Who Displays Ethical Leadership and Why Does it Matter? An Examination of Antecedents and Consequences of Ethical Leadership

Drawing on social learning and moral identity theories, this research examines antecedents and consequences of ethical leadership. Additionally, this research empirically examines the distinctiveness of the ethical leadership construct when compared to related leadership constructs such as idealized influence, interpersonal justice, and informational justice. Consistent with the theoretically-derived hypotheses, results from two studies of work units (N’s = 115 and 195 units, respectively) provide general support for our theoretical model. In Study 1, there was a positive relationship between leader moral identity symbolization and internalization (approaching significance) and ethical leadership, and a negative relationship between ethical leadership and unit unethical behavior and relationship conflict. In Study 2, both leader moral identity symbolization and internalization were positively related to ethical leadership, and after controlling for idealized influence, interpersonal justice, and informational justice, ethical leadership was negatively related to unit outcomes. In both studies, ethical leadership partially mediated the effects of leader moral identity. A perennial question asked by managers, employees, business students, and the general public is “What effect does leadership have on the behavior of followers?” By now, management scholars know there are definitive answers to this question, but those answers largely depend on the follower behaviors and leadership variables being considered. Two follower behaviors that have been shown to be influenced by leadership are ethical behavior and interpersonal conflict (Brown & Treviño, 2006a; Ehrhart, 2004). Importantly, both follower behaviors have been linked directly to bottom-line performance (Detert, Treviño, Burris, & Andiappen, 2007; LePine, Piccolo, Jackson, Mathieu, & Saul, 2008). This paper examines whether a new leadership construct called ethical leadership (Brown, Treviño, & Harrison, 2005) may be particularly well suited to explaining unethical behavior and interpersonal conflict in work units. Brown et al. (2005) recently provided a new conceptualization of ethical leadership. They highlight three key building blocks of ethical leaders: being an ethical example, treating people fairly, and actively managing morality. The first two of these building blocks are reflected in the moral person component of ethical leadership, wherein ethical leaders have desirable characteristics such as being fair and trustworthy. The last building block is captured by the moral manager component whereby ethical leaders encourage normative behavior and discourage unethical behavior on the part of their subordinates using transactional efforts such as communicating about ethics and punishing unethical behavior (see Brown & Treviño, 2006a for a review). The conceptual basis for treating ethical leadership as a distinct leadership construct has been presented previously (Brown et al., 2005), but to date few empirical studies have directly examined the unique effect of ethical leadership above and beyond related leadership constructs. Furthermore, few studies have examined the relationship between ethical leadership and ethical outcomes because the construct is relatively new (see Brown et al., 2005; Detert et al., 2007; Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, 2009; Piccolo, Greenbaum, den Hartog, & Folger, 2010; Walumbwa, Mayer, Wang, Wang, Workman, & Christensen, in press; Walumbwa & Schaubroeck, 2009, for exceptions). Finally, we are aware of few studies examining antecedents of ethical leadership. Our research addresses all of these gaps in the management literature by examining why ethical leadership matters, who engages in ethical leadership, and whether ethical leadership represents a distinct aspect of leadership that is not captured by other leadership constructs. In the present research, we examine antecedents of ethical leadership by testing whether one source of motivation for leaders to exhibit ethical behaviors arises from a self-defining knowledge structure that several writers (e.g., Aquino & Reed, 2002; Blasi, 1983, 2004; Damon & Hart, 1992; Lapsley & Narvaez, 2004) refer to as moral identity. Our theoretical model posits that moral identity motivates leaders to act in ways that demonstrate some responsiveness to the needs and interests of others, an orientation that many philosophers (e.g., Kant, 1948) and psychologists (e.g., Eisenberg, 2000; Gilligan, 1982) consider a defining characteristic of moral behavior. We also explore consequences of ethical leadership at the work-unit level by drawing on social learning theory (Bandura, 1977, 1986). We focus on unit-level outcomes because group members exposed to similar cues in the environment regarding norms for appropriate behavior tend to behave in a fairly homogenous manner (e.g., Salancik & Pfeffer, 1978). The specific outcomes we examine include unethical behavior (i.e., behavior that is morally unacceptable to the larger community; Jones, 1991) and relationship conflict (i.e., interpersonal strife associated with differences in personalities or matters unrelated to the job; Jehn, 1995). THEORETICAL BACKGROUND Moral Identity and Ethical Leadership In this paper, we adopt a social-cognitive conception of moral identity to explain the relationship between moral identity and ethical leadership. Moral identity is defined as a selfschema organized around a set of moral trait associations (e.g., honest, caring, compassionate) (Aquino & Reed, 2002). Theorists (e.g., Aquino and Reed, 2002; Blasi, 1980, 2004; Lapsley and Lasky, 2001) have argued that people differ in the degree to which moral identity is experienced as being central to their overall self-definition. From a social cognitive perspective, this difference implies that the moral self-schema is more cognitively accessible for some people than others. According to Lapsley and Lasky (2001: 347), a person who has a moral identity is “one for whom moral schemas are chronically available, readily primed, and easily activated for information processing.” Similarly, Aquino and Reed (2002) suggest that moral identity has higher self-importance for some people than others, meaning that this particular knowledge structure is central to a person’s overall self-conception, making it more readily available for processing information and regulating conduct. Schema-based conceptions of moral identity have been used to explain various aspects of moral functioning in non-organizational domains (Aquino & Freeman, 2009; Aquino & Reed, 2002; Lapsley & Lasky, 2001; Lapsley & Narvez, 2004; Reed & Aquino, 2003), but only recently has moral identity been introduced into the management literature (e.g., Detert, Treviño, & Sweitzer, 2008; Reynolds & Ceranic, 2007). Emerging empirical evidence supports the schema-based conceptualization of moral identity (Aquino, Freeman, Reed, Lim, & Felps, 2009; Aquino & Reed, 2002; Aquino, Reed, Thau, & Freeman, 2007; Olsen, Eid, & Johnsen, 2006; Reed & Aquino, 2003; Reynolds & Ceranic, 2007; Reed, Aquino, & Levy, 2007; Skarlicki, Van Jaarsveld, & Walker, 2008), but to understand why moral identity should be related to ethical leadership it is important to note that these studies also show that the centrality of this identity to the self predicts various forms of moral behavior (see Shao, Aquino, & Freeman, 2008 for a review). For example, studies show that moral identity is positively related to prosocial behaviors like charitable giving (Aquino & Reed, 2002; Reed et al., 2007) and negatively related to unethical behaviors like lying (Aquino et al., 2009; Reynolds and Ceranic, 2007). Aquino and Reed (2002) proposed that moral identity influences moral behavior by acting as a self-regulatory mechanism rooted in people’s internalized notions of right and wrong. The motivational power of moral identity arises from peoples’ desire for self-consistency (Blasi, 1983, 2004). In other words, people whose moral identity is self-important should be motivated to act in ways that are consistent with their understanding of what it means to be a moral person (i.e., to demonstrate some responsiveness to the needs and interests of others) because acting otherwise can produce dissonance and self-condemnation (Aquino et al., 2009; Aquino & Reed, 2002). If moral identity does indeed function as a self-regulatory mechanism that motivates moral action, then the expected relationship between moral identity and ethical leadership is fairly straightforward: Leaders whose moral identity has high self-importance should act in ways that are consistent with common understandings of what it means to be a moral person, which in turn should result in their being perceived as ethical leaders. Aquino and Reed’s (2002) conception of moral identity has two dimensions, one of which captures its public aspect, which they call symbolization, and the other its private expression, which they call internalization. These dimensions correspond to theories of the self that posit that self-awareness can be characterized by an external and active self as a social object that impacts others and an internal introspective awareness of one’s inner thoughts and feelings (Fenigstein, 1975). Individuals high in moral identity symbolization demonstrate their possession of moral traits through moral actions (Aquino & Reed, 2002). We expect moral identity symbolization to be positively related to ethical leadership because these leaders are more likely to demonstrate morally positive behaviors, which manifest as ethical leadership. It is important for leaders high in moral identity symbolization to behave outwardly in ways that are consistent with how they view themselves—and thus they are more likely to engage in ethical behaviors directed towards their employees. Prior research demonstrates positive relationships with symbolization and religiosity, volunteerism, charitable giving, and willingness to aid out-groups (Aquino & Reed, 2002; Reed & Aquino, 2003; Reynolds & Ceranic, 2007). Thus, we predict a positive relationship between leader moral identity symbolization and ethical leadership. Moral identity internalization represents moral traits that are imbedded in one’s self concept. Those high in moral identity internalization are likely to avoid behaviors that are seen as immoral, which would challenge their self concept. Leaders that are high in moral identity internalization are more likely to pay attention to, correct, and punish unethical behaviors. They are also more likely to define success not just by results, but by the way they are accomplished. To do otherwise would make those high in moral identity internalization feel inauthentic. Research on moral identity internalization has linked it to moral reasoning, volunteering, satisfaction from volunteering, and donating cans of food to the needy (Aquino & Reed, 2002; Reynolds & Ceranic, 2007). We therefore expect a positive relationship between leader moral identity internalization and ethical leadership. Hypothesis 1a: Leader moral identity symbolization will be positively related to ethical leadership. Hypothesis 1b: Leader moral identity internalization will be positively related to ethical leadership. Ethical Leadership and Unit-level Outcomes In addition to examining who is likely to be perceived as an ethical leader, we also examine the relationship between ethical leadership and two unit-level outcomes—unethical behavior and relationship conflict—to better understand why ethical leadership matters. Ethical leadership and unethical behavior. Consistent with Brown et al. (2005), we draw on social learning theory (Bandura, 1977, 1986) to explain the effects of ethical leadership. Social learning theory posits that individuals learn appropriate behaviors through a rolemodeling process by observing the behaviors of others (Bandura, 1977, 1986). In choosing models for appropriate behavior, individuals are likely to pay attention to and emulate behaviors from credible and attractive role models. Given their position in the organization, supervisors