unethical leadership case study

Unethical Leadership: Review, Synthesis and Directions for Future Research

• Original Paper
• Open access
• Published: 18 March 2022
• Volume 183 , pages 511–550, ( 2023 )

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• Sharfa Hassan   ORCID: orcid.org/0000-0003-2828-4212 1 ,
• Puneet Kaur 2 , 3 ,
• Michael Muchiri   ORCID: orcid.org/0000-0001-6816-8350 4 ,
• Chidiebere Ogbonnaya 5 &
• Amandeep Dhir 3 , 6 , 7  

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The academic literature on unethical leadership is witnessing an upward trend, perhaps given the magnitude of unethical conduct in organisations, which is manifested in increasing corporate fraud and scandals in the contemporary business landscape. Despite a recent increase, scholarly interest in this area has, by and large, remained scant due to the proliferation of concepts that are often and mistakenly considered interchangeable. Nevertheless, scholarly investigation in this field of inquiry has picked up the pace, which warrants a critical appraisal of the extant research on unethical leadership. To this end, the current study systematically reviews the existing body of work on unethical leadership and offers a robust and multi-level understanding of the academic developments in this field. We organised the studies according to various themes focused on antecedents, outcomes and boundary conditions. In addition, we advance a multi-level conceptualisation of unethical leadership, which incorporates macro, meso and micro perspectives and, thus, provide a nuanced understanding of this phenomenon. The study also explicates critical knowledge gaps in the literature that could broaden the horizon of unethical leadership research. On the basis of these knowledge gaps, we develop potential research models that are well grounded in theory and capture the genesis of unethical leadership under our multi-level framework. Scholars and practitioners will find this study useful in understanding the occurrence, consequences and potential strategies to circumvent the negative effects of unethical leadership.

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Introduction

The contemporary business landscape is witnessing staggering levels of unethical conduct that has strikingly surfaced at the bottom-line figures with estimated total losses worth US$42 billion reported by PwC's Global Economic Crime and Fraud Survey ( 2020 ). Interestingly, the contributions of top management in various unethical practices account for over 26% which includes some of the costliest instances of fraud producing not only financial impacts for organisations but also emotional and psychological impacts for their stakeholders (PwC, 2020 ). While sufficient evidence also indicates that top management exhibits serious concerns for business integrity in terms of complying with rules and regulations, behaving responsibly towards various stakeholder groups and maintaining high moral standards (Earnest &Young, 2020 ), the trajectory of corporate scandals continues to increase at a more rapid rate than ever before (Mishra et al., 2021 ), and reciprocal dynamism is witnessed among ‘bad apples’ and ‘bad barrels’(Cialdini et al., 2021 ). Accordingly, corporate leaders, along with the cultures they foster within organisations, work in a vicious cycle wherein one reinforces the other to establish a breeding ground for profound and severe unethical practices. Unsurprisingly, therefore, more than 50% of companies globally experience a minimum of six fraud incidents per year, with another 50% not reporting or investigating the worst incidents (PwC, 2020 ). Hence, unethical leadership is at the intersection of immoral, illegal leadership practices and the unethical climate that further strengthens such leadership. Whether bad apples promote bad barrels or bad barrels host bad apples, the contemporary line of discourse in leadership is increasingly realising the consequential nature of unethical leadership.

Unethical leadership is conceptualised as leader behaviours and decisions that are not only anti-moral but most often illegal and exhibit an outrageous intent to instigate unethical behaviours among followers (Brown & Mitchell, 2010 ). Unethical leadership has long been documented to cause a deleterious impact on organisations. For example, the famous emissions scandal of Volkswagen, known as ‘Dieselgate’, cost the company an estimated US$63 billion (Jung & Sharon, 2019 ). The consequences of this scandal resulted from an interplay of unethical leaders and an unethical organisational culture (Javaid et al., 2020 ). Similar evidence has been reported in another famous case involving Enron, where an unethical climate fostered conscious rule breaking within the organisation, which resulted in both reputational and financial consequences (Sims & Brinkmann, 2003 ). This scenario has been accentuated by the growing reporting of corporate misconduct in the mainstream media (Chen, 2010a ), which has heightened the interest of scholars in this direction.

Research into unethical leadership has largely focused on the aftermath that accompanies organisation leaders’ morally inappropriate and legally unacceptable behaviours that are directed towards the organisation and followers (Javaid et al., 2020 ). Scholars have gauged the impact of unethical leadership in the domains of employee attitudes, e.g. intentions to stay (Ruiz-Palomino et al., 2021 ) and intentions to engage in fraudulent acts (Johnson et al., 2017 ), and employee behaviours, e.g. counterproductive work behaviours (Knoll et al., 2017 ), crimes of obedience (Carsten & Uhl-Bien, 2013 ) and knowledge hiding (Qin et al., 2021 ), among others. Recently, scholars have begun to investigate the team- or group-level ( b ; Cialdini et al., 2021 ; Peng, Schaubroeck, et al., 2019 ) and organisational-level consequences (Mujkic & Klingner, 2019 ; Sherif et al., 2016 ; Vasconcelos, 2015 ) of this phenomenon; however, such investigations remain scant.

An important trend in recent years is the interchangeable use of various measures, conceptualisations and terminologies, which has, by and large, confused the research space on unethical leadership. In fact, concepts such as destructive leadership and its offshoot abusive supervision have dominated this area (Mackey et al., 2021 ), and research pertaining solely to unethical leadership has received extremely limited attention. Given the rampant proliferation of measures and concepts, both the empirical and conceptual distinctiveness of unethical leadership has been blurred (Ünal et al., 2012 ). Furthermore, a dispute over the distinction between unethical and ethical leadership has distorted the conceptual underpinnings of both concepts. Some scholars treat unethical leadership as the flipside of ethical leadership and equate the absence of exemplary leader behaviours with the presence of unethical leadership. However, others have challenged this notion, asserting a quantitative distinction between unethical and ethical leadership styles, which requires separate lines of academic inquiry (Gan et al., 2019 ). Ünal et al. ( 2012 ) captured this view, demonstrating that a single occurrence of dysfunctional leader behaviour does not amount to unethical leadership.

Despite the consequential and distinctive nature of unethical leadership, scholars have made few attempts to systematically organise the literary work in this field and thereby facilitate a comprehensive understanding of unethical leadership from an academic perspective. One of the earliest scholarly investigations in this regard is that of Brown and Mitchell ( 2010 ), who synthesised the academic literature on unethical leadership under the framework of ethical leadership. Their article had an overt focus on ethical leadership within organisations, which they supplemented with unethical perspectives on leadership to broaden the study’s scope. Our review is not only exclusively geared towards unethical leadership but also distinguishes unethical leadership from the absence of ethical behaviours. Furthermore, the early work on unethical leadership does not provide a comprehensive account of the developments in the area, perhaps because this line of literature, as a separate research area, has developed only in the recent past. Thus, we believe that the significant body of research conducted on unethical leadership since Brown and Mitchell’s ( 2010 ) review study needs to be synthesised. Furthermore, Lašáková and Remišová ( 2015 ) enhanced theoretical understanding of unethical leadership by delineating problems in its existing conceptualisations. While their study broadened the concept’s definitional space, it did not account for the extant empirical work in the area. Our study not only distinguishes unethical leadership from related concepts but also provides a detailed view of the empirical work in the area and offers new practical insights into the field.

Apart from the above-discussed rationale, we contend that unethical leadership remains the least researched concept among its academic offshoots. In fact, scholars have thoroughly investigated concepts such as abusive supervision and destructive leadership via both empirical studies and a good number of systematic literature reviews (SLRs) and meta-analyses (Mackey et al., 2017 , 2021 ; Schyns & Schilling, 2013 ; Zhang & Bednall, 2016 ). This points towards the need to examine the extant unethical leadership studies in their own right without confusing them with studies that focus on any of these related concepts. Furthermore, existing SLRs are either too specific or too general and, thus, provide few insights into the area of unethical leadership. For example, studies pertaining exclusively to abusive supervision highlight the verbal and non-verbal abuse leaders direct towards their followers, but these studies offer only a limited understanding of other unethical behaviours, e.g. violations of rules or norms. In the same manner, studies pertaining to destructive leadership examine myriad behaviours that further add to the problematic proliferation of concepts in this research domain (Mackey et al., 2021 ).This underscores an urgent need to re-examine the concept of unethical leadership and the associated literature and thereby facilitate a robust understanding of unethical leadership as a distinct concept.

The current study’s overarching aim is, thus, to conduct an SLR of the extant literature and thereby not only help to synthesise this literature but also identify new issues and broaden the horizon of research in that area by highlighting important knowledge gaps in the existing body of work. Consistent with the above discussion, the present study seeks to address the following research questions (RQs): RQ1 What is the research profile of the relevant extant literature published on unethical leadership? RQ2 What are the dominant focus areas and themes on which most of the academic inquiry has concentrated? RQ3 What are the important knowledge gaps in the existing body of research and potential future research areas that must be investigated to enrich the field?

To address the above research queries, we first extracted the most relevant data with the aid of a robust SLR protocol that has already been validated in a number of studies (Kaur et al., 2021 ; Khan et al., 2021 ; Seth et al., 2020 ; Talwar et al., 2020 ). For RQ1 , we generated the descriptive statistics for the existing research by establishing precise inclusion and exclusion criteria and listing the keywords to search in the most reliable databases. To address RQ2 , we organised all of the shortlisted studies around themes derived from the results of our content analysis. For RQ3 , we identified research gaps and corresponding research questions specific to each emergent theme. To further complement the identified gaps, we developed a multi-level framework of unethical leadership—titled the ‘M3 framework’. Furthermore, we proposed seven potential research models for scholars and practitioners interested in studying unethical leadership. The proposed framework and potential models will be useful for delineating the specific variable relationships scholars can examine in greater detail and from various theoretical lenses to facilitate both conceptual and empirical work in this area. Therefore, these models aim to capture some of the lacunae in the literature.

This SLR is organised into the following sections. In Sect. 2, we examine the conceptual understanding of unethical leadership and make some important distinctions between unethical leadership and other concepts. Section 3, which is devoted to the methodology, explicates the exact protocol we followed to identify the relevant corpus of studies. In this section, we discuss both the data extraction process and the research profile of the sampled studies. In Sect. 4, we discuss the themes that emerged in the coding process as well as the knowledge gaps and potential research questions pertaining to each theme. In Sect. 5, we propose and discuss the conceptual framework and seven potential research models based on gaps identified in Sect. 4. Section 6 provides the practical and theoretical implications of the current study, while Sect. 7 concludes the study by acknowledging its limitations.

Conceptualising Unethical Leadership

Defining unethical leadership.

Contemporary discourse on unethical leadership remains relatively sparse, with only a few studies extensively focused on crystallising the conceptual underpinnings of this leadership type. Brown and Mitchell ( 2010 ) laid the early foundations by offering definitional and conceptual reflections on the phenomenon. They defined unethical leadership ‘ as behaviours conducted and decisions made by organisational leaders that are illegal and/or violate moral standards and those that impose processes and structures that promote unethical conduct by followers ’ (Brown & Mitchell, 2010 , p. 588). The essential tenet of this definition pertains to the leader behaviours that instil unethical conduct in followers. Under this definition, therefore, unethical leadership amounts not only to leaders themselves engaging in unethical behaviours but also enabling and harnessing unethical follower behaviours. Leaders perform these efforts either by overtly demonstrating unethical conduct or passively promoting an unethical climate by ignoring unethical conduct and, thus, allowing unethical behaviours to flourish within organisations (Brown et al., 2005 ).The potential drawback of this definition, however, is its failure to explicitly identify the exact behaviours that could be labelled as unethical. Because morality is a diverse and culturally ingrained phenomenon, the manifestations of unethical behaviours are likewise diverse, which renders unethical leadership a rather relative concept (Resick et al., 2011 ).

To address some of these pitfalls, Ünal et al., ( 2012 ) conducted a seminal study to develop a more robust and comprehensive understanding of unethical leadership. They discussed unethical leadership from normative perspectives and advanced a deeper understanding of the concept by differentiating it from similar leadership styles as well as from the lack of exemplary ethical leader behaviours. Specifically, they defined unethical leadership/supervision as ‘ supervisory behaviours that violate normative standards ’(Ünal et al., 2012 , p.6). Their distinction between unethical leadership and other related concepts, along with the description of precise unethical leadership practices, offers nuanced insights into this research area. In particular, they utilised virtue ethics, deontology, teleology and utilitarian perspectives to develop normative foundations of unethical leadership practices. They identified the violation of employee rights, unfair justice mechanisms, violation of legitimate organisational interests and weak leader character as potential manifestations of unethical leadership. Subsequent research has captured these manifestations of unethical leader behaviour in various cultural contexts. For example, Eisenbeiß and Brodbeck ( 2014 ) examined cross-cultural and cross-sectoral similarities in unethical leadership perceptions. Their comparative research highlighted the interplay of compliance-oriented and value-oriented perspectives within the domain of unethical leadership, and they identified dishonesty, unfair treatment, irresponsible behaviour, non-adherence to rules, laws and regulations, engagement in corruption and other criminal behaviours, an egocentric orientation, manipulative tendencies and a lack of empathy towards followers as the common manifestations of unethical behaviour in various countries.

The above discussion highlights the efforts made, thus, far to clarify what unethical leadership is and what it is not and to define it as a distinct concept rather than merely the opposite of ethical leadership (Ünal et al., 2012 ). With research on unethical leadership taking a new direction and scholars investigating distinct yet related concepts more frequently than unethical leadership itself, however, it becomes crucial to highlight unethical leadership as a separate line of inquiry that requires equal attention. In the sections that follow, we discuss some of these concepts and reveal the differences between them and the concept of unethical leadership.

Unethical Leadership and Related Concepts

The domain of unethical leadership has witnessed an increasing proliferation of concepts, which has seriously obstructed the meaningful application of findings to unethical leadership research and practice (Tepper & Henle, 2011 ; Ünal et al., 2012 ). For example, scholars have employed concepts including petty tyranny (Ashforth, 1997 ), supervisor undermining (Duffy et al., 2002 ), workplace aggression (Neuman & Baron, 1998 ), despotic leadership (De Hoogh & Den Hartog, 2008 ), abusive supervision (Tepper, 2000 ), destructive leadership (Einarsen et al., 2007 ) and some newer forms, e.g. Machiavellian leadership (Belschak et al., 2018 ), interchangeably. In fact, concepts such as abusive supervision and destructive leadership have received the most scholarly attention and have developed into separate lines of academic inquiry. It is important to mention here that destructive leadership and abusive supervision have been highly influential in the academic literature (Mackey et al., 2021 ), and the remainder of the concepts mentioned above fall under the domain of these two leadership types. Hence, we discuss these two concepts and attempt to differentiate them from unethical leadership. Furthermore, we advance the conceptual distinction between unethical leadership and the absence of ethical leadership/the lack of exemplary ethical behaviours. Figure  1 presents a conceptual overview of the differences between unethical leadership and other forms of leadership styles. Before discussing these, we provide a brief conceptual understanding of unethical leadership and the lack of ethical behaviours.

Overview of conceptual differences between unethical leadership and other forms of leadership styles

Unethical Leadership vs Lack of Ethical Leadership

The dominant discussions on ethical and unethical leadership have recently shifted towards viewing ethical and unethical leadership as distinct concepts that require their own investigation (Gan et al., 2019 ). These concepts are increasingly recognised as quantitatively distinct, with scholars acknowledging that the absence of ethical behaviour does not necessarily amount to unethical leadership (Ünal et al., 2012 ). While ethical leadership is ‘ the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships’ (Brown et al., 2005 , p. 120), unethical leadership, as discussed above, incorporates behaviours and decisions that could be illegal or morally unsound (Brown & Mitchell, 2010 ). This suggests that the mechanism that explains the formation of unethical leadership and its consequences is distinct from that of ethical leadership (Gan et al., 2019 ). Therefore, a single instance of dysfunctional leader behaviour does not always equate to unethical leadership (Ünal et al., 2012 ). This understanding has implications for the concept’s operationalisation because simply reverse coding the scale items would fail to accurately reflect an unethical leader’s behaviour. Hence, the present study incorporates research that has explicitly studied unethical leadership. In mining the literature, we specifically sought studies that were focused on unethical leadership and not those where the major theme was the absence of exemplary leader behaviours or ethical failures.

Unethical Leadership vs Destructive Leadership

Destructive leadership is defined as ‘ a process in which over a longer period of time the activities, experiences and/or relationships of an individual or the members of a group are repeatedly influenced by their supervisor in a way that is perceived as hostile and/or obstructive ’ (Schyns & Schilling, 2013 , p. 141) While an overlap appears to exist between unethical and destructive leadership, a fine line separates these concepts. Destructive leadership essentially captures harmful methods of influence directed at followers (Mackey et al., 2021 ), and it includes myriad leader behaviours, such as punishment, leader incivility, leader undermining, leader atrocities, toxic behaviours etc. We argue that although both concepts share the dimension of immorality, unethical leadership also includes behaviours that can be compliance based (Eisenbeiß & Brodbeck, 2014 ). In other words, unethical leadership can also entail behaviours that are illegal and amount to regulatory violations (Javaid et al., 2020 ). Furthermore, we argue that some types of destructive leader behaviours—e.g. tyrannical and insular leadership—can be pro-organisational. While such leadership types override follower interests, leaders pursue them under the guise of organisational interests (Einarsen et al., 2007 ).

