Fostering Ethical Leadership in Organizations
Swiss Management Center (SMC University), Switzerland.
Postal Address: Burgemeester Cortenstraat 26, GV 6226, Maastricht, The Netherlands
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High profile ethical scandals engulfing every sphere of life and profession have gained importance currently. For
example, major business failures such as WorldCom, Enron, Tyco International, HealthSouth, Parmalat, and
Lehman Brothers are among business organizations where leaders failed ethically for a number of reasons. It has
been noted that ethical leadership failures have affected the culture, reputation and productivity of organizations.
With the ever-increasing number of extensively discussed ethical scandals, the question has come up how these
ethical failures could have been prevented. Moreover, previous research work shows that ethical leadership
remains largely unexplored and there is still paucity of knowledge regarding antecedents of ethical leadership.
Thus, this study addresses the question: What facilitates and increases ethical leadership? This paper is an
attempt to look for strategies that could foster ethical behaviour as well as prevent unethical practices in
organizations. Pedagogical and didactic implications for leadership educators have been delineated. Equally,
future research directions are suggested. Future at embracing authentic ethical leadership in various domains of
society embracing educational institutions, businesses, civil organizations, governments and homes can only be
secured by reinstating holistic education and character formation of students in all places of learning.
Keywords: ethical leadership, ethical failures, holistic education, character formation
The present economic circumstances and ethically questionable business practices have motivated a study of
ethical leadership. Given the recurring high profile ethical scandals, the extent and depth of their effect, and their
span across almost every sphere of life and profession, the significance of an ethical aspect of leadership appears
evident (Yukl, Mahsud, Hassan & Prussia, 2013; Klann, 2007; Brown & Treviño, 2006; Sims & Brinkmann,
2003). Multiple ethical failures affect reputation, culture and production of an organization (Klann, 2007). Green
& Odom (2003) observe that the lack of ethical leadership in Enron brought unimaginable suffering and pain to
many employees, destroyed consumer trust and confidence in the financial services industry as well as
encouraged greater government regulation (Thompson, Thach, & Morelli, 2010). To facilitate understanding of
ethical leadership and its links with history it is crucial to discern the essence of ethical leadership.
2. The Critical Role of Ethics to Leadership
Ethics is a critical topic that is increasingly growing in importance among people in leadership positions
particularly after the ethical corporate scandals of the 1970s, 1980s and 1990s. Corruption has gained currency in
human activities in all fields of life, and attention of the world is focused on actions and conduct of leaders in
government, business, society and equally in religious associations (Marsh, 2013). Ethics in business and
leadership has become the focus of interest (McCann & Holt, 2013; Brenkert, 2010). Consequently, both
academic researchers and practitioners are becoming conscious that rules and regulations are needed and that
leadership may be the key determinant in ethical engagement.
It is usually leaders who lay down standards for managerial goals and organizational behaviour at most
workplaces and subsequently establish systems that impact employee outcomes (Yukl, 2013). Moreover, leaders
at the higher level of the organization communicate initial values and guide employees in ways of attaining
rewards for adhering to them. Employees also depend on their leaders for direction when they meet ethical
questions. Scientific research tends to corroborate the conviction that employees will obey and stick to ethical
values espoused by their leaders (Treviño & Brown, 2004). Personal values of leaders determine what kind of
ethical climate to cultivate in their organizations. The complete integration of ethical principles into the
curriculum of higher educational institutions and corporate organizations is therefore critical and indispensable
for long-term survival of organizations and society as a whole.
3. Conceptualization of Ethical Leadership
3.1 Definitions of Ethical Leadership
Ethical leadership as defined by various scholars has basically contained traits, behaviours and values. Brown
and colleagues (2005, p.120) define ethical leadership as “the demonstration of normatively appropriate conduct
through personal actions and inter-personal relationships and the promotion of such conduct to followers through
two-way communication, reinforcement and decision-making”.