Ethical leadership and the dual roles of examples

Through the examples they set, leaders do a great deal to shape—for good or for ill—the culture of the organizations in which they serve. Leaders thus serve in a teaching role. But in order to learn how to set positive examples, leaders must also be students who seek to learn what they can from others’ examples. Employing as a jumping-off point a recent high-profile and multi-faceted scandal involving Penn State University and decision makers affiliated with it, this article explores a number of ethical decision making lessons to be learned from that scandal and considers how those lessons can be applied to a variety of decisions faced by corporate leaders. Along the way, the article addresses ways in which common human tendencies impair the quality of thinking and decision making. It also offers ways for improving thinking quality and enhancing the ethical nature of resulting business decisions.     

Ethical Stewardship – Implications for Leadership and Trust

Great leaders are ethical stewards who generate high levels of commitment from followers. In this paper, we propose that perceptions about the trustworthiness of leader behaviors enable those leaders to be perceived as ethical stewards. We define ethical stewardship as the honoring of duties owed to employees, stakeholders, and society in the pursuit of long-term wealth creation. Our model of relationship between leadership behaviors, perceptions of trustworthiness, and the nature of ethical stewardship reinforces the importance of ethical governance in dealing with employees and in creating organizational systems that are congruent with espoused organizational values. Cam Caldwell is Assistant Professor of Management in the School of Business at Weber State University. His research is primarily in the areas of organizational governance, ethical leadership and trust. He received his Ph.D from Washington State University where he was Thomas S. Foley Graduate Fellow. He has worked as a City manager, Human Resource Director, and Management Consultants for 30 years. Linda A. Hayes is Assistant Professor and Director of Program Assessment in the School of Business Administration of the University of Houston – Victoria. She received a B.S.M.E. from Clarkson University, an M.B.A from the University of Houston, and a Ph.D from University of California at Berkeley. Dr. Hayes has 15 years of industry experience. Her research interests include decision-making, stakeholder behavior, business strategy. Dr. Hayes was a 1996 NASA Faculty Fellow. Recently, she has published in the Journal of Management Development, Journal of International Marketing, Business Horizons and International Journal of Mobile Communications. Ranjan Karri is an Associate Professor of Management at the University of Illinois at Springfield. He received his Ph.D from Washington State University. His research interests are in the areas of entrepreneurship, ethics and strategy. Patricia Martinez is a cum laude graduate of the University of Houston – Victoria School of Business and works for the Learning Education Achieve Dreams program at that University to help young people in the Victoria, Texas Community set and achieve personal and educational goals.     

Normative Self-Interest or Moral Hypocrisy?: The Importance of Context

We re-examine the construct of Moral Hypocrisy from the perspective of normative self-interest. Arguing that some degree of self-interest is culturally acceptable and indeed expected, we postulate that a pattern of behavior is more indicative of moral hypocrisy than a single action. Contrary to previous findings, our results indicate that a significant majority of subjects (N = 136) exhibited fair behavior, and that ideals of caring and fairness, when measured in context of the scenario, were predictive of those behaviors. Moreover, measures of Individualism/Collectivism appear more predictive of self-interested behavior than out-of-context responses to moral ideals. Implications for research and practice are discussed. George W. Watson received his Ph.D. from Virginia Tech, his M.B.A. from California State at Fullerton, an M.S. in Systems Management from the Naval Postgraduate School in Monterey, an a B.A. in Business Administration from the University of Washington, Seattle. His teaching focus is on corporate social responsibility and ethics. Dr.Watson’s current research interests include moral psychology,ethical decision making, and ideology. He has published in Business Ethics Quarterly, Business and Society, and the Journal of Business Ethics. Farooq Sheikh received his BS in Physics from Indiana University of Pennsylvania, and his Ph.D. from Smeal College of Business, Penn State University. He is currently Assistant Professor of Operations Management, School of Business at the State University of New York at Geneseo. Dr. Sheik’s research interests include rational and behavioral models in business operations, bounded-rational behavioral models in population games, social norms, game theory and cross-disciplinary research involving behavioral models.     