In fact, pseudo-transformational leadership, yet another form of destructive leadership, has the potential to yield positive organisational outcomes (Almeida et al., 2021 ). In contrast, unethical leadership includes behaviours that are undeniably illegal and, at the same time, violate moral standards, thus, granting no benefit of the doubt to the intentionality of the leader’s behaviour. It can, thus, be inferred that destructive leadership and its various types employ ‘harmful methods of follower influence’, where the intentionality of such behaviour is subject to interpretation. While unethical leadership may not employ harmful methods of punishment, oppression or committing atrocities, it may reflect in corporate scandals and financial misreporting, among others. Finally, destructive leadership, which essentially includes behaviours that are hostile and obstructive, can originate from other types of leadership that need not be unethical. Even positive leadership types, e.g. ethical leadership, can instigate hostile behaviours with the presence of a curvilinear relationship between ethical leadership and positive employee outcomes (Stouten et al., 2013 ).

Unethical Leadership vs Abusive Supervision

Another leading concept in this direction is abusive supervision, which scholars have, at times, categorised under destructive leadership. Abusive supervision is defined as ‘subordinates' perceptions of the extent to which supervisors engage in the sustained display of hostile verbal and nonverbal behaviours, excluding physical contact ’ (Tepper, 2000 , p. 178). Under this definition, abusive supervision, like destructive leadership, encompasses longitudinal hostile behaviours, but these are limited solely to verbal and non-verbal abuse (i.e. these behaviours exclude physical abuse; Zhang & Bednall, 2016 ). Once again, however, scholars have not explicated the direction of outcomes in the context of abusive supervision, making it a typical category of destructive leadership (Guo et al., 2020 ).

The target of the intended behaviour is another critical point of distinction not only for delineating the scope but also the research framework of the present study. Under abusive supervision, leaders’ demeaning language and derogatory remarks are directed solely at their followers (Tepper, 2000 ). Under unethical leadership, however, different forms of unethical leader behaviours can target both followers and organisations. This confirms the view that abusive supervision is highly psychological in nature, encompassing high-intensity hostile behaviours that are directed at people (Almeida et al., 2021 ). The preceding discussion, however, suggests that unethical leadership need not be highly intense or hostile. Rather, it can entail passive and more subtle as well as legally unacceptable behaviours. This means that unethical leadership, unlike abusive supervision, can be task-oriented. Therefore, corporate scandals and financial misreporting fall under the concept of unethical leadership, and abusive supervision is, thus, conceptually distinct from unethical leadership. Furthermore, abusive supervision entails micro-level interactions between a leader and his or her immediate followers. In contrast, unethical leadership can operate at many levels and is much broader than these interactions between the leader and his or her followers.

The remaining concepts enumerated above, including petty tyranny, supervisor undermining, workplace aggression, despotic leadership, corrupt leadership, evil leadership and derailed leadership, likewise fall under the framework of destructive leadership with minor differences based on intentionality, types of behaviour, perceived versus actual behaviour, the inclusion of outcomes and the persistence of behaviours (Schyns & Schilling, 2013 ; Ünal et al., 2012 ). For example, workplace aggression is a type of destructive leadership wherein leaders direct hostile physical behaviours—e.g. pushing, hitting etc.—towards their followers (Neuman & Baron, 1998 ). Similarly, individuals who exercise Machiavellian leadership do not exhibit persistent hostile behaviours but rather intermittent and situational hostile behaviours towards followers (Belschak et al., 2018 ). It is important to mention here that although these conceptual differences have been delineated, the operational measurement of these concepts is not mutually exclusive, which often renders them interchangeable (Ünal et al., 2012 ). However, the current study treats them as separate concepts and includes only those studies that have examined unethical leadership in its own right without reference to any of these overlapping concepts.

The aim of the present study is to systematically review the extant literature on unethical leadership. Systematic reviews are considered scientific and enable the researcher to identify and critically analyse relevant research in a particular domain. This method of synthesising academic literature has gained acceptance across various disciplines primarily because it enhances research rigour (Dorn et al., 2016 ). In fact, the SLR method has gained wider acceptance in the management literature (Talwar et al., 2020 ) because it provides evidence-informed and reproducible research (Tranfield et al., 2003 ). As we discuss in the following paragraphs, SLRs ensure an audit trail of the decisions taken, which produces transparent, unbiased and objective results with minimum bias (Seth et al., 2020 ).

To ensure objectivity throughout the entire process, researchers follow various steps in systematically synthesising the existing body of research in a particular domain; the resulting objectivity in the process, in turn, expands opportunities for replicating as well as extending the work of the SLR (Seth et al., 2020 ; Talwar et al., 2020 ). Consistent with the procedures previous scholars have followed, we employed a four-step sequential process to systematically review research in the area of unethical leadership. We began by planning the review and ended with a descriptive analysis of the sampled studies. We now discuss these steps in detail (see Fig.  2 ).

An overview of the SLR process

Planning the Review

In this step, which aims to obtain the most relevant and greatest number of results, we ran a preliminary search on Google Scholar with the terms ‘unethical leadership’ and ‘unethical leader’. We analysed the first 100 results from this initial search to update the list of keywords that would eventually be used in developing the final corpus of studies. Then, consistent with best practices, we ran a similar search in the leading journals on ethics, including the Journal of Business Ethics , Business Ethics Quarterly and Leadership Quarterly , to ensure that we did not miss any important studies. Recent work in the domain of business ethics has supported the inclusion of these journals (Newman et al., 2020 ). The results from Google Scholar and reputed journals in business and ethics revealed that, by and large, the literature has employed uniform terminology for unethical leadership with a difference of one or two concepts, e.g. unethical supervision and bad leadership. Therefore, to ensure that we used only the most relevant search terms, we constructed a review panel, which consisted of two senior professors and two senior scholars. The panel was assembled with the intent to provide us with critical feedback and appraisal before we finalised each step in the process. After thorough discussions with the panel members, we added ‘unethical supervision’, ‘unethical supervising’ and ‘unethical supervisor’ to the initial list of keywords. Finally, we searched these terms in Scopus and Web of Science databases because these databases have been frequently used in SLRs due to the exhaustive list of journals they host, particularly in social sciences research (Mongeon & Paul-Hus, 2016 ).

Screening Criteria

We established the following inclusion criteria before constructing the dataset for the present study. First, we only included studies that were peer-reviewed and published in the English language on or before 7 December 2021. Second, we included studies that contained the term unethical leadership in any part of the study, including the title, abstract, keywords or text. Third, we only included studies that had direct relevance to organisational research. Fourth, we only included studies that pertained to unethical leadership. In other words, we discarded studies that used synonyms for unethical leadership that are conceptually different from unethical leadership unless otherwise specified. The exclusion criteria caused us to omit those studies that(a) had no direct relevance to unethical leadership; (b) had little or no relevance to the organisational context—e.g. teacher samples, military samples, sports administration; (c) appeared twice with the same DOI and (d) pertained to reviews, dissertations, conference proceedings, book chapters and editorials.

Data Extraction

We used asterisk (*), 'OR' and 'AND' connectors to develop search strings for use in the databases. We retrieved a total of 1167 research articles, 555 from Scopus and 612 from the Web of Science databases. We removed duplicate items, which reduced the initial corpus to 856. These remaining studies were filtered through the inclusion and exclusion criteria, which resulted in the exclusion of 678 studies. It is important to mention here that studies pertaining to abusive supervision, destructive leadership and authentic supervision were excluded for the reasons mentioned in Sect. 2. The two authors then thoroughly and independently analysed the remaining 178 studies. After a comprehensive evaluation of these studies, we decided that another 132 studies should be removed because they were only remotely relevant to ethical leadership research and practice. For example, initially, we had shortlisted pseudo-transformational leadership (Barling et al., 2008 ) as a type of unethical leadership, but after carefully screening the text, we decided that this type of leadership does not directly pertain to the research domain of unethical leadership. This left us with 46studiesin the main dataset of the present study. Finally, we added one paper manually after conducting forward and backward chaining of the references of the 46 shortlisted papers (see Fig.  2 ). Because two authors were independently involved in this process, we assessed interrater reliability (IRR) using the kappa statistic (Landis & Koch, 1977 ), which significantly exceeded the threshold for agreement between the independent coders.

Research Profiling

A comprehensive overview of the extant literature on unethical leadership is presented in Table 1 .This includes (a) year of publication; (b) research design; (c) unit of analysis/respondent profile; (d) geographic scope and (e) theoretical perspectives. The table reveals that research on unethical leadership has progressed, particularly over the past three years. However, much of the research remains concentrated in developed nations, particularly the USA, which poses serious limitations to the generalizability of the results to emerging nations. Most scholars have employed quantitative techniques, including field surveys, laboratory experiments and field experiments, and various quantitative techniques, including structural equation modelling, logistic regression, hierarchical regression and polynomial regression, to enhance the existing understanding and the generalizability of the results. Interestingly, a good number of scholars have utilised multiple surveys in the same study to comprehensively gauge the proposed effects. For example, scholars have often used experiments and questionnaire-based surveys with different respondents in a single study to enhance the reliability and generalizability of their findings.

No consensus exists regarding the best type of scale for capturing unethical leader behaviours. We observed the use of various scales, with some of the studies simply reverse coding the ethical leadership scale items. For example, Cialdini et al. ( 2021 ) reverse coded the scale item, ‘ Sets an example of how to do things the right way in terms of ethics ’, so that a higher score represented unethical behaviour. The remainder of the studies employed toxic leadership dimensions (Ruiz-Palomino et al., 2021 ) or organisational and interpersonal deviance (Qin et al., 2021 ), or they adapted general unethical organisational behaviours to the leadership context (Fehr et al., 2020 ; Javaid et al., 2020 ).

Moral theory, institutional theory, social cognitive theory and social information processing theory have been the most widely used approaches to understand the phenomenon of unethical leadership in organisational contexts. However, we also observed that scholars have relied less on validation from other theoretical perspectives, e.g. institutional pillars, organisational structure, goal setting and stakeholder theory, among myriad others.

Finally, most of the studies have used organisations, managers, CEOs and employees as the main respondents from whom to collect data—mostly through questionnaires administered via various offline and online modes. While these categories of respondents are common in leadership research, few studies have examined leader–follower dyads.

Review of Extant Research on Unethical Leadership

We thoroughly analysed the final sample of included studies with the goal of understanding the antecedents, boundary conditions and consequences of unethical leadership. We employed the content analysis method, a qualitative data analysis technique, to analyse and synthesise the selected studies and thereby develop themes, identify critical knowledge gaps in the existing literature and suggest future research directions. We adopted a three-step protocol employed in recently published studies (Kaur et al., 2021 ; Khan et al., 2021 ; Seth et al., 2020 ), which minimises bias and produces an audit trail of crucial decisions in conducting SLRs. Following Glaser and Strauss ( 1967 ), we developed first-order codes and second-order codes and, finally, segregated the studies into aggregate theoretical dimensions (see Fig.  3 ). In the first step, we utilised open coding to categorise all of the reviewed studies into provisional categories. We then examined the studies to determine their research model and the results of the relationships hypothesised. When this was not possible, we relied on the major findings of the study to curate themes. In the next step—i.e. the axial coding process, we examined the relationships among these categories following deductive and inductive logic to arrive at broader categories. In the final step, we used the selective coding process to identify the final core/aggregate thematic dimensions, which we will discuss in the subsequent sections. In this step, we also invited two academicians with experience in ethics-related topics to review the aggregate themes developed in the prior step. Upon receiving their feedback, we made some minor changes to the themes.

Concept map of extant research on unethical leadership

The process resulted in four broad themes: antecedents, consequences, boundary conditions and miscellaneous. The first three themes are discussed at three levels: the individual, group and organisational levels. Figure  4 presents an overview of the three key thematic areas of research examined in the prior extended literature. The major scholarly work has expanded to gauge the impact of unethical leadership, with employee-related outcomes receiving the greatest attention. We also noted that group-level examinations of unethical leadership are quite scant with outright exclusion of group-level antecedents. In the following sections, we discuss these levels and the associated factors in detail and propose important research directions in the area.

An overview of associations among three key thematic areas of research on unethical leadership

Antecedents of Unethical Leadership

We discuss factors that lead to the formation of unethical leadership and identify possible knowledge gaps in this direction.

Individual-Level Antecedents

Leaders’ personality traits.

In seeking to identify individual-level factors that promote unethical leader behaviours, the prior literature has devoted significant attention to leaders’ personality traits. In particular, the literature has cited narcissism, hubris and psychopathological traits as the determinants of unethical leader behaviour. Scholars suggest that a narcissistic leader is likely to possess inflated views about his or her own achievements and capabilities, which create dysfunctional agentic relationships among leaders and followers because leaders promote their own self-interests at the expense of their followers (Campbell et al., 2011 ). Narcissistic leaders indulge in self-aggrandising and derogatory behaviours, which often causes their subordinates to perceive them as unethical in the context of organisations (Hoffman et al., 2013 ). In addition, leaders who are high in narcissism can exhibit moral entitlement, where follower pro-organisational behaviour could lead to the emergence of unethical leadership (Ahmad et al., 2020 ).

Hubris is a similar personality trait that refers to a leader’s exaggerated confidence and prestige in work-related situations. Hubris is often described as a cognitive state in which leaders develop an amplified sense of self-esteem and pride in their abilities; their inflated self-esteem and pride, in turn, makes them think that prevailing norms do not apply to them, which could result in unethical manifestations of this personality trait (Petit & Bollaert, 2012 ). Research has provided similar evidence regarding hubris among CEOs. CEO hubris has a significant influence on the unethical practice of earnings manipulation in organisations (McManus, 2016 ). In fact, hubris is positioned to stimulate leaders towards manipulative language use, which could foster an unethical climate within organisations (Akstinaite et al., 2020 ).

Finally, unethical leadership practices are also associated with psychopaths who are deficient in emotions and conscience and, thus, engage in cold, ruthless and self-seeking behaviours (Marshall et al., 2014 ). Boddy’s ( 2016 ) study supported this, finding that leader psychopathy is associated with unethical practices, including corporate scandals.

The above discussion signals that the literature, thus, far has examined only dark personality traits, which opens room for other personality frameworks in this direction. The two key research gaps in this regard are as follows. First, many individual factors, needs and behaviours remain unexamined in the literature, thus, far. Second, different personality frameworks have not been validated in the context of unethical leadership. We propose three research questions to address these research gaps. RQ1 How do leaders’ various needs (e.g. achievement, power, affiliation) produce unethical behaviours? RQ2 Do leaders’ personality traits adjust in the work context to stimulate unethical practices? RQ3 Can the cybernetic Big Five model be used to explain unethical leadership?

Leaders ‘Manipulative Tendencies

Leader immorality has long been considered the foundational pillar of unethical leadership practices within organisations (Hartman, 2000 ; Pelletier & Bligh, 2008 ). Unethical leaders are often associated with a lack of integrity and exhibit manipulative behaviours, including hypocrisy and breach of trust (Pelletier & Bligh, 2008 ). Here manipulation refers to the deliberate unethical use of leader competencies and use of manipulative communication directed towards followers in a disguised way (Auvinen et al., 2013 ). Scholars have identified leaders’ prominent statements and communication styles as fostering unethical behaviour within organisations (Akstinaite et al., 2020 ; D’Adda et al., 2014 ). Such manipulative storytelling directed towards followers is considered one possible way to fortify unethical leadership practices within organisations (Auvinen et al., 2013 ). In fact, such manipulation is also manifested in leaders’ use of their emotional competencies to serve their self-interests (Segon & Booth, 2015 ).

While immoral behaviour is the cornerstone of most negative leadership types, including unethical leadership, scholars have investigated most manipulative tendencies in isolation without any regard to leader–follower interactions or person–situation perspectives. To address this gap, we propose the following RQs. RQ1 How can a leader's expression of humour and/or anger interact with his or her moral awareness to produce unethical behaviours? RQ2 What is the relationship of leaders’ implicit personality traits (incremental and entity) and leader–situation fit on the formation of unethical leadership?

Organisational-Level Antecedents

Despite the centrality of organisational factors in the formation of unethical leadership, scholarly attention in this direction is quite scarce. One of the important organisational-level factors with the potential to facilitate unethical behaviour is the lack of organisational oversight mechanisms. When organisations have inadequate control mechanisms, lackadaisical rules enforcement and a lack of transparency, unethical leader behaviours tend to surface (Benlahcene & Meddour, 2020 ). The job specificities and role expectations that are entrusted to a leader can accentuate this effect. For example, under the framework of social role theory, the overarching importance of group goals and the expectations thereof can cause leaders to engage in unethical means to achieve the group’s ends (Hoyt et al., 2013 ). Joosten et al.'s ( 2014 ) study elucidates this effect, suggesting that the depletion of cognitive resources as a result of an excessive workload can cause the emergence of unethical leader behaviours.

