Professional Documents
Culture Documents
DOI 10.1007/s10551-010-0670-3
ABSTRACT. Since time immemorial, the phenomenon studies about leadership (Bass, 1990), only a few are
of leadership and its understanding has attracted the concerned with the moral dimension of leadership as
attention of the business world because of its important a means to better understand this concept. This
role in human groups. Nevertheless, for years efforts to aspect only started to attract interest from academics
understand this concept have only been centred on when the concern for understanding the wholeness
people in leadership roles, thus overlooking an important
of the ‘‘leadership’’ phenomenon arose amongst
aspect in its understanding: the necessary moral dimension
which is implicit in the relationship between leader and
them, implying to have a focus on the two main
follower. As an illustrative example of the importance of characters involved in the relationship: both the
considering good morality in leadership, an empirical leader and the follower (Bass, 1990; Burns, 1978; Gini,
study is conducted in which a good performance of the 1997; Greenleaf, 1977, 1979). When this perspective
‘‘leader–follower’’ relationship is reflected when indi- is taken into consideration the moral dimension of
viduals perceive ethical leadership in higher hierarchical the process of leadership necessarily arises and attracts
managerial levels. To be precise, findings of this study the attention of academics and professionals in the
demonstrate that follower job response is improved business world. Any relationship requires mutual trust
through an ethics trickle-down partial effect from the in order to be optimal (Kouzes and Posner, 2002) and
Top Manager to the immediate supervisor, and also reveal trust needs, in turn, good morality (Treviño et al.,
both key aspects and managerial level on which the 2000). As a consequence, scholars have started to give
practice of ethical leadership should rest upon to have a
the role of wielding good morality major importance
stronger effect on the follower positive job response.
Practical implications of these findings and directions for
on the part of the leader to better understand that
future research are finally presented. phenomenon, thus getting the optimum out of the
relationship between the leader and the follower
KEY WORDS: ethics, job response, leadership, (Bass, 1990; Burns, 1978; Greenleaf, 1977, 1979;
‘‘leader–follower’’ relationship, trickle-down effect Perez-Lopez, 1998).
In spite of this, the attention paid to empirical
ABBREVIATIONS: SDB: Social desirability bias; SEL: research in this aspect is still very limited. Rather, the
Supervisor’s ethical leadership; TMEL: Top Manager’s study on ethical leadership is still infant (Mayer et al.,
ethical leadership 2009), and knowledge about what exactly ethical
leadership phenomenon comprises is not plentiful
(Toor and Ofori, 2009). Furthermore, the call of
Introduction Brown and Treviño (2006) for future research to
demonstrate a trickle-down effect on ethics from top
Due to its importance in human groups, the concept to bottom is scarcely explored (e.g. Mayer et al.,
of leadership is one of the organizational topics that 2009) and absent when we emphasize on the
have most intrigued researchers for centuries (Burns, necessary identification of the managerial level
1978). However, aside from the high number of (Top Management vs. supervisor) which is more
588 Pablo Ruiz et al.
important in influencing the employee job response. On the other hand, this study is aimed at, keeping
Therefore, we think that more theoretical and in mind the most used and cited study of Treviño
empirical efforts are still necessary to move forward and colleagues (Brown et al., 2005; Treviño et al.,
not only in the organizational behaviour field as 2000), describing the most important parts of the
Wright and Quick (2009) state, but also in the nature of ethical leadership (moral person and
ethical leadership field of study. Thus the purpose of manager). In this sense, this study seeks to contribute
this article is to make a contribution to the devel- to the ethical leadership field by identifying those
opment of the three following aspects, which, in our aspects on which more emphasis should be attached
opinion, are still not definitively comprehended. in order to really create a moral manager and/or a
On the one hand, this study is aimed at empir- moral person – both for Top Management and
ically supporting the important role which is sug- Supervisors – and therefore finally, an ethical lead-
gested to be played by ethics in understanding the ership that contributes to the followers’ deployment
concept of leadership. Indeed, based on the idea of a positive job response.
that leadership is defined as a phenomenon that Finally, and as it is certainly unusual in the liter-
gets: the voluntary adhesion of followers (Guillen ature on ethical leadership (Mayer et al., 2009), we
and Gonzalez, 2001), the necessary effort of fol- have included in the empirical analysis two impor-
lowers to achieve the group and organizational tant variables of leadership – one referred to the Top
objectives (Koontz and Weichrich, 1994), and an Manager and the other one to the Supervisor – and
increase in the followers’ performance (Drucker, we analyse their distinct influence on the employee
1986), a suitable consequential indicator of leader- job response. Thus our findings are also thought to
ship may be the extent to which followers feel make a relevant contribution to the literature by
motivated and ‘‘comfortable to bring the best of extending the results obtained by Mayer et al. (2009)
their knowledge and abilities’’ to the organization on the existence of a trickle-down effect on ethics
(Offerman, 2004, p. 832). Thus, the more followers with additional and distinct job outcomes. More
deploy positive job attitudes and behaviour, the importantly, our findings may help to resolve a
more effective the practiced leadership (Ciulla, typical controversy surrounding literature, and re-
2004), and the higher the performance of the ferred to the knowledge about the managerial level,
relationship between the leader and the follower is whether Top Management (Barney, 2005; Weaver
thought to be. Drawing on this perspective we et al., 2005) or Supervisor (Brandes et al., 2004),
think that in order to confirm the importance of which is more influential on the employee positive
ethics in leadership, empirical exploration of the job response (Mayer et al., 2009).
