GENERAL MANAGEMENT ISSN:1582-2559 QUALITY 295 Vol. 24, No. 196/August 2023 Access to Success Accelerating Values In Shaping Ethical Leadership And It’s Effect On Organisational Performance I Gede Putu KAWIANA 1* , Burhan Reshat REXHEPI 2 , I Made Risma M ARSHA 3 , Ni Nyoman Adityarini Abiyoga Vena SWARA 3 , Putu Gde Arie YUDHISTIRA 4 1 Faculty of Economics and Business, Universitas Hindu Indonesia , Email: igp.kawiana@unhi.ac.id 2 UBT College, Pristina, Kosovo, Email: burhan.rexhepi@ubt-uni.net 3 Faculty of Economics and Business, Universitas Hindu Indonesia, Email: risma@unhi.ac.id, adityarini.abiyoga@unhi.ac.id 4 Politeknik Pariwisata Bali, Indonesia, Email: arie.yudhistira@ppb.ac.id *Corresponding Author Received: 20.07.2022 Accepted: 10.02.2023 Published: 01.08.2023 DOI: 10.47750/QAS/24.196.36 Abstract Modern society has abandoned much of the existing local wisdom resulting in a decline in community morale. Morality is necessary for managing a business organization so that it can become a sustainable business. Therefore, the values of local wisdom are essential in managing a business. Local wisdom can encourage a business to perform well when organizational performance is as challenging as it is today. This research fills the research gap in the management literature by analyzing the role of values on ethical leadership and organizational performance. The research population was LPD employees and administrators in Bali. This study uses the Slovin formula to determine the sample, which is 158 employees. Data collection was done through questionnaires, and data analysis was done using SEM - PLS. The results of the study show that values do not have a significant effect on organizational performance; however, values have a significant effect on ethical leadership. Finally, ethical leadership has a significant effect on organizational performance. The research results indicate that there is full mediation of ethical leadership in the influence of values on organizational performance. This implies the impact of ethical leadership formed by values that will continue to exist and enhance organizational performance. Besides, culture becomes an essential tool in an organization, especially in Bali, which has a very strong local culture. Future research is expected to explore local culture and leadership transformation in state and private organizations. Keywords: values, ethical leadership, organizational performance, LPDs Introduction Lembaga PerkreditanDesa (LPD) was established in 1984 at the initiative of the Governor of the Province of Bali. The initial idea of establishing an LPDs was to function as a village granary, also known as the banking village model which serves rural residents and communities who do not have access to finance from commercial banks. LPDs is a special financial institution that operates outside the official regulation by the Indonesian government (Financial Services Authority of the Republic of Indonesia), with the main controller being customary villages as owners and managers. Despite its development until the current Covid-19 pandemic, LPDs are still facing performance problems. LPDs that perform poorly and those that experience bankruptcy are mostly caused by internal LPD management problems, which can be identified, including the competence of human resources (HR), the implementation of good corporate governance (GCG), and leadership as well (Scholar, 2013; Putu et al., 2014; Saputra et al., 2019). Preliminary surveys showed indications of the same direction based on a brief report from the Chairman of the Bali LPDs Cooperation Board, which stated that several LPDs that initially performed poorly (unhealthy) improved their performance after being managed by new leaders. This evidence strengthens the empirical fact that leadership is a crucial factor in LPDs management. A number of corruption cases involving LPDs leaders have further demonstrated the obstacles in LPDs management. To obtain a form of leadership that is in accordance with the needs of the LPDs, several obstacles in their management must be addressed. LPDs require a more holistic leadership model that can solve leadership problems and improve performance. The ethical leadership model is one such model. According to Sharif and Scandura (2014), an ethical leader is someone who has personal qualities, such as being trustworthy, honest, fair, and showing concern. An ethical leader is also responsible for their business and the environment, has a strong grip on their functions and duties, and possesses fundamental knowledge of the values that are the source of ethical leadership (Dey et al., 2022). Values require movement to be translated into ethical behavior by leaders. Several studies have found that values are closely related to behavior and leadership style and that they are important for effective leadership (Chang & Lin, 2008; Gao, 2017; Arun &Kahraman, 2020; Jaya & Saleh, 2020; Hidayat, 2021; Kamann&Gyurácz-Németh, 2023). Reave (2005) found that spiritual values and practices are correlated with effective leadership. Values such as integrity, honesty, and humility have been shown to be influential in leadership success. Similarly, practices such as showing respect for others, treating people fairly, and expressing care and concern, which are emphasized in many spiritual teachings, have also been found to be important leadership skills.