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Leadership matters in Leadership in

crisis-induced
crisis-induced digital digital
transformation
transformation: how to lead service
employees effectively during the 71
COVID-19 pandemic Received 9 May 2020
Revised 12 June 2020
24 June 2020
Silke Bartsch Accepted 25 June 2020
Institute of Marketing, Ludwig-Maximilians-Universit€at Mu
€nchen,
Munich, Germany
€ttgen
Ellen Weber and Marion Bu
Institute of Marketing and Management, University of Hohenheim,
Stuttgart, Germany, and
Ariana Huber
Institute of Marketing, Ludwig-Maximilians-Universit€at Mu
€nchen,
Munich, Germany

Abstract
Purpose – The COVID-19 pandemic has, besides the health concerns, caused an unprecedented social and
economic crisis that has particularly hit service industries hard. Due to extensive safety measures, many
service employees have to work remotely to keep service businesses running. With limited literature on
leadership and virtual work in the service context, this paper aims to report on leadership effectiveness
regarding employees’ work performance in virtual settings brought on by the COVID-19 pandemic.
Design/methodology/approach – Drawing on the input–process–outcome (IPO) framework, this research
investigates the effectiveness of leadership on service employees’ work performance mediated by work-related
tension, autonomy, and group cohesiveness. Furthermore, this study explores moderating effects of the service
provider’s digital maturity. To test the derived model, the authors collected survey data from 206 service
employees who, due to the COVID-19 pandemic, unexpectedly had to transform to a virtual work environment.
The authors analyzed the data using partial least squares structural equation modeling (PLS-SEM).
Findings – The results indicated that it took task- and relation-oriented leadership behavior to maintain
service employees’ work performance in a virtual environment during crisis situations. Further, results
indicated mediating effects of service employees’ individual job autonomy and team cohesiveness;
surprisingly, work-related tension did not impact employees’ work performance. Results offered service
businesses guidance on how to effectively lead in times of crisis when service employees predominantly work
in virtual environments.
Originality/value – This is the first empirical study to show how leadership affects service employees’ work
performance in a virtual work environment during crisis times. Thus, the study contributes to the scarce
literature on the impact of leadership in service firms that have to operate in such a setting.
Keywords Crisis, COVID-19, Leadership, Service employee, Remote work, Team cohesiveness, Autonomy,
Job tension, Work performance, Virtual teams, Virtual work environment, Digital transformation
Paper type Research paper

Introduction
The COVID-19 pandemic has caused an unprecedented global crisis that especially hit many
service industries hard (Suneson, 2020). Notably, this unforeseen global pandemic has
disrupted markets and service ecosystems, impacting the service sector (McKinsey, 2020) and Journal of Service Management
Vol. 32 No. 1, 2021
pp. 71-85
This paper forms part of a special section “The Coronavirus Crisis and Beyond: Implications for Service © Emerald Publishing Limited
1757-5818
Research and Practice” guest edited by Prof. Volker G. Kuppelwieser and Dr. J€org Finsterwalder. DOI 10.1108/JOSM-05-2020-0160
JOSM the way service businesses operate (Finsterwalder and Kuppelwieser, 2020, in press; Kabadayi
32,1 et al., 2020, in press) in different ways. On the one hand, firms providing essential services, such
as health care, logistics, and food retailing, remained operative but have had to incorporate
appropriate security measures to protect employees and customers. On the other hand, and
different to former economic and other crises, many service providers, such as hairdressers,
airlines, and hotels, could no longer provide their services at all due to lockdown measures,
while others, such as financial services, consulting, media, and education, unexpectedly had to
72 adapt and start operating in new ways (Tuzovic and Kabadayi, 2020, in press). These service
providers as well as some essential service providers’ back-office operations had to
transform quickly to create a virtual work environment and keep their businesses running
(Carnevale and Hatak, 2020). A virtual work environment is characterized by work
arrangements where employees are dispersed in various ways (e.g. geographically) and
interact within and outside their company through technology (Huang et al., 2010). While
highly transformational contexts, such as digital transformation, already pose challenges to
leaders (Bolden and O’Regan, 2016; Vial, 2019), the pandemic-induced and forced
transformation caught service providers totally unprepared, thereby aggravating the
challenges to lead a service business and its employees (Carnevale and Hatak, 2020). As
leadership and the degree of a service provider’s digitalization are decisive in such
situations, this study develops and empirically tests a conceptual model to investigate the
leaders’ impact in service firms, while also exploring the moderating effect of digital
maturity. Hence, we hypothesize that leaders need to enable and manage service employees
in a crisis-induced virtual work environment to maintain high work performance among
them. Specifically, we aim to contribute to service literature by examining three critical
issues.
First, considering that literature on leadership in virtual work environments and in service
contexts during crises is scarce, we investigate the effectiveness of seemingly opposing
leadership behaviors, i.e. task- and relation-oriented leadership behavior, regarding service
employees’ work performance in a virtual environment to which they are unaccustomed
during the crisis caused by COVID-19.
Second, based on the input–process–outcome (IPO) framework (Dulebohn and Hoch,
2017), we build a conceptual model and examine the mediating effect of affective and
behavioral process variables, i.e. of individual work and teamwork tension and individual job
autonomy and team cohesiveness, respectively. This is specifically interesting as the sudden
switch to a virtual work environment due to the COVID-19 pandemic, often accompanied by
additional family duties, poses challenges to employees (Tuzovic and Kabadayi, 2020, in
press) on individual and team levels.
Third, considering the scant literature on digital transformation and leadership (Uhl-Bien
and Arena, 2018), we explore the moderating effect of service firms’ digital maturity on the
impact of enabling and managing leadership behavior on service employees’ work
performance. As the COVID-19 pandemic is often referred to as a major digital
transformation driver (Iansiti and Richards, 2020), we expect leadership effectiveness to
have differential effects based on the service provider’s digital maturity.