are often deemed legitimate models for normative behavior. In addition to direct observation, employees are influenced by their supervisor because he/she has the power to delve out both punishments and rewards. Thus, because ethical leaders reward ethical behavior and discipline unethical behavior, they influence their employees to engage in desired behavior. Finally, in addition to being influenced directly by modeling leader’s behavior and one’s own rewards and punishments, social learning theory highlights the role of vicarious learning—the idea that individuals learn what is expected of them and the norms for behaving appropriately not only through their own experience, but also by observing others (Bandura, 1977, 1986). Thus, within a work group context, social learning can occur either directly or vicariously through the experiences of fellow group members. When leaders behave in an ethical manner, communicate the importance of ethics, and use punishment and reward systems to encourage ethical behavior, group norms for acceptable behavior are formed and employees in the work unit will be less likely to engage in unethical behavior. Hypothesis 2: Ethical leadership will be negatively related to unit unethical behavior. Ethical leadership and relationship conflict. We expect ethical leadership to influence interpersonal dynamics in work groups. By definition, ethical leaders exhibit normatively appropriate conduct through their actions and interpersonal relationships with employees in the work unit (Brown et al., 2005). They also stress the importance of two-way communication such that they are concerned not only with expressing their own opinions, but highlighting the importance of listening and getting along with others (Brown et al., 2005). In addition, ethical leaders exhibit social responsiveness and caring by communicating to employees that their best interests are the leader’s primary concern (Brown et al., 2005). Based on social learning principles, the behaviors displayed by ethical leaders can “trickle down” to employees (Mayer et al., 2009) encouraging those who witness them to behave similarly towards their coworkers. Ethical leaders help develop norms in the group in terms of how to treat others that ultimately should influence group relations. Researchers have found that when employees observed displays of virtuous interpersonal behavior in their work group such as sharing, loyalty, advocacy, or caring, it can result in higher levels of liking, commitment, participation, trust, and collaboration (Koys, 2001; Walz & Niehoff, 2000). Thus, by working under an ethical leader, it is conceivable that employees can become more willing to allow coworkers to express their opinions, avoid personal attacks on coworkers, and demonstrate respect and consideration for coworkers’ needs. By role modeling the positive interpersonal behavior displayed by ethical leaders, it is possible that employees are more likely to constructively rather than destructively manage the interpersonal tensions that inevitably arise in their interactions with fellow unit members. Emulating the positive interpersonal behavior of ethical leaders, employees can reduce tension and friction associated with relationship conflict, which can strengthen their interpersonal relationships (Bateman & Porath, 2003). Hypothesis 3: Ethical leadership will be negatively related to unit relationship conflict. To this point we have hypothesized that leader moral identity is positively related to ethical leadership and ethical leadership is negatively related to unit-level unethical behavior and relationship conflict. In an effort to complete our theoretical model, we predict that the relationship between leader moral identity and the unit outcomes is mediated by ethical leadership. We suggest that the effects of a leader’s identity should only be related to employees’ behavior through its effect on leader’s behavior. In other words, leader moral identity alone is not expected to relate to employees’ behavior but rather the manifestation of that identity, in the form of ethical leader behaviors, is expected to explain the link. Indeed, leaders with a high moral identity strive for self-consistency and feel inauthentic unless they “walk the talk” by engaging in ethical leadership behaviors (e.g., modeling ethical behaviors, using rewards and punishment systems to discourage unethical behavior), and these leader behaviors influence employees’ conduct through social learning processes. Employees are likely to witness the behaviors of ethical leaders and try to model their leaders by not engaging in wrongdoing and avoiding interpersonal conflict with unit employees. Although we expect the effects of leader moral identity on unit employees’ behavior to be realized through leader behavior, it is possible that other types of leader behavior could help explain the moral identity to employees’ behavior link. For example, it is possible that leader moral identity might influence how leaders choose to structure interactions among employees, which could be an alternative behavioral mechanism through which moral identity influences unit-level outcomes. Another possibility is that the effects of leader moral identity on employees’ behavior are a function of some level of value congruence between leaders and employees. Indeed, prior work has linked socialized charismatic leadership to interpersonal and organizational deviance at the unit level through value congruence (Brown & Treviño, 2006b). Leaders and employees may have similar values regarding the importance of being ethical at work. This similarity in values could then drive employees’ behavior. Thus, we predict that ethical leadership should mediate the leader moral identity to employees’ unit behavior relationship, but we believe that it is most defensible to predict partial mediation because of the possibility of other mechanisms that could also explain this relationship. Hypothesis 4: Ethical leadership partially mediates the relationship between leader moral identity and unit unethical behavior and unit relationship conflict.