relationship between ethical leadership and follower In order to fulfil all the above proposed lines of
positive job response is necessary. Certainly, some action, we proceed as follows. First we carry out a
recent literature exists on such matter (e.g. Brown literature review of research on theories of leadership
et al., 2005; Chiaburu and Lim, 2008; Mayer et al., to show how the moral dimension may imply an
2009; Toor and Ofori, 2009) but empirical research important aspect to consider to adequately defining
on the topic is scarce (Mayer et al., 2009) and the and understanding the said phenomenon. Secondly,
wide range of positive employee job attitudes and in order to delineate hypotheses, we review litera-
behaviour has not been considered to the present ture and discuss about the distinct dimensions which
(e.g. turnover intention). Therefore, the findings of make Top Managers and Supervisors be considered
this study are thought to advance the understanding as ethical leaders, we review literature on the rela-
of the role played by ethics in leadership, particu- tionship between ethical leadership and the follower
larly in an unexplored cultural context (Spain), and positive job response, and finally analyse the theo-
in an industry such as the banking sector (the retical arguments supporting the existence of a
insurance sector was also part of the sample of the trickle-down effect on ethics. Thirdly, we describe
study) whose moral failure has been suggested to be the research method and findings. Finally we present
as the causal epicentre of the current world eco- the discussion of results and outline contributions
nomic and financial crisis. and implications for researchers and practitioners.
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 589
Understanding the ‘‘leadership’’ conceptual out on this topic, leadership, practically speaking, has
nature always been considered as a relation, purely on a
transactional basis (Bass, 1990). However, according
In the past century many theories have been to this perspective, leadership was understood ego-
developed with the objective of understanding istically and this undoubtedly led to the non-opti-
leadership better. According to the perspective from mization of the results of the relationship between
which this phenomenon is analysed, these theories leader and follower, since leadership was understood
can be grouped into two main approaches: Tradi- from a context of exchange in which not only the
tional and Relational. follower but also the leader obtained something
which was already bargained. Thanks to the new
emphasis which was attached more than three dec-
Traditional approach to leadership ades ago on the relationship itself and on the
requirements by the follower from such relationship,
All of these theories (e.g. Blake and Mouton, 1964; different more enriching leadership perspectives such
Fiedler, 1967; Hersey and Blanchard, 1988; Stodgill, as transformational leadership (Bass, 1990; Burns,
1948) were well accepted by academics. However, 1978) and servant leadership (Greenleaf, 1977, 1979)
most of them are focused only on the leader as a were developed, through which the leader–follower
person and on his/her particular style, without relationship is improved.
considering other important aspects in the leadership Indeed, in contrast to the transactional approach,
process. Only contingent theories focus their atten- moral quality of leadership is seen to have increased
tion on other elements apart from the leader as a outstandingly on both new approaches (Whetstone,
person (e.g. type of task, the follower’s job experi- 2002), reason for why the very best of the existing
ence and maturity) as important factors in predicting relationship between the leader and the follower
leadership and leadership’s effectiveness. All of this may be obtained. Both transformational leader the-
implies an important move forward and a trend in ory and servant leader theory emphasize other types
the understanding of the phenomenon, specifically, of associations which are not exclusively limited
when the academic interest began to be focused on to formally required behaviour on the part of the
one of these elements: the follower. Leadership, then, employee (follower) but yield optimum results on
was left without much attention as a one person both sides of the relationship. On the one hand, the
phenomenon and begun to be considered rather as transformational leader stimulates followers to do
an interpersonal devotee relationship between two more than it was initially expected (Bass, 1985). The
agents (leader and follower) (Gini, 1997), in which relationship would be based on social aspects of
knowing and explaining the reasons why the fol- the exchange (Cardona, 2000) and appealing to the
lower is motivated to follow and adhere to the leader satisfaction of higher order needs (e.g. self-realiza-
was essential to understanding the phenomenon tion, self-esteem, etc.) and to the concern for
better. Thus, in the past few decades of the past common good/welfare (Bass and Steidlmeier, 1999)
century, new theories on leadership came up with an would give rise to a change in beliefs, values
emphasis on the analysis of the phenomenon from a (extending to a higher moral level) (Burns, 1978)
psychological point of view on human motivation. and also follower’s attitudes and actions. On the
These new theories on leadership form the relational other hand, the servant leader, through serving and
approach to understand the leadership phenomenon, satisfying the main follower’s needs, would inspire
taking into account the moral dimension of leader- not only intrinsic or extrinsic motivations but also
ship as a central role for that purpose. transcendental motivation in the follower, by trying
to transform the follower into a servant who will
look for the good in the consequences over others
Relational approach to leadership by his/her actions.
Therefore, it is through the development of these
Even though the relational dimension of leadership theories that a new focus appears on morality as a
has never been the focal point of the studies carried necessary aspect to understand the leadership
590 Pablo Ruiz et al.
phenomenon, leading to the conclusion that the It seems clear that an ethical leader must dem-
moral dimension is closely linked to leadership onstrate that he/she is a morally good person who
(Ciulla, 1995; Sendjaya, 2005). It should then be develops appropriate behaviour (Brown et al., 2005),
through ethics that the better performance of the making the person who exercises this behaviour to
‘‘leader–follower’’ relationship can be understood excel him/herself in human terms (Guillen, 2006)
and the reason for why the follower freely adheres to and which suggests a motivation to act and to decide
the leader’s will. Indeed, the follower’s perception of in an altruistic nature (Brown et al., 2005). There-
ethical leadership would make the follower feel as fore, honesty, justice, integrity, caring for others,
having greater confidence in the leader (Kouzes and empathy, listening to others, etc. are attitudinal and
Posner, 2002) and in the relation kept with him/her. behavioural aspects which are linked to being a
As the research literature suggests (e.g. Brown et al., morally good person. However, being morally good is not
2005; Ehrhart, 2004; Liden et al., 2008), this would enough since an ethical leader must show an image
probably result in a more positive job response, thus of good morality to followers; that is, being a morally
showing not only the follower’s well-being but also good manager. Then, if in addition to being a morally
a strong follower’s loyalty to the leader’s will. good person the leader does not care about if (a) his/
her ethical behaviour is perceptible by followers, (b) the
consequences of the follower’s ethical/unethical behaviour
Ethical leadership: constitution are not rewarded or sanctioned or/and (c) ethics and its
and relationship with follower relevance to decisions/actions are not thoroughly commu-
positive job response nicated to followers, ethical behaviour amongst the
followers might not be promoted (Brown et al.,
The research literature seems to suggest the relevance 2005).