The literature and conceptual background

Our literature review emphasizes that, in the limited body of leadership research in the service
context, most studies have been conducted in nonvirtual work environments and noncrisis
situations (e.g. Wieseke et al., 2011; Benlian, 2014; Herhausen et al., 2017). Consistent with
Liao’s (2017) statement that the processes and behaviors associated with leading virtual
teams to date have been insufficiently investigated, we find barely any work on virtual team
leadership in the service context. Only a few researchers have addressed this topic, studying,
for instance, work satisfaction (Mihhailova et al., 2011), antecedents and consequences of
team efficacy (Schepers et al., 2011), and different forms of leadership (Muganda and Pillay, Leadership in
2013) in virtual teams. At the same time, there is a research gap regarding effective leadership crisis-induced
of service employees in crisis situations. Stoker et al. (2019) provided an exception for
studying leadership in manufacturing and financial institutions following the 2008 financial
digital
crisis, detecting increased directive leadership but no change in participative leadership transformation
behaviors. These findings could underpin the relevance of task-oriented behaviors in crisis
situations, yet they do not give any indication of their effectiveness. Finally, we found no
research on leading service employees working in a virtual environment during a crisis (see 73
Figure 1). Therefore, based on the call to investigate leadership contexts in which employees
fear extreme consequences (Hannah et al., 2009), we aim to provide an understanding of
leadership in service firms affected by a crisis and unexpectedly having to transform to
virtual work arrangements. Similar to Stoker et al. (2019), who contrasted directive and
participative leadership, we follow a dichotomy of task- and relation-oriented leadership
behaviors to examine two seemingly opposing types of leadership behavior.
We build our research on the IPO framework, which provides a useful theoretical
foundation for identifying key input, team members and team emergent states, processes,
moderators, and outcomes relevant to both virtual team and individual effectiveness
(Dulebohn and Hoch, 2017).

Input
Liao (2017) emphasized that in virtual work environments task- and relation-oriented
leadership behaviors are key input factors in overcoming the challenges associated with
virtual work environments, such as employees’ difficulties in systematically understanding
how tasks should be done collectively. While task-oriented leadership behavior, also referred
to as “initiating structure,” focuses on attaining organizational objectives by clarifying each
task’s goals and monitoring work processes (Judge et al., 2004), relation-oriented leadership

Noncrisis Situation Crisis Situation

ƒ Humphreys, 2002
ƒ Battilana et al., 2010
ƒ Wieseke et al., 2011
Nonvirtual Work ƒ Benlian, 2014
ƒ Myrden and Kelloway, 2015 ƒ Stoker et al., 2019
Environment ƒ Popli and Rizvi, 2015
ƒ Lindblom et al., 2016
ƒ Herhausen et al., 2017
ƒ Guerrero et al., 2018

ƒ Schepers et al., 2011

Virtual Work ƒ Mihhailova et al., 2011
Environment ƒ
ƒ
Muganda and Pillay, 2013
Mihhailova, 2017
? Figure 1.
Existing research on
leadership in the
service context
JOSM behavior, also named “consideration,” focuses on enhancing collaborative interaction among
32,1 organizational members and establishing a supportive climate (Battilana et al., 2010). Both
meta-categories include behaviors specifically relevant in virtual work environments, such as
specifying team structures (task-oriented) or facilitating team building and member
interactions (relation-oriented) (Liao, 2017).

