Leaders Matter Morally: The Role of Ethical Leadership in Shaping Employee Moral Cognition and Misconduct

Abstract

There has long been interest in the role of leaders on the misconduct of those who are subordinate to them. However, the limited evidence about how this occurs focuses predominantly on behavioral aspects of role modeling and reciprocation. We extend this research by more closely examining how ethical leaders can shape employee behavior via their effect on employees’ moral disengagement — a cognitive orientation that determines how individuals conceive and mentally approach decisions with ethical import. In three integrated studies, we find that ethical leadership decreases employees’ moral disengagement, which in turn mediates the effect of ethical leadership on employees’ deviant behavior and unethical decisions. Further, subordinate moral identity moderates the mediated effect of ethical leaders on subsequent subordinate decisions and misconduct. Whereas results from Study 2 support an “immunity” hypothesis, wherein high moral identity subordinates are less susceptible to less ethical leader behaviors, Study 3 findings support a “virtuous synergy” perspective wherein high moral identity subordinates are susceptible to the influence of moral exemplars. These results provide evidence that ethical leadership matters in employees’ tendencies to morally disengage, and that employees’ moral identity affects this relationship in important ways, with consequential behavioral outcomes for organizations.