mediating role of PW and WH in
a hierarchical model.
Psychological
Openness Well-being
In-role Service
Behavior
Inclusive
Availability
Leadership
Extra-role
Service Behavior
Accessibility
Workplace
Happiness
The following is how the rest of the paper is organized: section 2 offers contemporary literature
on service behaviors with two aspects, IL, PW and WH followed by developing the current
5
hypotheses. The sample procedure, data collecting, study instruments, and analysis methodology
are all discussed in Section 3. Section 4 deals with the results and findings of the study. Section
5 contains overall discussion and conclusion, after which Section 6 discusses important policy
implications and limitations, and Section 7 offers suggestions for future research.
2. Underlying Theory: Social Exchange Theory (SET)

The "reciprocity norm" is the fundamental tenet of SET that justifies how people behave in social
transformations (Blau, 1964). This theory states that when someone experiences positive social
behavior, a desire for positive behavior develops in that individual (Walumbwa et al., 2011). In
leader-follower relationship, a strong link between them fosters their effective interactions,
which in turn enhances intrinsic motivation and cultivates energy such that employees actively
engage in their work (Fang et al., 2021). When managers give their staff members a useful and
beneficial resource, they have a duty to give something back (Yasin et al., 2023). According to
academics, IL embodies moral behavior towards workers by treating them fairly and having faith
in the unity of the organization (Liu et al., 2017). Inclusive leaders also demonstrate a high level
of availability and openness to encourage helpful behaviors (Carmeli et al., 2010), which helps
subordinates understand the importance of receiving favorable treatment from their organization
(Tran and Choi, 2019). Inclusive leaders are approachable, transparent, and readily available to
their team. They encourage their team members to participate in the decision-making process of
the company by listening to their ideas, issues, and requirements (Zhou and Mou, 2021). Positive
feedback is given by employees when they perceive their employers as helpful. Employee
performance and organizational citizenship practices both improve with increased employer
assistance. According to SET, workers who have positive working connections with their bosses
are more productive (Walumbwa et al., 2011). Workers in social exchange connections are more
giving and require less instant gratification (Mitchell et al., 2012). Hence, it is expected that in
social exchange ties, IL could enhance service performances of employees.
3. Literature review and hypotheses development