of ethics in understanding the ‘‘leadership’’ phe- In conclusion, taking into practice the two pillars
nomenon, but how can ethical leadership be defined? explained is the path a formal leader should follow to
In general, ethical leadership implies thoughts, values, be a truly ‘‘ethical’’ leader who earns the devotion of
attitudes and morally good behaviour that are directed the follower voluntarily. Ethical leadership, as pre-
in such a way as to promote ethical behaviour in the viously described, entails the inextricable virtuous-
employees (Brown et al., 2005; Treviño et al., 2000). ness (Ciulla, 2004; Havard, 2007) with character
Indeed, ethical leaders are understood to exhibit virtues such as love, faithfulness, temperance, jus-
commitment to ethical values for getting the fol- tice… (Neubert et al., 2009) and some other positive
lower’s implication and free adhesion to them. Then characteristics (e.g. caring-concern for others, fair
an ethical leadership requires the leader to not only be treatment to others or altruism) (Treviño et al.,
morally good natured but also to motivate the fol- 2000) which not only facilitate the achievement of
lower to behave and perform well (Brown et al., followers’ key needs and desires of human beings
2005). So according to Treviño et al. (2000) and (e.g. solidarity, trust, security, safety) (Garcia-
Brown et al. (2005), it is believed that an ethical leader Echevarria, 1993; Neubert et al., 2009) but also
is created by the development of two necessary pillars: enable the follower to move forward in moral rea-
being both a morally good manager and a morally good soning (Schminke et al., 2005) and behave ethically
person (Figure 1). (Peterson, 2004). As a consequence, the achieve-
ment for the follower of the Aristotle’s ‘‘eudaimo-
nia’’ concept is easier, and then the flourishing of the
follower as human being (Ciulla, 2004), finally
affecting his/her job response in a positive manner.
ETHICAL LEADERSHIP Indeed, in his Nicomachean Ethics, Aristotle (2009)
Morally good Morally good defended that a virtuous behaviour in accordance
person manager
with reason is the main way to be truly happy/
eudaimon (both in terms of personal-material and of
Figure 1. Pillars of ethical leadership. Source: Adapted moral development), to live well and do well.
from Treviño et al. (2000). Therefore, in the presence of ethical leadership, not
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 591
only do followers flourish as human beings by feeling ment-employees’’ ties is thought to be created (Katz
the existence of adequate conditions to do it but also and Kahn, 1966), thus reinforcing the influence of
by being influenced in moral terms, and then by TMEL on the employee’s job response. Thus, when
behaving ethically or practicing virtue (Ciulla, 2004). the morally good manager dimension is perceived in
Some previous empirical studies seem to support such Top Management levels, employees may feel that
statement as they conclude that positive employee job they are supported, taken care of (Valentine et al.,
response is reflected when either a context of an 2006) and fairly treated by Top Management (Tre-
ethically virtuous type is experienced (Neubert et al., viño et al., 1998), and they also may perceive that
2009; Rego et al., 2010; Sharma et al., 2009) or an different and basic needs and desires for them (e.g.
ethical/virtuous behaviour is performed by individ- security, safety, solidarity) (Garcia-Echevarria, 1993)
uals (Baker et al., 2006; Burke et al., 2009; Roman can be satisfied (Neubert et al., 2009). In addition,
and Munuera, 2005; Ryan, 2001). employees may develop relational psychological
Undoubtedly, an ethical leader is associated with contracts which reinforces the mutual commitment
the act of real authority that generates trust in the acquired by both parties (individual and Top
follower and changes the follower’s mind, heart and Management) in order to work for mutual (Top
will (Guillen and Gonzalez, 2001). Then it is very Management-employee) well-being (Barnett and
likely that the follower makes more effort in doing Schubert, 2002). Therefore, when Top Manage-
tasks that are initially expected from him/her (Brown ment’s ethical leadership is perceived, a positive
et al., 2005; Chiaburu and Lim, 2008; Mayer et al., contribution to perform valuable positive job atti-
2009) and who is generally happy, satisfied and loyal tudes and behaviour may be deployed by employees.
to the company by developing work attitudes that are Ample research suggests such relationship as a result of
very valuable to the company (Koh and Boo, 2001; the outcomes obtained: job satisfaction increases (Koh
Neubert et al., 2009; Toor and Ofori, 2009). Spe- and Boo, 2001; Tsai and Huang, 2008; Valentine and
cifically, job satisfaction, (affective) organizational Fleischman, 2004; Viswesvaran et al., 1998; Vitell and
commitment, citizenship behaviour and lower inten- Davis, 1990), organizational commitment increases
tion to leave are expected on the part of the follower, (Treviño et al., 1998; Tsai and Huang, 2008; Valen-
which are only some of the attitudes and behavioural tine and Barnett, 2002; Valentine et al., 2002) and
aspects which may be used to measure the perfor- turnover intention decreases (Mulki et al., 2008;
mance of the ‘‘leader–follower’’ relationship. Peterson, 2003; Pettijohn et al., 2008; Shafer, 2002)
when an ethical context or simply Top Management’s
ethics/interest for ethics is perceived by employees.