Our review of the literature suggests that scholars have yet to explore the full range of organisational factors in the unethical leadership context. To that end, future research can investigate the impact of organisation structure on unethical leader behaviour. In particular, scholars could analyse the impact of new and emerging forms of organisation structures to understand their facilitating and inhibiting impact on unethical leadership. In fact, scholars can employ various theoretical frameworks, including dual-factor theory, to identify the factors that inhibit and facilitate unethical leader behaviours; such endeavours have, thus far, been entirely overlooked. Furthermore, research can explore the potential impact of technology, particularly digital technology, on unethical leadership practices. We propose the following research questions for future scholars. RQ1 Do organic and mechanistic organisational structures differ in their influence on unethical leadership? If so, under what conditions? RQ2 What are the mechanisms that underlie unethical leader behaviours in contemporary organisational structures, e.g. virtual organisations? RQ3 Can the dual-factor theory be used to investigate different sets of facilitators and inhibitors of unethical leadership at the organisational level? RQ4 How might firm digitalisation influence unethical leadership practices at the organisational level?

Consequences of Unethical Leadership

We discuss the impact of unethical leadership at various levels and identify relevant research gaps.

Individual-Level Consequences

Employee work attitudes.

Workplace attitudes are considered the fundamental mechanisms through which employees respond to the prevailing ethical or unethical culture as well as the dominant leadership style in an organisation (Zhao & Li, 2019 ). Such employee perspectives regarding their organisation’s dominant ethical or unethical tone condition their own work-related attitudes, e.g. intentions to leave (Charoensap et al., 2018 ). In addition, these favourable or unfavourable evaluations about the dominant ethical or unethical tone in the organisation, which emanate from social exchange and social learning phenomena, condition followers to exhibit positive and negative work attitudes, respectively (Ruiz-Palomino et al., 2021 ).

In this vein, scholars have not only investigated the impact of unethical leader behaviours on the development of negative work attitudes but also the deleterious impact of such behaviours on positive work attitudes. In fact, scholars are also increasingly interested in whether unethical leadership can foster positive attitudes under certain boundary conditions. For example, Moutousi and May ( 2018 ) suggested that unethical leadership that manifests in organisational change-related initiatives can result in follower attitudinal resistance to such changes, which could benefit the organisation. This study demonstrated follower resistance as a functional organisational outcome that may result whenever unethical means or unethical ends are suspected in change manifestos heralded in the organisation. The work demonstrated that change-related unethical leadership can result in followers’ resistance to change. They found evidence of the impact of unethical leader practices, including the ethicality of change-related goals and the means to achieve them, on followers’ attitudinal resistance to such change initiatives. Furthermore, the study viewed follower resistance as a positive and functional work attitude triggered by prevailing unethical change manifestos heralded in the organisation.

In sharp contrast, unethical leadership also stimulates malfeasance and the development of negative work attitudes. Johnson et al.'s ( 2017 ) study corroborated this, finding that unethical leaders encourage financial statement fraud intentions among employees. Furthermore, unethical leadership has also been found to negatively influence important work attitudes, e.g. lower job satisfaction. Thus, unethical leadership is considered detrimental to employees’ personal growth satisfaction and intentions to stay (Ruiz-Palomino et al., 2021 ). Furthermore, employees’ perceptions of the desirability of remaining with an organisation depend on the extent to which their leaders work to meet the employees’ developmental needs (Ruiz-Palomino et al., 2021 ). Because unethical leadership weakens such employee perceptions, it is logical to assume that it increases their volition to leave.

Similar evidence has been found for the influence of unethical leadership on followers’ task-specific self-efficacy (Kabat-Farr et al., 2019 ). A cognitive phenomenon, self-efficacy refers to the ‘ beliefs in one's capabilities to mobilise the motivation, cognitive resources and courses of action needed to meet given situational demands ’(Wood & Bandura, 1989 ). In the present context, task-specific self-efficacy describes an employee's subjective appraisal of his or her work-related abilities (McGonagle et al., 2015 ). By acting as workplace stressors, unethical leader behaviours negatively influence employees’ beliefs in their own ability to successfully perform their jobs (Kabat-Farr et al., 2019 ).

The prior literature suffers from inconclusive findings regarding the influence of unethical leadership on employee outcomes and the exclusion of important work attitudes. In light of the varying and inconclusive nature of the extant results, future research might consider studying other organisational factors in the context of unethical leadership. We propose two key research questions here. RQ1 How is unethical leadership related to organisational commitment? Does it influence normative, affective and continuance commitment differently? If so, how? RQ2 Does unethical leader behaviour influence work engagement and employee loyalty?

Employee Work Behaviours

Scholars have shown that unethical leadership contributes to negative workplace behaviours and, at the same time, exerts a negative influence on functional work behaviours. Drawing upon the conservation of resource theory, Qin et al. ( 2021 ) asserted that unethical leadership exerts a significant impact on employees’ knowledge hiding behaviour (Qin et al., 2021 ). In addition, unethical leader behaviours induce actual and perceived resource depletion among employees; this further reaffirms their hiding behaviour, with an aim to avoid additional resource losses. In such situations, employees not only work to protect their existing knowledge from further loss but also attempt to comply with unethical leader requests, which might violate followers’ moral grounds (Javaid et al., 2020 ). In other words, followers indulge in crimes of obedience where they find themselves abiding by leaders’ immoral actions either out of coercion or respect for their authority (Carsten & Uhl-Bien, 2013 ). This may further trigger employees to exhibit negative behaviours and reduce positive work outcomes. For example, follower perceptions of unethical leadership result in negative employee outcomes in the form of deviant workplace behaviour(DWB) and the reduction of positive work behaviours (Knoll et al., 2017 ), including organisational citizenship behaviour (OCB) (Zoghbi-Manrique-de-Lara & Suárez-Acosta, 2014 ). In fact, the prevalence of interpersonal injustice has been shown to influence the perceptions of unethical leadership, which, in turn, promote negative interpersonal work behaviours (Zoghbi-Manrique-de-Lara & Suárez-Acosta, 2014 ).

Despite the above findings, it is quite surprising that few employee work behaviours have been empirically validated in the context of unethical leadership. While one study above captured DWBs, we did not locate any research that has attempted to examine counterproductive work behaviours (CPBs) directed towards the organisation. Furthermore, the impact of unethical leadership on overt employee behaviours, including scouting for a new position and leaving the organisation, remains inconclusive. Future research can investigate employees’ actual exit behaviour emanating from leaders’ unethical conduct. In fact, employee voice behaviours and pro-organisational behaviours could provide significant insights into the phenomenon of unethical leadership. Finally, given the intrusion of digital technology in the workplace, the influence of unethical leadership on cyber loafing would be worth scholarly investigation. We enumerate the following key research questions for future research. RQ1 Under what conditions does unethical leadership result in destructive and constructive employee behaviours? RQ2 What is the incidence of unethical leadership on employees’ actual exit behaviour? RQ3 How and when does unethical leader behaviour result in cyber loafing?

Employee Emotions

While employee emotions are increasingly seen as important work-related feelings directed at supervisors and organisations ( b ; Peng, Schaubroeck, et al., 2019 ), the extant literature on unethical leadership has not comprehensively captured employee emotions in the work context. We found very little evidence of the emotional outrage that prevailing unethical practices in the organisation might provoke among employees. However, this stimulation of negative emotions directed at organisations and their leaders as a response to unethical leader behaviours can take the form of employee cynicism, pessimism, fear and paranoid tendencies (Pelletier & Bligh, 2008 ). Pelletier and Blight ( 2008 ) found that employees experience a heightened sense of disillusionment, abhorrence and anger after being exposed to unethical leader behaviours. In fact, in their study, 50% of these emotional reactions took the form of frustration, which employees expressed in the form of cynical statements aimed at organisational practices, retributive justice and unsuccessful implementation of ethics intervention. These reactions to the breach of trust resulting from unethical leadership (Knoll et al., 2017 ) can also promote fear and increased suspicion among employees (Pelletier & Bligh, 2008 ).

While we found some evidence of the negative emotional backlash arising from unethical leadership, scholars have yet to produce conclusive evidence regarding the impact of unethical leader behaviours on negative as well as positive employee emotions. Future research can investigate whether unethical leadership results in emotional dissonance such that employees experience incompatibility between what they feel and what they express. This has potential relevance to the domain of unethical leadership research because employees, as a result of their respect for authority and fear at the workplace, might experience such emotional inconsistency. Another research direction pertains to the impact of unethical leadership on emotional labour (both service and non-service organisations), where affective events theory and social information processing theory (Salancik & Pfefer, 1978 ) offer useful theoretical lenses. Furthermore, mediation analysis has the potential to determine whether employee exhaustion and psychological burnout resulting from unethical leadership influence the work–life balance and employee well-being. Finally, employee happiness is another research area where unethical leadership plays a potential role. We recommend that scholars examine the following RQs. RQ1 Can unethical leadership result in employee emotional dissonance? RQ2 Is unethical leadership related to work–family balance or employee well-being? If so, what are the psychological mechanisms to it?

Employee Performance

In the present context, efforts to understand the role of unethical leadership in the task performance of employees, including the quality and efficiency of their work output, have been quite scarce. We identified only one a single significant study from the selected pool that examined the impact of unethical leadership on employee performance. It found that unethical leader behaviour decreases employee performance by influencing employees' moral mental maps (Gan et al., 2019 ). When employees witness amoral practices in their organisation, their moral identity activates; this, in turn, reduces their work discipline and productivity.

Scholars have largely neglected the performance outcomes that result from unethical leadership. Furthermore, prior studies lack robust theoretical frameworks that could be used to explain how unethical leadership influences employees’ task-specific performance. Noting the dearth of studies related to job performance, we suggest the use of self-determination theory to understand work motivations in the context of unethical leadership. Self-determination theory (Rigby & Ryan, 2018 ) can provide a useful theoretical lens to understand potential interactions between various levels of employee work motivations (from low quality to high quality) and unethical leadership behaviours, which, in turn, influence employee job performance. Furthermore, scholars can use the job-demands-resources (JD-R) (Lesener et al., 2019 ) model to investigate the ways in which unethical leadership increases the psychological and physiological costs associated with a job by increasing job demands (e.g. extra work shifts demanded by the leader) and reducing job resources (e.g. lack of supervisor support) to influence employee performance. We suggest three key research questions for future research. RQ1 How do various levels of employee work motivations interact with unethical leadership behaviours to influence job performance? RQ2 Does task-specific performance of employees could be influenced by unethical leadership? Can self-determination theory offer a useful theoretical lens? RQ3 In what ways does unethical leadership increase the psychological and physiological costs associated with employee performance? Can the JD-R model be used to investigate this phenomenon?

Group-Level Consequences

Scholars have investigated the potential consequences of unethical leadership at the group or team level. Cialdini et al.( 2021 ) studied the impact of unethical leadership on group members’ turnover intentions. Drawing on the attraction–selection–attrition model, the study established that unethical leader behaviours increase group members’ intentions to leave their organisations. Furthermore, followers who intend to stay with an organisation after unethical encounters engage more in cheating and other unethical group behaviours (Cialdini et al., 2021 ). D’Adda et al. ( 2014 ) found similar evidence, demonstrating that unethical leader behaviours are causally related to group members’ unethical conduct. These studies suggest that unethical leadership can stimulate an unethical climate among workgroups, which could, in turn, negatively impact other group behaviours. For example, unethical leader behaviours hinder team creativity by fostering knowledge hiding behaviours among group members ( b ; Peng, Schaubroeck, et al., 2019 ). Under the framework of social information processing and social learning theory, the study reported that team members experience psychological distress and exhibit a dysfunctional sense of competitiveness that is detrimental to team creativity.

Given the paucity of research on group-level outcomes in the context of unethical leadership, scholars must devote additional research to understanding the implications of unethical leadership at the team level. One such fundamental research direction, which has, thus, far received no attention, is the impact of unethical leadership on group performance. Future research can study in-role (task-specific) and extra-role (helping behaviour) group performances and the mechanisms through which unethical leadership influences them. Another potential area of interest might explore whether unethical leadership can trigger group conflict through in-group and out-group categorisations. In this context, social categorisation theory may prove useful. Finally, scholars can investigate group organisational citizenship behaviours to understand the circumstances in which unethical leadership promotes or hinders such pro-organisational team behaviours. Consistent with this discussion, we outline the following potential research questions. RQ1 How is unethical leadership related to group performance? RQ2 Through what specific mechanisms does unethical leadership influence in-role and extra-role group behaviours? RQ3 Can unethical leadership hinder or foster group pro-organisational behaviours? Why or why not? RQ4 Does unethical leadership result in group conflict? How can social categorisation theory lend support to this phenomenon?

Organisational-Level Consequences

We found very few scholarly investigations of the organisational-level outcomes associated with unethical leadership. Furthermore, the research pertaining to this level of consequences is extremely disparate, with the studies pertaining to various organisational dynamics. For example, Vasconcelos ( 2015 ) found that unethical leadership contributes to derogatory discrimination framing of the organisation, which may result in a negative corporate image. Furthermore, unethical leadership can foster unsustainable corporate practices, including corporate scandals that can tarnish organisations’ social responsibility ethics (Mujkic & Klingner, 2019 ). In an entirely different context, unethical leadership has been found to result in the failure of information systems that aim to foster control mechanisms within organisations (Sherif et al., 2016 ). The study establishes the strategic importance of leadership ethics where the ethical or unethical tone set by the leaders determines the success of such control mechanisms. The study further highlighted the ways in which unethical leadership can circumvent the potential use of information systems by fostering unethical conduct that supersedes control interventions.

The prior literature, however, does not provide clear empirical evidence on the organisational consequences of unethical leadership. Furthermore, evidence pertaining to contemporary forms of performance measures are lacking. In light of the paucity of existing research, future research can investigate the impact of unethical leadership on firm performance, market share and firm value. Apart from these outcomes, scholars can study firm innovation performance and sustainable business model innovation in the context of unethical leadership. We, thus, propose the following key RQs. RQ1 How does unethical leadership translate into various organisational outcomes, e.g. financial performance, market share? RQ2 In what ways does unethical leadership influence green innovation practices within organisations? RQ3 What are the mechanisms through which unethical leadership relate to sustainable business performance?

Boundary Conditions of Unethical Leadership

In this section, we discuss important boundary conditions that have been established either to mitigate or to exacerbate the negative consequences of unethical leadership as well as the various coping mechanisms and amplifiers that are critical in scholarship on unethical leadership.

Individual-Level Boundary Conditions

Follower moral awareness and ethical ideology.

The contemporary line of discourse in leadership research is witnessing a burgeoning interest in the active role that followers play in the dyadic and reciprocal nature of leadership phenomena (Uhl-Bien et al., 2014 ). Follower perspectives have been advanced to provide a more comprehensive picture of the emergence of various leadership practices (Carsten & Uhl-Bien, 2012 ) and insights into the co-production of unethical organisational behaviours (Carsten & Uhl-Bien, 2013 ). In fact, in the context of the present study, follower morals and ethicality have been established to condition the impact of unethical leadership via its various consequences. Javaid et al.'s ( 2020 ) work supports this assertion, finding differences in followers’ moral awareness and the tendency of unethical leadership to foster unethical employee behaviours. Based on socio-cognitive theory, the study advances the role of follower moral cognition and awareness in mitigating the effects of unethical leadership on unethical work behaviours. Similarly, followers with a high propensity to morally disengage retain higher levels of trust in their unethical leaders and exhibit greater support for unethical leader behaviours than do followers with a low propensity for moral disengagement (Fehr et al., 2020 ). Scholars have attributed such differences in follower compliance with unethical leader requests to follower ethical ideologies such that followers’ scores on relativism and idealism determine their perceptions and reactions to any unethical encounters (Moutousi & May, 2018 ). Followers high on idealism and low on relativism are, thus, likely to be more sensitive to the unethical practices in which their leaders engage. The common thread in these studies pertains to the followers’ moral awakening and the strengthening of their good conscience, which may reduce occurrences of unethical behaviours within the organisation (Solas, 2016 ).

While follower-focused studies are valuable, we believe leader-specific behaviours, social and ethnic ascriptions require further examination. To date, scholars have not explored leader-related factors that could condition the impact of unethical leadership. We suggest the following potential research questions. RQ1 What is the relevance of leader religious affiliations and religiosity to unethical leadership practices? Can cross-cultural studies benefit from this line of investigation? RQ2 How and under what circumstances does a leader’s gender condition the effects of unethical leadership?