3.1 Literature review
3.1.1 Employee Service Behavior (ESB)
ESB or employee service performance is about how the service provider and customer interact
with each other (Liao & Chuang, 2004; Browning, 2006). ESB refers to how employees move,
6
speak, and act when they serve customers (Tsaur et al., 2004). There are two distinct categories
of service behavior, namely IRSB and ERSB. Organizational papers, such as job descriptions
and performance assessment forms, outline role-specific behavior. These documents may be
based on implicit workplace norms or explicit requirements (Tsaur et al., 2004). According to
Raub & Liao (2012), service behaviors that adhere to standardized job descriptions, service
draughts, and standard service procedures are categorized as in-role behavior or general service
performance. Besides, Tsaur et al. (2004) indicated the term extra-role service describes
behaviors beyond the boundaries outlined in one's job description. Additionally, Raub and Liao
(2012) argued that proactive or ERSB is characterized by a self-starting, long-term focused, and
forward-thinking approach to service delivery. Burney et al. (2009) and Wang and Hui (2010)
provided evidence to support the notion that employee performance is enhanced and more
effective when it encompasses both behaviors shown formally and willingly at the workplace.
Moreover, service businesses have unique needs regarding how they interact with customers and
represent the company to customers (Zhao et al., 2018). Accordingly, service employees are
expected to perform role-prescribed duty as a normal service delivery duty and to go the extra
mile in serving customers superfluous demands to get a good serving reputation (Keh et al.,
2013; Zhao et al., 2018). As a result, the current research focuses on employees' entire service
behaviors, which include both categories of ESB, i.e., IRSB and ERSB.
3.1.2 Inclusive Leadership
Despite the current increase in focus on workplace inclusion, there exists considerable
conceptual diversity among academics in terms of defining and operationalizing this
phenomenon. The significance of "belongingness" was emphasized in the first efforts towards
inclusion. Pertinently, Miller (1998) provided the concept of inclusion, stating that it refers to the
extent to which people are permitted to participate and are empowered to make full
contributions. According to Roberson (2006), inclusion may be explained as eliminating
obstacles that hinder workers from fully participating and contributing inside organizations.
According to Shore et al. (2011), inclusion may be described as the extent to which an employee
perceives themselves as a valued member of their work group based on the fulfillment of their
needs for both belongingness and distinctiveness. Moreover, Tang et al. (2014, p. 4) define
inclusion as "the cognitive and psychological states of employees perceiving themselves as
7
distinct members of the organization." An inclusive climate, IL, and inclusive behaviors are three
contextual antecedents that may contribute to employees' perceptions of a welcoming workplace
(Shore et al., 2011). Inclusive leaders create an inclusive culture in which leaders’ inclusive
behaviors value differences in employees, seek their opinions, be open and supportive to them
(O’Brien, 2019).
However, Nembhard & Edmondson (2006) argued that the demonstration of IL is the use of
language and behavior by a leader or leaders that conveys an open invitation and genuine regard
for the input and contributions of others. They state that such leaders portray an invitation style
approach so that individuals feel safe to have their say. Following that, employees feel
recognized implying that their different opinions are really appreciated and listened to
(Nembhard and Edmondson, 2006). According to Carmeli et al. (2010), inclusive leaders are
characterized by their visibility, accessibility, and availability to their followers. Inclusive leaders
endeavor to reduce inequalities between themselves and the co-workers they supervise and
ensure that all staff members get acknowledgment for their achievements, irrespective of their
hierarchical position within the organization (Hassan & Jiang, 2019). In pursuit of this objective,
inclusive leaders prioritize decision-making approaches that recognize and appreciate the diverse
backgrounds of employees. Leaders that are inclusive make their staff feel at ease and encourage
them to offer their ideas without fear of power imbalances or status inequalities. In this way, IL
is linked to the relational dimension that builds the relationship and support between leaders and
followers (Nembhard & Edmondson, 2006; Choi et al., 2017). Based on the conceptualization of
Van Dierendonck (2011), the present study indicates IL as a leadership style that includes the
demonstration of skills encompassing 'availability', 'openness', and 'accessibility'. This leadership
style is associated with the implementation of inclusion practices within the workplace, to
establish an inclusive environment that fulfills employees' desires for both belongingness and
uniqueness. Consequently, this fosters a sense of connection among individuals and
organizations.
3.1.3 PW and WH
The term "well-being" refers to the absence of stress, anxiety, depression, and other mental
health issues in an individual's life (Ryff, 1995). Since the 17th century, people's well-being has
been studied using a variety of characteristics as a measure of their level of contentment (Ryff &
Keyes, 1995). Subjective (hedonic) and psychological (eudemonic) approaches are two well-
8
being types found in the literature. Subjective well-being dates to the 1950s and describes well-
being in terms of avoiding discomfort and achieving contentment (Telef, 2013). PW is developed
in the 1980s and gets its place as an important area of organizational behavior. Moreover, Deci &
Ryan (2008) defined PW as happiness in individual's personal and professional life, as well as
optimal efficiency. PW is defined as "a state of mind in which a person feels good and performs
admirably" (Huppert, 2009). PW is a broad concept that incorporates all aspects of an
individual's overall contentment and fulfillment in life, including emotional and mental health, as
well as job satisfaction. The construct of PW represents measuring an individual's overall
efficacy in terms of psychological functioning, specifically concerning hedonic experiences and
degrees of pleasure (Cartwright & Pappas, 2008). Employees seek pleasure, which is frequently
associated with PW, with an emphasis on emotion and cognition (Jalali & Heidari 2016).
WH refers to how much employees love their jobs and are satisfied with the facilities offered by
the company (Mousa et al., 2020). According to Fisher (2010), workplace satisfaction stems
from employees' interactions with their bosses. As a result, it helps to shape employee attitudes,
positive emotions, and feelings about the workplace, peers, superiors, and the business (Mousa et
al., 2020). There is concurrent affirmation of workplace pleasure when people are satisfied with
leadership, work climate, job tasks, helpful colleagues, and possibilities for career advancement
(Erdogan et al., 2012; Wu et al., 2017). According to Kun & Gadanecz (2019) employees who
are inspired and enthusiastic about their profession, find their work pleasant and significant, have
constructive and positive connections at work, and feel involved in their work are said to be
happy at work. Simply said, WH is when employees are in a good mood. A happy individual is
in good physical and psychological health (Lyubomirsky et al. 2006), which allows them to be
more creative and do tasks outside their job responsibilities.
3.2 Hypotheses Development

