Despotic Leadership and Deviant Work Behavior in Banking: The Buffering Role of Psychological Capital

Abstract

This study examines the impact of despotic leadership on employees’ deviant work behavior (DWB) in the banking sector of southern Khyber Pakhtunkhwa (KPK), Pakistan, and investigates the moderating role of psychological capital (PsyCap) in this relationship. Drawing on Social Exchange Theory and Conservation of Resources Theory, the research employs a quantitative, cross-sectional design with data collected from bank employees. Results reveal that despotic leadership significantly predicts DWB. Additionally, PsyCap moderates this relationship buffering the negative effects of despotic leadership. The findings highlight the dual importance of mitigating authoritarian leadership practices and fostering employees’ psychological resources to reduce workplace deviance. Practical implications include leadership training programs and PsyCap interventions to promote ethical behavior and employee well-being in high-stress banking environments. This study contributes to the literature by contextualizing these dynamics in a developing economy and underscores the need for organizational policies that address both leadership quality and employee resilience.

Keywords: Despotic Leadership, Deviant Work Behavior, Psychological Capital, Banking Sector, Pakistan