Ethical and Unethical Leadership: Exploring New Avenues for Euture Research

The purpose of this article is to review literature that is relevant to the social scientific study of ethics and leadership, as well as outline areas for future study. We first discuss ethical leadership and then draw from emerging research on "dark side" organizational behavior to widen the boundaries of the review to include ««ethical leadership. Next, three emerging trends within the organizational behavior literature are proposed for a leadership and ethics research agenda: 1 ) emotions, 2) fit/congruence, and 3) identity/ identification. We believe each shows promise in extending current thinking. The review closes with discussion of important issues that are relevant to the advancement of research on leadership and ethics. T IMPORTANCE OF LEADERSHIP in promoting ethical conduct in organizations has long been understood. Within a work environment, leaders set the tone for organizational goals and behavior. Indeed, leaders are often in a position to control many outcomes that affect employees (e.g., strategies, goal-setting, promotions, appraisals, resources). What leaders incentivize communicates what they value and motivates employees to act in ways to achieve such rewards. It is not surprising, then, that employees rely on their leaders for guidance when faced with ethical questions or problems (Treviño, 1986). Research supports this contention, and shows that employees conform to the ethical values of their leaders (Schminke, Wells, Peyrefitte, & Sabora, 2002). Furthermore, leaders who are perceived as ethically positive influence productive employee work behavior (Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, 2009) and negatively influence counterproductive work behavior (Brown & Treviño, 2006b; Mayer et al., 2009). Recently, there has been a surge of empirical research seeking to understand the influence of leaders on building ethical work practices and employee behaviors (see Brown & Treviño, 2006a for a review). Initial theory and research (Bass & Steidlemeier, 1999; Brown, Treviño, & Harrison, 2005; Ciulla, 2004; Treviño, Brown, & Hartman, 2003; Treviño, Hartman, & Brown, 2000) sought to define ethical leadership from both normative and social scientific (descriptive) approaches to business ethics. The normative perspective is rooted in philosophy and is concerned with prescribing how individuals "ought" or "should" behave in the workplace. For example, normative scholarship on ethical leadership (Bass & Steidlemeier, 1999; Ciulla, 2004) examines ethical decision making from particular philosophical frameworks, evaluates the ethicality of particular leaders, and considers the degree to which certain styles of leadership or influence tactics are ethical. ©2010 Business Ethics Quarterly 20:4 (October 2010); ISSN 1052-150X pp. 583-616 584 BUSINESS ETHICS QUARTERLY In contrast, our article emphasizes a social scientific approach to ethical leadership (e.g.. Brown et al., 2005; Treviño et al., 2000; Treviño et al, 2003). This approach is rooted in disciplines such as psychology, sociology, and organization science, and it attempts to understand how people perceive ethical leadership and investigates the antecedents, outcomes, and potential boundary conditions of those perceptions. This research has focused on investigating research questions such as: What is ethical leadership (Brown et al., 2005; Treviño et al., 2003)? What traits are associated with perceived ethical leadership (Walumbwa & Schaubroeck, 2009)? How does ethical leadership flow through various levels of management within organizations (Mayer et al., 2009)? And, does ethical leadership help or hurt a leader's promotability within organizations (Rubin, Dierdorff, & Brown, 2010)? The purpose of our article is to review literature that is relevant to the descriptive study of ethics and leadership, as well as outhne areas for future empirical study. We first discuss ethical leadership and then draw from emerging research on what often is called "dark" (destructive) organizational behavior, so as to widen the boundaries of our review to also include ««ethical leadership. Next, we discuss three emerging trends within the organizational behavior literature—1) emotions, 2) fit/congruence, and 3) identity/identification—that we believe show promise in extending current thinking on the influence of leadership (both positive and negative) on organizational ethics. We conclude with a discussion of important issues that are relevant to the advancement of research in this domain. A REVIEW OF SOCIAL SCIENTIFIC ETHICAL LEADERSHIP RESEARCH The Concept of Ethical Leadership Although the topic of ethical leadership has long been considered by scholars, descriptive research on ethical leadership is relatively new. Some of the first formal investigations focused on defining ethical leadership from a descriptive perspective and were conducted by Treviño and colleagues (Treviño et al., 2000, 2003). Their qualitative research revealed that ethical leaders were best described along two related dimensions: moral person and moral manager. The moral person dimension refers to the qualities of the ethical leader as a person. Strong moral persons are honest and trustworthy. They demonstrate a concern for other people and are also seen as approachable. Employees can come to these individuals with problems and concerns, knowing that they will be heard. Moral persons have a reputation for being fair and principled. Lastly, riioral persons are seen as consistently moral in both their personal and professional lives. The moral manager dimension refers to how the leader uses the tools of the position of leadership to promote ethical conduct at work. Strong moral managers see themselves as role models in the workplace. They make ethics salient by modeling ethical conduct to their employees. Moral managers set and communicate ethical standards and use rewards and punishments to ensure those standards are followed. In sum, leaders who are moral managers "walk the talk" and "talk the walk," patterning their behavior and organizational processes to meet moral standards. ETHICAL AND UNETHICAL LEADERSHIP 585 Treviño and colleagues (Treviño et al., 2000, 2003) argued that individuals in power must be both strong moral persons and moral managers in order to be seen as ethical leaders by those around them. Strong moral managers who are weak moral persons are likely to be seen as hypocrites, failing to practice what they preach. Hypocritical leaders talk about the importance of ethics, but their actions show them to be dishonest and unprincipled. Conversely, a strong moral person who is a weak moral manager runs the risk of being seen as an ethically "neutral" leader. That is, the leader is perceived as being silent on ethical issues, suggesting to employees that the leader does not really care about ethics. Subsequent research by Brown, Treviño, and Harrison (2005:120) further clarified the construct and provided a formal definition of ethical leadership as "the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making." They noted that "the term normatively appropriate is 'deliberately vague'" (Brown et al., 2005: 120) because norms vary across organizations, industries, and cultures. Brown et al. (2005) ground their conceptualization of ethical leadership in social learning theory (Bandura, 1977, 1986). This theory suggests individuals can learn standards of appropriate behavior by observing how role models (like teachers, parents, and leaders) behave. Accordingly, ethical leaders "teach" ethical conduct to employees through their own behavior. Ethical leaders are relevant role models because they occupy powerful and visible positions in organizational hierarchies that allow them to capture their follower's attention. They communicate ethical expectations through formal processes (e.g., rewards, policies) and personal example (e.g., interpersonal treatment of others). Effective "ethical" modeling, however, requires more than power and visibility. For social learning of ethical behavior to take place, role models must be credible in terms of moral behavior. By treating others fairly, honestly, and considerately, leaders become worthy of emulation by others. Otherwise, followers might ignore a leader whose behavior is inconsistent with his/her ethical pronouncements or who fails to interact with followers in a caring, nurturing style (Yussen & Levy, 1975). Outcomes of Ethical Leadership Researchers have used both social learning theory (Bandura, 1977,1986) and social exchange theory (Blau, 1964) to explain the effects of ethical leadership on important outcomes (Brown et al., 2005; Brown & Treviño, 2006b; Mayer et al , 2009; Walumbwa & Schaubroeck, 2009). According to principles of reciprocity in social exchange theory (Blau, 1964; Gouldner, 1960), individuals feel obligated to return beneficial behaviors when they believe another has been good and fair to them. In line with this reasoning, researchers argue and find that employees feel indebted to ethical leaders because of their trustworthy and fair nature; consequently, they reciprocate with beneficial work behavior (e.g., higher levels of ethical behavior and citizenship behaviors) and refrain from engaging in destructive behavior (e.g., lower levels of workplace deviance). 586 BUSINESS ETHICS QUARTERLY Emerging research has found that ethical leadership is related to important follower outcomes, such as employees' job satisfaction, organizational commitment, willingness to report problems to supervisors, willingness to put in extra effort on the job, voice behavior (i.e., expression of constructive suggestions intended to improve standard procedures), and perceptions of organizational culture and ethical climate (Brown et al., 2005; Neubert, Carlson, Kacmar, Roberts, & Chonko, 2009; Toor & Ofori, 2009; Walumbwa & Schaubroeck, 2009). At the group level, supervisory ethical leadership is positively related to organizational citizenship behavior and psychological safety, and negatively related to workplace deviance (Mayer et al., 2009; Walumbwa & Schaubroeck, 2009). Ethical leadership enhances followers' perceptions of important job characteristics such as autonomy and task significance (Piccolo, Greenbaum, Den Hartog, & Folger, 2010), the later mediating the relationship between ethical leadership and follower effort. At the highest levels of management, executive ethical leadership is positively related to perceived top management team (TMT) effectiveness as well as optimism among TMT members (De Hoogh & Den Hartog, 2008). Ethical leaders are seen as having greater potential for promotion to senior management positions, especially in contexts in which there is a high pressure to perform (Rubin et al., 2010). Previous research has shown that high pressure contexts are related to unethical behavior (Robertson & Rymon, 2001). According to Rubin et al. (2010), ethical leadership sends a strong signal that an individual is potentially suitable for the pressures of senior management because of his or her ability to maintain strong ethical performance in the face of such pressure. In addition, scholars have investigated the ethical dimensions of various styles of leadership. Most notably, transformational (Bass, 1985; Bass & Avolio, 1993) and charismatic leaders (Conger, 1999; Conger & Kanungo, 1998) are thought to be ethical leaders who model ethical conduct (Avolio, 1999), engage in ethically positive modes of influence (Kanungo & Mendonca, 1996), operate at higher levels of moral reasoning (Turner, Barling, Epitropaki, Butcher, & Milner, 2002), and transform their followers into moral leaders (Bums, 1978). Transformational and charismatic leadership have been studied extensively (see Avolio, Walumbwa, & Weber, 2009; Judge & Piccolo, 2004 for reviews), and the cumulative findings suggest that transformational and charismatic leadership are positively associated with important ethics-related outcomes such as follower's perceptions of trust in fairness of their leader (Pillai, Schriesheim, & Williams, 1999) and organizational citizenship behaviors (Podsakoff, MacKenzie, Moorman, & Fetter, 1990). These styles of leadership are also negatively related to outcomes such as employee aggression (Hepworth & Towler, 2004) and workplace deviance (Brown & Treviño, 2006b). A new construct, authentic leadership, also is related to transformational leadership (Luthans & Avolio, 2003; Walumbwa, Avolio, Gardner, Wemsing, & Peterson, 2008) and shares its strong emphasis on the ethical dimension of leadership. With the recent development of the Authentic Leadership Questionnaire (ALQ; Walumbwa et al., 2008), future research linking authentic leadership to important ethics-related outcomes is promising. ETHICAL AND UNETHICAL LEADERSHIP 587 Antecedents of Ethical Leadership Researchers very recently have begun to explore the influences on ethical leadership. Both situational (e.g., role modeling) and individual (e.g., personality traits) predictors of ethical leadership have been proposed (Brown & Treviño, 2006a) but there is little published research testing these and other potential antecedents. In one of the few empirical studies, Walumbwa and Schaubroeck (2009) found that the personality dimensions of agreeableness and conscientiousness were positively related to ethical leadership. Obviously, there are many opportunities for investigating the influences on ethical leadership in future research.