3.2.1 IL and ESB
Xiaotao et al., (2018) demonstrate that IL has positive relationship with subordinate’s task
performance. A leader’s inclusiveness pursues the subordinates to show their citizenship
behavior in a positive manner in the workplace through organizational justice and learning
culture (Tran & Choi, 2019). The researchers have discovered a correlation that was statistically
significant between the enforcement of IL practices and the exhibit of employee organizational
9
citizenship behavior. In two ways, IL can help employees improve their service behavior. First,
according to SET, inclusive leaders' supporting behaviors cause employees to believe they have
been treated favorably, motivating them to act reciprocally toward the leader and the
organization (Wang et al., 2019). Employees are inclined to reciprocate by engaging in both
IRSB and ERSB (Aryee et al., 2002; Konovsky & Pugh, 1994). Second, by seeing inclusive
leaders' conduct and behavior employees may exhibit extra-role behavior. Employees see
inclusive leaders with helping behaviors, such as availability to help others, as a result,
employees are more inclined to display similar supportive helping behaviors to others.
Javed et al. (2017) have identified that IL practices have positive influence on subordinates’
innovative behavior through leader member exchange. In this pertinent, Nguyen et al. (2019)
found that IL can positively influence employee engagement and staff innovative behavior. In
another study, Qi & Liu (2017) agree that IL plays a critical role in encouraging employee voice
behavior as well as team performance. Since IL has positive impact on various employee
outcomes as references state and it improves reciprocal relation between leader and followers,
the current research assumes the following hypotheses:
Hypothesis 1a: IL has positive effect on employee IRSB.
Hypothesis 1b: IL has positive effect on employee ERSB.
3.2.2 IL, PW and WH
Leadership roles have enormous effects on subordinate’s PW as well as on their behavioral

outcomes in the organization. Arnold et al. (2007) have assessed the association between
transformational leadership and PW where they found significant positive relationship. Choi et
al. (2017) revealed significant positive effect of IL on employee PW. Similarly, Arnold (2017)
concludes that a leadership position is demonstrated to have a positive correlation with indicators
of well-being and a negative correlation with indicators of ill-being. On the other hand, Park et
al. (2017) have conducted a study between empowering leadership and PW through
psychological capital. The results of the findings showed that sharing tendency of power among
the group members enhances both PW and psychological capital. In a recent research, Ahmed et
al. (2021) identifies the influence of IL on nurses’ psychological safety and PW. Thus, from the
previous literature support it can be proclaimed that exposure to psychologically safe workplace
10
created by inclusive leaders is likely to influence employee PW. IL creates positive feeling
among employees as a norm of supporting leaders’ inclusive behaviors following the conception
of SET. Therefore, we posit the hypothesis between IL and PW.
Hypothesis 2a: IL has a positive effect on employee PW.
Furthermore, the current study also focuses on observing the influence of IL on employee WH.
Abdullah et al. (2017) reveal that leadership practices are the key sources of making employees
happy in the workplace. The authors find significant positive influence of transformational
leadership on both employee WH and affective commitment. Similarly, Salas-Vallina et al.
(2016) found significant positive influence of transformational leadership on employee WH.
Semedo, Coelho and Ribeiro (2018) agree that only leaders can change the attitudes and
behavior of employees and make them organizational centered. The authors found that authentic
leadership significantly influences employee WH. In a similar study, Salas-Vallina et al. (2020)
assessed the influence of inspirational leadership on employee happiness at work and find
significant positive influence. As such, leaders’ positive behavior is reciprocated by followers’
happy feelings which further justify the exchange process between leaders and followers.
Therefore, it is expected that leader’s openness in the organization, their accessibility and
availability might help to increase subordinates’ happiness in the workplace. In this regard the
current research develops the following hypothesis.
Hypothesis 2b: IL has positive influence on employee WH.
3.2.3 PW, WH and ESB
The significance of employee PW depends on its association with employee attitude and
behavior. Research by Jain & Sullivan (2019) suggests that employees who experience higher
levels of PW tend to exhibit more dedication to their jobs and organization, ultimately leading to
improved performance. According to Wright & Cropanzano (2000), perceived PW positively
influences staff work performance. The authors indicated that those with higher levels of PW
have superior job performance compared to those with lower levels of PW. Similarly, Donald et
al. (2005) examined a sample of 16,000 workers from the United Kingdom, where they found a
substantial percentage of the variances in self-reported worker productivity determined by the
11
construct of PW. Besides, Robertson et al. (2011) found that PW, along with positive job and
work attitudes, had additional predictive value in determining individuals' self-reported
performance levels.
In recent time researchers also confirm the significance of PW on employee behavioral
outcomes. Foster et al. (2020) found that PW of nurses positively influences their caring
behavior of patients. Kundi et al. (2020) find the positive influence of PW on employee
performance through the mediating effect of affective commitment. Accordingly, it is expected
that employees’ positive feelings about the organization would further motivate them to exhibit
supportive behaviors for example, here IRSB and ERSB. Thus, the current research highlights
the following hypotheses.
Hypothesis 3a: PW has positive effect on employee IRSB.
Hypothesis 3b: PW has positive effect on employee ERSB.
Furthermore, the current study also intends to investigate the relationship between employee WH
and ESB. Employee WH plays an important role in enhancing their attachment with the
organization as well as increasing their contribution (Kim, 2019). Similarly, Adnan Bataineh
(2019) found that WH significantly and positively influence on employee job performance in the
context of Jordan. In a meta-analysis based on WH literature, Lyubomirsky et al. (2005) find that
workers who experience a sense of happiness tend to exhibit increased levels of productivity,
generate higher sales figures, demonstrate enhanced performance within the workplace, obtain
more favorable performance evaluations, and reflect reduced rates of absenteeism and turnover.
According to Suojanen (2012), there is evidence suggesting that experiencing pleasure in the
workplace may have many positive outcomes including improved job quality, enhanced
performance, better decision-making and communication, strengthened immune systems, and
increased efficiency and satisfaction in serving clients.
According to Salas-Vallina et al. (2017), there is a positive correlation between WH and many
outcomes, such as the motivation to acquire new information, the quality of interpersonal
connections among workers, and the display of pro-social behaviors. Besides, de Waal (2018)
found that happy workers tend to be involved more with the organization and try to contribute
more; whereas Mousa et al. (2020) further revealed that happy employees try to contribute
beyond their role prescribed duties. The author found a significant positive relationship between
12
WH and organizational citizenship behavior (OCB). Therefore, the current study considers the
following hypotheses between WH and ESB.
Hypothesis 3a: WH has a positive influence on employee IRSB.
Hypothesis 3b: WH has a positive influence on employee ERSB.
3.2.4 PW and WH as Mediators
The last focus of the current research is to examine the mediating effect of both PW and WH
between IL and ESB. In earlier research, Jena, Pradhan, S., & Panigrahy, N. P. (2018) found
significant positive mediating effect of PW between employee engagement and organizational
trust. In another research, Devonish (2013) assesses the influence of PW as a mediator between
workplace bullying and employee performance in the context of Caribbean countries. The study
confirms significant mediating effect of PW.
In the same way, earlier research also finds the mediating effect of WH between authentic
leadership and employee affective commitment (Semedo, Coelho & Ribeiro, 2019). Abdullah et
al. (2019) find significant mediating effect of WH between transformational leadership and
employee organizational commitment. Furthermore, Pradhan RK, Hati L, Kumar (2017) also
signify the importance of happiness at work. The authors find significant mediating effect of
happiness between well-being and psychological empowerment of service employees in the
context of India.
Considering prior findings, it can be assumed that IL could ensure employee PW and WH and
employees with psychologically safe and happy feelings are more likely to demonstrate both
role-prescribed and extra-role behaviors. Thus, current research can develop the following
hypotheses.
Hypothesis 4a: PW mediates the relationship between IL and IRSB.