Top Manager’s ethical leadership and employee job Research results also demonstrate a significant influ-
response ence on the employee citizenship behaviour, espe-
cially when an ethical/virtuous context is perceived
Although due to factors related to the size of the by them (Mayer et al., 2009; Rego et al., 2010).
organization it is not probable for an employee to Therefore, TMEL may get the best employee job
perceive the Top Manager’s morally good person, Top response, and as a consequence the following
Manager’s ethical leadership (TMEL) is suggested as hypotheses are proposed:
an important influence on employee job response
since it is possible to perceive the Top Manager’s H1a: Top Manager’s ethical leadership has a posi-
morally good manager, that is, his/her image of good tive influence on employee job satisfaction.
H1b: Top Manager’s ethical leadership has a posi-
morality. Then if the Top Manager shows that ethics
is not only a common aspect in his/her work-life but tive influence on employee (affective) orga-
also important in the operation of the organization, nizational commitment.
H1c: Top Manager’s ethical leadership has a negative
the ethical tone is set for the whole organization
influence on employee turnover intention.
(Mayer et al., 2009). Furthermore, due to the great
H1d: Top Manager’s ethical leadership has a posi-
distance separating Top Management levels from
tive influence on employee organizational
lower hierarchical levels, a magical image of Top
citizenship.
Management facilitating emotional ‘‘Top Manage-
592 Pablo Ruiz et al.
Supervisor’s ethical leadership and employee job response H2c: Supervisor’s ethical leadership has a negative
influence on employee turnover intention.
In the case of the supervisor’s ethical leadership (SEL), H2d: Supervisor’s ethical leadership has a positive
as supervisors are very proximal to employees, the influence on employee organizational citi-
follower may not only get the impression that the zenship.
leader is morally good but also that he/she is really
morally good. In fact, both pillars may be perceived by
the follower who may be able to identify himself/
herself to a higher degree with leaders and their values Organizational trickle-down effect: Top
(Brown et al., 2005). Thus, there is not a magical Manager–Supervisor–employee job response
image but a real image derived from the continuous
interaction maintained with the leader. Therefore, Finally, it is suggested that Top Manager’s ethical
insofar supervisors are perceived to practice an quality may be reflected in other leaders in the
ethical leadership, ethical, loving, faithful and tem- organization. From the Role-Set Theory perspective
perate behaviour, trustworthiness, honesty, integ- (Merton, 1957), it is suggested that the formal
rity, listening, concern and responsibility for others authority level of the person which is considered as a
(employees or community) and interpersonal fairness referent develops a key role in affecting the indi-
are some of the pleasant aspects that may be perceived vidual’s attitudes and behaviour, above all consid-
by followers from the formers (Brown and Treviño, ering it in conjunction with other important factors
2006; Neubert et al., 2009; Treviño et al., 1998) and like frequency of interaction and intra-organizational
with high probability, in the immediate work envi- distance. Therefore, keeping in mind that Top
ronment (Neubert et al., 2009). Drawing on these Management has a broad impact on the organization
conditions, then, followers may be satisfied and as a whole (Mayer et al., 2009), it may be suggested
motivated to respond in a positive manner (Brown that the moral quality level of the Top Manager’s
and Treviño, 2006; Brown et al., 2005; Ehrhart, 2004) leadership flows through a trickle-down effect in the
and even give the best of themselves for the good of business organization (Mayer et al., 2009). Different
the leader, the group and the organization. Previous hierarchies in management may be influenced
empirical research exists in support of such association through a cascade effect by the moral quality level of
as employee job satisfaction (Neubert et al., 2009; the Top Manager’s leadership suggesting that job
Toor and Ofori, 2009), organizational commitment response consequences of that leadership are medi-
(Neubert et al., 2009) and citizenship behaviours ated by the different mid-low level leaders. Then if
(Chiaburu and Lim, 2008; Mayer et al., 2009) are the employee’s supervisor may be one of these
found to be increased when ethical leadership is per- influenced leaders, SEL may have a probable medi-
ceived in immediate supervisors. Also previous re- ation effect on the proposed relationship between
search suggests the above-mentioned association TMEL and employee job response. However, this
when turnover intention of the individuals is the focal mediation effect cannot be total as some logical
dependent variable, as trust in supervisor, a necessary arguments can be claimed in support for the par-
ingredient for ethical and good leadership (Kouzes and tiality of this effect. For example, it is not unusual to
Posner, 2002), is found negatively associated with find multiple small informal groups in the organiza-
intention to quit the organization (Mulki et al., 2008). tion which may be guided by different values or
Therefore, SEL is expected to yield a positive job norms from those formally implemented in the
response from followers, thus leading to the proposi- organization (Schein, 1992). Thus, although employ-
tion of the next hypotheses: ees perceive the practice of ethical leadership in Top
Management hierarchical levels, they may be rather
H2a: Supervisor’s ethical leadership has a positive negatively influenced in terms of job response by the
influence on employee job satisfaction. immorality of supervisors and vice versa. Further-
H2b: Supervisor’s ethical leadership has a positive more, both Top Manager and supervisors are thought
influence on employee (affective) organiza- to possess different personality backgrounds (Machi-
tional commitment. avellianism, locus of control, conscientiousness,
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 593
agreeableness, etc.) which significantly weigh at the insurance industries. Surveys were handed to a
moment of deciding or behaving ethically/unethi- sample of 4,500 employees and confidentiality was
cally and in constructing an ethical leadership (Brown guaranteed, both in individual and corporative
and Treviño, 2006). Drawing on the arguments terms. Due to the fact that organizational variables
above provided, we have proposed that the trickle- are included in the questionnaire and having the aim
down effect on ethics from top to bottom, ending in to receive trustworthy information, all persons who
an influence on the employee’s job response, is cer- only had a temporal contract and had been working
tainly likely to occur, but SEL plays only a partial less than 1 year for the company at the time of
mediation role in such relationship. A third hypoth- receiving the questionnaire were not accepted for
esis (H3) is proposed, which means adding a sub- the study. In the end 525 usable surveys were re-
hypothesis (H3a): ceived, which implies a response rate of 11.7%. This
response rate is reasonable in organizational behav-
H3 : Supervisor’s ethical leadership partially medi- iour research especially if we consider that employ-
ates the relationship between Top Manager’s ees from multiple different business organizations
ethical leadership and employee job response. have been surveyed in this study (Valentine et al.,
H3a: Top Manager’s ethical leadership positively 2006) which is also necessary and appropriate in this
influences Supervisor’s ethical leadership. type of research (Valentine et al., 2006).
