Page Title

The Impact of Ethical Leadership Behavior on Employee Outcomes: The Role of Psychological Empowerment and Authenticity

July 28, 2005 

"Leaders are obligated to set a moral example for organizational members and to determine those organizational activities which may be detrimental to the values of society in general (Aronson, 2001).  Leaders exhibit ethical behaviors when they are doing what is morally right, just, and good, and when they help to elevate followers' moral awareness and moral self-actualization.  Ethics is fundamentally concerned with the impact of an individual's action on others.  Frankena (1973) outlined two of the major theoretical perspectives in the ethics field - which are referred to as teleological and deontological theories.  The teleological perspective emphasizes the outcomes or consequences of an action when evaluating whether the act is moral (Helms & Hutchins, 1992).  The deontological perspective is primarily concerned with the inherent obligations and rights of differing parties involved in decisions, not the overall outcomes per se.  A third perspective often discussed in both the organizational behavior and philosophy literatures is the 'justice' or fairness of a decision.  It is expected that ethical leaders will treat their employees fairly and in an unbiased and impartial manner, i.e., using doth distributive and procedural justice to guide their leadership behaviors.

Organizational commitment is defined as 'the relative strength of an individual's identification with and involvement in a particular organization' (Mowday et al., 1982, p. 27).  A number of authors have referred to effective leadership as being characterized as empowering, which in turn, would be expected to enhance organizational commitment and effectiveness (Conger, 1999; Conger & Kanungo, 1988).  Prior research has shown that organizational commitment is greater for employees whose leaders encourage their participation in decision-making (e.g., Jermier & Berkes, 1979, Rhodes & Steers, 1981), who treat them with consideration (e.g., Bycio, Hackett, & Allen, 1995; DeCotiis & Summers, 1987), fairness (e.g., Allen & Meyer, 1990), and are supportive of them (e.g., Allen & Meyer, 1990; Mottaz, 1988; Withey, 1988).  Proposition 1: Ethical leadership behavior is positively associated with employees' organizational commitment.

Jones and George (1998) argued that there are two types of trust, conditional and unconditional trust.  Conditional trust is a state of trust in which both parties are willing to transact with each other, as long a each behaves appropriately and uses a similar interpretive scheme to define the situation.  Unconditional trust is characterized with the shared values that structure the social situation and become the primary vehicle through which whole individuals experience trust (Jones & George, 1998).  Two core aspects of trust relevant to our discussion here focus on a leader's (1) behavioral consistency with his/her words and (b) benevolence toward others (Bulter, 1991).  First, most perspectives on trust acknowledge that a leader's words must accurately predict his/her future actions in order to crate a necessary, though perhaps not sufficient, condition for the development of trust.  The ethical leader is one who does not seek to fulfill his/her own self-interest (psychological egoism) at the expense of others, but who looks after the groups interest at a minimum (utiitarianism).  Proposition 2: Ethical leadership behavior is positively associated with employees' trust in leaders.

Empowerment is another important construct that can potentially lead to positive organizational and individual level outcomes.  Thomas and Velthouse (1990), and leader Spreitzer (1995), defined empowerment as 'increased intrinsic task motivation manifested in a set of four cognitions reflecting an individual's orientation to his or her work role: meaning, competence, self-determination and impact.'  Meaning refers to when employees experience their jobs as having value or importance (Fulfor & Enz, 1995; May, Gilson, & Harter, 2004).  Competence (or self-efficacy) is the knowledge that the individual has the skill necessary to successfully perform the task in a specific context (Bandura, 1986; Conger & Kanungo, 1988; Fulford & Enz, 1995; Thomas & Tymon, 1994).

Prior research indicates that employees who feel more empowered are more likely to reciprocate by being more committed to their organizations (Eisenberger, Fasolo, & Davis-LaMastro, 1990; Kraimer, Seibert & Liden, 1999; Sims & Kroeck, 1994).  Proposition 3: Employees' psychological empowerment mediates the relationship between ethical leader behavior and employees' organizational commitment.  Employees who feel empowered at work are more likely to have greater levels of trust in their leaders.  Ultimately, those employees who believe they can have an impact on the outcomes of their jobs and organizations may attribute the responsibility for the design of their work environment to their leader and consequently extend more trust to them.  Proposition 4:  Employees' psychological empowerment mediates the relationship between ethical leader behavior and employees' trust in leaders.

The focus here is on the employees' perceptions of the authenticity of a leader's ethical behavior.  Authentic ethical behavior represents behavior which is consistent with the leader's values and moral intentions and does not seek to hid that intention, but rather is transparent with the moral evaluations that lead up to that behavior (May et al., 2003).  First, Lewicki and Bunker (1996) proposed a sequential development model for trust in work relationships.  Second, leaders can also exhibit ethical behaviors in organizations such as setting up empowering, well-designed jobs for their employees, yet they may not have respect for the dignity and autonomy of the individuals in mind when they do so.  Third, without a well-developed sense of authenticity leaders are unable to earn the credibility they need to motivate people to follow them toward their dreams, missions, purposes, and goals, even if they display ethical leadership behaviors (Morrison, 2001).  Proposition 5a:  Employees' perception of the authenticity of a leader's ethical behavior moderates the relationship between ethical leader behavior and employees' trust.  Compared with inauthentic ethical behaviors, authentic ethical behavior by leaders will have a stronger positive effect on employees' trust in their leader.  Proposition 5b: Employees' perception of the authenticity of a leader's ethical behavior moderates the relationship between ethical leader behavior and employees' organizational commitment.  Compared with inauthentic ethical behaviors, authentic ethical leader behavior has a stronger positive effect on employees' organizational commitment.

In this paper, we advanced a theoretical model that attempts to explain how ethical leader behavior influences employees' organizational commitment and trust via psychological empowerment.  One of the important theoretical implications of this model is the discussion of the authenticity of ethical leadership behavior as a variable that moderates the impact of leaders' ethical behaviors on individual outcomes such as trust and commitment.  We believe that the proposed model may help to determine whether ethical behavior in organizations motivates and empowers employees (Zhu, May, & Avolio, 2004, p. 16-25)."

Reference:  Zhu, W.; May, D.R.; & Avolio, B.J. (2004).  The impact of ethical leadership behavior on employee outcomes: the roles of psychological empowerment and authenticity.  Journal of Leadership and Organizational Studies, vol. 11, no. 1.

Back to Top >

Created: 2007-08-28, Updated: 2009-02-17