Follower Traits and Behaviours

Despite the importance of follower traits in the leadership domain, we encountered only two studies in which follower tendencies and socially constructed follower identity were able to resist or amplify unethical leadership within organisations. Stouten et al. ( 2019 ) showed that employee silence plays a strategic and functional role in circumventing the negative effects of unethical leadership. Employee silence has been considered a significant dysfunctional employee behaviour that could fortify unethical leader behaviours (Morrison, 2014 ). Based on the 'see-judge-act' mechanism, however, employees can better understand the ethicality of a situation and develop more robust responses beyond merely voicing their opinions (Stouten et al., 2019 ). Furthermore, unethical leader requests are filtered through the socially constructed ideation of followership. In particular, follower good citizenship and insubordination determine whether unethical leadership is welcomed or abhorred. In other words, followers who exhibit good citizenship are more inclined to abide by their leaders’ unethical requests than followers who tend towards insubordination (Knoll et al., 2017 ). Moreover, employee grit—defined as ‘ perseverance and passion for long-term goals’ (Duckworth et al., 2007 )—moderates the relationship between unethical leader behaviour and employee outcomes. Seeking to gauge this effect, Kabat-Farr et al. ( 2019 ) documented the insignificant impact of unethical leadership on the perceived workability of high grit employees. The study also indicated that this relationship holds even when employee job involvement is high. Finally, followers who are inclined towards self-sacrificing and self-enhancement but who hold less proactive attitudes exhibit greater compliance with CEO requests (Johnson et al., 2017 ).

Based on the above discussion, the extant literature has rigorously studied personality factors, while leaving room, however, for future investigations of various job and career-related issues. Thus, we recommend that scholars address the following research question. RQ1 Does employees’ career adaptability influence the practice of unethical leadership within organisations?

Leader–Follower Nexus

Another individual-level boundary mechanism that can influence the outcomes of unethical leadership falls under the leader–follower connection. We understand this connection in terms of the moral congruence between leaders and followers and the quality of the relationship they share. Moral or value congruence refers to a follower's perception of the fit between the values he or she holds and the values the leader holds (Cable & De Rue, 2002 ). This concordance of moral and ethical principles has been considered fundamental in followers’ perceptions of leadership, both ethical and unethical (Egorov et al., 2020 ). In fact, when followers and leaders have entirely different moral identities, followers are more likely to develop unethical leadership perceptions (Giessner & van Quaquebeke, 2010 ). Studies have empirically validated the ability of this leader–follower value congruence to condition the impact of unethical leadership on follower outcomes, with high-value congruence amplifying the effect (Fehr et al., 2020 ). Furthermore, the quality of relationships between leaders and followers in the form of leader–member exchange (LMX) can also exacerbate the negative consequences of unethical leadership. For example, Gan et al. ( 2019 ) highlighted that situations of high LMX lead employees to exhibit poor job performance as a result of their greater sensitivity to unethical leader behaviours. This suggests that followers who have high reciprocity with their leaders may reduce their job performance.

While scholars have validated value congruence in the context of unethical leadership, we believe other leader–follower parameters require further investigation. Apart from moral congruence, we understand little about the role of the leader–follower nexus in unethical leadership. We suggest future studies examine the following RQ. RQ1 Do cross-generational differences surface in leader–follower dyads? If so, what is their impact on unethical leadership?

Group-Level Boundary Conditions

At the team level, scholars have paid scant attention to delineating the boundary mechanisms that might moderate team-related outcomes. Cialdini et al.'s ( 2021 )study positioned value congruence at the group level as an important boundary condition that stimulates selective attrition among group members who experience unethical leader behaviour. These group members’ perceptions of the fit between group moral values and their own ethicality (Kristof-Brown et al., 2005 ) determine their future course of action, including their decisions to leave the group or engage in malfeasance. Another group-level moderator used in the context of unethical leadership pertains to job design in groups. Goncalo and Staw ( 2006 ) found that team–task interdependence facilitates information sharing and increases the interdependence of group members in the successful completion of group tasks. Such job characteristics can mitigate the negative consequences of unethical leadership on group-level outcomes, e.g. team creativity ( b ; Peng, Schaubroeck, et al., 2019 ).

The existing research on group-level moderators is shallow, exhibits disparate results and has neglected important team- and group-level constructs. Given the paucity of research on group-level boundary conditions, we enumerate some critical research avenues with the potential to advance the literary developments in this area. RQ1 What is the role of group diversity in mitigating the negative impact of unethical leadership? RQ2 In what ways can groupthink promote unethical leadership practices within organisations?

Organisational-Level Boundary Conditions

At the organisational level, scholars have suggested work design as a coping mechanism against the potential downsides of unethical leadership. For example, job complexity, defined as the degree of complexity a job involves (Morgeson & Humphrey, 2006 ), increases employee interdependence and knowledge sharing, which, in turn, help mitigate the negative effects of unethical leadership (Qin et al., 2021 ). Ruiz-Palomino et al. ( 2021 ) reported similar evidence, demonstrating that a responsibility climate can act as a buffer for the effects of unethical leader behaviour. Their study utilised job autonomy to manifest the responsibility climate of organisations where employees are entrusted with the responsibilities of their jobs and delegated adequate job authority (Ahmad et al., 2018 ). Another organisational-level coping mechanism is a resilient ethical culture that can transcend and resist unethical leader behaviours. Ethical culture delineates the line between ethical and unethical behaviours and can enable employees to develop perceptions to guide their ethical assessments of leaders’ behaviours (Kaptein, 2011 ). In the context of unethical leadership, an ethical culture could encounter unethical leader practices through a robust succession process, the eradication of perceptions of inequity, efforts to overcome moral blindness and the banality of evil and to reduce moral mutism through control mechanisms (Roque et al., 2020 ).

The above discussion reveals that scholars have examined the roles of few organisational factors in circumventing the impact of unethical leadership. In fact, most of the papers dwelt on organisational design perspectives while neglecting structure- and size-related factors. We suggest scholars explore the following RQs in future studies. RQ1 How does ownership structure relate to unethical leadership practices? RQ2 Can organisation size moderate the impact of unethical leadership? RQ3 Do unethical leadership practices differ significantly between leaders of large and small firms?

Miscellaneous

In this section, we discuss studies that did not fit in any of the prior categories. These pertain to the taxonomy of unethical leadership, the development of followers’ perceptions of unethical leadership in general and in different cultures and the country-specific conditions that influence the practice of unethical leadership at the macro-level.

Ünal et al.’s ( 2012 ) extension of the conceptual underpinnings of unethical leadership added the dimensions of utilitarianism, perceptions of justice and the right to dignity as important normative grounds to define unethical leadership in a robust way. These dimensions enhanced the conceptual rigour of unethical leadership, which the existing literary work in the field has largely ignored.

In another approach to unethical leadership in work contexts, scholars have gauged the influence of various individual-, organisational- and country-specific factors on perceptions of unethical leadership. For example, managers’ demographic characteristics, including age, gender, tenure and education, have been shown to influence their perceptions of unethical leadership (Lašáková& Remišová, 2019). In a slightly different context, follower perceptions of unethical leadership stem from the reputation that a leader has prior to the manifestation of infidelity at work and the degree to which the leader’s discretion involved the abuse of power (Grover & Hasel, 2018 ). As expected, these perceptions vary across countries. However, similar attributions of unethical leadership have also surfaced in the prior literature. While noting differences in the perceptions of unethical leadership across cultures, Resick et al. ( 2011 )also identified dominant perceptions that held across six countries. Similarly, Eisenbeiß and Brodbeck ( 2014 ) found that managers’ perceptions of unethical leadership in Eastern and Western countries are specific to their cultural roots, but some attributions, including those regarding a leader’s honesty, integrity, responsibility etc., remain constant across countries (Kimura & Nishikawa, 2018 ). Apart from institutional pressures from a country’s media, shareholders also influence the practice of unethical leadership (Chen, 2010a , 2010b ).

While the above studies have captured institutional factors, we did not locate any robust study delineating the impact of various institutional conditions on the formation of unethical leadership. It is important to note that broader institutional pillars can influence the perceptions of moral behaviour as well as the legality of actions in a country. Thus, we propose that future scholars address the following RQs. RQ1 How do a country’s institutional conditions (regulatory, normative and socio-cultural) influence unethical leadership? RQ2 Does the institutional stability of a country influence the extent of unethical leadership in organisations within that country?

Conceptual Framework and Potential Models

In this section, we discuss our multi-level conceptual framework and potential research models, which scholars can further investigate to advance the literary space of unethical leadership. Our multi-level conceptual framework essentially extends the existing body of work on unethical leadership while including the missing elements identified in the knowledge gaps (see Sect. 4). The extant literature has neglected group-level mechanisms—in particular, group-level antecedents—as well as organisational-level consequences and antecedents (see Fig.  4 ). Our conceptual model addresses these lacunae by capturing the missing elements and organising the extant work in a multi-level framework. While the multi-level framework addresses the broader themes in the field, the proposed potential research models discern precise research directions informed by the multi-level framework. Scholars have suggested that proposing potential models enables us to address critical knowledge gaps in the existing literature and thereby inform theoretical as well practical developments in the field (Shamsollahi et al., 2021 ).

Micro-Meso-Macro (M3) Framework of Unethical Leadership

Our segregation of the sampled studies into various themes offers a broader understanding of the similarities and differences in the extant academic discourse on unethical leadership and allowed us to uncover various knowledge gaps in the current body of work. Following this understanding and using inductive logic, we developed a M3 framework of unethical leadership using a multi-level analysis approach. Multiple levels of analysis are quite popular among organisational research scholars primarily because their use facilitates a robust analytical focus by offering linkages among the various units of organisations (Roberts, 2020 ).

Approaching leadership contexts from a multi-level perspective also captures the leadership dynamics within organisations in a comprehensive manner (Schriesheim et al., 2009 ). With the presence of teams, workgroups, individuals, departments and dyads, organisations are inherently multi-level entities, which is sufficient to justify the use of multiple levels of analysis in work contexts (Kwon et al., 2016 ). Because leadership manifests at different levels in an organisation, it is imperative to understand leadership research at various levels to gauge a particular process or phenomenon at its respective level and in relation to other levels (Barbour, 2017 ).

The level of analysis refers to the specific unit (individual, group or department) within an organisation where a particular effect is desired or a particular phenomenon is to be studied (Barbour, 2017 ). Methodologically, therefore, leadership can operate at micro, meso and macro levels, which are, in turn, interconnected. Macro-level analysis pertains to the broader organisational factors, including organisational structure, culture and processes that act as contextual factors in understanding leadership dynamics (Markham, 2010 ). Drawing insights from the results of the current study, we argue that macro-level factors operating at the country level can also influence leadership practices within organisations. These factors pertain to ‘ strategies for governing ’ and constitute ‘ building blocks ’ for maintaining national order. Beneath these foundational pillars sits a country’s institutional complex, which influences unethical leadership practices (Chen, 2010a ).

Micro-level analysis is arguably the most commonly researched level, which focuses on individual-level processes and outcomes . Micro-level leadership variables include leadership skills, traits, leader–member exchange, member cognition and interpersonal communication where the individual is the main unit of the analysis (Gardner & Cogliser, 2009 ). Meso-level analysis, finally, centres on the mechanisms involved in the interaction of micro and macro perspectives (Barbour, 2017 ). At this level, the unit of analysis is teams, groups and networks that connect various functional parts of the organisation and in which leader and follower behaviours influence organisational factors and vice versa(Gardner & Cogliser, 2009 ). We organised our understanding of the academic literature on unethical leadership around these three levels and developed a framework that facilitates a multi-level understanding of the phenomenon.

In our M3 framework, we discuss antecedents, boundary conditions and consequences of unethical leadership at the micro, meso and macro levels (see Fig.  5 ). As the framework illustrates, unethical leadership can operate at various levels within an organisation. The solid boxes represent work based on the extant literature of unethical leadership, while the dotted boxes are the authors' own compilations. The prior literature has largely neglected the country-level consequences and group-level antecedents, which also provide avenues for future research.

A multi-level M3 framework of unethical leadership

We expect cross-level and reciprocal interactions between these levels, which are functional in unethical leadership processes. For example, at the micro-level, scholars might gauge the influence of individual antecedents, including leaders’ ethical ideologies and personality traits, in terms of their individual, group and organisational consequences. In fact, a reciprocal and cross-level dynamism exists among individual, group and organisational factors. This means a micro-level investigation is not complete unless and until it incorporates macro- and meso-level interventions. For example, an attempt to explore the impact of leader traits on employees’ unethical behaviour would be incomplete if the study did not also account for organisational factors (culture, size and job design). Similarly, macro-level factors, which, in the context of the current study, are conceptualised as national and organisational factors, influence both the occurrence and the consequences of unethical leadership.

We expect national regulatory, normative and cognitive pillars to influence organisational, group and individual factors across the anticipated effects (antecedents, boundary conditions and consequences). Apart from institutional factors, national culture has a trickle-down effect in our framework, which promotes the general and mass prevalence of unethical practices in a country’s organisational, group and individual dynamics. Here again, incorporating meso- and micro-level boundary conditions, e.g. follower morality and ethical group culture, influences the degree and extent of the proposed effect.

Potential Models for Future Research

We offer seven potential research models to direct future scholars in this area.

Potential Model 1

Dark personality traits have largely dominated the discussion regarding the individual-level antecedents of unethical leadership, which leaves ample room for validating the roles of other leader-specific factors. One such factor might be a leader’s inclination towards power and achievement, which could potentially influence his or her proclivity towards unethical practices. Furthermore, this influence could be circumvented or exacerbated by the prevailing institutional conditions in a country, which are related to ethical codes and the morality and legality of actions. We propose a potential model (see Fig.  6 ) based on McClelland’s ( 1985 ) theory of needs and Scott’s ( 1995 ) institutional theory to examine the formation of unethical leadership under the influence of a leader’s individuality as well as the prevailing country-level factors. We propose that leaders are essentially motivated by a certain need to engage in unethical practices, which could be their need for power ( n Pow) or achievement ( n Ach).

Model of unethical leadership under the framework of institutional theory and theory of needs

Our proposition is informed by the recent literature, which suggests that power and status play a key role in encouraging unethical decisions (Liu et al., 2020 ). Furthermore, we expect a leader’s need for affiliation ( n Aff) to be negatively associated with unethical leadership, given the fact that leaders high in this need are motivated by concerns for the collective welfare and warm interpersonal relationships (Steinmann et al., 2020 ). This effect, however, would likely be conditioned by the laws and regulations in a particular nation as well as by the normative standards of behaviour and beliefs pertaining to the morality of actions. We expect these regulatory and normative macro-level factors to condition the micro-level effect of leader needs on the incidence of unethical leadership. A cross-country study exploring these relationships would, thus, be of immense value.

Potential Model 2

Closely examining Fig.  5 reveals that the extant literature has focused least on group-level mechanisms while completely neglecting group-level antecedents. Thus, to advance group-level mechanisms in the context of unethical leadership, we proposed a model based on social identity theory, fit theory and value congruity theory (see Fig.  7 ). As the model illustrates, group identification maybe a central pivot around which followers categorise themselves in a highly relevant social context and which camouflages the reasoning of individual members under the influence of an unethical leader. Put simply, under the framework of social identity theory (Ashforth et al., 2008 ), individuals develop a sense of shared social categorisation, which is contingent upon the work context in question (Scheepers & Derks, 2016 ). This shared categorisation or in-group membership enables the development of collective or shared group identity, which is expected to result in various group-related outcomes, including group cohesiveness, groupthink and group conformity (Hogg, 2018 ). These effects, however, are contingent upon the fit that a group member perceives between himself or herself and the rest of the group (Cai et al., 2018 ). This ‘compatibility between an individual and his [or her] workgroup’ (Kristof-Brown et al., 2014 ) is likely to enhance the member’s perceptions of his or her collective identity with the group and thereby strengthen groupthink. With studies showing the role of groupthink in constraining ideation and building socially restrictive minds (Fox, 2019 ), we also expect it to foster unethical leadership practices. Therefore, we anticipate that meso-level dynamics will translate into micro-level influences where collective thinking at the group level constrains the honest appraisal of the task under the influence of congruence expected between an employee and his group. Since group-level mechanisms are yet to get fully explored, a qualitative study would be suitable in this direction.

Model of unethical leadership under the framework of fit theory, social identity theory and value congruity theory

Potential Model 3

We highlight the impact of institutional factors on unethical leadership formation under the framework of institutional theory. As discussed in our M3 framework (see Fig.  5 ) and miscellaneous theme, a country’s institutional context may be a significant contributor to unethical leadership. Hence, we propose that institutional uncertainty within a nation—in terms of abruptly changing laws, erratic and random formal procedures and low levels of economic freedom (Boudreaux et al., 2019 )—increases the incidence of unethical behaviours (see Fig.  8 ). We expect political uncertainty, defunct regulatory checks, nepotism and widespread corruption (Kelling et al., 2021 ) to weaken the social and organisational fabric. Such institutional uncertainty also reduces trust among organisational members, which could further encourage unethical leadership practices because lack of trust is considered to be one of the biggest sources of organisational misconduct and malfeasance (Ndalamba, 2019 ). Given the centrality of morality in unethical leadership as depicted in the prior literature (Pelletier & Bligh, 2008 ), however, we contend that this effect is conditional upon the extent to which leaders are morally awake. Therefore, we expect a trickle-down effect under the M3 framework such that macro-level inconsistencies are inflicted upon meso-level (group-level) interactions and, finally, result in micro-level consequences.