These last hypotheses combined with the previous To explore the possibility of non-response bias, we
ones make it possible to reflect the model which is assessed possible differences in relevant variables
being tested in this article in Figure 2. across early and late respondents under the assump-
tion that late respondents are more similar to
non-respondents than early respondents are to non-
Methodology respondents (Armstrong and Overton 1977). Two-
sample t-tests and chi-square tests on dependent
Sample and procedure variables in this study, respectively, indicated that
early (the first quarter) and late respondents (the last
A survey instrument was used to gather data to test quarter) do not differ from one another at the 5%
the relationships shown in the research model, significance level suggesting that non-response bias is
having decided to choose Spanish banking and not a concern. Furthermore, a chi-square test shows no
JOB SATISFACTION
ORGANIZATIONAL H1c
COMMITMENT
H2b H1d
SUPERVISOR’S
ETHICAL
TURNOVER
INTENTION
H2c LEADERSHIP
Top
H2d Manager
ORGANIZATIONAL Employee
CITIZENSHIP
job response
Supervisor
significant differences at the 5% level between sectors (‘‘helpful behaviour’’, ‘‘sportsmanship’’, ‘‘individual
for both TMEL and SEL assessment by respondents. initiative’’ and ‘‘loyalty’’ dimensions), (e.g. I usually
Finally, as the information was gathered through only suggest new ideas to improve the department or the office
one instrument, suggestions to avoid common where I work). Finally, a group of socio-demograph-
method bias were considered in the questionnaire ical questions are included (age, gender, level of
(Podsakoff et al., 2003). In addition a one-factor education, organizational tenure and sectorial
Harman test was conducted in order to assess the occupancy) whose inclusion in this research is really
possible existence of this problem (Scott and Bruce, necessary due to the probable influence they may
1994). The principal component factorial analysis have on dependent attitudinal and behavioural
done to all the items of the questionnaire reflected variables (Cotton and Tuttle, 1986; Mathieu and
that up to 8 factors with eigenvalues greater than 1 Zajac, 1990).
explained the 67% of the variance. As many factors
accounted for that variance and the first factor only
explained the 30% of that, it is suggested that common Statistical method
method bias cannot be a problem in this study.
Structural equations analysis was used since it pre-
sents some advantages over traditional multivariate
Operacionalization techniques (Haenlein and Kaplan, 2004). Specifi-
cally, we used partial least squares (PLS), a powerful
Previously developed measures were utilized in this method of analysis (Chin et al., 2003) which
study although in some cases, items were addition- develops a flexible modelization through rigorous
ally added. All measures were rated with a five-point and robust statistical procedures (Wold, 1979). We
scale anchored by ‘‘1’’ (completely disagree) and ‘‘5’’ considered that PLS is a suitable analysis technique
(completely agree). On the one side, in relation to for our study since PLS is a statistical tool primarily
independent variables, we used a seven-item scale intended for causal-predictive analysis that has
for measuring TMEL. This is an adapted scale from proved very useful in situations of high complexity
the Corporate Ethical Values’ scale (Koh and Boo, but low theoretical information (Vitell et al., 2010).
2001; Vitell and Davis, 1990), adding some items Thus, PLS is adequate in developing and con-
from other researches (Treviño and Weaver, 2001; structing theory (Wold, 1979) or for testing theories
Treviño et al., 1998) to emphasize the morally good that are at a developmental stage (Fornell, 1982), as it
manager dimension (e.g. Top Manager in my organi- is the case in this study. Furthermore, SEM tech-
zation is a model of ethical behaviour). SEL was mea- niques are particularly recommended to test the
sured by a ten-item scale from Brown et al. (2005) in mediation hypothesis (James et al., 2006) and several
which items absorb both the morally good manager and recent studies can be found analysing this effect with
morally good person aspects (e.g. My superior conducts PLS (e.g. Cording et al., 2008). Accordingly, the
his/her personal life in an ethical manner). On the other PLS via PLS-Graph 3.00 (Chin, 2003) was used for
side, in relation to dependent variables, item- hypothesis testing and the stability of the estimates
reduced scales were used. Job satisfaction was was tested via a bootstrap re-sampling procedure
measured by a three-item scale from the General (500 sub-samples). SPSS 17.0 statistical software was
Satisfaction Scale (Seashore et al., 1982). (Affective) also used although only for socio-demographical
organizational commitment was measured by a descriptive and correlational exploration of the data.
three-item scale by Allen and Meyer (1990) which
has been previously validated by Moideenkutty
et al. (2001). Turnover intention was measured Results
by Konovsky and Cropanzano’s three-item scale
(1991), and organizational citizenship was measured The results obtained will be described in the next
by a five-item scale adapted from the four-item sections. Due to the fact that the number of
Cardona et al.’s scale (2004) and one item designed respondents (525 respondents) was much more than
for this research to cover the ‘‘loyalty’’ dimension 10 times the number of predictors (5 predictors), it
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 595
TABLE III
Measurement model: item loadings, construct reliability and convergent validity
TABLE IV
Mean, typical deviations and correlation matrix (AVE in bold)
Mean SD 1 2 3 4 5 6 7 8 9
Notes: Diagonal elements (bold figures) are the square root of the variance shared between the constructs and their
measures. Off-diagonal elements are the correlations amongst the constructs. For discriminant validity, diagonal elements
should be larger than off-diagonal elements in the same row and column.
n.a. Non-applicable.
a
The original variables were transformed to dummy ones; therefore, mean and SD are not applicable.