74 Process
In virtual work environments, leadership can influence individual- and team-related process
factors, which mediate the relationship between input and output (Liao, 2017). We
concentrate on the affective (i.e. individual work and teamwork tension) and behavioral
(i.e. autonomy and team cohesiveness) process factors since service employees exposed to the
COVID-19 pandemic are likely to be emotionally affected in their working and living
conditions, i.e. in terms of perceived insecurity or tension and could show behavioral changes
in how they perform individually or in a team.

Outcome
The final component of the IPO model, output, is typically represented by the extent to which
employees achieve performance targets (Dulebohn and Hoch, 2017). However, in situations
where individuals have to adapt to changing conditions, proactivity can be more important
than proficient and predictable performance (Griffin et al., 2010); hence, self-motivated work
behaviors as performance outputs are particularly interesting. Therefore, we use an activity-
based understanding of performance indicated by service employees’ work intensity.

Hypotheses
Task- and relation-oriented leadership behaviors are considered appropriate to enhance
individual as well as team outcome variables in virtual work environments (Liao, 2017).
Nevertheless, leaders face the challenge of influencing and motivating geographically
dispersed employees (Cascio and Montealegre, 2016). Hence, to enable flexibility, leaders in a
virtual work environment should focus specifically on enhancing the self-management
abilities of their employees (Carte et al., 2006). Further, in a virtual work environment
coordinating employees synchronically in already challenging conditions is bound to be
exacerbated because of employees’ varying working times, caused, e.g. by homeschooling
tasks or the absence of childcare, as is evident during the COVID-19 crisis. Employees can
lack clarity in their tasks and the means of accomplishing them (Liao, 2017). Therefore,
leaders should step in to manage the virtual team because they know the goals, resources, and
processes of the entire team best (Liao, 2017). The different challenges associated with the
virtual context, particularly in times of crisis, require leaders to simultaneously exhibit task-
and relation-oriented leadership behaviors (e.g. structuring tasks and enabling employees).
Hence, referring to the Digital Leadership Framework (Weber et al., 2019), we focus on
enabling leadership behavior (ELB) as a relation-oriented leadership behavior and on
managing leadership behavior (MLB) as a task-oriented leadership behavior (see Figure 2).

The impact of an enabling leadership behavior on individual and team processes

Leaders who enable a supportive and open climate among team members contribute to the
members’ convergence around the team and increase bonding among team members, which
are central aspects of group cohesion (Post, 2015). Extant research shows that a supportive
leader positively influences group cohesiveness (Wendt et al., 2009), which is defined as “team
members’ attraction and commitment to their team, team members, and the team’s task”
(LePine et al., 2008, p. 290). Further, a leader who fosters participative decision-making
 Input Process Outcome

Individual Level

Behavioral:
Individual Job
H1a
Autonomy
Relation-oriented
Leadership Behavior:
H2a
Enabler Affective:
H1b Individual Work Tension H5a

H2b H6a
Individual Work
Performance
H5b
Team Level
H3a
H6b
H4a Behavioral:
Team Cohesiveness
Task-oriented H3b
Leadership Behavior:
H4b
Manager Affective:
Teamwork Tension

Control Variables:
Moderating Variable: Age, Gender, Digital Expertise,
Digital Maturity Work-related Uncertainty,
Family-Work-Conflict
transformation
crisis-induced