Hypothesis 4b: PW mediates the relationship between IL and ERSB.
Hypothesis 5a: WH mediates the relationship between IL and IRSB.
Hypothesis 5b: WH mediates the relationship between IL and ERSB.
4. Methodology
4.1 Survey Focus and Design
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The present study was a cross-sectional in nature where data were collected from the front-line
employees (FLE) working in the private commercial banks (PCB) in Bangladesh. To assess the
hypotheses the current research surveyed 533 FLEs from 22 PCBs. FLEs were selected for the
following two reasons: First, the growth of private banking, along with personalized services, has
created a significant amount of competition in this area, hence their service behaviors could
create significant differences for their respective banking organization (Rubel et al., 2018).
Second, FLEs' face to face encounter, verbal as well as nonverbal interactions with the clients
might affect banks’ reputation.
The current research employed judgmental sampling, a part of non-probability sampling design
as there was no comprehensive list of the personnel in the organizations. Researchers use
judgmental sampling technique when they purposively chose samples based on some set criteria
as well (Rubel et al., 2017). In this research the current sample was taken based on the following
conditions suggested by Rubel et al. (2018): (1) respondents are FLEs working in the banking
organizations for at least two years and (2) the respondents are the full-time bank employees.
Full time employees are more committed and trustworthy to their organization (Rubel et al.,
2021). Conway and Briner (2002) suggest that the psychological contract and one's employment
position may determine differential attitudes between full-time and part-time workers. Therefore,
to obtain a more accurate and fair evaluation, only full-time employees with a minimum two-
year employment duration were considered.
For the research purpose, an official letter was sent to all 57 PCBs through the assistance
of HR department to collect data smoothly. The letter included a questionnaire, a cover letter, a
description of the research objective, and the respondents' selection criteria. In this process only
22 organizations agreed to participate. We distributed and collected questionnaires using the
drop-off/pick-up (DOPU) method. DOPU minimizes the interviewer's partiality by allowing
respondents to fill out their own responses on their own time (Maclennan, Langley and Kypri,
2011). We sent 40 sets of questionnaires to each participating bank after consultation with the
HR department. In total 880 questionnaires were delivered to all 22 PCBs. Approximately two
months were needed to collect the data, from October to November 2021. Of the 880
questionnaires 568 were returned, and 533 were found usable for data analysis and interpreting.
We were able to achieve a 60.56% useable response rate, higher than the most recent study by
14
Rubel et al. (2020) (33.3%). Table 1 provides a summary of the demographic data of 533
participants of this research.
[Table 2 here]
4.2 Survey Measures
For determining our predictor, outcome, and mediator variables, we used 24 items from various
widely used scales. We employed nine items to measure three dimensional IL such as, openness,
accessibility and availability. These nine items were adapted from the work of Carmeli, Reiter-
Palmon, & Ziv, (2010). Both in-role and ERSB were measured by six items adapted from the
work Rubel et al. (2018). Employee PW was measured by three items adapted from the study of
Kim, Lee, Chun, Han and Heo (2017). WH was assessed by 6 items scale developed by (RRR).
The scale validity for all adapted items ranges from 0.745 to 0.92; therefore, the items were
considered satisfactory, based on the threshold limit suggested by Hair et al. (2019).
4.3 Data Analysis Technique
Both SPSS version 22 and Structural Equation Modeling-Partial Least Squares (SEM-PLS 3.2.7)
were employed in this investigation. While descriptive statistics were tested using SPSS, data
analysis and hypotheses testing were carried out using SEM-PLS. SEM-PLS was used as it
simultaneously tests the hypothesized model's linkages and adjusts for the measurement errors in
the scales that measure the theoretical components in the model (Hair et al., 2019).
4.4 Common Method Variance (CMV)

