THE IMPACT OF ISLAMIC WORK ETHICS ON EMPLOYEE PERFORMANCE: MEDIATING ROLE OF WORK ENGAGEMENT AND MODERATING ROLE OF ETHICAL CLIMATE

Abstract

Background: The influence of Islamic Work Ethics (IWE) on employee outcome is explored, with study planning support (in the form of work engagement) acting as a bridge and ethical climate holding a moderating position.

Theoretical Framework: Based on Social Exchange Theory and the Job Demands–Resources (JD-R) Model, this study introduces a framework that shows how both ethical beliefs and organizational setting influence the way employees behave in both service-sector and public organizations.

Methodology: Using a survey of 161 public sector workers in Pakistan, the data were evaluated by Confirmatory Factor Analysis (CFA) and Hayes’ PROCESS Macro (Model 7).

Results: Findings revealed that Islamic Work Ethics (IWE) had a significant direct effect on employee performance (β = 0.35, p < .001), and a strong positive impact on work engagement (β = 0.44, p < .001). Work engagement also significantly predicted job performance (β = 0.38, p < .001), fully mediating the IWE-performance link (indirect effect = 0.17, 95% CI [0.08, 0.26], p < .01). Ethical climate moderated the relationship between IWE and engagement (interaction effect: β = 0.16, p < .01), where the conditional indirect effect of IWE on performance was stronger at high levels of ethical climate (β = 0.26, p < .001) compared to low levels (β = 0.17, p < .01). These results validate the proposed moderated mediation model using Hayes’ PROCESS Macro (Model 7), with robust model fit indices (e.g., CFI = 0.93, RMSEA = 0.045).

Conclusion: The results show that Islamic work ethics improve employees’ performance by strengthening their work engagement. Companies with a powerful ethical culture often experience this relationship more strongly. Rewarding worker engagement and improvement is best done by including ethics and spirituality in HR strategies for public and community-founded organizations.