75
digital
Leadership in

Conceptual framework
Figure 2.
JOSM increases employees’ degree of job autonomy (Cheong et al., 2016; Mertens and Recker, 2020).
32,1 Here, job autonomy refers to the degree of independence employees experience in their work
schedules and in their decisions on how to perform the work (Hackman and Oldham, 1976).
According to Chiniara and Bentein (2016), leaders should support employees’ need for
autonomy by enabling them to take initiative, learn from mistakes, and handle difficult
situations in their own way. We assume that this particularly holds true for service employees
who unexpectedly have to work spatially distant from one another in a virtual context. Hence,
76 we hypotheses:
H1. An ELB is positively related to (a) individual job autonomy and (b) team
cohesiveness.
A recent meta-analysis revealed that a high level of relation-oriented leadership behavior acts
as a protective factor, showing that such leadership relates negatively to undesired states of
mental health like burnout or stress (Montano et al., 2017). Yee et al. (2013) found the same
mitigating relationship in the context of service employees. Hence, we assume that leaders
who provide their employees with flexibility regarding when and how they perform their
work, establish an open error culture, and foster teamwork buffering individual tensions as
well as tensions within the team. Such job tension reflects how much the job, job evaluations,
and achieving performance goals contribute to individual-level stress (Jaworski and
MacInnis, 1989). We assume that the presented findings specifically prevail in a virtual
working context such as the unexpected and insecure crisis setting induced by the COVID-19
pandemic. Therefore, we hypotheses:
H2. An ELB is negatively related to (a) individual work tension and (b) teamwork tension.

The impact of a managing leadership behavior on individual and team processes

Stoker et al. (2019) showed an increase in task-oriented (specifically directive) leadership in
response to the 2008 financial crisis. However, extant leadership studies have revealed that
leaders who focus strongly on structuring tasks and controlling work outcomes decrease
employees’ self-perception in a team and weaken positive attitudes toward other team
members (Tjosvold and Tjosvold, 1991). Similarly, Wendt et al. (2009) found a significant
negative relationship between directive leadership and group cohesion. Further, leader
behavior, such as clarifying objectives and specifying means of accomplishing objectives,
undermine employees’ self-directed action and proactive behavior (Martin et al., 2013), which
indicate reduced employees’ job autonomy. Such leadership behaviors might be especially
counterproductive for service employees working in an unfamiliar and crisis-induced virtual
environment that prevents them from developing self-reliance at work, on both individual
and team levels. We therefore hypotheses:
H3. An MLB is negatively related to (a) individual job autonomy and (b) team
cohesiveness.
Diebig et al. (2016) showed that when leaders display high performance expectations that
strongly focus on achieving challenging goals, employees experience higher stress levels
because achieving such goals takes special effort and energy. Hence, in times of crisis, which
per se are characterized by increased uncertainty, stress, and threats of job loss (Tuzovic and
Tabadayi, 2020, in press), service employees whose leaders continuously control and monitor
them are likely to perceive higher levels of work tension due to fear of not being able to meet
requirements and accomplish their tasks properly. This could bring about a more competitive
and less team-oriented working climate. Hence, we expect:
H4. An MLB is positively related to (a) individual work tension and (b) teamwork tension.
The impact of individual and team processes on individual work performance Leadership in
A rich body of research (e.g. Zaccaro, 1991) has identified a positive relationship between crisis-induced
group cohesiveness and performance, showing that a cohesive team induces conformity,
improves coordination between team members, and increases adherence to group norms,
digital
thus enabling team members to enhance their own performance orientation (Man and Lam, transformation
2003). Further, particularly under challenging crisis-induced working conditions, autonomy
allows employees’ greater flexibility and control of their work, which motivates them to try out
and master new tasks (Morgeson et al., 2005). Hence, autonomy increases work performance 77
by motivating employees to increase their work effort (Nesheim et al., 2017). We therefore
hypotheses:
H5. (a) Individual job autonomy and (b) team cohesiveness are positively related to
individual work performance.
Cheong et al. (2016) as well as Lusch and Serpkenci (1990) showed that job tension reduces
employees’ work role performance. Also, a recent meta-analysis showed that work stress,
which included job tension, is negatively related to individual task performance (Gilboa et al.,
2008). Moreover, Savelsbergh et al. (2012) assumed that tensions in teams, such as ambiguity,
conflict, and/or overload, impair the team’s problem-solving and coordination competencies
and also diminish team members’ motivation to invest in achieving objectives. These tensions
could have even greater impact in virtual environments where team coordination per se is
more difficult than in physical collocation. Thus, we hypotheses:
H6. (a) Individual work and (b) teamwork tension are negatively related to individual
work performance.
The IPO framework specifically mentions potential moderating influences of context-related
variables (Dulebohn and Hoch, 2017). Organizations require strong leaders at the helm when
they encounter a turbulent business environment such as digital transformation (Kane et al.,
2019). Since digital maturity indicates a company’s status in accomplishing digital
transformation, we suppose a moderating impact of this context factor on leadership
effectiveness in handling unpredicted virtual work environments. We therefore define digital
maturity in line with Kane et al. (2017) as the degree to which an organization has transformed
its digital processes, digital talent engagement, and digital business models.

