Faith at work: how Islamic leadership transforms Indonesia’s Islamic banking landscape

Purpose This study aims to examine the direct and indirect relationships between Islamic leadership (IL) and employee Islamic performance (EIP) through Islamic work ethic (IWE), Islamic work motivation (IWM) and organizational commitment (OC) in the context of Indonesia’s Islamic banking sector. Grounded in the principles of amanah (trust), adl (justice), shura (consultation), and taqwa (piety), the study seeks to provide empirical evidence on the mechanisms through which leadership values rooted in Shariah contribute to employee outcomes. Design/methodology/approach A quantitative approach was employed using partial least squares structural equation modeling to analyze data from 364 employees of major Islamic banks in Indonesia. The model tested both direct paths and mediating effects involving IL, IWE, IWM, OC and EIP. Reliability, validity and model fit were assessed to ensure robustness. Findings IL has a significant positive effect on EIP, both directly and indirectly, through IWM and OC. By contrast, the mediating role of IWE was found to be nonsignificant. These results confirm that while Islamic ethical values are important, their impact on performance is most strongly realized when reinforced by leadership-driven motivation and commitment. Research limitations/implications The study is limited to Indonesia’s Islamic banking sector, which may affect generalizability. Future studies could expand to other cultural or institutional contexts and use qualitative methods to capture deeper insights into IL processes. Practical implications The findings suggest that Islamic banks should strengthen leadership development and human resource management (HRM) programs that emphasize amanah, adl, shura and taqwa. Focusing on enhancing motivation and OC is particularly critical to translating leadership values into sustainable performance outcomes. Originality/value This research offers a novel empirical framework linking IL with key organizational outcomes. It extends the literature on Islamic organizational behavior by demonstrating the pathways through which spiritual leadership values drive motivation, commitment and ethical performance in financial institutions.