Abstract:
The Sri Lankan banking sector, a crucial economic pillar, grapples with knowledge
hiding (KH), where employees intentionally conceal vital work information,
hindering innovation, efficiency, risk management, and overall organizational
success. This research examines the relationship between exploitative leadership
(EL) and KH within this context, drawing on Social Exchange Theory (SET). It also
examines whether the quality of the Leader-Member Exchange (LMX) can mitigate
this negative effect. Despite existing research, the moderating role of LMX in this
specific industry remains underexplored. This study aims to determine whether the
quality of LMX can buffer the tendency of employees to hide knowledge when led
exploitatively in Sri Lankan banks, ultimately providing insights for fostering
knowledge sharing and enhancing organizational effectiveness in this critical sector.
Data for this study were gathered from 253 banking sector employees in Sri Lanka
via questionnaires and analyzed using SPSS. Pearson’s correlation analysis revealed
a moderate positive relationship between EL and KH (r = 0.52, p < 0.01), indicating
that higher perceptions of EL are significantly associated with increased KH.
Additionally, EL showed a moderate negative correlation with LMX (r = -0.41, p <
0.01), suggesting that perceptions of EL coincide with poorer leader-member
relationships. Hierarchical regression analysis confirmed these findings: EL
positively predicted KH (β = 0.52, p < 0.001), while LMX negatively predicted KH
(β = -0.33, p < 0.001), demonstrating that strong leader-member relationships
reduce KH behaviors. Importantly, the interaction effect between LMX and EL was
significant (β = -0.28, p = 0.001), indicating that high-quality LMX moderates and
weakens the positive relationship between EL and KH, especially when employees
perceive a strong leader-member relationship. Conversely, low-quality LMX
strengthens the link between exploitative leadership and knowledge hiding. These
findings underscore the importance of fostering positive leader-member
relationships in mitigating KH behaviors in exploitative environments within Sri
Lankan banks. This study’s cross-sectional design limits causal inference, and self
reported data may involve response bias. Future research should consider
longitudinal methods and explore other moderators like organizational culture or
psychological safety. Broader sectoral or cultural comparisons could improve
generalizability.