The methodological approach

The research context and sample
To test our conceptual model, we collected data from service firms’ employees in Germany
that mainly offer nonessential services (e.g. media, insurance, consulting, and education).
The data collection proceeded during major lockdown, April to May 2020, when service firms
rapidly had to change to virtual work environments. We distributed a survey link via
professional networks and associations, gaining a final sample of 206 service employees
mostly working in virtual work settings due to the COVID-19 pandemic. The service
employees’ sample comprised 149 (72%) women and 57 men (28%), with an average age of 40
years (ranging from 19 to 65). The majority of participants were living in a two- or more-
person household (76%) and predominantly working remotely (89%).

Measures
Our study used measures as validated in prior research. Explicitly referring to the current
COVID-19–induced work context in our survey, we measured all constructs on seven-point
Likert scales, except the moderating variable and some control variables. To measure ELB,
JOSM we used Weber et al.’s (2019) six-item scale containing items such as “As a leader, she/he
32,1 enables non hierarchical teamwork” and added an item to account for the specific virtual
work environment context, “As a leader, she/he enables virtual teamwork.” To measure MLB,
we used the six-item scale validated by Weber et al. (2019). A sample item was “As a leader,
she/he effectively pre-structures tasks.” We measured individual job autonomy using Singh’s
(1993) five-item scale and team cohesiveness using Podsakoff et al.’s (1993) three-item scale.
We based individual job tension measurement on the latter two items of Jaworski and
78 MacInnis’s (1989) three-item scale. To measure teamwork tension, we adapted Jaworski and
MacInnis’s (1989) scale and used two items: “I experience tension when interacting with my
colleagues” and “I experience tension between myself and my colleagues.” As the crisis
context is challenging to employees, they necessarily spend more effort and energy on work
task fulfillment. Hence, we assessed individual work performance using Brown and Leigh’s
(1996) five-item scale of work intensity. The single item for digital maturity was measured on
a ten-point Likert scale as developed by Kane et al. (2017). Further, we controlled for age,
gender, work-related uncertainty (using the first three items of Colquitt et al.’s (2012) four-
item scale), digital expertise (based on the expertise scale of Mishra et al. (1993), which we
adapted to expertise with digital tools in a work context and included a further item), and
family-work conflict (Frone et al., 1992). We considered the latter control variable to be
especially relevant in accounting for the specific COVID-19 pandemic context because mostly
all members of one household were forced to work and live together in their homes. Finally,
we checked for the scales’ reliability and validity using different criteria (e.g. Cronbach’s
alpha, average variance extracted [AVE], and heterotrait–monotrait [HTMT] ratio). All the
criteria fulfilled the common thresholds and were used for further calculation (Hair et al.,
2014, 2017).

