The relationships between self-efficacy and employee performance among life insurance agents in Malaysia: the mediating role of risk tolerance

This study examines the relationships between self-efficacy, risk tolerance, and employee performance among life insurance agents in Malaysia. Guided by Bandura’s Social Cognitive Theory, four dimensions of self-efficacy—performance accomplishment, vicarious experience, social persuasion, and physiological/emotional states—were identified as independent variables. Risk tolerance was introduced as a mediating variable, linking self-efficacy to employee performance, the dependent variable. Data were collected through a structured questionnaire from 129 registered life insurance agents under the Life Insurance Association of Malaysia (LIAM) and analysed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings revealed that performance accomplishment and social persuasion significantly influenced risk tolerance, while vicarious experience and physiological/emotional states demonstrated weaker effects. Furthermore, risk tolerance exhibited a significant positive relationship with employee performance and partially mediated the effects of selected self-efficacy dimensions. Overall, the structural model explained 47% of the variance in employee performance, underscoring the importance of psychological and behavioural factors in shaping outcomes within high-pressure service industries. Theoretically, this study extends Social Cognitive Theory by incorporating risk tolerance as a mediator, thus advancing the understanding of how psychological resources translate into performance outcomes. Practically, the study suggests that insurance companies should enhance training and interventions that strengthen agents’ confidence, adaptability, and risk-taking capacity to sustain performance and reduce turnover in increasingly digitalised and uncertain environments.