Direct Election of Group Decision-Makers Can Facilitate Cooperation in the Public Goods Game

Research on social dilemma has shown that the delegation of decision-making to group leaders can increase cooperation in the collective action problem. In this paper, we show that the voting scheme used for the election of leaders could make a difference to the emergence of cooperation. We design a public goods game experiment in which actors elect leaders to make decisions on their behalf in the contribution to public goods. In particular, we compare the leadership elected from direct and indirect election systems. In direct election, a leader is elected directly by majority-votes from a group, whereas in indirect election the group is divided into smaller subgroups and a leader is elected from the elected subgroup leaders. We run a simulation model to show that direct election would choose a more cooperative leader than indirect election when voters’ preferences of leadership are not homogenous. A laboratory experiment with human subjects further indicates that people hold stronger preferences for cooperators as leaders in direct election than in indirect election, suggesting that the voting scheme has an effect not only on the processing of actors’ preferences, but also on the shaping of their preferences of leadership in the public goods dilemma.     

A Review of The Empirical Ethical Decision-Making Literature: 1996–2003

This review summarizes and critiques the empirical ethical decision-making literature from 1996–2003. One hundred and seventy-four articles were published in top business journals during this period. Tables are included that summarize the findings by dependent variable – awareness, judgment, intent, and behavior. We compare this review with past reviews in order to draw conclusions regarding trends in the ethical decision-making literature and to surface directions for future research.Michael J. O’Fallon is a graduate student in the Department of Management and Operations at Washington State University. His primary research interest is individual ethical decision-making and behavior in organizations. Recently, he has explored issues in organizational behavior, human resource management, and consumer behavior toward genetically modified foods.Kenneth D. Butterfield is an associate professor of management at Washington State University. He received his Ph.D. in Business Administration from The Pennsylvania State University. His research has been published in a variety of academic journals, including Academy of Management Journal, Academy of Management Review, Business and Society, Business Ethics Quarterly, Human Relations, Journal of Higher Education, Journal of Managerial Issues, and Research in Higher Education. His current research interests involve organizational behavior issues such as managing ethical decision-making and behavior in organizations, examining why people fail to recognize moral issues, understanding academic dishonesty and promoting academic integrity, and examining organizational punishment from the manager’s perspective.     

Exploring Top Management Language for Signals of Possible Deception: The Words of Satyam’s Chair Ramalinga Raju

This paper explores the potential for systematic scrutiny of the language of top management to reveal signals of possible deceptive conduct. The language used in letters signed by Ramalinga Raju, Chair of the Indian multi-national company Satyam, are analysed using a multi-method quantitative approach. We explore the language in Raju’s annual report letters from 2002–2003 to 2007–2008; and in his letter of January 7, 2009 in which he confessed to deceptive conduct. We analyse the frequency of personal pronouns, the tone of positivity or negativity, the frequency of words of extreme emotion and aspects of the characteristics of language use indicated by the DICTION 5.0 text analysis master variable, CERTAINTY. The text of Raju’s letters appears to have been influenced by his self-confessed deceptive behaviour. Raju’s word choice changed noticeably in his five annual report letters prior to the collapse of Satyam as the scale and impact of his financial misstatements increased. The methods presented should be considered for adoption by auditors and regulators—as a way of assessing whether signals emerging from language use warrant closer (including audit) scrutiny of a firm’s financial reporting and governance. They should also be considered for use by monitors of entity risk, such as credit rating agencies and financial analysts.     

The Effects of Euphemism Usage in Business Contexts

Transparency is important in today’s business environment. The use of euphemisms decreases transparency yet is increasing in business and business education. This study examines the effects of euphemism on people’s attitudes toward actions and their intentions to perform those actions. It also measures the effect of oversight on attitudes and behavioral intentions. Using a 2 × 2 experimental design, we measured participants’ attitudes by employing a semantic differential scale and behavioral intentions by using a simple yes/no question regarding the action described. A questionnaire with 20 brief scenarios provided the euphemistic (transparent) versus non-euphemistic (less-transparent) condition. Oversight versus non-oversight conditions were manipulated through instructions to participants. Hypotheses regarding the effects of euphemism were supported; participants were both more likely to rate an action as appropriate and to indicate they would take that action when stated euphemistically. Oversight did not have a significant effect on attitude toward the action, but did significantly affect participants’ intentions to take that action. Findings suggest both managerial and ethical implications for businesses. Greater transparency includes more straight talk and less euphemism and is recommended to ensure employees’ understanding and implementation of ethical business actions.     