The analysis and results

We assessed our conceptual model using partial least squares structural equation modeling
(PLS-SEM). All data were calculated with SmartPLS 3.0 software (Ringle et al., 2015). To test
our hypotheses, we ran the PLS algorithm, followed by the bootstrapping procedure using
5,000 samples. We evaluated significance on a ten percent probability level.
The results given in Table 1 indicate significant positive effects of ELB on individual job
autonomy (β 5 0.789, p < 0.01) and team cohesiveness (β 5 0.327, p < 0.01) as well as a
significant negative effect on teamwork tension (β 5
0.257, p < 0.05), thus supporting H1a,
H1b, and H2b. However, the effect of ELB on individual work tension was not significant;
hence, H2a is not supported. While MLB significantly reduced individual job autonomy
(β 5
0.262, p < 0.01) as hypothesized (H3a), we found a positive effect of MLB on team
cohesiveness (β 5 0.172, p < 0.1), thus contradicting H3b. Moreover, we cannot confirm a
positive effect of MLB on either individual work or teamwork tension as hypothesized in H4a
and H4b.
Further, employees’ tension on either the individual or team level did not significantly
impact their work performance; therefore, we cannot confirm H6a and H6b. However, work
performance is significantly influenced by individual job autonomy (β 5 0.174, p < 0.05) and
team cohesiveness (β 5 0.375, p < 0.01), which supports H5a and H5b.
To explore the moderating effect digital maturity has on how leadership behavior relates
to service employees’ work performance in a virtual work environment during times of crisis,
we conducted a multigroup analysis (MGA) (low digital maturity 5 scores between 1 and 5
and high digital maturity 5 scores between 6 and 10). While we did not find digital maturity
having a moderating effect on the relationship between ELB and respective process
variables, we did find it having a significant effect on the relationship between MLB and
individual job autonomy (Δ path coefficients 5 0.208, p < 0.1).
Structural path Hypothesis β t-value
Leadership in
crisis-induced
Hypothesized effects digital
Enabler → individual job autonomy H1a 0.789** 8.937
Enabler → team cohesiveness H1b 0.327** 2.855 transformation
Enabler → individual work tension H2a
0.086 0.728
Enabler → teamwork tension H2b
0.257* 2.091
Manager → individual job autonomy H3a
0.262** 3.382 79
Manager → team cohesiveness H3b 0.172y 1.891
Manager → individual work tension H4a 0.095 0.850
Manager → teamwork tension H4b 0.086 0.860
Individual job autonomy → individual work performance H5a 0.174* 2.050
Team cohesiveness → individual work performance H5b 0.375** 3.122
Individual work tension → individual work performance H6a 0.111 1.141
Teamwork tension → individual work performance H6b 0.103 0.739
Controls
Age → individual job autonomy 0.044 0.714
Age → team cohesiveness 0.056 0.810
Age → individual work tension
0.103 1.334
Age → teamwork tension
0.077 0.973
Age → individual work performance 0.301** 4.543
Gender1 → individual job autonomy 0.067 1.133
Gender1 → team cohesiveness
0.046 0.636
Gender1 → individual work tension 0.006 0.079
Gender1 → teamwork tension 0.151* 2.197
Gender1 → individual work performance
0.063 0.923
Digital expertise → individual job autonomy 0.171* 2.473
Digital expertise → team cohesiveness
0.060 0.788
Digital expertise → individual work tension 0.019 0.234
Digital expertise → teamwork tension 0.146* 2.013
Digital expertise → individual work performance 0.177* 2.023
Family–work conflict → individual job autonomy
0.140* 2.041
Family–work conflict → team cohesiveness
0.189* 2.511
Family–work conflict → individual work tension 0.064 0.787
Family–work conflict → teamwork tension 0.118 1.521
Family–work conflict → individual work performance
0.135y 1.838
Work-related uncertainty → individual job autonomy
0.005 0.066
Work-related uncertainty → team cohesiveness 0.018 0.228
Work-related uncertainty → individual work tension 0.281** 3.024
Work-related uncertainty → teamwork tension 0.176* 1.962
Work-related uncertainty → individual work performance 0.031 0.364

