Due to its significant impact on national output, socio-economic status, and employment, the oil palm industry plays a significant and vital role in Malaysia. Hence, the labor productivity in oil palm industry is critical in terms of national income and export earnings. However, recently drops in Malaysian oil palm production have been attributed to a shortage of labor, particularly foreign labor, as a result of the movement order of COVID-19 pandemic. Malaysian oil palm smallholders rely solely on local labor at the moment, so measuring local labor productivity is critical. Understanding the level of local labor productivity in relation to provided leadership productivity and work environment are vital. However, there is still a scarcity of research that identifies the specific relationship between leadership productivity and work environment on local labor productivity. Therefore, this paper aimed to investigate the relationship between i) leadership productivity and local labor productivity and ii) work environment local labor productivity. Data was collected from smallholders in the oil palm industry in Sarawak, Malaysia. The study employs partial least squares structural equation modeling (PLS-SEM) to investigate the relationship between i) leadership productivity and ii) work environment on local labor productivity. The findings show that leadership productivity and work environment have a strong positive and significant relationship with local labor productivity. This study has several practical implications for smallholders in the oil palm industry in terms of increasing local labor productivity.
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