Model of unethical leadership under the framework of institutional theory

Potential Model 4

While reviewing the literature on the consequences of unethical leadership, we observed that psychological outcomes have received scant attention. In light of this gap, we developed a research model (see Fig.  9 ) that delineates the psychological costs associated with unethical leadership under the framework of conservation of resource theory (COR). COR is fundamentally a resource conservation strategy through which individuals seek to minimise losses and increase the odds of making gains in work settings (Hobfoll, 2002 ; Hobfoll et al., 2018 ). While material resources initially served as the main elements of interest, psychological resources have increasingly figured into the research context (Qin et al., 2021 ). We observed many investigations of follower-related outcomes in the context of unethical leadership; however, we were unable to locate a single study that ventured into the realm of work–life balance. We contend that unethical leadership has the potential to drain employees of their psychological resources, which may, in turn, deplete their psychological capital and eventually produce burnout. This depletion of resources is also likely to trickle down to affect, causing employees to experience issues in balancing their work and family commitments (Leitão et al., 2019 ). We expect these micro-level interactions to feature at the macro-level in the form of organisational performance.

Model of unethical leadership under the framework of conservation of resource theory (COR)

Potential Model 5

In terms of the consequences of unethical leadership, we found a dearth of studies on employee behaviours, with scholars particularly neglecting contemporary behaviours that are influenced by the digitalisation of work. To that end, we propose a research model that captures the impact of unethical leadership on cyber loafing (Fig.  10 ). Cyber loafing is defined as ‘a set of behaviours at work in which an employee engages in electronically mediated activities, particularly through the use of the internet, that his or her immediate supervisor would not consider job-related ’ (Askew et al., 2014 ). We propose that unethical leadership induces cyber loafing through the mediating effect of workplace ostracism among employees. Workplace ostracism refers to the feeling of being socially isolated from the group and the strong perception of oneself as a member of the out-group (Ferris et al., 2008 ). We expect unethical leadership behaviour to provoke this type of workplace aggression as an employee response. This feeling of social isolation among employees in work contexts may result in various deviant workplace behaviours (Yeik, 2018 ). For example, we propose that such exclusion may prompt employees to engage in cyber loafing (i.e. activities and time that employees spend on digital devices and digital content over and above what is demanded by their work). Such deviance could be circumvented, however, by the inherent nature of the job, which may keep employees more engaged and more dependent on their co-workers. Drawing on the job characteristics model (JCM) (Hackman, 1980 ), we propose that when a task is inherently rich in skill variety, the proclivity of employees to roam the Internet and social media may decline. Therefore, we expect a macro-level boundary condition to circumvent the negative impact of unethical leadership on micro-level consequences. Since, we found quantitative traces of job design in the extant literature, exploratory sequential research designs could be employed in future.

Model of unethical leadership under the framework of job design theory and workplace ostracism

Potential Model 6

We developed a model of unethical leadership that delineates its impact on the contemporary forms of organisational performance. Recognising the increasing prominence of sustainability in organisations’ strategic decision making (Nicholson & Kurucz, 2019 ), our sixth model of unethical leadership captures organisations’ green innovation performance (see Fig.  11 ). Working within the micro–macro nexus, we propose a model that links organisational perspectives with individual-level perspectives. At the micro-level, we expect unethical leadership to negatively influence employees’ green creativity, which refers to their novel ideation of green products, green services and pro-environmental solutions (Tuan, 2020 ). Under the framework of COR, we expect employees’ mental exhaustion to negatively influence this creative capacity. However, we also expect organisational structure, which is a macro-level boundary condition, to moderate this effect. In a lean and flexible organisational structure, this effect could be circumvented via the open flow of communication (rather than a hierarchical bureaucratic structure). We also expect unethical leadership to negatively influence green innovation performance under the moderating impact of green human resource management practices. Organisations’ efforts to implement green practices nurture a culture that values and endorses green behaviour and, thus, influence green organisational performance (Mousa & Othman, 2020 ). Furthermore, we suggest that scholars investigate the mediating effect of green creativity on the relationship between unethical leadership and innovation performance and explore the impact of organisation size or culture.

Model of unethical leadership under the framework of the theory of organisational structure and sustainability

Potential Model 7

Given the increasing digitalisation of the workplace and the ethical challenges that accompany this transition, it is important to explore the possible mechanisms through which unethical leader behaviour may result in such situations. We, thus, developed a model (see Fig.  12 ) that links the digitalisation of the workplace with unethical leadership practices. Scholars have predicted the potential of digitalisation to generate ample opportunities for digital fraud (Kumar et al., 2021 ) when broader industry standards regarding technology and its use are largely absent (Foucart & Li, 2021 ).These opportunities, moreover, are ultimately likely to translate into unethical leader behaviour under the influence of organisational size. Indeed, Archambeault and Webber ( 2018 ) showed that both the incidence of fraud and the chances of organisational survival after its discovery are comparatively higher in large rather than small organisations.

Model of unethical leadership under the framework of the theory of organisational structure and digitalisation of work

Study Implications

Theoretical implications.

The present SLR unravelled various specific underpinnings of the unethical leadership literature while also identifying a good number of areas where impactful research could advance the theoretical robustness of the field.

First and foremost, the present study provides evidence that the field of unethical leadership is not only understudied (i.e. only a small number of studies have actually explored unethical leadership as a distinct concept) but also disjointed. The domain of unethical leadership, in fact, exhibits serious limitations as a result of concept proliferation, which scholars regularly but inappropriately interchange. Seeking to remedy these limitations, our study advances a comprehensive picture of the existing body of work on unethical leadership while also differentiating unethical leadership from other concepts; in doing so, it justifies further investigations of this type of leadership. Having engaged in a nested multi-level analysis of this leadership type, we offer critical insights into the operation of unethical leadership at various levels of analysis.

Second, the present SLR illuminates the prominent theoretical perspectives in the domain of unethical leadership. We assert that theories focused primarily on morality have largely dominated the field. Given the nature of unethical leadership, it is logical to expect the application of such theories, including moral foundations theory (Egorov et al., 2020 ), moral licencing theory (Ahmad et al., 2020 ) and moral self-regulation (Joosten et al., 2014 ). Apart from morality, however, the field of unethical leadership could benefit from the theoretical rigour of other theories. For example, self-determination theory (Rigby & Ryan, 2018 ) may provide a useful theoretical lens to understand the interactions between various levels of employee work motivations (from low quality to high quality) and unethical leadership behaviours, which, in turn, influence job performance. Similarly, the JD-R model (Lesener et al., 2019 )could be used to investigate the role of unethical leadership in increasing job demands (e.g. extra work shifts demanded by the leader) and reducing job resources (e.g. lack of supervisor support) and thereby increasing the psychological and physiological costs associated with a job and influencing various employee outcomes. Furthermore, affective events theory and social information processing theory (Salancik & Pfefer, 1978 ) offer useful theoretical lenses to understand the impact of unethical leadership on emotional labour.

Third, we propose a multi-level framework that identifies antecedents, consequences and boundary mechanisms of unethical leadership at three levels of analysis, i.e. the micro, macro and meso levels. We also identify various individual-, group-, organisational- and country-level factors that could heighten the consequences of unethical leadership. It is important to mention here that the literature pertaining to national-level factors and group-level factors remains scant, and the focus of most studies has been on either individual- or organisational-level factors. Furthermore, employee-related outcomes, especially attitudinal and behavioural outcomes, have received the most attention, which opens ways to understand the impact of unethical leadership on various other outcomes. For example, the impact of unethical leadership on overt employee behaviours, including scouting for a new position and leaving the organisation, has not been conclusively uncovered. Future research can investigate actual exit behaviour resulting from leaders’ unethical conduct. Although one study captured DWBs, we did not locate any research attempting to examine CPBs directed towards the organisation. Similarly, future scholars could investigate group organisational citizenship behaviours to understand the circumstances under which unethical leadership can promote or hinder pro-organisational team behaviours. Again, the extant literature has provided an inadequate account of the impact of unethical leadership on organisational outcomes. Future research can, thus, investigate the impact of unethical leadership on firm performance, market share and firm value. Apart from these outcomes, scholars can explore firm innovation performance and sustainable business model innovation in the context of unethical leadership. Beyond examining various outcomes and antecedents, our framework also highlights the possibility of cross-level interactions among the factors, which can further advance our understanding of unethical leadership. For example, employing hierarchical modelling, scholars can gauge the trickle-down effect of unethical leadership from the individual level to the team level or from the organisational level to the individual level while also considering differences in the outcomes at each level. Specifically, the ethical climate at the organisational level might influence perceptions of ethical leadership at the team level, which, mediated by employee exhaustion and psychological burnout, are likely to produce work–life conflict and an adverse impact on employee well-being.

Fourth, our study advances theory-based potential research models, which future researchers can empirically validate. By relying on well-established theories to clearly identify paths and contextual factors, we advance the theoretical rigour in the area. Informed by our M3 framework, these models provide critical insights into the formation and outcomes of unethical leadership at various levels of analysis. Furthermore, because they are not exhaustive, these models suggest additional investigations in this area.

Finally, we systematically present research gaps in the extant literature. In other words, we identify research gaps pertaining to each theme and propose potential research questions for each thematic category. Given the consequential nature of unethical leadership practices, we believe our research questions can guide scholars who seek to uncover various facets and mechanisms of unethical leadership. For example, our research highlights the outright neglect of the group-level antecedents of unethical leadership. Because team-based structures are here to stay, especially in today's era of digitalisation, efforts to explore this space can be quite valuable to unethical leadership research.

Practical Implications

From a practical standpoint, our work shifts the focus of managers and practitioners towards the gravity of unethical leadership while sensitising them to the diverse factors that can encourage unethical leadership and the strategies that can mitigate its negative effects.

First, our study highlights the critical nature of job design, which, when done appropriately, can serve as a coping mechanism to mitigate the negative effects of unethical leadership. Organisations must strategically design work unit structures to suppress unethical instincts and promote information sharing.

Second, our work entails serious implications for HR practices within organisations. Having highlighted its role in unethical leadership, we assert personality’s importance in the selection process of organisations. In fact, apart from selecting the moral soul, efforts to foster moral character through ethics training and management exercises could have strategic importance. Furthermore, performance appraisals, incentives and promotion avenues can focus on ethicality/unethicality within organisations.

Third, managers and practitioners must understand the centrality of organisational communication, which may act as a buffer against unethical practices. Transparency in information sharing and two-way communication can help to foster ethical values within organisations. This has implications for designing organisational structures by suggesting that managers strategically design flatter structures to reduce the distortion of information.

Fourth, our study signals that unethical leadership is not a short-term phenomenon. At the core of this statement sits the concept of ethical culture, which develops gradually and becomes internalised over decades. Nevertheless, top managers can play a decisive role in aligning their organisations’ strategic maps with those organisations’ ethical considerations. Incorporating ethical facets into the organisational vision may, thus, provide leaders with a sense of direction in disseminating ethical values and achieving their vision.

Finally, our study highlights the role of institutional and cultural factors in influencing the perceptions and emergence of unethical leadership within organisations. This suggests implications at the policy level where the government is entrusted with establishing regulatory conditions to tackle unethical practices at the macro-level. In fact, such policy frameworks can be devised for various sectors of the economy, e.g. the public sector, private sector and NGOs.

The present study provides a systematic account of the academic literature regarding unethical leadership within organisations and offers important theoretical and practical implications for this field of inquiry. We first systematically unravelled the extant work on unethical leadership by providing important descriptive statistics about the yearly progression, theoretical rigour, choice of publication outlet, methodologies, including sampling techniques and unit of analysis, and geographic concentration/diffusion of unethical leadership research. Apart from these descriptive indicators, we also explored how, why and under what conditions unethical leadership is fostered and inhibited in organisational contexts. As a corollary, we developed themes that portray the mechanisms underlying the emergence of unethical leadership. We arranged these themes in the form of a framework that lucidly demonstrates the factors that contribute to its formation and the ways in which the emergence of unethical leadership results in varied types and levels of consequences. To that end, the present study identified the various levels at which unethical leadership research and practice can benefit. We proposed potential research questions pertaining to each level and urge scholars to utilise these questions to expand the existing theoretical and practical understanding of unethical leadership. While we noted a dearth of studies in general, the group and organisational levels appear particularly neglected. Given that contemporary work is increasingly organised around teams, our study advocates for additional investigations of unethical leadership at the group level. Furthermore, we point scholars towards the investigation of particular organisational interventions to reduce the emergence and impact of unethical leadership. Future researchers, finally, can work to empirically validate our well-grounded potential models. These models warrant future investigation at various levels of analysis to understand ways to curb unethical leadership at the macro-level and prevent its occurrence at the micro-level.

Limitations of the Study

The present study has systematically captured the practice of unethical leadership within organisations, identified knowledge gaps in the existing literature and provided relevant future research directions. Despite its contributions, however, our study entails some limitations, which future research should address. First and foremost, our literature search was confined to Scopus and the Web of Science databases. Although these databases include most of the reputed journals, we suspect that we may have missed some relevant and potentially useful studies. Therefore, future research can mine other databases to address this limitation. Second, following best practices, one of our screening criteria excluded various publication sources, such as conference proceedings, book chapters, thesis work and non-peer-reviewed journals. Future scholars can, thus, incorporate these sources in their work, including studies written in languages other than English. Finally, although systematic reviews are valuable, the method itself is not devoid of limitations. Therefore, future research should conduct meta-analyses to provide more robust and statistical support for our findings.

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Hassan, S., Kaur, P., Muchiri, M. et al. Unethical Leadership: Review, Synthesis and Directions for Future Research. J Bus Ethics 183 , 511–550 (2023). https://doi.org/10.1007/s10551-022-05081-6

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A New Model for Ethical Leadership

• Max H. Bazerman

Rather than try to follow a set of simple rules (“Don’t lie.” “Don’t cheat.”), leaders and managers seeking to be more ethical should focus on creating the most value for society. This utilitarian view, Bazerman argues, blends philosophical thought with business school pragmatism and can inform a wide variety of managerial decisions in areas including hiring, negotiations, and even time management. Creating value requires that managers confront and overcome the cognitive barriers that prevent them from being as ethical as they would like to be. Just as we rely on System 1 (intuitive) and System 2 (deliberative) thinking, he says, we have parallel systems for ethical decision-making. He proposes strategies for engaging the deliberative one in order to make more-ethical choices. Managers who care about the value they create can influence others throughout the organization by means of the norms and decision-making environment they create.

Create more value for society.

Idea in Brief

The challenge.

Systematic cognitive barriers can blind us to our own unethical behaviors and decisions, hampering our ability to maximize the value we create in the world.

The Solution

We have both an intuitive system for ethical decision-making and a more deliberative one; relying on the former leads to less-ethical choices. We need to consciously engage the latter.

In Practice

To make more-ethical decisions, compare options rather than evaluate them singly; disregard how decisions would affect you personally; make trade-offs that create more value for all parties in negotiations; and allocate time wisely.

Autonomous vehicles will soon take over the road. This new technology will save lives by reducing driver error, yet accidents will still happen. The cars’ computers will have to make difficult decisions: When a crash is unavoidable, should the car save its single occupant or five pedestrians? Should the car prioritize saving older people or younger people? What about a pregnant woman—should she count as two people? Automobile manufacturers need to reckon with such difficult questions in advance and program their cars to respond accordingly.

• MB Max H. Bazerman is the Jesse Isidor Straus Professor of Business Administration at Harvard Business School and the author (with Don A. Moore) of Decision Leadership: Empowering Others to Make Better Choices (Yale University Press, 2022) and Better, Not Perfect: A Realist’s Guide to Maximum Sustainable Goodness (Harper Business, 2020).

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Saving the moral self: unethical leadership and employee behaviors – a moral cleansing perspective

European Journal of Management and Business Economics

ISSN : 2444-8494

Article publication date: 10 May 2022

Issue publication date: 11 July 2023

The purpose of this study is to investigate the concept of vicarious moral cleansing and scrutinize whether unethical behavior of leaders initiate moral cleansing in subordinates or not. This study also highlights a boundary condition under which employees are motivated to cleanse their moral self-image through increased organizational citizenship behaviors and decreased counterproductive work behaviors.