Leader narcissism and outward foreign direct investment: Evidence from Chinese firms

Researchers use the upper echelons theory to establish how leaders’ attributes affect firms’ outward foreign direct investment (OFDI), a proxy for foreign operations. This extant literature has largely ignored the impact of leaders’ psychological attributes, particularly, narcissism. We use a narcissism index of leaders of Chinese listed companies to examine the relationship between leader narcissism and firm-level OFDI for the period 2007-2017. We show that leader narcissism has a positive and significant impact on firm-level OFDI. In addition, we find that firms with state ownership and political connections show a greater positive effect of leader narcissism on the firm’s OFDI. Our results suggest that leader narcissism appears to be a stimulus to corporate OFDI, and thus in recruiting top corporate executives who are responsible for managing the international investments of the corporation, this psychological trait should be given special consideration in addition to other qualifications.     

How can leaders of multinational organizations be ethical by contributing to corporate social responsibility initiatives? Guidelines and pitfalls for leaders trying to do good

Corporate social responsibility (CSR) is a laudable goal for multinational enterprises (MNEs) because of the significant positive impact they can bring to the society and environment around the world. However, there are significant challenges to the practice of CSR in MNEs. This article discusses two major barriers to CSR that are especially significant for MNEs: leaders’ attitudes and cultural variance. We then apply insights from Rest’s ethical decision-making and cross-cultural research to offer guidance to leaders of MNEs to implement CSR in their organizations. We present a multistep process by which leaders first reflect on and clarify what goals they want to accomplish in the realm of CSR and then how to build consensus for those goals and modify them to incorporate the values and beliefs of local constituents.     

Gladiators in the Corporate Political Arena: Reforming A Top Management Team

This case describes the top management team’s transfer of power and change in the Wuhan Company of Zhong Yin Real Estate Group (ZY-REG). The company experienced acquisition of Haitian and ZY-REG, introduction of the Wanke management team, the general manager’s loss of control over the company, aggravating conflicts among executives, and abuse of power by a clique of managers. The new general manager Yang Ling took actions to reform and transferred power and responsibilities of each executive in the management team, withdrew power from his opponents, and standardized the decision-making process. The management team’s rebuilding was finally completed in June 2008, and the Wuhan Company was then back on track soon after.     

Business leaders’ personal values,organisational culture and market orientation

In a world where competitive advantages based on technology, physical assets and large advertising budgets are fungible, business leaders’ personal values as an alternative or complementary influence on decision-making and market orientation have an intuitive appeal. Research findings based on data collected from 370 business leaders of independent indigenous companies in China suggest that business leaders with different sets of personal values create and develop different types of organisational culture. Leaders with openness to change values form an adhocracy culture, while leaders expressing conservation values promote a hierarchy culture. Different organisational cultures have different influences on market orientation. The hypothesised relationships between self-enhancement leaders and market culture and between self-transcendence leaders and clan culture were not supported. Finally, the article discusses the theoretical contribution of the study, managerial implications and suggestions for future research.     

Matching audio/video app features with young user preferences: An integrated approach

Audio/video mobile applications (apps) enable people to engage in leisure activities without time and space restrictions, which gradually changed human leisure behaviours. This study is one of the first to integrate means-end chain theory, Kano and conjoint analyses to reveal young user preferences for entertainment audio/video mobile apps. A preliminary qualitative survey with 36 young interviewees established the questionnaire items in the subsequent survey of 389 young respondents. Results show that ‘subtitle choice’, ‘resolution selection’, ‘top ranking list’ and ‘advertising mode and format’ are key attributes that directly influence young user willingness to download apps. In particular, ‘flashing banner ads’, ‘resolution ≤ 480 ppi’, ‘5 seconds to skip ads’, providing ‘subtitle choice’ and without ‘top ranking list’ is the best combination of attribute levels of audio/video apps that meet young users' desires. That is, young users prefer mobile apps with ‘resolution ≤ 480 ppi’ and ‘subtitle’ choices and expect that they can skip flashing banner ads in 5 s. Providing a top audio/video ranking list, however, is unnecessary for young app users. The findings can help marketers and app designers develop effective app designs and advertising strategies for young users to expedite the adoption of entertainment audio/video apps.     