Podsakoff et al. (2003)'s strategies were used to combat CMV. Separate questionnaires were
utilized for each of the constructs' measures, with different sets of instructions for each. A 5-
point scale was used to measure the independent and mediator variables while a 7-point scale
was used to measure the dependent variable. Finally, Harman's single-factor test was used for
statistical control to determine the degree of CMV. There are concerns with the use of CMV if a
single latent factor accounts for the most explained variance, according to Podsakoff and
colleagues (2003). Finding that exhibit only 33.36 percent of variation could be accounted for by
the first component proved that the dataset did not contain a substantial amount of CMV.
15
5. Results
The present research model was examined following two-step approach suggested by Anderson
and Gerbing (1988). First, to examine the reliability and validity of the instruments,
measurement model was assessed. Then, in the second step a structural model was used to
evaluate and validate the hypotheses developed.
5.1 Second-order reflective model of IL

In the current research the repeating indicator approach, proposed by Wetzels et al. (2009) was
used to examine the second-order reflective construct of IL. A second-order factor is evaluated
by the indicators of all the first-order elements. Hulland (1999) claims that a second-order
construct is reflective when all the measurement items in each construct and all constructs in
first-order structure are associated. Considering this framework, the findings reveal a positive
correlation and statistical significance (p < 0.01) for all items under three dimensions of IL.
Three dimensions of IL are also significant statistically (p < 0.01). Both average variances
extracted (AVE) and composite reliability (CR) of IL are found significant according to the rule
of thumb proposed by Hair et al. (2019).
Table 2: Hierarchical Inclusive Leadership
Inclusive leadership (AVE= 0.710, CR= 0.880)
Openness Availability Accessibility
R2 = 0.711 R2 = 0.734 R2 = 0.685
β = 0. 843 β = 0.857 β = 0.828
P < 0.01 P < 0.01 P < 0.01
5.2 Measurement Model

In this phase we utilized confirmatory factor analysis (CFA) to look at the reliability, convergent
validity, and discriminant validity of the data. Based on Hair et al (2019) guidelines, factor
loading of the indicators, CR, and AVE were examined to confirm reliability and validity. Hair
and colleagues suggested that factor loading should exceed 0.70, CR should be greater than or
equal to 0.700, and AVE should be greater than 0.50. The current study findings surpass all the
suggested criteria of the measurement model.
Measurement Model
16
Constructs Measurement Items Loading AVE CR

