C orporate leaders have enjoyed life in the national spotlight. That spotlight used to shine brightly on their accomplishments, but today its glare scrutinizes the ethical misdeeds of far too many business leaders. Anyone who has followed the wave of corporate scandals that began with the collapse of Enron Corp., in 2001, will recognize names like Ken Lay, John Rigas, and Bernie Ebbers. They are but a few of the highprofile leaders who fell from grace because of their involvement in corporate scandals. With so many examples of leaders behaving badly, many questions come to mind: Why have so many of our business leaders demonstrated poor ethical leadership? Were these leaders good people gone bad, corrupted by the attendant wealth and power of the executive suite? Or were these individuals rotten from the beginning? Can we develop more ethical leaders? Unfortunately, we will never know for sure why these particular leaders did what they did. However, business ethicists and leadership researchers have been studying leaders (both positive and negative) in order to develop a better understanding of ethical leadership in the workplace. Ethical leadership seems easy in theory. After all, if every leader (and employee) acted honestly, treated others the way that they wanted to be treated (i.e., The Golden Rule), and remained immune to greed, then there would be no leadership scandals to discuss. Recent events remind us that ethical leadership is more difficult in practice. The simplest and most obvious explanation for the ethical lapses of our business leaders is poor character, but it would be a serious mistake to blame all of their misdeeds on personal weaknesses and defects. In fact, the tendency to attribute others’ behavior to individual factors such as character more frequently than to acknowledge alternative influences (e.g., peer pressure) on behavior has a name. Psychologists call it the fundamental attribution error, and it occurs frequently whenever people try to explain why leaders do the things they do. Clearly, leaders’ character influences their ethical performance at work. Many management scholars have emphasized the role that strong character and principles play in effective leadership of self and others. Leaders must rely on their ‘‘inner compasses’’ to point them in the right direction. Without one, a leader is like a captain of a ship sailing aimlessly along. However, piloting a ship requires more than a good sense of direction. Good captains have a good compass and know how to use it, but they also must know how to sail a ship, motivate a crew, and manage a journey. Similarly, decades of research on ethics and leadership Organizational Dynamics, Vol. 36, No. 2, pp. 140–155, 2007 ISSN 0090-2616/$ – see frontmatter 2007 Elsevier Inc. All rights reserved. doi:10.1016/j.orgdyn.2007.03.003 www.organizational-dynamics.com