TABLE V
Direct, indirect, total effects and explained variances
***p < 0.001, **p < 0.01, *p < 0.05 (based on a Student t(499) one-tailed test): t(0.001;499) = 3.106644601;
t(0.01;499) = 2.333843952 and t(0.05;499) = 1.64791345.
a
In the ‘‘explained variance’’ column, socio-demographical contribution is not considered.
existence of the aforementioned mediation effect is also a significant relationship between SEL and
shown. As can be seen in Figure 3, conditions for employee job response (H2a–d); a significant effect
supporting a partial mediation effect (Tippins and for TMEL on employee job response (as observed in
Sohi, 2003) are accomplished: there is a significant the direct model) is greatly diminished in the partial
relationship between TMEL and SEL (H3a); there is mediation model; and lastly, the partial mediation
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 599
TABLE VI
Direct and mediation model: variance explained and strength of the mediation effect
f2 = (R2included - R2excluded)/(1 - R2included); effect sizes of f2 £ 0.02, £ 0.15 and £0.35 are regarded as weak, moderate and
strong, respectively (Chin, 1998b; Cohen, 1988).
(A)
JOB SATISFACTION
R2= 0.200
H1a= 0.439
ORGANIZATIONAL
COMMITMENT
R2= 0.245
H1b= 0.481 TOP MANAGER’S
ETHICAL
LEADERSHIP
H1c= -0.310
TURNOVER
INTENTION
R2= 0.114
H1d= 0.544
CONTROL VARIABLES
ORGANIZATIONAL OCCUPANCY LEVEL OF EDUCATION
CITIZENSHIP
ORGANIZATIONAL TENURE
R2= 0.351
(B)
H2 2d= 0.452*** H2a= 0.341
JOB SATISFACTION
H1a= 0.252 TOP MANAGER’S
R = 0.280 ETHICAL
LEADERSHIP
H1b= 0.359
ORGANIZATIONAL H2b= 0.221 H1c= -0.204 H3a= 0.554
COMMITMENT
Figure 3. Mediation effect: comparative analysis of models. a Structural model incorporating direct effects. b Struc-
tural model incorporating mediation effect. Notes: ***p < 0.001, **p < 0.01, *p < 0.05 (based on a Student t(499)
one-tailed test): t(0.001; 499) = 3.106644601; t(0.01;499) = 2.333843952 and t(0.05;499) = 1.64791345.
In the end, following the recommendations of lower than 0.139, with the ‘‘citizenship behaviour’’
Chin (2010) in terms of reporting a PLS analysis, as variable having a maximum explained variance of
principal indicators we used the R2 values of the 0.367, and the mean level of the explained variance
endogenous constructs to assess the predictiveness of of the implied variables of 27.42%. In addition to the
the model. As shown in Table VI, it can be stated R2 statistic, we also performed the Stone–Geisser test
that our research model has an appropriate predictive to assess model fit (Geisser, 1975; Stone, 1974), a
power for all the endogenous variables since all of procedure which uses the Q2 test statistic as an
them are explained in a percentage higher than 10% analogue of the R2 statistic, and which needs to be
which is the optimal minimum according to Falk greater than zero in order to show predictive rele-
and Miller (1992). More specifically, the endoge- vance for the dependent variable (Chin, 2010). With
nous variables have reached R2 values that are never the only exception of the turnover intention
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 601
variable, all the Q2 test values are positive, which As it was already referred to above when explaining
indicates that for most of the endogenous variables, the item-trimming process, only one of the aspects
observed values are well reconstructed by the model of the morally good manager pillar ‘‘ethical/unethical
and its parameter estimates (Chin, 2010). Finally, to behaviour reward/sanction’’ does not seem to be
conclude, we calculated the Tenenhaus et al.’s accurate for performing an ethical leadership, as it
(2005) global fit index for PLS, which is the geo- does not load well in either the TMEL or SEL
metric mean of the average communality and the constructs. Indeed, making ethics perceptible and com-
average R2. As expected, this value is higher in the munication on ethics and its importance seems to be the
mediation model (GoF = 0.4367) than in the direct main morally good manager’s aspects to be considered
model (GoF = 0.397), which represents a better fit for exercising an effective ethical leadership. Above
for the data in the former case. In addition, the GoF all the former is considered because the latter
value for the mediation model represents in general a does not even appropriately load for the TMEL
good fit for the data (Antioco et al., 2008), since is construct.
above 0.36, a value indicating a large effect size for Contrary to what was to be expected, findings
GoF when considering a cut-off value of 0.5 for the revealed that TMEL has more influence on em-
average communality (Fornell and Larcker, 1981) ployee job response than SEL, having a greater total
and effect sizes for R2 proposed by Cohen (1988) effect on all of the attitude and behavioural variables.