Accessibility
ACCE 1 0.893 0.813 0.885
ACCE 2 0.901
ACCE 3 0.911
Availability AVAI 1 0.879 0.872 0.861
AVAI 2 0.907
AVAI 3 0.867
Extra-role service Behavior ERSB 1 0.914 0.872 0.927
ERSB 2 0.949
ERSB 3 0.939
In-role service Behavior IRSB 1 0.93 0.875 0.929
IRSB 2 0.945
IRSB 3 0.932
Openness OPEN 1 0.866 0.763 0.845
OPEN 2 0.894
OPEN 3 0.861
Psychological Well-being PWB 1 0.919 0.844 0.908
PWB 2 0.936
PWB 3 0.902
Workplace Happiness WPH 1 0.836 0.699 0.914
WPH 2 0.866
WPH 3 0.844
WPH 4 0.841
WPH 5 0.822
WPH 6 0.805
[Table 3 here]
In addition, the Fornell-Larcker criterion and the Heterotrait-Monotrait (HTMT) ratio, introduced
by Henseler et al. (2015) and Hair et al. (2019), were used to assess discriminant validity.
Henseler and colleagues proposed two different cutoff values to explain the HTMT ratio (the
tougher criterion is ≤ 0.85, while the mode tolerant threshold is ≤ 0.90). The current study uses a
cutoff value of 0.85 and finds that all values are much lower than the benchmark. Furthermore,
for Fornell-Larker approach, the square root of AVEs (i.e. values of all the diagonal numbers)
are found substantially larger than the correlations of the constructs in comparable off-diagonal
values (Chin, 2019). Thus, the measurement model exhibits good convergent and discriminant
validity.
Table 5: Discriminant Validity-Fornell-Larker
17
Accessibility Availability ERSB IRSB Openness PWB WPH

Accessibility 0.902
Availability 0.582 0.884
ERSB 0.402 0.459 0.934
IRSB 0.449 0.516 0.814 0.935
Openness 0.523 0.591 0.53 0.567 0.874
PWB 0.285 0.31 0.464 0.459 0.533 0.919
WPH 0.473 0.432 0.568 0.595 0.618 0.485 0.836
Mean
S.D
Table 4: Discriminant Validity-Heterotrait-Monotrait (HTMT0.85)

Accessibility Availability ERSB IRSB Openness PWB WPH
Accessibility
Availability 0.666
ERSB 0.443 0.513
IRSB 0.494 0.576 0.878
Openness 0.604 0.691 0.599 0.638
PWB 0.317 0.348 0.504 0.497 0.607
WPH 0.526 0.486 0.617 0.644 0.704 0.532
[Table 4 and 5 here]

5.3 Structural Model
According to Hair et al. (2019), several metrics are employed to analyze the goodness-of-fit of
the structural equation model, including path coefficient b, coefficient of determination (R2),
effect size (f2), and cross verified redundancy (Q2). Cohen (1988) proposed the following values
for R2: 0.02-0.12, week; 0.13-0.15, moderator; 0.26 and above is significant. In the current
research, inclusive leadership, the independent variable, and both PW and WH, mediating
variables, jointly influence both in-role and ERSB, the dependent variables. Output of the result
exhibited IRSB and ERSB explain 35.3% and 29.6% of the variance by both independent and
mediating variables. According to Cohen’s (1988) guideline the variance for both IRSB and
ERSB are considered substantial.
As exhibited in Table 4 and figure 2, all eight direct hypotheses of the current research obtained
significant for instance, IL to in-role (β = 0.354, p < 0.01), IL to ERSB (β = 0.282, p < 0.01), PW
to IRSB (β = 0.151, p < 0.01), PW to ERSB (β = 0.189, p < 0.01), WH to IRSB (β = 0.307, p <
0.01) and ERSB (β = 0.305, p < 0.01). Furthermore, the direct hypotheses from IL to PW (β =
18
0.450, p < 0.01) and IL to WH (β = 0.606, p < 0.01) also showed positive significant
relationship.
Table: Output of Structural Model
Std. Std. P f2 Q2 Decision

