The impact of perceived organizational politics and political risk on project success through ethical leadership and the psychological contract

Abstract

PurposePolitical risk devastates social and economic developmental projects. Countries with political stability attract foreign direct investment (FDI) and engage domestic investment corporations. This study aims to investigate the impact of perceived organizational politics and political risk on project success, considering the moderating and mediating roles of ethical leadership and the psychological contract.Design/methodology/approachA multimethod approach was adopted in this work that includes an exploratory content analysis to confirm the latent factors of the variables under study. A measurement scale was developed and tested for perceived organizational politics, political risk, the psychological contract and ethical leadership in the projectized environment. Lastly, cross-sectional data were collected from the senior-level professionals of the projectized organizations and analyzed using SPSS and SMARTPLS techniques.FindingsThe findings indicate that ethical leadership and the psychological contract mitigate political risk. The study recommends that developing countries emphasize well-defined policies and standard operating procedures to streamline the project design and execution processes.Research limitations/implicationsThe study claims that ethical leaders can play a vital role in mitigating perceived organizational politics and political risk and maximizing project value through the psychological contract.Originality/valueAlthough previous research predicts that ethical leadership has very little effect on project success, this study provides critical theoretical and practical contributions to research on project success regarding leadership expertise and the psychological contract.