(small 0.02; medium 0.13 and large 0.26). Only when explaining job satisfaction, variance ex-
plained by the supervisor is greater than the one
explained by the Top Manager. These results sup-
Discussion and conclusions port ideas of some authors highlighting that the tone
at the top is critical in affecting employee attitudes
The results obtained support the hypothesis that and behaviour (Barney, 2005; Weaver et al., 2005).
ethical leadership has a significant influence on In our opinion Top Management’s moral authority
employee job response. Indeed, it is unimportant carries more weight with the workforce than a
that in relation to the influence on the employee mixture of higher interaction and lower formal
turnover intention Q2 statistic shows that the model authority (supervisor). So, an interest in ethics from
lacks predictive relevance. Such fact simply means the Top Manager may have greater consequences for
that, in order to better explain such an attitudinal the employees. If Top Manager’s good moral image
variable, other variables and relationships should is perceived, followers may feel that ethics are all
have been considered in the model, as for example important within the organization, not just in a
those which are suggested to exist amongst the job department or group, and this perception may be a
attitudes included in this study (Griffeth et al., 2000), transcendental fact to be strongly appreciated by the
as confirmed by a post hoc analysis. The model employee in any organization.
proposed in the present research was, however, Finally, with regard to the partial mediation effect
empirically supported, thus also proving the signifi- which was hypothesized between TMEL and em-
cant influence of ethical leadership on all the em- ployee job response, results confirm its existence.
ployee job attitudes and behaviour variables Indeed in this research SEL was positively influenced
included. Firstly it is confirmed that TMEL has a by TMEL. This is an expected result because the
significant impact on job satisfaction, (affective) moral quality level of the person with the highest
commitment to the organization, citizenship behav- formal authority may be reflected in other employ-
iour (loyalty, sportsmanship and individual initiative) ee’s moral quality as suggested and confirmed in
and turnover intention; and secondly the same literature (Treviño et al., 1998). Nevertheless, the
results are obtained for these attitude and behav- interesting point is that SEL partially mediated the
ioural aspects by means of the SEL. Then, it seems relationship between Top Manager’s leadership and
that exercising an ethical leadership based on two employee job response, moderately in job satisfac-
pillars that, according to Treviño et al. (2000), help tion and poorly in the rest of the dependent attitude
to positively affect the follower’s ethical behaviour, and behavioural variables. This is an interesting result
is the way to get a positive employee job response. because it shows the proposal by Brown et al. (2005)
602 Pablo Ruiz et al.
and extends the results obtained by Mayer et al. building up a superior unit from which to pass the
(2009) on the statement that Top Management’s formally required limits. Furthermore, the follower
effort in exercising an ethical leadership to promote surely would be influenced in moral terms (Schm-
ethics may translate into influencing on lower-level inke et al., 2005), which would contribute to the
employees’ job response. Indeed, due to the high follower as a human being, helping him/her by
interaction and proximity that individuals present in means of moral virtuous behaviour to attain the
their relation with supervisors, and since supervisors highest and most complete good/end: the true
play an important role in filtering, interpreting and happiness (eudaimonia) Aristotle (2009) refers to in
enacting formal policies, supervisors are thought to his ‘‘Nicomachean Ethics’’. As a consequence, a
be the key mechanism through which Top Man- positive job response on the part of the follower is
agers influence on lowest-level employees’ behav- expected so we believe that through including the
iour and attitudes (Mayer et al., 2009). However, as moral dimension when trying to understand the
found in this study, TMEL’s effect on lower hier- leadership phenomenon this concept becomes en-
archical levels continues causing a direct impact on riched and the leader–follower relationship becomes
the follower’s job attitudes and behaviour. As we improved.
have found that the mediation effect for the super-
visor on the TMEL-employee job response is partial,
we can highlight the important role that Top Contributions and developmental implications
Management plays in the employee’s mind and will,
no matter the organizational distance between them. The primary contribution of this study is high-
In summary, the results obtained in this research lighting the importance of including the moral
support the belief that ethics may be an important dimension to understand the leadership phenome-
aspect to be considered when exercising leadership non by means of obtaining a better ‘‘leader–
in business organizations. Not only does the moral follower’’ relationship. Through this objective, this
dimension of leadership give better comprehension study exceeds the limits of empirical grounding on
but it contributes to a stronger and successful ‘‘lea- this matter, since by showing the association be-
der–follower’’ relationship. Indeed, the leadership tween ethical leadership and employee positive job
phenomenon is only understood in a plural context, response, the ‘‘leader–follower’’ relationship may be
that is to say, the leader needs the followers to act justified to work adequately. Improving the perfor-
which results in the fact that good morality becomes mance of the ‘‘leader–follower’’ relationship in this
necessary, especially as leadership has as an essential way may be a logical consequence of an effective
task, that of understanding and satisfying the fol- leadership that achieves the goal of attracting and
lower. In this sense, trust is essential in any rela- getting the best from the followers.
tionship and this is gained when followers are sure This study also contributes to the literature by
that the leader does not want to take advantage of identifying the hierarchical level of management in
them but he/she is honest, trustworthy and is con- which managers play a more important role in
cerned with their needs and he/she is willing to give improving the employee job response. We differ-
up particular interests for them (Mele, 2000). entiate between a higher formal authority (Top
Therefore, ethical leadership makes the follower Manager) and a less formal authority and higher
trust in the leader and satisfies the expectation interaction (supervisor). Results obtained in this
of the relationship, achieving as a consequence research confirm that formal authority (Top Man-
an improvement in terms of performance of such ager) plays a more important role, no matter the
relationship. The relationship between the two large organizational distance separating Top Man-
agents based on social aspects is better than the one ager from the average workforce. Further, the cas-
based on instrumental aspects since in the former the cade effect on ethics happens only in a partial way
follower’s effort is greater than formally expected in since the Top Manager still goes on having an
the job contract. The perception of this type of important and significant direct effect on employee
exchange makes it possible that collaborators identify job response, which helps to resolve the classical
themselves with the leader up to the point of controversy existing about the most influential
Improving the ‘‘Leader–Follower’’ Relationship: The Ethical Leadership Trickle-Down Effect 603
managerial level on the employee. The results Theory of the firm (Grant, 1991; Peteraf, 1993;
obtained agree with literature which states that Rumelt, 1991), since such outcomes are a reflection
promoting ethical behaviour amongst employees of the well-being of such hard-to-imitate business
must be primarily at the top of the organization assets as human beings truly are (e.g. knowledge,
(Gini, 1997; Schroeder, 2002). Proximity and abilities, know-how, etc.).