R2 (adjusted) Q2

Individual job autonomy 0.503 0.318

Team cohesiveness 0.218 0.180
Individual work tension 0.081 0.049
Teamwork tension 0.115 0.068 Table 1.
Individual work performance 0.292 0.191 Results of structural
Note(s): yp < 0.10, *p < 0.05, **p < 0.01, β represents standard path coefficients; 1female 5 1, male 5 0 model evaluation
JOSM General discussion
32,1 Theoretical implications
Although research examining the role of leadership behavior in the context of planned
organizational change exists (e.g. Battilana et al., 2010; Oreg and Berson, 2019; Sverdlik et al.,
2020, in press), no leadership, change management, and service literature studies deal with
effective leadership behavior in a rapid and unpredictable organizational transformation like
the crisis situation of the COVID-19 pandemic. Hence, this study offers several theoretical
80 contributions to the scarce literature on leadership effectiveness in service firms during a
crisis and in virtual work environments. First, this paper reveals that ELB and MLB
represent different resources which are both crucial in supporting service employees with
task fulfillment while working virtually in times of crisis. Thereby, we supplement Stoker
et al.’s (2019) finding by showing that a both-and rather than an either-or approach could be
particularly effective in a crisis-induced virtual work environment.
Second, building on the IPO framework (Liao, 2017), we developed insight in affective and
behavioral process variables’ mechanisms in a virtual work environment during an
unexpected, far-reaching pandemic. The results indicate that ELB positively influences both
affective and behavioral process variables. However, we found no significant ELB effect on
individual work tension. A possible reason could be that individual service employees take
less responsibility for achieving performance goals when leadership behavior focuses on
enabling teamwork in flexible working conditions, which does not affect individual work
tension.
Further, counter to our hypotheses, we found that MLB is not universally negative.
Although MLB decreases autonomy, we revealed a positive relationship to team cohesiveness.
It seems that MLB that strongly focuses on coordinating tasks, clarifying expectations, and
establishing well-defined patterns for team members is very important in crisis-induced
virtual work environments, where virtual team structures are usually not well-established.
Moreover, many service employees are overwhelmed by new technology-based working
methods (Pfeiffer, 2020) and family responsibilities (Bennett, 2020). These factors trigger
feelings of high uncertainty and stress among service employees. Therefore, we assume that
MLB provides virtual teams with required structure and thus reinforces team cohesiveness.
Nevertheless, we identified an ambivalent pattern for MLB and therefore complement service
research by offering a dialectical perspective on leadership behavior’s impact on process
variables and in turn on employees’ performance. On this matter, we found only the
behavioral process variables (i.e. autonomy and team cohesiveness) to be positively related to
employees’ work performance, whereas the affective process variables (i.e. individual work
and teamwork tension) showed no effects. We expected tension to be relevant in impairing
individual work performance. However, due to fear of negative consequences of diminished
performance in crisis times, service employees might compensate for such a potential
decrease in performance caused by perceived work tension. The analyses of our control
variables support this assumption since we found a significant positive effect of employees’
work-related uncertainty on work tension but no diminishing effect on individual work
performance.
Third, in line with Martins et al.’s (2004) call to examine moderating variables such as the
organizational context, we found MLB’s negative impact on autonomy to be weaker for
service firms with higher levels of digital maturity. Digitally mature service firms already
have established digital working processes, implemented workplace innovation, and
cultivated digitally minded organizational cultures (Kane et al., 2017). Hence, MLB might
be perceived as less directive and less restrictive. Providing insight on the suitability of
different leadership behaviors for service firms in varying states of digitalization, we thus
contribute to scarce research on leadership in digital transformation.
Managerial implications Leadership in
Regardless of how severely a crisis disrupts a service firm, ultimately appropriate leadership crisis-induced
behaviors are decisive in maintaining employees’ work performance and steering them
through uncertain times. In such crisis times, appropriate leadership does not entail deciding
digital
between MLB and ELB; rather, it requires a balance between the two. We have shown that transformation
both behaviors contribute in distinct ways to favorable outcomes regarding employees’ work
performance, thereby becoming complementary. Managers leading teams through a crisis
should take this into account by 81
(1) Engaging in task-oriented behavior that provides guidance and sets a clear direction
which will help improve teamwork in a rapidly emerging virtual work environment;
(2) Granting their employees the necessary autonomy and support, enabling them to
adapt to difficult crisis-induced circumstances individually in ways that work best for
each individual.
Finally, our results also provide evidence that more digitally mature service firms are better
able to maintain high performance levels among employees in times of crisis. This
underscores the relevance of investing in digitalization and building digital capabilities
throughout the company (Kane et al., 2017). Managers could use our findings to drive planned
or ongoing digital transformation initiatives in their service firms, equipping their teams with
the necessary technological infrastructure and know-how to sustainably foster their firm’s
resilience and their work systems’ adaptability, also for future crises.

Limitations and future research

This study’s limitations indicate several directions for future research. First, we used a cross-
sectional design with service employees as a single data source. This shortcoming could be
addressed by using secondary data or another person’s assessment of work performance
(Podsakoff et al., 2012). Further, a longitudinal study could reveal the impact of leadership on
service employee’s performance during the COVID-19 crisis over time. Second, our sample
largely contains female respondents, which potentially limits our results’ generalizability to
male employees. Also, with a third of our respondents living in a family household, the
females in our sample could be particularly influenced by the crisis due to additional strain
resulting from the combination of remote work and, e.g. homeschooling. Finally, we collected
the data from service employees who were able to continue their profession remotely from
home. Investigating workers in other service sectors, affected differently by the crisis, could
also provide valuable insights. Future studies could therefore examine employees forced into
compulsory leave by lockdown measures, e.g. investigating their emotional and behavioral
response, such as their situational subjective well-being or job-related countermeasures.
Further, investigating employees in essential service industries such as health care, food
retail or logistics, who are not able to work remotely and, in many cases, were burdened with
long hours of overtime would be profitable. Future research studies could address this area,
specifically focusing on work overload and exhaustion of those working in the front line of the
pandemic.

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Corresponding author
Silke Bartsch can be contacted at: [email protected]

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