The moderation and mediation role of employee engagement and dynamic capabilities on leadership decision making and organisational performance in the UAE energy sector

The UAE's energy sector plays a crucial role in the country's economy, making its performance vital for sustainable economic contributions. This study investigates the interrelationship among three key factors: leadership decision-making, dynamic capabilities, and employee engagement. The aim is to provide a comprehensive understanding of the mechanisms driving organisational performance in the UAE Energy Sector's challenging environment. Using a quantitative causal design, the study gathered opinions from 383 strategically placed employees in the UAE energy sector. Having meticulously chose these personnel from several industries, especially focussing on those in grades 13 and higher. Structural equation modelling was utilised to examine the intricate interactions between the variables. A partial least squares structural equation model was employed to evaluate the proposed hypotheses. The findings indicate that leadership decisions have a strong influence on various organisational capabilities. Strong evidence suggests that leadership decisions significantly impact the abilities to coordinate, integrate, learn, and sense. This is shown by high beta coefficients and strong statistical significance in all of these areas. These relationships suggest that leadership plays a crucial role in enhancing the core functions of an organisation by effectively shaping and guiding its capabilities. Each of these capabilities shows a strong positive association with leadership decision-making, highlighting its central importance in the overall organisational structure.
The direct impacts of these capabilities on organisational performance vary. Sensing capabilities show a significant positive relationship with performance, indicating that this capability directly contributes to better outcomes. On the other hand, coordinating, integration, and learning capabilities do not exhibit a significant influence on performance, with some even showing weak or negative relationships. Despite this, leadership decision-making itself has a moderate but significant positive effect on organisational performance, highlighting that, while the direct contributions of certain capabilities may be limited, strong leadership remains a key driver of overall success. This study contributes empirical evidence supporting the integration of social exchange theory, path-goal theory, and toxic triangle theory within a single framework, offering a novel perspective on the intersection of leadership, capabilities, and performance. It underscores the importance of dynamic capabilities as a mediating factor between leadership decisions and organisational outcomes. Furthermore, the research highlights employee engagement as a vital component in this dynamic by advocating for strategies that foster employee commitment and optimise organisational performance. By spotlighting these connections, the study provides actionable insights for leaders within the UAE energy sector to enhance their strategic decision-making processes and cultivate a culture that promotes engagement and adaptability.