Design/methodology/approach

The study is quantitative based on hypothesis testing. By adopting convenience sampling technique, employees working at all managerial levels of service sector organizations were asked to fill out the questionnaires. Being a time-lagged study, data for independent variable (unethical leadership) and moderator (relational self-construal) were collected at T1, data for mediator (moral self-image) were collected at T2 and data for outcomes (OCBs, CWBs) were collected at T3 from same respondents. To rule out the possibility of common method bias and social desirability bias, a multi-wave design was adopted and respondents were asked to provide unique keys/IDs instead of their names.

This study investigated the impact that unethical leaders impose on employee self-concept. Moreover, this study also explored the motivational tendencies of moral self-image. Findings suggest that employees' desirable or undesirable behaviors against leader are dependent upon the perceptions related with their own role, self-image and perception of leader's integrity and intentions. Leader's unethicality is perceived threatening for their own moral self-image and they deal with it constructively. This study has laid the foundation for presence of vicarious moral cleansing in organizational setup, and it is advised that researchers must investigate this phenomenon in different settings to provide useful insights.

Research limitations/implications

Due to lack of resources, employing a pure longitudinal research design was not feasible, and therefore a time-lagged research design was used to gather data from only two cities of Pakistan. However, authors believe that a longitudinal research design, with data collection from a larger sample, will provide more fine-grained results. Secondly, use of perceived leader's integrity scale to measure unethical leadership is another limitation. Although the authors tried to address this issue by conducting an EFA and adopting only suitable items, yet a new scale which is able to measure the true essence of unethical leadership ought to be developed.

Originality/value

Use of moral self-image as an indicator of moral cleansing is an additional contribution of this study, as previous studies used levels of guilt as driving force behind moral cleansing and compensatory cleansing. Most of the studies on unethical leadership as well as moral cleansing took place in the Western context and scholars' stress that culture can substantially influence outcomes of these constructs. Thus, this study extends the literature on moral cleansing and moral self-regulation by developing and testing a model in cultural settings of Pakistan.

本研究擬探討間接感受到的道德清洗 (以下簡稱間接道德清洗) 這個概念；研究亦會仔細審視領袖的不道德行為會否在其下屬間引起道德清洗。就此而言，本研究亦強調了一個邊界條件，在這邊界條件之下，僱員透過組織公民行為的增加，以及為工作目標帶來負面影響的工作行為的減少得到激勵，進而淨化他們的道德自我形象。

本研究為一個基於假設檢定的量性研究；研究採用任意抽樣方法而進行。在服務業機構內不同管理階層工作的僱員被邀回答問卷；由於這是一個時滯研究，即使是同一的答覆者，IV (不道德的領導) 和仲裁人(關係型自我建構)的數據在T1收集，調解員 (道德自我形象) 的數據在T2收集，結果 (OCBs，CWBs) 的數據在T3收集，為了排除共同方法偏差和社會期許誤差的出現，研究採用多波浪設計，而且，答覆者必須提供獨一無二的密鑰或身份證明，而不是提供他們的名字。

本研究探討了不道德的領袖對僱員自我概念的影響；研究亦探索了可能推動道德自我形象的因素。研究結果暗示、僱員會做對領袖而言可取的行為與否，全視乎他們如何看待自己的角色和自我形象，也視乎他們對領袖的誠信和動機有甚麼看法。領袖若不道德，這會被認為會對僱員的道德自我形象做成威脅，在這情況下，僱員會積極地應付這個威脅。本研究為在組織架構內存有間接道德清洗這個觀點打下基礎。今後的研究學者或許應就不同的環境、對這個現象進行探討和研究，以使我們能更深刻地瞭解這個課題。

從前的研究均採用內疚的程度、作為道德清洗和補償清洗背後的推動力 (Liao et al. , 2018) 。本研究另外的貢獻在於採用了道德自我形象、作為道德清洗的指標。以前關於不道德領導以及道德清洗的研究，大多以西方國家為背景。研究學者均強調文化因素會很大程度地影響這些觀念帶來的結果；因此，本研究透過設計一個以巴基斯坦文化為背景的模型、並對其進行測試、來擴展有關道德清洗及道德自我調節的文獻。

Unethical leadership

• Moral cleansing

Moral self-image

• Self-construal

Malik, S.A. , Nawab, S. and Shafi, K. (2023), "Saving the moral self: unethical leadership and employee behaviors – a moral cleansing perspective", European Journal of Management and Business Economics , Vol. 32 No. 3, pp. 370-387. https://doi.org/10.1108/EJMBE-03-2021-0085

Emerald Publishing Limited

Copyright © 2022, Shakil Adnan Malik, Samina Nawab and Khurram Shafi

Published in European Journal of Management and Business Economics . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

Current era has witnessed many communal scandals linked with unethical and immoral practices of leaders, which urged researchers to investigate when and how unethical leaders are affecting their subordinates and how the subordinates respond toward them ( Schyns and Schilllings, 2013 ; Shaw et al ., 2020 ). Unethical leadership, as defined by Brown and Mitchell (2010) , is a leadership style where leaders themselves act unethically and also impose practices and procedures which permit and promote unethicality of their followers. These leaders indulge in immoral and unethical practices, set up an environment conducive for unethical practices and impose great harm for the organization, yet research on this important leadership style is lagging both empirically and theoretically ( Brown and Mitchell, 2010 ; Eisenbeiß and Brodbeck, 2014 ).

Mainstream research comprehends that leader's unethical conduct results in low productivity, poor performance, decreased well-being, emotional dissonance and psychological disorders ( Ferris et al ., 2009 ; Mesdaghinia et al ., 2019 ; Vriend et al ., 2020 ). Moreover, subordinates of these leaders respond with hostility, deviance, supervisor-directed aggression and organizational sabotage ( Chi and Liang, 2013 ; Burton and Hoobler, 2011 ; Thau and Mitchell, 2010 ). Yet, there is some recent evidence which suggests that employees differ in their response toward leaders and different employees deal with them differently. Employees play an agentic role, and instead of passively absorbing the harm caused by unethical leaders, they behave mindfully and consciously try to mitigate the effects of these leaders ( Milosevic et al ., 2020 ), that is, some employees respond toward unethical leaders with deviance, while others indulge in impression management, thus handling this adverse experience positively. The literature investigating the positive responses to dark leadership is sparse. Yet, scholars and practitioners are interested in knowing that why and when employees indulge in prosocial actions, exercise self-control and regulate their behavior despite the negative experiences with the leader ( Vogel and Mitchell, 2017 ; Wee et al ., 2017a , b ). Lin et al . (2016) investigated the ethical and unethical behavior of individuals through the moral licensing lens and provided evidence that ethical behavior of an individual (leader in their case) could transform into abusive behavior via the mechanism of moral licensing and stressed to test the opposite mechanism, that is, that reverse of this could also be possible such that present unethical act could force an individual to indulge in ethical or altruistic actions to restore his/her threatened moral self-image.

This research comprehends that these varying responses to unethical leadership could be explained through the phenomenon of moral cleansing. Moral cleansing phenomenon is based on the premise that all individuals desire for a positive self-regard and whenever they feel that they have acted immorally and/or their identity of being a moral individual is under scrutiny, they undergo compensatory actions to restore their moral balance ( Sachdeva et al ., 2009 ; West and Zhong, 2015 ). Moreover, moral cleansing not only comes into action by one's own action but it also gets initiated by morally dubious behaviors of close others. Although initial investigation of Monin and Miller (2001) posited that unethical practices of close others could initiate moral cleansing actions, yet there is no empirical investigation of this to date. Specifically, moral cleansing is highly prevalent at workplace; yet the theoretical and empirical investigations for exploring and understanding causes and effects of moral cleansing are sparse. This research is thus aimed at investigating whether or not unethical leadership instigates moral cleansing of their subordinates. Particularly, it is argued that moral self-image (MSI), that is, one's assessment of being a moral individual at any given instant, could explain the impact of unethical leadership on outcomes. It is argued that unethical leaders would threaten the self-concept of their subordinates, and to uphold their self-concept, they will undergo citizenship behaviors and refrain from CWBs. OCBs are discretionary actions which benefit the organizations and their members, whereas CWBs are deliberate actions to harm the organization or peers. The conceptual framework is presented in Figure 1 .

This research is aimed at making following contributions to existing literature. First of all, it is augmenting the literature on unethical leadership by investigating it in organizational settings and unleashing its effects on subordinates. By doing this, it answers calls of researchers to study how unethical leaders affect their subordinates. Secondly, this research explains the moral self-regulation of subordinates of unethical leaders. By doing this, it aims to address calls of researchers to investigate that how and when moral self-regulation comes into action under unethical leaders. Thirdly, this research studies the self-serving motivations of individuals behind pro-social actions, that is, this research comprehends that OCBs are not always enacted for the organization or its members; rather, sometimes they serve as a reparative role in building one's self-image. Fourthly, this research also adds into domain of moral cleansing by investigating moral cleansing in work settings, and provides support for the fact that not only action of oneself, but also activities of close others (vicarious moral cleansing), such as unethical leaders, enforce cleansing action of their subordinates. This article is among the few studies which are testing the concept of vicarious moral cleansing, specifically in organizational settings. Above all, this study is developing and testing in new cultural settings of Pakistan.

Literature review and hypothesis development

Definition of unethical leadership.

Before proceeding further, it is worthwhile to define unethical leadership and differentiate it from other comparable constructs. The first definition for unethical leadership came from Brown and Mitchell (2010) who defined unethical leadership style as “ behaviors conducted and decisions made by organizational leaders that are illegal and/or violate moral standards, and those that impose processes and structures that promote unethical conduct by followers” (p. 588). Later, Ünal et al . (2012) added into their work and stated that leaders who are unjust, egotistic, immoral and who violate the rights of others lie in frame of unethical leadership. Afterward, Eisenbeiß and Brodbeck (2014) conducted a cross-cultural research to highlight the commonly held perceptions about unethical leaders and summarized that immoral foundations, egoism, urge to exploit and manipulate others and indifference toward feelings of subordinates are frequently associated with unethical leadership. Lašáková and Remišová (2017) described unethical leadership as a style where intentional or unintentional behaviors of leaders are harmful for their peers, subordinates and/or for the organization. Hence, unethical leadership style can be summed up as a leadership style where leaders act unethically themselves, possess self-serving intentions and to achieve their self-interest they exploit their subordinates and organizational resources.

Though many conceptually overlapping constructs exist in extant literature such as abusive supervision, tyrannical leadership and despotic leadership, yet unethical leadership is distinct. Specifically, not a single construct as mentioned above has taken exploitation and violation of interest of subordinates and organization together. For example, abusive supervision as well as tyrannical leadership exploits their followers and mistreat them, but their behaviors toward organizations are not a part of these constructs. Similarly, despotic and pseudo-transformational leaders exploit followers for their self-interest, yet none of these leaders force them to act unethically. However, unethical leaders not only act immorally themselves but also force their subordinates to act so. Hence, we can conclude that unethical leadership is a broader concept which might be conceptually overlapping with some dark leadership styles, yet it is distinct in its scope.

Moral cleansing theory

The concept of moral cleansing is a part of moral licensing theory ( Monin and Miller, 2001 ) which is supported by the moral balance model ( Nisan and Horenczyk, 1990 ). Moral licensing theory put forth the concept of moral licensing and moral cleansing, and argues that one's self-worth is derived from one's actions. Every morally dubious action diminishes one's moral self-worth, and every good action enhances one's moral self-image ( Sachdeva et al ., 2009 ). In other words, people tend to maintain a desired level of moral standing and constantly monitor their actions ( West and Zhong, 2015 ). Individuals who perceive that their moral standing exceeds the desired level tend to feel licensed to engage in immoral behavior (moral licensing), and they are motivated to engage in moral behavior when they feel that their moral standing is below a desired level (moral cleansing).

According to moral cleansing theory, every immoral/unethical action has repercussions on one's moral self-image, which then motivates one to act morally. Moral actions are motivated by the desire to retain a preferred moral self-worth. Further, this theory contends that not only one's own actions but the actions of close others have the same effect on one's self-image, that is, individuals tend to act morally in response to their own morally dubious actions as well others' morally degenerate actions. This is termed as vicarious moral cleansing.

Existing research has validated the notion of moral cleansing. The research shows that individuals often experience negative emotions, such as guilt and shame, which leads them to believe they are morally deficient ( Ding et al ., 2016 ; Wang et al ., 2021 ; West and Zhong, 2015 ), prompting them to act in a morally acclaimed manner. Drawing support from the basic tenants of moral cleansing theory, this study argues that unethical leaders' behavior will negatively affect employees' moral self-image. Considering that unethical leaders not only act unethically but also encourage and compel their subordinates to do the same, it is likely that the moral self-image of employees will also be threatened under these leaders. In order to retain their moral self-worth, employees will then engage in more OCBs and less CWBs.

Unethical leadership and moral self-image

Jordan et al. (2015) stressed that individuals wish to retain a positive self-image and constantly evaluate their moral standing by asking themselves, “How moral I am?” The answer to this question changes with every favorable or unfavorable doing. Monin and Jordan (2009) argued that moral self-image is not static and, while verifying the malleable nature of self-image, stressed that moral self-image varies from one instant to another depending upon the situation. They highlighted that situational influence has substantial impact on one's self-image, which then shapes subsequent behaviors.

Followers emulate their leaders by internalizing their moral/immoral values, and these values, standards and behavioral patterns are made a part of one's self-image ( Bandura, 1991 ; Gardner et al ., 2005 ). Unethical leaders are self-serving who misbehave with others, abuse and mistreat them, violate organizational norms, exploit organizational resources and are dishonest ( Brown and Mitchell, 2010 ; Ünal et al. , 2012 ); thus, followers, while perceiving these moral transgressions as a reflection of their own behavior, would begin to perceive a diminished moral self-image.

Moreover, moral self-image is also shaped by one's own actions ( Monin and Miller, 2001 ; Sachdeva et al. , 2009 ); unethical leaders encourage or sometimes force their followers to act unethically. They promote unethical conduct of their followers by making unethical requests or by making them follow the dishonorable rules and regulations ( Sparks, 2012 ). Such leaders implant disputes at workplace, turn employees against each other, force their subordinates to lie to cover for their own misdeeds and fuel clashes among employees for their self-interest ( Craig and Gustafson, 1998 ). Thus, it is assumed that individuals who are working under unethical leaders would be, intentionally or unintentionally, acting unethically. All such behaviors are found to be detrimental for one's moral self-image.

Unethical leadership is negatively related to moral self-image.

Moral self-image and outcomes (OCBs, CWBs)

Individuals are substantially concerned about portraying an image of a moral being ( Monin and Jordan, 2009 ). They want to appear moral to others as well as to themselves ( Adler, 2006 ). This motivates them to undergo morally praiseworthy behaviors to present them as moral beings. All individuals possess an ideal image of character, which they want to achieve and strive to reach the ideal levels of morality in their daily endeavors ( Barkan et al ., 2015 ; Ploner and Regner, 2013 ). When individuals perceive that their expected and actual moral self-images are not aligned, then they regulate their behaviors to reduce the discrepancy ( Higgins, 1987 ; Jordan et al. , 2015 ).

Individuals always strive to maintain a positive self-image, and when they perceive that their self-image is threatened or their morality is questioned, then they strive to rebuild it by undergoing actions that could help them restore the morality in their own eyes as well as in eyes of others ( Ploner and Regner, 2013 ). For instance, in an experiment when participants recalled their immoral behaviors, they tried to balance their declining self-image by either involving themselves more in moral activities, conveying pro-social intentions or by reducing later deceptive/cheating conduct ( Jordan et al. , 2011 ). This serves as base argument for proposing that a diminished moral self-image could motivate individuals for prosocial actions at workplace such as OCBs and less CWBs.

Extant research has shown that OCBs are also performed for managing one's image such that helping others at workplace, staying late for work, taking extra responsibilities ( Emami et al ., 2012 ) and involving in other relevant activities helped individuals in maintaining a positive image ( Bolino et al ., 2008 ). Similarly, individuals often indulge in unethical practices for the sake of self-interest, but if these actions pose a threat to their moral self-image, then they withhold such behavior ( Mazar et al ., 2008 ). Similarly, Bandura (2004) stressed that when people know the penalties of their actions, then they are more likely to exercise self-control and avoid immoral behavior.

Moral self-image is negatively related to OCBs.

Moral self-image is positively related to CWBs.

Mediating role of moral self-image between unethical leadership and outcomes

Moral cleansing theory posits that one's own morally vile actions as well as those of close others can make individuals suspect their own standing of being a moral individual ( Monin and Miller, 2001 ). Such actions can have emotional and cognitive ramifications, which then lead to reparative actions that mitigate the effects of these actions ( Liao et al. , 2018 ).

