Leadership development practice bundles and organizational performance: The mediating role of human capital and social capital

There is evidence linking a variety of leadership development practices (LDPs) with individual-level leader outcomes. However, both theoretical and empirical work relating bundles of multiple LDPs and organizational performance is lacking in the literature. To address this gap, we proposed and tested a model examining the influence of two LDP bundles on organizational performance, with human capital and social capital as mediators. Differentiation LDPs are aimed primarily at building intrapersonal knowledge, skills, and abilities of leaders, while integration LDPs help build their interpersonal knowledge, skills, and abilities. Utilizing a sample of 223 organizations in a growing economy (India), we found that differentiation LDPs were positively associated with human capital, while integration LDPs positively influenced social capital. Further, human capital mediated the relationship between differentiation LDPs and sales growth. Our study highlights the economic impact of investing in leadership development and the mechanisms underlying the relationship between LDPs and organizational performance.