Hypotheses Beta Error T Value Values
IL > ERSB 0.282 0.044 6.37** 0 0.082 0.082 S
IL > IRSB 0.354 0.048 7.44** 0 0.141 0.141 S
IL > PW 0.450 0.039 11.51** 0 0.254 0.254 S
IL > WH 0.606 0.039 15.65** 0 0.580 0.580 S
PW > ERSB 0.189 0.051 3.69** 0 0.045 0.045 S
PW > IRSB 0.151 0.051 2.95** 0.003 0.031 0.031 S
WH > ERSB 0.305 0.06 5.08** 0 0.092 0.092 S
WH > IRSB 0.307 0.05 6.19** 0 0.102 0.102 S
**p < 0.01, *p < 0.05, (analyzed the direct relationship based on one-tailed); S= Supported
Note:
[Table 6 here]
Furthermore, the current study examines the mediating role of both PW and WH in the
relationship between IL and both ERSB and ERSB following Preacher and Hayes (2008).
Findings of the analysis showed positive significant mediating effect of PW between IL and
IRSB (β = 0.0.68, p < 0.01), IL and ERSB (β = 0.085, p < 0.01). The same significant results are
found for WH as mediator between IL and IRSB (β = 0.186, p < 0.01) and IL and ERSB (β =
0.185, p < 0.01). Therefore, the results supported all direct and indirect hypotheses as assumed.
Finally, a blindfolding approach with a distance of 7 was used to test the model's predictive
relevance (Q2). In this study, Q2 was 0.141 for IRSB, 0.082 for ERSB 0.254 for PW and 0.580
for WH all of which were higher than 0, indicating that Q2 was satisfactory.
Table: Output of Mediation Analysis
Std. Std. P 95% 95% Decision

Hypotheses Beta Error T Value Values LL UL
IL > PWB > ERSB 0.085 0.024 3.55** 0 0.04 0.137 S
IL > WPH > ERSB 0.185 0.039 4.71** 0 0.111 0.262 S
IL > PWB > IRSB 0.068 0.023 2.91** 0.004 0.025 0.113 S
IL > WPH > IRSB 0.186 0.033 5.56** 0 0.126 0.258 S
19
[Table 7 here]
6. Discussion
Because a service organization's achievement typically depends on its workforce who exhibit
required service performances as well as extra-role performances that enable it to deal with
growing customer demands and stay competitive, research on how leaders can nurture employee
overall service performances is critical. We hope to contribute to the service literature by better
understanding the nature of IL, a type of relational leadership that focuses on service employee
outcomes. Our research proposes and tests a mediation model to investigate the connection
among IL, PW, WH, and ESB, extending previous study on leadership roles in supporting
employee service performances. We explore the association among the study variables
employing a sample of 533 bank employees. The findings of the model analysis show that IL is
associated to ESB directly and indirectly through PW and WH, implying that PW and WH may
play the mediating roles in the relationship between IL and ESB. As a result, this study on
banking service organizations of an emerging economy, Bangladesh, provides several advances
to leadership and employee service performance theory and research.
7. Implications
7.1 Theoretical Implications
Our study investigated how we may improve our understanding of leadership and ESB
relationship (Zhang, Li, Gong and Xu, 2018; Yang et al., 2018). By identifying IL as a type of
relational leadership, this study contributes to our understanding of the nature of leadership
processes that contribute to employee IRSB and ERSB. Further, we deepen our knowledge of
how leadership support fosters service performances through the development of PW and WH.
Specifically, according to our findings, inclusion is critical in providing leadership support for
encouraging service employees task required as well as extra helpful services as it promotes
high-quality interactions, which improve PW and make a happier workplace. PW and happy
workplace offer an encouraging environment for people to feel valued, accepted and share their
thoughts, express their opinions, and ask questions. All these practices have been linked to an
20
increase in overall service activities (Edmondson, 2004). In service organization where

