ABSTRACT

The COVID-19 pandemic outbreak—as a typical emergency event—significantly has impacted employees’ psychological status and thus has negatively affected their performance. Hence, along with focusing on the mechanisms and solutions to alleviate the impact of work stress on employee performance, we also examine the relationship between work stress, mental health, and employee performance. Furthermore, we analyzed the moderating role of servant leadership in the relationship between work stress and mental health, but the result was not significant. The results contribute to providing practical guidance for enterprises to improve employee performance in the context of major emergencies.

Keywords: COVID-19, work stress, mental health, employee performance, social uncertainty

INTRODUCTION

Small- and medium-sized enterprises (SMEs) are the key drivers of economic development as they contribute >50, 60, 70, 80, and 90% of tax revenue, GDP, technological innovation, labor employment, and the number of enterprises, respectively. However, owing to the disadvantages of small-scale and insufficient resources (Cai et al., 2017; Flynn, 2017), these enterprises are more vulnerable to being influenced by emergency events. The COVID-19 pandemic outbreak—as a typical emergency event—has negatively affected survival and growth of SMEs (Eggers, 2020). Some SMEs have faced a relatively higher risk of salary reduction, layoffs, or corporate bankruptcy (Adam and Alarifi, 2021). Consequently, it has made employees in the SMEs face the following stressors during the COVID-19 pandemic: First, employees’ income, promotion, and career development opportunities have declined (Shimazu et al., 2020). Second, as most employees had to work from home, family conflicts have increased and family satisfaction has decreased (Green et al., 2020; Xu et al., 2020). Finally, as work tasks and positions have changed, the new work environment has made employees less engaged and less fulfilled at work (Olugbade and Karatepe, 2019; Chen and Fellenz, 2020).

For SMEs, employees are their core assets and are crucial to their survival and growth (Shan et al., 2022). Employee work stress may precipitate burnout (Choi et al., 2019; Barello et al., 2020), which manifests as fatigue and frustration (Mansour and Tremblay, 2018), and is associated with various negative reactions, including job dissatisfaction, low organizational commitment, and a high propensity to resign (Lu and Gursoy, 2016; Uchmanowicz et al., 2020). Ultimately, it negatively impacts employee performance (Prasad and Vaidya, 2020). The problem of employee work stress has become an important topic for researchers and practitioners alike. In this regard, it is timely to explore the impact of work stress on SME problems of survival and growth during emergency events like the COVID-19 pandemic.

Although recent studies have demonstrated the relationship between work stress and employee performance, some insufficiencies persist, which must be resolved. Research on how work stress affects employee performance has remained fragmented and limited. First, the research into how work stress affects employee performance is still insufficient. Some researchers have explored the effects of work stress on employee performance during COVID-19 (Saleem et al., 2021; Tu et al., 2021). However, they have not explained the intermediate path, which limits our understanding of effects of work stress. As work stress causes psychological pain to employees, in response, they exhibit lower performance levels (Song et al., 2020; Yu et al., 2022). Thus, employees’ mental health becomes an important path to explain the relationship mechanism between work stress and employee performance, which is revealed in this study using a stress–psychological state–performance framework. Second, resolving the mental health problems caused by work stress has become a key issue for SMEs during the COVID-19 pandemic. As the core of the enterprise (Ahn et al., 2018), the behavior of leaders significantly influences employees. Especially for SMEs, intensive interactive communication transpires between the leader and employees (Li et al., 2019; Tiedtke et al., 2020). Servant leadership, as a typical leader’s behavior, is considered an important determinant of employee mental health (Haslam et al., 2020). Hence, to improve employees’ mental health, we introduce servant leadership as a moderating variable and explore its contingency effect on relieving work stress and mental health.

This study predominantly tries to answer the question of how work stress influences employee performance and explores the mediating impact of mental health and the moderating impact of servant leadership in this relationship. Mainly, this study contributes to the existing literature in the following three ways: First, this research analyzes the influence of work stress on employee performance in SMEs during the COVID-19 pandemic, which complements previous studies and theories related to work stress. Second, this study regards mental health as a psychological state and examines its mediating impact on the relationship between work stress and employee performance, which complements the research path on how work stress affects employee performance. Third, we explore the moderating impact of servant leadership, which has been ignored in previous research, thus extending the understanding of the relationship between the work stress and mental health of employees in SMEs.

To accomplish the aforementioned tasks, the remainder of this article is structured as follows: First, based on the literature review, we propose our hypotheses. Thereafter, we present our research method, including the processes of data collection, sample characteristics, measurement of variables, and sample validity. Subsequently, we provide the data analysis and report the results. Finally, we discuss the results and present the study limitations.

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