interfacing does not seem to matter as much as some
authors think (e.g. Davis and Rothstein, 2006; Fal-
kenberg and Herremans, 1995) and ethical leader- Limitations and future research directions
ship by Top Managers seems to overcome the
supervisors’ in having an effect on employee job re- Some limitations should be considered. First of all,
sponse. Probably, as already stated by Katz and Kahn this research took place only within two industries –
(1966), because of the idealized and magical image banking and insurance – and in a specific cultural
that employees may have of Top Managers when context – Spain – so although it is very probable that
good morality is perceived in them, TMEL is more results may be repeated in other contexts, the
influential on the employee job response than SEL. external validity and spread of our results beyond
Furthermore, as Top Managers may represent the the population of this study is limited. Secondly, the
most important reference for employees (Sims and ‘‘ethics’’ trickle-down effect that seems to exist in
Brinkmann, 2002), when an ethical image is pre- organizational settings has only been contrasted in
sented, it may give the workforce not only the per- two leadership figures when the organizational
ception of being taken care of but also a feeling of trust hierarchical structure is usually much more complex.
in that the whole organization is doing well, which Furthermore, in some cases, workmates may also
will undoubtedly facilitate a positive employee job serve as informal leaders and they may also have an
response. important effect – even greater than in the case of
Finally, this study presents interesting outcomes formal leadership – on the individual’s positive job
having direct implications for managers. In addition response.
to prescribing to firms ‘‘the more ethical manager Another important limitation is that we had no
the more ethical organization’’, our results seem to control over social desirability bias (SDB), a problem
stress the need for ethics in managerial positions to commonly faced in business ethics research (Randall
help the firm to have leaders in all hierarchical levels, and Fernandes, 1991) and in the organizational
and have a source of competitive advantage. To be behaviour field study (Zerbe and Paulhus, 1987).
precise, it seems that the most important aspect that Therefore, this study might have been affected by
any manager should consider in daily managerial the respondents’ tendency to give a favourable
tasks is the personal practice of moral virtuosity, (socially and culturally) image of themselves or
which should be perfectly complemented with others. However, it is necessary to remark that in
continuous efforts to communicate the importance this study respondents assessed the level of morality
of ethics in the group/organization and make per- of other people, so problems of SDB are found
sonal ethics perceptible to subordinates. Indeed, this with greater difficulty (Beekun et al., 2008; Treviño
is the way through which managers may become and Weaver, 2001). In addition, we took some steps
complete leaders who gain recognized authority to reduce as much as possible this problem, for
from subordinates, inspire subordinates willingly in example, we guaranteed confidentiality and the
terms of behaviour and attitude (Gini, 1997) and anonymity for both individuals and companies
obtain a good performance in the relationship be- (Peterson, 2004; Podsakoff, et al., 2003; Randall and
tween the manager and the subordinate. Therefore, Fernandes, 1991) and included reverse score items in
by considering the development of the above- the survey (Podsakoff, et al., 2003). Furthermore, as
mentioned aspects, managers may get from the shown in Table IV, the mean of the focus variables
employees special job outcomes (e.g. job satisfaction, included in this study does not reflect the existence
organizational commitment, citizenship behaviour, of ceiling or floor effects, which are likely to take
etc.) that are considered as signs of possible business place when SDB is present in the data (Mulki et al.,
value generation according to the Resource-Based 2008), and more importantly, a post hoc descriptive
604 Pablo Ruiz et al.
analysis of the data shows that less than 5% of the different hierarchical levels and the final effect on the
responses were of 5 (responses range from 1 to 5) on follower’s ethical behaviour should be tested to de-
those scales which are considered as more prob- scribe some important implications. Moreover,
lematic with regard to this problem (SEL, TMEL informal leadership by workmates should be assessed
and self-ratings of citizenship behaviour). in terms of influence on the individual job response.
As a final limitation, this research considered that a Then, some interesting questions that would extend
positive job response like the one used in this study is the findings of this study are: Does good morality
valid to measure the performance of the leader–fol- really make a difference in producing an effective
lower relationship. However, only some of the usual leadership? Is there really a trickle-down effect on
measures reflecting a positive job response were in- ethical leadership through the different hierarchical
cluded meanwhile several others can be used too (e.g. levels? Is this effect total or partial in every level or
job performance, job effort, pay satisfaction, job not? Do workmates serving as informal leaders have
involvement, etc.). What is more, to better reflect the an important effect on the individual job response?
performance of the leader–follower relationship other Does the sanction/reward dimension for constitut-
constructs might have been used like the ones referring ing an ethical leader really need rewording?
to the commitment, admiration or trust in the leader.
Further research should address some of the
study’s limitations. The use of a variety of data col- Note
lection methods would be a good option to objectify
1
results obtained in this research and future studies Although the nature of indicators measuring citizen-
should test whether our model applies to other ship behaviour has been widely debated, LePine and
industries and cultural regions as well. Other studies Johnson (2002) show strong evidences for a sound rela-
might be conducted comparing results obtained by tionship between the different citizenship dimensions, and
different leadership styles including or not good these authors recommend defining it as a personality vari-
able which must be measured with reflective indicators.
morality, to check if good morality really matters for
defining the leadership phenomenon. Furthermore,
tools measuring ethical leadership may consider
rewording the sanction/reward dimension of lead-
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