customers have unpredictable and ever-changing service demands, the function of leadership in
facilitating service performances is very crucial (Mumford et al., 2002). Though banking
organizations are providing almost similar services, service employee’s behavior can create
differences. In such conditions, a bank's competitive advantage is heavily reliant on service-
minded employees who can generate required as well as extra service motives that are critical for
the competitiveness of the organization. Because service customer’s measure service motives of
the service employees, inclusive leaders can foster a high level of inclusion by being open,
accessible, and available to express and discuss with employees to build a psychologically safe
and pleasant workplace that encourages customer care and respect. As such, this study uses SET
to clarify how inclusive leaders’ characteristics influence service employees’ positive behaviors.
Employee desire to engage in service behaviors becomes increasingly important. This study adds
to the body of knowledge by highlighting the assumptions of SET showing the importance of IL
in fostering employee PW and WH and thus, improving their both in-role and extra-role
responsibilities.
7.2 Practical Implications
IL in service organizations is a topic that has been gaining increasing attention in recent years.
Openness, accessibility, and availability are the three pillars of IL, which we proposed and
investigated. Leader support is a well-known concept in relational leadership, but in this study,
the authors narrow their focus to one specific component of leader support and relational
leadership: IL. Furthermore, it has been proposed that this type of leadership and its features
could promote employees’ both IRSB and ERSB. Moreover, the findings of this study add to the
growing body of evidence that shows organizational leaders and managers how important it is
for them to be inclusive in the creation of employee PW and WH. In doing so, practical
managers could prioritize the importance of PW and WH in fostering ESB. Specifically,
according to our findings, leaders who are open, accessible, and willing to accept all employees
create a social environment in which people feel psychologically comfortable and happy to
express themselves, speak up, and come up with service-mindsets. These findings could make
organizational leaders feel the necessity of creating a social work environment that encourages
employee role-specific and extra voluntary service activities as well. Furthermore, by examining
21
the role of PW and WH in facilitating ESB, HR leaders and policymakers might be interested to
identify other related psychological factors that promote employee personal engagement in
specific work tasks as well as helping behaviors.
8. Limitations and Conclusion
The findings of this study should be interpreted considering several factors. Because we
collected data at a single point in time, it was difficult to deduce cause–effect relationships in our
study. Despite our theoretical justification, future research should use a longitudinal design to
better understand our model's causality. Second, although we primarily focused on IL and PW
and WH, we understand that other unobserved variables may play a critical role. As a result, our
findings may be limited by unobserved variables. Future studies may combine hypotheses and
explanations of ESB at work that are based on different organizational factors such as diversity
and inclusion management strategy and open work culture. IL is important for creating settings
that promote ESB, such as PW and WH, although cognitive abilities and work features can also
encourage ESB. Positive feelings toward the leader or service-oriented self-efficacy may also be
influenced by the leader's inclusivity. To better understand how IL fosters ESB, it's critical to
find new approaches that take an integrated approach. Third, all the variables in this study were
based on employee self-reports, which allowed the researchers to rule out any common technique
bias. Nonetheless, we used Podsakoff, et al. (2003) suggestion to separate the measurement of
predictor and criterion variables to address issues with self-report data. Although this set of
analyses suggests that common method variance is unlikely to be a significant issue in our
investigation, we recognize that the magnitude cannot be fully determined without a longitudinal
study and the use of multiple data sources. Finally, as a metric of service behaviors, we looked at
employee perceptions of in-role and extra-role behaviors. According to Zhou, Shin, and Cannella
(2008), "studying employees' self-perceived assessment" has "strong theoretical merit."
However, we recognize the need to assess ESB through a variety of sources, including direct
management, peers, and consumers.
This research contributes significantly to our understanding of an understudied type of
leadership, IL, and its potential to foster service behaviors. This study not only adds to the body
of evidence supporting inclusive leadership's role in improving ESB, but it also advances our
22
understanding in two areas. In the first place, this study examines IL, a type of relational
leadership. Then, this research determines how IL might boost service behaviors of employees
signifying the conception of SET. We may conclude from the outcomes of this study that an IL
style that is defined by openness and accessibility and availability leads to an improvement in
PW and WH and thus an increase in ESB.
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Inclusive leadership and service behaviors of bank employees: Mediating effect of

Key words: Inclusive leadership, psychological well-being, workplace happiness, employee

Workforce diversity is considered a strategic imperative in dynamic, complex, and competitive

significant contribution of the banking industry in bolstering the economy of Bangladesh

2. Underlying Theory: Social Exchange Theory (SET)

3. Literature review and hypotheses development

3.1.2 Inclusive Leadership

3.2 Hypotheses Development

3.2.2 IL, PW and WH

Leadership roles have enormous effects on subordinate’s PW as well as on their behavioral

3.2.3 PW, WH and ESB

3.2.4 PW and WH as Mediators

Hypothesis 4a: PW mediates the relationship between IL and IRSB.

4.2 Survey Measures

4.3 Data Analysis Technique

4.4 Common Method Variance (CMV)

5.1 Second-order reflective model of IL

5.2 Measurement Model

Constructs Measurement Items Loading AVE CR

Accessibility Availability ERSB IRSB Openness PWB WPH

Table 4: Discriminant Validity-Heterotrait-Monotrait (HTMT0.85)

[Table 4 and 5 here]

Std. Std. P f2 Q2 Decision

Std. Std. P 95% 95% Decision

7.1 Theoretical Implications

increase in overall service activities (Edmondson, 2004). In service organization where

7.2 Practical Implications

8. Limitations and Conclusion

O'Brien S. The Effects of Inclusive Leadership on Employee Engagement in a Financial Services

Thompson A, Bruk-Lee V. Employee happiness: Why we should care. Applied Research in

Zhang N, Li M, Gong Z, Xu D. Effects of ethical leadership on nurses’ service behaviors.

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