Existing research has provided theoretical and empirical evidence that leader's behavior has substantial impact on follower's sense of self and they can threaten or even change the way individuals envisage themselves ( Krylova et al ., 2017 ; Vogel and Mitchell, 2017 ). For example, these followers of ethical leaders begin to induce morality in their working self-concept and develop a self-image of being a moral person. Similarly, it is plausible to expect that followers of unethical leaders will perceive themselves to be unethical and thus will perceive a low moral self-image. Moreover, unethical leaders promote unethical behavior of their followers and contrive an environment where unethicality is promoted ( Brown and Mitchell, 2010 ). Therefore, it is expected that in such a toxic environment, individuals will be bound to act in ways that do not go along with their moral values which will have implications for their moral self-image. Thus, this study posits that when individuals will perceive a threat to their morality and consider their moral self-image under scrutiny, then they would be encouraged to undergo reparative actions in the form of increased OCBs as well as refrain from acting unethically through decreased CWBs.

Moral self-image will mediate the relationship between unethical leadership and OCBs.

Moral self-image will mediate the relationship between unethical leadership and CWBs.

Relational self-construal as moderator in the relationship between unethical leadership and moral self-image

Among many associations found at workplace, leader-subordinate relationship holds a prime position and individuals define themselves in term of their leaders/supervisors ( Brewer and Chen, 2007 ). Relational self-construal is defined as an individual's tendency to construe oneself in terms of relations with others including family member, supervisor and friend ( Cross et al ., 2003 ). Individuals differ in the way in which they incorporate their valued associations into their self-view ( Heintzelman and Bacon, 2015 ) such that for individuals with higher levels of relational self-construal, close relationships hold a significant position in their self-concept ( Cross et al. , 2003 ). Individuals high in relational self-construal, aiming at healthy relationship with significant others (i.e. leaders), do not stand against their unethical demands but comply with them and act unethically or unfairly ( Van Houwelingenn et al. , 2017 ). This research argues that such followers will align their behavior with that of their leader's unethical behavior, and as a result their current moral self-image will be jeopardized.

The concept of vicarious moral cleansing asserts that actions of not only oneself but also close others such as friends, family member and colleagues are capable of instigating cleansing actions. Van Knippenberg et al. (2005) verified the notion that leaders have substantial influence on follower's self-concept and different leaders' behaviors could elicit different aspects of self. They expected that since different leaders' behaviors influence different facets of self-concept, the follower's self-construal – that is, the degree to which individuals include others in their self-definition – might interact with leader's behaviors and influence other facets of self-conception. Since unethical leaders frequently misbehave, lie, abuse and exploit others ( Brown and Mitchell, 2010 ; Eisenbeiß and Brodbeck, 2014 ); therefore, those who are close to their leaders will perceive that their immoral actions are spilling on to their own self-image. Thus, in line with moral cleansing theory and arguments presented above, it is plausible to expect that relational self-construal will moderate the relationship between unethical leadership and moral-self-image.

Relational self-construal will moderate the negative relationship between unethical leadership and moral self-image such that this relationship will be stronger at higher levels of relational self-construal as compared to low

Methodology

This study is a quantitative study based on hypothesis testing. To gather data, a survey was conducted among service sector employees of Pakistan. By adopting convenience sampling technique, employees working at all managerial levels of service sector organizations of Rawalpindi and Islamabad were contacted and asked to fill out the questionnaires. Being a time-lagged study, data for IV (unethical leadership) and moderator (relational self-construal) were collected at T1, data for mediator (moral self-image) were collected at T2 and data for outcomes (OCBs, CWBs) were collected at T3 from same respondents. Previous researchers in same domain adopted the same methodology ( Naseer et al ., 2016 ; Rasool et al ., 2018 ). The participation in the study was voluntary, and respondents were informed about the scope of the study before filling out the questionnaire. To rule out the possibility of common method bias and social desirability bias, a multi-wave design was adopted and respondents were asked to provide unique keys/IDs instead of their names. At T1, 600 questionnaires were distributed, whereas 557 were retrieved back; at T2, these 557 respondents were accessed and requested to provide data, but only 445 were retrieved back. At T3, of 445, only 390 responses were retrieved. Later, incomplete and unengaged responses were discarded, and a total of 362 usable responses were generated. The response rate for this study is 60.3%

Instruments

This study adopted the existing questionnaires. The questions were in English language, as English is the official language of Pakistan and also the medium of education. Moreover, no respondent complained about not understanding the questions, and thus authors did not feel any need to translate the questions into native language, that is, Urdu. Following questions were used.

Previous studies utilized 31 items that perceived leader integrity scale developed by Craig and Gustafson (1998) to tap into unethical leadership (e.g. Spark, 2012 ). They argued that items of this scale particularly refer to unethical behavior enacted by leaders. Still this scale has some items similar to that of abusive supervision scale. Therefore, exploratory factor analysis (EFA) was conducted to derive the items that measure unethical leadership, and later analysis was performed by utilizing these items. EFA yielded 26 items which truly represent unethical leadership; thus, these 26 items were used for further analysis (detailed results are presented in the next section).

Data for moral self-image were collected through a 9-item scale developed by Jordan et al. (2015) . Responses on 7-point Likert scale (1 = much less than what I want to be to 7 = much more than what I want to be) were obtained.

A 13-item scale developed by William and Anderson (1991) was used. It is divided into two sub-scales measuring organizational citizenship behavior individual (OCBI) and organizational citizenship behavior organization (OCBO). The items represent OCBs directed at peers and organization. Sample items include “takes time to listen to co-workers' problems and worries” and “gives notice when unable to come to work.” Responses were obtained on a 7-point Likert scale ranging from “1-Never” to “7-Always.”

A 13-item scale developed by Aquino et al . (1999) was used. The items represent CWBs directed at peers and organization. Responses on a 7-point Likert scale (1 = Never, 7 = Always) were obtained. Sample items include “called in sick when he/she was not really ill” and “refused to talk to a coworker.”

Relational self-construal

A 11-item scale of relational-interdependent self-construal scale by Cross et al. (2000) was used. Responses on a 7-point Likert scale (1 = strongly disagree to 7 = strongly agree) were obtained. The statements were adapted to add leader as the focal person (e.g. “my relationship with the leader is an important part of my self-image”).

Analysis tools

SPSS and AMOS software were used for obtaining results. For preliminary analysis, SPSS v21 was used. Factor analysis was performed by using AMOS. PROCESS macro by Hayes was used for regression analysis. Since this study proposed mediation and moderation hypothesis, model 4 and model 1 were used, respectively, to test these hypotheses.

Exploratory factor analysis

As discussed above, there is no validated scale of unethical leadership, and previously scholars have used perceived leader's integrity scale to measure unethical leadership; therefore, an EFA was performed to assess the suitability of the items of this scale to measure unethical leadership.

The first step in the EFA is to check the suitability of data for factor analysis ( Williams et al ., 2012 ). For this purpose, two tests are applied which include Kaiser-Meyer-Olkin (KMO) test to check for the adequacy of the sample ( Kaiser, 1970 , 1974 ) and Bartlett’s test for sphericity ( Bartlett, 1950 ). The results of KMO and Bartlett’s tests are reported below. KMO values for individual questions were greater than 0.645, which is well above the acceptable limit of 0.5 ( Field, 2009 ). Bartlett's test of sphericity χ 2  = 27603.555, p  = 0.000, indicated that correlations between questions were sufficiently large for principal component analysis (PCA) ( Table 1 ).

As the data were found suitable for factor analysis, we proceeded for the next step – the calculation of factor loadings. A PCA with varimax rotation was conducted on the items composing the unethical leadership instrument used in this study. The results obtained are shown in the Table 2 . The factor loadings for item 21, item 22, item 26, item 30 and item 31 were 0.29, 0.19, 0.33, 0.18 and 0.16, respectively. These factor loadings are below acceptable limit (<0.4), and hence these five items were removed from further analysis. So EFA results highlight that among 31 items, 26 items are true representative of unethical leadership construct; hence, these 26 items were used further. The factor loadings and Eigen values along with the variance explained are shown in Appendix .

Confirmatory factor analysis (CFA)

After EFA, CFA was performed to assess the discriminant and convergent validity of the study constructs. For CFAs, a five-factor model was run, and corresponding model fit indices were obtained. The following data represent the goodness of fit. We used the extracted 26-item scale for unethical leadership for conducting CFA. Factor loadings for all the variables were in acceptable limit, that is, greater than 0.3, whereas other indicators of fitness including IFI-0.90, CFI = 0.90, TLI = 0.89, BFI = 0.80 are also in acceptable range, that is, >0.8. Also, the RMSEA for five-factor model is 0.48 and χ 2 /Df is 2.78. All these values are within the standard limit put forth by Marsh and Hocevar (1985) .

Control variables

When collecting data, respondents provided information about their demographics, such as their age, gender and qualifications. SPSS was used to run an analysis of variance test to determine whether any of the demographics affected the mediating or dependent variable. However, none of the demographic variables had a significant effect on the mediating variable (MSI) as well as the dependent variables (OCBs, CWBs)., Thus, none of the demographic variables were controlled in the analysis.

Descriptive statistics

Table 2 presents means, standard deviations, Pearson's correlation coefficients and Cronbach's alpha for study constructs. Unethical leadership shows a positive correlation with relational self-construal ( r  = 0.24, p  < 0.05) and OCBs ( r   = 0 . 38, p   < 0 . 05 ), and negative correlation with moral self-image ( r  = −0.12, p  < 0.01) and CWBs ( r  = −0.36, p  < 0.05). Similarly, moral self-image shows a positive correlation with relational self-construal ( r  = 0.45,  p  < 0.05), CWB ( r  = 0.42, p  < 0.05) and negative correlation with OCBs ( r  = −0.19, p  < 0.05).

Proposed direct effect hypothesis, mediation hypothesis and moderation hypothesis were tested using PROCESS macro by Preacher and Hayes. Detailed results of direct and mediation effects are depicted in Table 3a and b . H1 proposed a negative association between unethical leadership and moral self-image. Results fully support H1 , that is, unethical leadership is negatively and significantly associated with moral self-image ( B  = −0.3, t  = 0.02, p  < 0.005).

H2a and H2b asserted a negative association between moral self-image and OCBs ( H2a ) and a positive association with CWBs ( H2b ). Results fully supported H2a and H2b , that is, moral self-image had a significant impact on OCBs ( B  = −0.44, t  = −6.71, p  < 0.001) and CWBs ( B  = 0.55, t  = 8.30, p  < 0.001).

H3 asserted that moral self-image acts as a mediator between unethical leadership and OCBs ( H3a ) and unethical leadership and CWBs ( H3b ). Results fully supported H3a and H3b , that is, significant indirect effect is witnessed between unethical leadership and OCBs (indirect effect = 0.02, p  < 0.01) and CWBs (indirect effect = 0.02, p  < 0.001). Furthermore, nonzero values in 95% bootstrapped confidence interval for OCBs (−0.002, 0.003) and CWBs (−0.03, −0.04) also supported H3a and H3b .

After the main effect and mediation effect hypothesis, the moderation hypothesis was also tested by conducting hierarchical moderated regression analysis using PROCESS macro. The moderation analysis results provided impact of high and low values of moderator (relational self-construal) on UL-MSI relationship. An interaction plot at ±1 SD of moderator is shown in Figure 2 . H4 proposed that the negative relationship between unethical leadership and moral self-image would be fortified for individuals having higher levels of relational self-construal. Table 4 represents the results of the moderated regression analysis. H4 received full support as the interaction term UL x RSC was significant for moral self-image ( B  = −0.12, SE = 0.01, p  < 0.05). Furthermore, the bootstrap results for impact of different values of moderator on unethical leadership and moral self-image relationship also support H4 , such that for high values of relational self-construal, the relationship between unethical leadership and moral self-image is the strongest ( Table 4 ). Same can be seen in the interaction plot formulated at ±1 SD ( Figure 2 ). As shown in Figure 2 , the relationship between unethical leadership and moral self-image is moderated by relational self-construal. Figure 2 highlights that the negative relationship between unethical leadership and moral self-image is significant and stronger at higher levels of relational self-construal ( B  = −0.12, p  < 0.001), whereas the unethical leadership and moral self-image relationship is insignificant at low levels of relational self-construal, thus lending support to H4 .

The aim of this study was to investigate how and when moral self-regulation in the form of moral cleansing is instigated in employees of unethical leaders. Research suggests that moral cleansing is highly prevalent in our day-to-day life; however, only few studies have investigated it in organizational settings ( Liao et al ., 2018 ). Specifically, while discussing moral cleansing, research has neglected the concept of vicarious moral cleansing. This research has shed light on the phenomenon of vicarious moral cleansing and integrated the literature of dark leadership and identification to explain the process of moral cleansing in response to transgressions of others (leader). The findings of this study have fully supported the proposed hypothesis. Though the proposed associations have not been developed and tested before, yet a bourgeoning line of research highlights that instead of always behaving destructively, individuals act thoughtfully or practically in response to detrimental supervisory/leadership behaviors. For instance, followers of abusive leaders sometime increase their job performance with an aim to avoid future abuse ( Shao et al. , 2018 ) or they indulge in ingratiation or façade creation to appear likeable in leader's eyes and restore their self-esteem ( Vogel and Mitchell, 2017 ). Even individuals also increase their citizenship behaviors when they fear that they would be negatively evaluated ( Syed et al. , 2018 ). Research in this domain is at nascent stage. This study is adding into this domain by comprehending the role of moral cleansing in compensatory altruistic behaviors under unethical leaders.

This study is unique as it is relating unethical leadership with outcomes via mechanism of moral self-image and increase in OCBs and decrease in CWBs under the tenets of moral cleansing effect. This study has specifically focused unethical leadership, which is an important yet theoretically and empirically overlooked construct ( Eisenbeiß and Brodbeck, 2014 ). To the best of researcher's knowledge, no prior study has specifically investigated the moral self-regulation in the form of moral cleansing under a dark leader such as unethical leader. This research surpasses the mainstream literature and provides insight into the fact that followers of unethical leaders who identify with them have implications for their moral self-image. This diminished self-image forces them to undergo compensatory behaviors, and through these they try to revert to their moral self-image. Moreover, use of moral self-image as an indicator of moral cleansing is also an additional contribution of this study, as previous studies used levels of guilt ( Liao et al. , 2018 ) as driving force behind moral cleansing and compensatory cleansing.

Most of the studies on unethical leadership as well as moral cleansing took place in the Western context, and scholars' stress that culture can substantially influence outcomes of these constructs. Thus, this study extends the literature on moral cleansing and moral self-regulation by developing and testing a model in cultural settings of Pakistan. Since Pakistan has a distinct culture where people possess the collectivistic orientation and have high power distance, in such an environment aggressing against the leader or organization is least likely. In fact, the findings suggest that despite the negative influence of unethical leaders, employees tend to react mindfully, that is, instead of retaliating they try to neutralize the harm by using their discretionary altruistic behavior. Also, they actively try to evade themselves from any questionable action so that their moral self-image is not further harmed.

Practical implications

The findings of current study support the notion that increase in OCBs and decrease in CWBs are not necessarily enacted in the best interest of organization or peers; rather, employees may have personal reasons for such behavior, such as boosting their own moral self-image ( Organ, 1997 ). Since these behaviors and intentions are thought to be a means of boosting one's self-esteem, it is quite possible that once employees feel they have maintained a positive image, they would cease to perform them. Thus, by understanding employees' behavior and the motivating factors behind them, managers and organizations will be able to work with them more effectively.

Although the findings indicate that unethical leadership promotes positive outcomes, it does not mean that it should be encouraged. Despite short-term benefits, in the long run, unethical leadership is to be discouraged. Employees with a diminished moral self-image become depressed, exhausted and burned-out over time. Therefore, a workplace with unethical leaders is emotionally stressful and morally demanding for their subordinates. Organizations should thus pay attention to the emotional state of their employees and keep a check on the conduct of the managers or supervisors. It is equally important to provide a safe channel for employees to speak up and highlight the challenges they are facing. Doing so will prevent long-term losses for the organizations.

Limitations and future research directions

This study has some limitations which must not be overlooked. First of all, due to scarcity of time and resources, employing a pure longitudinal research design was not feasible, and therefore a time-lagged research design was used to gather data from only two cities of Pakistan. However, authors believe that a longitudinal research design, with data collection from a larger sample, will provide more fine-grained results. Secondly, use of perceived leader's integrity scale to measure unethical leadership is another limitation. Previous researchers also utilized the same scale, yet it is critiqued that this scale has similarities with abusive supervision scale. Although we tried to address this issue by conducting an EFA and adopting only suitable items, a new scale which is able to measure the true essence of unethical leadership ought to be developed in future. Moreover, unethical leadership is not a new construct; however, theoretical and empirical work on this important construct is sparse. Thus, we encourage scholars to investigate the effects of such leaders by taking individual-level, team-level and organizational-level outcomes into account. Specifically, the mechanisms and boundary conditions through which these leaders exercise their influence are fruitful areas for investigation.

