Dynamic organisational capabilities: The role of authentic leadership and trust

Abstract

country, might be more susceptible to these negative external pressures. As an example, the South African manufacturing industry, more specifically the steel-making sector, has been plagued by challenging economic, market and operational challenges. During the second quarter of 2020, the manufacturing industry decreased by 74.9 % and its contribution to the South African gross domestic product (GDP) was −10.8 % (Statistics South Africa, 2020). In order to stay afloat, the sector had to embark on numerous restructuring and staff reduction initiatives over the past few years. This resulted in leaders finding it increasingly difficult to maintain employee trust and secure organisational competitiveness. Orientation: The world of work has become unstable and precarious, thereby accentuating the need to maintain dynamic capabilities such as sensing, seizing and reconfiguring to adapt and thrive. Associated challenges potentially threaten the well-functioning of organisations and their employees. This problem might be alleviated by encouraging the leaders to be more authentic, resulting in various positive outcomes. Research purpose: The aim of the study was to assess the associations authentic leadership (AL) have with trust in organisation (TO), trust in colleagues (TC) and dynamic organisational capabilities (DC) such as sensing, seizing and reconfiguring as these manifest within a context of extreme volatility. Motivation for the study: Having a high level of DC might contribute to the feasibility of successful organisations in the struggling manufacturing industry, as it could enhance their sustainability and competitiveness. Research approach/design and method: A quantitative cross-sectional survey design was used. The Authentic Leadership Inventory, Workplace Trust Survey and Dynamic Capabilities questionnaire were administered. Main findings: AL positively associates with TO, TC and DC. The direct effect of AL on DC was further enhanced through both TO and TC as underlying mechanisms. Practical/managerial implications: Manufacturing industry organisations should promote an AL style as it will contribute to higher levels of TO, TC and eventually improved DC. Contribution/value-add: Our study highlights the association of AL with DC as an important outcome. Insight into the underlying mechanisms by which AL achieves effect is advanced through trust, simultaneously targeting interpersonal as well as organisational levels as foci.