The contests for power and influence over the regulatory space within the English professional football industry, 1980–2012

This study draws on the concept of ‘regulatory space’ to analyse the evolution of financial regulation of professional football clubs in England over the past 30 years. It begins by setting out the institutional context and, in particular, the internal governance structure of the Football Association. It then discusses three periods that demonstrate how the regulatory environment is characterised and shaped by different organisations, particularly the football authorities. It concludes by arguing that appropriate financial regulation is unlikely to occur under the following four circumstances: where internal governance structures of regulatory bodies are constituted in such a way as to inhibit the process of decision-making; where powerful actors maintain control of significant financial resources and have a desire to limit financial regulation; where minor actors do not have sufficient power and leverage; and where the government is unwilling to intervene and use legislation.     

The Effects of the Dark Triad on Unethical Behavior

In the wake of a series of corporate scandals, there has been a growing call for authentic leadership in order to ensure ethical conduct in contemporary organizations. Authentic leadership, however, depends upon the ability to draw a distinction between the authentic and inauthentic leader. This paper uses Deleuze’s discussion of Platonism as a point of departure for critically scrutinizing the problem of authenticating the leader—drawing a distinction between authentic and inauthentic leaders. This will be done through a reading of Bill George’s book Authentic Leadership. Informed by Deleuze’s inverted Platonism, the paper challenges the practice by which authentic leaders are distinguished from inauthentic leaders. In conclusion, the paper suggests that an adequate concept of authentic leadership should consider how ethics can occur when the authentic leader is able to critically reflect his or her own value-commitments.     

Determinants and Performance Effects of Social Performance Measurement Systems

This study investigates the performance measurement systems adopted by companies to manage their social responsibility activities, a theme that remains under-researched despite the important role that these mechanisms may play in helping firms control and improve their social performance. An integrative model is developed to examine how the three fundamental drivers of corporate social strategies, i.e., business motivations, perceived stakeholder pressures, and top management’s social commitment, influence the use of social performance indicators for internal decision-making and control and how such use impacts companies’ social and economic performance. The results from a survey of 97 Italian companies suggest that economic motivations and top management’s commitment are associated with a more intensive use of social performance indicators for decision-making and control, whereas perceived pressures from stakeholders do not represent a significant determinant of such use. The use of social performance indicators, in turn, is found to directly influence a firm’s social performance and, indirectly, its bottom line.     

Strategic actions in European soccer: Do they matter?

The objective of this paper is to discover (if and) what kind of strategic actions European football clubs conduct and whether these actions affect their financial performance and therefore their competitive position. In this paper we measure the context, content and process dimensions of strategic renewal and relate these to financial performance. The individual strategic actions undertaken by eight football organisations during the period 1995–2002 were examined. In total, 963 strategic actions could be assigned to three dimensions of strategic action. Our study shows that even in an environment in which other factors are crucial for surviving, undertaking strategic actions does contribute to the financial performance of firms. In the European football industry that requires some kind of ‘competitive balance’, strategic actions positively contribute to financial performance.     

Merit versus maleness: How strategic positioning can mitigate external gender bias

Despite the proactive efforts of many firms to combat gender bias within their organizations, societal prejudices still disadvantage women leaders and the firms who employ them. This external gender bias shapes outside stakeholder evaluations of women leaders’ efforts in various ways, and firms need strategies to cope with this external gender bias. We examine the conditions that might alleviate this burden of external bias and what women leaders and top executives can do to leverage these conditions—from a strategic positioning perspective—that will effectively allow female leaders to differentiate their work. To do this, we synthesize and build upon evidence that the external gender bias against women leaders diminishes when they lead in areas that are unconventional rather than mainstream. We then propose a two-step process based on (1) identifying the likely threat of external gender bias, which is stronger in some industry contexts than others, and (2) leveraging unconventionality to circumvent male prototypical comparisons, thereby reducing the hazards of external gender bias.     

The Language Backfire Effect: How Frontline Employees Decrease Customer Satisfaction through Language Use

Extant marketing research holds that customers prefer frontline personnel to speak the customers’ first language. Furthermore, current managerial practices instruct frontline employees to either use the customers’ first language or, in international settings, to use English. Through five studies in different retail and service contexts, we identify situations where the opposite is true. The results of the first two studies suggest that if customers initiate contact in a second language, the frontline employee’s switch to the customer’s first language constitutes an identity threat leading customers to feel less satisfied; an effect we term the language backfire effect. Our third study extends these results to a domestic context to test for the impact of linguistic acculturation on how immigrant customers perceive frontline employees’ language switch. The fourth study replicates the findings in a real-life retail context. These results present a paradox for marketing research: although frontline employees switch to customers’ first language to accommodate them, these actions might not have the desired consequences. Having identified and described the problem of the language backfire effect, our final study introduces and verifies a managerially actionable solution: combining the language switch with a language proficiency compliment offsets the language backfire effect.     

The Honeymoon of China and Mexico

For China and Mexico, the just past July 2008 is their ＂honeymoon＂, as their relations have been consolidated by a series of big events. Only three days later after Mexican President Felipe Calderon Hinojosa met his counterpart Hun Jintao at G8, he paid an official visit to China on July 9, and agreed with Chinese top leaders on some significant issues. It was the first China tour that Calderon paid since he took office in December 2006.     

A Cross-Cultural Examination of the Endorsement of Ethical Leadership

The western-based leadership and ethics literatures were reviewed to identify the key characteristics that conceptually define what it means to be an ethical leader. Data from the Global Leadership and Organizational Effectiveness (GLOBE) project were then used to analyze the degree to which four aspects of ethical leadership – Character/Integrity, Altruism, Collective Motivation, and Encouragement – were endorsed as important for effective leadership across cultures. First, using multi-group confirmatory factor analyses measurement equivalence of the ethical leadership scales was found, which provides indication that the four dimensions have similar meaning across cultures. Then, using analysis of variance (ANOVA) tests each of the four dimensions were found to be universally endorsed as important for effective leadership. However, cultures also varied significantly in the degree of endorsement for each dimension. In the increasingly global business environment, these findings have implications for organizations implementing ethics programs across cultures and preparing leaders for expatriate assignments. Christian J. Resick is Assistant Professor of Industrial and Organizational Psychology at Florida International University. His research is aimed at understanding how people interact with and influence various aspects of their work environments, including cultures, climates, leaders, and teammates along with the implications for various aspects of organizational behavior. A particular focus of Christian’s work examines ethical leadership and the critical linkages between leadership and organizational ethics. He received his Ph.D. from Wayne State University. Paul J. Hanges is a professor in the Department of Psychology at the University of Maryland and the head of the Industrial/Organizational Psychology program in the department. He is an affiliate of the Cognitive Psychology program and the R. H. Smith School of Business. Paul’s research focuses on three topics (a) social cognition, leadership, and cross-cultural issues; (b) personnel selection, test fairness, and racial/gender discrimination; and (c) research methodology. He is on the editorial board of the Journal of Applied Psychology and The Leadership Quarterly and is a fellow of the Society of Industrial and Organizational Psychology and the American Psychological Association. Marcus W. Dickson is Associate Professor of I/O Psychology at Wayne State University in Detroit. His research generally focuses on issues of leadership and culture (both organizational and societal), and the interaction of those constructs. He is a former Co-Principal Investigator of the GLOBE Project, and his work has appeared in Journal of Applied Psychology, Applied Psychology: An International Review, and The Leadership Quarterly, among others. Jacqueline K. Mitchelson is a doctoral candidate in Industrial and Organizational Psychology at Wayne State University. Her current research areas are leadership, organizational culture, individual differences and work-family conflict.