This study investigated the impact that unethical leaders impose on employee self-concept. Moreover, this study also explored the motivational tendencies of moral self-image. Based on the premise that every individual strives to maintain a moral self-image, thus study argued that individual's desirable or undesirable actions are motivated by the perceptions of their own moral standing at any instant. The findings suggest that employees' desirable or undesirable behaviors against leader are dependent upon the perceptions related with their own role, self-image and perception of leader's integrity and intentions. Leader's unethicality is perceived threatening for their own moral self-image, and they deal with it constructively. In addition to extending the research on discretionary behaviors, the findings revealed that altruistic behaviors are not only enacted in the best interest of organization, but that they might have self-serving motivates (increasing moral self-image) behind them. Therefore, one may not always refrain from CWBs just to maintain the moral self-image at a desired level. As once the moral self-image is balanced, employees may stop OCBs and engage in CWBs. Moreover, unethical leaders harm the moral self-image and emotional well-being of their subordinates, which adversely affects the organization. We can therefore deduce that unethical leadership must be discouraged, and effective ways must be devised to keep moral dilemmas in check in the workplace. This study has laid the foundation for the presence of vicarious moral cleansing in organizational setup, and it is advised that researchers must investigate this phenomenon in different settings and provide useful insights.

The conceptual framework

Graph depicting relationship between unethical leadership and moral self-image on high, medium and low levels of moderator

KMO and Barlett's test

Descriptive statistics, correlation and reliability statistics

Note(s): Extraction method: principal component analysis. Rotation method: varimax with Kaiser normalization

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4 Examples of Ethical Leadership in Business

• 14 Sep 2023

Have you ever faced an ethical dilemma? Maybe you found someone’s wallet on the ground or witnessed someone cheating during a test or competition. In these scenarios, the right answer isn’t always clear.

In business, you’re bound to encounter ethical dilemmas, especially as a leader. Behaving unethically can be illegal—for instance, stealing money or harming employees. In these situations, making the right choice is clearer. Sometimes, it’s not a question of legality but of weighing potential outcomes.

“Many of the decisions you face will not have a single right answer,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability . “Sometimes, the most viable answer may come with negative effects. In such cases, the decision is not black and white. As a result, many call them ‘gray-area decisions.’”

When facing ambiguity, how do you make the most ethical decision? Here’s a primer on ethical leadership and four examples of leaders who faced the same question.

Access your free e-book today.

What Is Ethical Leadership?

Ethical leadership is the practice of making decisions that balance stakeholders’ best interests with your company’s financial health, and empowering others to do the same.

As a leader, you have ethical responsibilities to four stakeholder groups—customers, employees, investors, and society—which Leadership, Ethics, and Corporate Accountability breaks down.

Responsibilities to Customers and Employees

• Well-being: What’s ultimately good for the person
• Rights: Entitlement to receive certain treatment
• Duties: A moral obligation to behave in a specific way
• Best practices: Aspirational standards not required by law or cultural norms

Employees have a fifth category—fairness—which comprises three types to consider:

• Legitimate expectations: Employees reasonably expect certain practices or behaviors to continue based on experiences with the organization and explicit promises.
• Procedural fairness: Managers must resolve issues impartially and consistently.
• Distributive fairness: Your company equitably allocates opportunities, benefits, and burdens.

Responsibilities to Investors

Your responsibilities to investors are known as fiduciary duties . The four types are:

• Duty of obedience: Adhere to corporate bylaws, superiors’ instructions, and the law.
• Duty of information: Disclose necessary information and remain truthful about performance and operations. Refuse to divulge certain information to nonessential parties.
• Duty of loyalty: Act in the most favorable way for shareholders and avoid conflicts of interest.
• Duty of care: Evaluate decisions’ potential outcomes before acting.

Responsibilities to Society

In addition to creating value for your business, you’re responsible for making a positive, or at least neutral, impact on society and the environment.

One framework to conceptualize this is the triple bottom line, also called the “three P’s”:

• Profit: Your business’s responsibility to make a profit.
• People: Your business’s responsibility to positively impact society by creating jobs, supporting charities, or promoting well-being initiatives.
• The planet: Your business’s responsibility to positively impact the natural environment, or at least not damage it.

Even business leaders with the best intentions can make unethical decisions. In a Harvard Business Review article , HBS Professor Max Bazerman describes the concept of motivated blindness , in which you become unaware of unethical decisions when they benefit you or your company.

Hsieh echoes this sentiment in Leadership, Ethics, and Corporate Accountability .

“Even when the right thing to do seems clear from an outsider’s perspective, factors like time, social pressures, and the need for self-preservation can complicate things,” Hsieh says in the course.

Learning about ethical leadership can enable you to be aware of unintended negligence and make more conscious, ethical decisions.

Here are four examples of business leaders who faced ethical dilemmas, how they handled them, and what you can learn from their experiences.

1. Johnson & Johnson’s Tylenol Poisonings

A classic case of ethical leadership in business is “the Chicago Tylenol poisonings.” On September 9, 1982, a Chicago-area 12-year-old girl woke up with a cold. Her parents gave her a tablet of extra-strength Tylenol to ease her symptoms and, within hours, she died.

Six more deaths followed—the connecting factor between them was having taken extra-strength Tylenol shortly before passing away. It was later discovered that the tablets were laced with cyanide, a chemical that interferes with the body’s ability to use oxygen.

Johnson & Johnson, Tylenol’s parent company, had an ethical dilemma and a public relations disaster to contend with.

Baffled as to how the cyanide got in the tablets, Johnson & Johnson’s leaders acted quickly and pulled all Tylenol products off the shelves—31 million bottles worth over $100 million—and stopped all production and advertising.

The swiftness of their decision, although incredibly costly, put customers’ well-being at the forefront and saved lives.

Johnson & Johnson partnered with the Chicago Police, the Federal Bureau of Investigation (FBI), and the Food and Drug Administration (FDA) to track down the perpetrator who added cyanide to the medication. The company offered a $100,000 reward and provided detailed updates on its investigation and product developments following the crisis.

When it became clear that the killer had bought the product, laced it with cyanide, and returned it to store shelves undetected, Johnson & Johnson developed the first-ever tamper-resistant packaging. The “safety seal” that now covers the opening of most food and drug products was born.

“Our highest responsibility has always been the health and safety of our consumers,” a Johnson & Johnson representative wrote in a statement to the Chicago Tribune . “While this tragic incident remains unsolved, this event resulted in important industry improvements to patient safety measures, including the creation of tamper-resistant packaging.”

The Tylenol brand recovered from the incident, largely because of Johnson & Johnson’s leadership team’s swift action and transparent care for customers.

2. JetBlue’s Shutdown

On Valentine’s Day, 2007 , at the John F. Kennedy International Airport, JetBlue Airlines sent nine planes from the gate to the runway during a snowstorm, hoping conditions would rapidly improve—but it had no such luck.

The misstep caused the planes to sit on the tarmac for more than five hours with disgruntled passengers inside. The issue snowballed from there.

Since JetBlue employees had to work overtime to deal with the delays, few had enough allowable flight time to handle upcoming departures. JetBlue was left with no choice but to cancel 1,096 flights over the following five days.

CEO David Neeleman responded by writing an apology letter to customers and crafting a “ customer bill of rights ” that the airline still abides by. The document outlined customers’ rights to information about flights, as well as how they’d be compensated in the event of delays or cancellations.

Neeleman also went on a public apology tour, taking full responsibility for the incident rather than blaming it on the weather.

This response stands in contrast to the 2022 Southwest Airlines incident that played out similarly but with less accountability from leaders. Initially caused by bad weather and then exacerbated by Southwest’s outdated booking systems, the 16,700 canceled flights left thousands stranded between December 21 and 31.

In contrast to Neeleman’s apologies and emphasis on customer rights, Southwest CEO Bob Jordan took a defensive stance, explaining in a video the impact that “record bitter cold” had on all airlines and that Southwest was doing everything it could to remedy the issue. While those points may have been true, the response didn’t go over well with customers who wanted to feel respected and understood.

Each leader's choices highlight the importance of being transparent and championing customer rights when facing similar issues.

Related: The Importance of Reflective Leadership in Business

3. Starbucks’s Racial Bias Incident

If one of your employees made a critical decision based on racial bias, how would you respond? That was the question Kevin Johnson, then-CEO of coffee shop chain Starbucks, had to answer in April 2014 .

One day, two Black men entered a Starbucks in Philadelphia and asked to use the bathroom. The manager on duty told them the restroom was for paying customers only, so they sat down to wait for their friend to arrive before ordering.

The manager called the police, who arrested the men for trespassing. Although no charges were filed, the arrest went viral and sparked protests throughout the United States.

Starbucks, which prides itself on being an ethical brand , has one of the most diverse leadership groups in corporate America—five of the board’s 14 members are women, and five are from racial minority groups. This racially motivated incident clashed with its values.

Johnson fired the manager who called for the arrest, apologized to the two men, and announced racial bias training for all Starbucks employees.

To emphasize the training’s importance, Johnson closed 8,000 locations on May 29, 2018, to educate 175,000 employees. This cost Starbucks an estimated $12 million in lost profit but spread the message that it cares about its customers, employees, and society.

Related: How to Create a Culture of Ethics and Accountability in the Workplace

4. The Muse Sticking Up for Employees

Ethical dilemmas often aren’t public scandals—even quiet, internal decisions can have enormous impacts. Kathryn Minshew, CEO and co-founder of The Muse , faced one such scenario in the early days of growing the online career platform.

She’d just signed a company to use The Muse’s recruiting platform. It was a major deal, and the young startup desperately needed revenue. But during the onboarding process, Minshew noticed the client’s representatives were talking down to her junior staff members. While they respected her, how they treated her team didn’t sit well.

She spoke with the client about it, effectively providing a warning and a chance to start the relationship on a better note. Still, the poor treatment of her team continued.

Minshew had a decision to make: Take the revenue despite the mistreatment or part ways with the client to support her team. She went with the latter.

“I told them nicely that it didn’t make sense to work together anymore and refunded the unused balance of their money,” Minshew says in an interview with Fast Company . “They tried to argue, but at that point, my mind was made up. I didn’t realize how relieved my team was—and how much they appreciated it—until after it was all done.”

By cutting ties with the client, Minshew fulfilled her ethical responsibility to create an environment that supported her employees’ well-being and right to be treated respectfully. In doing so, she built a strong foundation of trust and demonstrated that she’d have their best interest in mind—even at the business’s expense.

“I think backing your team in situations like that is really important,” Minshew says in the same interview, “but it’s not always easy, especially when you’re early-stage.”

How to Develop Ethical Leadership Skills

While these scenarios likely differ from those you face at your organization, ethical leadership’s guiding principles ring true.

To build your ethical leadership skills , consider taking an online business ethics course. In Leadership, Ethics, and Corporate Accountability , Hsieh presents several real-world examples of ethical dilemmas, prompts you to consider how you’d respond to them, and then lets business leaders share how they handled each.

In the course, you also learn how to use frameworks and tools to conceptualize your responsibilities to stakeholders, make judgment calls in gray-area situations, and act decisively to reach optimal outcomes.

By learning from the challenges and triumphs of those who came before you, you can equip yourself to handle any ethical dilemmas that come your way.

Are you interested in learning how to navigate difficult decisions as a leader? Explore Leadership, Ethics, and Corporate Accountability —one of our online leadership and management courses —and download our free guide to becoming a more effective leader.

About the Author

Wells Fargo Banking Scandal

• Markkula Center for Applied Ethics
• Focus Areas
• Business Ethics
• Business Ethics Resources

Why culture matters

What should business leaders take away from the disaster?

Wells Fargo Automated Tellers (AP Photo/Eric Risberg)

This case was updated in July of 2018.

Wells Fargo was the darling of the banking industry, with some of the highest returns on equity in the sector and a soaring stock price. Top management touted the company’s lead in “cross-selling”: the sale of additional products to existing customers. “Eight is great,” as in eight Wells Fargo products for every customer, was CEO John Stumpf’s mantra.

In September 2016, Wells Fargo announced that it was paying $185 million in fines for the creation of over 2 million unauthorized customer accounts.  It soon came to light that the pressure on employees to hit sales quotas was immense: hourly tracking, pressure from supervisors to engage in unethical behavior, and a compensation system based heavily on bonuses.

Wells Fargo also confirmed that it had fired over 5,300 employees over the past few years related to shady sales practices. CEO John Stumpf claimed that the scandal was the result of a few bad apples who did not honor the company’s values and that there were no incentives to commit unethical behavior. The board initially stood behind the CEO but soon after received his resignation and “clawed back” millions of dollars in his compensation.

Further reporting found more troubling information. Many employees had quit under the immense pressure to engage in unethical sales practices, and some were even fired for reporting misconduct through the company’s ethics hotline. Senior leadership was aware of these aggressive sales practices as far back as 2004, with incidents as far back as 2002 identified.

The Board of Directors commissioned an independent investigation that identified cultural, structural, and leadership issues as root causes of the improper sales practices. The report cites: the wayward sales culture and performance management system; the decentralized corporate structure that gave too much autonomy to the division’s leaders; and the unwillingness of leadership to evaluate the sales model, given its longtime success for the company.

General Discussion Questions

• What should business leaders take away from this scandal?
• What could Wells Fargo have done differently to avert this cultural meltdown?

Practice of Ethical Leadership Questions

• Modeling Character and Values:  What values did Stumpf model to Wells Fargo employees?  What impact might that have on the culture of Wells Fargo?
• Encouraging Ethical Conduct:  What behaviors can leaders model in order to encourage ethical behavior in their organization?
• Designing Ethical Systems:  Wells Fargo did have some systems in place, like the ethics hotline, to report unethical behavior, but it didn’t work.  Why do you think that is? What steps can leaders take to design systems that encourage ethical behavior rather than unethical behavior?

Additional Reading

Lessons from Wells Fargo: 10 Key Takeaways

• Author Rights
• Diversity, Equity & Inclusion

• JOLE 2023 Special Issue
• Editorial Staff
• 20th Anniversary Issue

Enron’s Ethical Collapse: Lessons for Leadership Educators

Craig Johnson 10.12806/V2/I1/C2

Craig Johnson Professor of Communication Arts Department of Communication

George Fox University 414 Meridian St.

Newberg, OR 97132

(503) 554-2610

[email protected]

Top officials at Enron abused their power and privileges, manipulated information, engaged in inconsistent treatment of internal and external constituencies, put their own interests above those of their employees and the public, and failed to exercise proper oversight or shoulder responsibility for ethical failings. Followers were all too quick to follow their example. Therefore, implications for teaching leadership ethics include, educators must: (a) share some of the blame for what happened at Enron, (b) integrate ethics into the rest of the curriculum, (c) highlight the responsibilities of both leaders and followers, (d) address both individual and contextual variables that encourage corruption, (e) recognize the importance of trust and credibility in the leader-follower relationship, and (f) hold followers as well as leaders accountable for ethical misdeeds.

Introduction

Enron’s bankruptcy filing in November 2001 marked the beginning of an unprecedented wave of corporate scandals. Officials at Tyco, WorldCom, ImClone, Global Crossing, Adelphia, AOL Time Warner, Quest, and Charter Communications joined Enron executives as targets of SEC probes, congressional hearings, stockholder lawsuits, and criminal indictments. Enron’s troubles, which had been center stage, were soon pushed to the background by subsequent revelations of corporate wrongdoing.

More recent instances of corporate corruption should not diminish the importance of Enron as a case study in moral failure. Enron collapsed in large part because of the unethical practices of its executives. Examining the ethical shortcomings of Enron’s leaders, as well as the factors that contributed to their misbehaviors, can provide important insights into how to address the topic of ethics in the leadership classroom.

Moral Failure at the Top

Events leading up to Enron’s bankruptcy have been chronicled in a host of magazine articles as well as in such books as Anatomy of Greed (Cruver, 2002), Enron: The Rise and Fall (Fox, 2003), What Went Wrong at Enron (Fusaro & Miller, 2002), The Enron Collapse (Barresveld, 2002), and Pipe Dreams (Bryce, 2002). The company’s collapse was ultimately triggered by failed investments in overseas ventures and the unraveling of a series of dubious limited partnerships called Special Purpose Entities (SPEs). These SPEs , backed by Enron stock and illegally run by company insiders, were designed to keep debt off the firm’s balance sheets and helped prop up its share price. However, when the firm’s stock price began to slide, the company was unable to back its guarantees. In addition to charges related to shady partnerships, Enron stands accused of:

• borrowing from subsidiaries with no intent to repay the loans (Wilke, 2002, August 5).
• avoiding federal taxes even though some of its subsidiaries, like Portland General Electric, collected tax payments from customers (Manning & Hill, 2002).
• contributing to the California energy crisis by manipulating electricity prices (Fusaro & Miller, 2002; Manning, 2002).
• bribing foreign officials to secure contracts in India, Ghana and other countries (Wilke, 2002, August 7).
• immediately claiming profits for long term projects that would eventually lose money (Hill, Chaffin, & Fidler, 2002).
• switching account balances immediately before quarterly reports to boost apparent earnings (Cruver, 2002).
• manipulating federal energy policy (Duffy, 2002; Duffy & Dickerson, 2002).

Much of the blame for what happened at Enron (nicknamed the “Crooked E” for its tilted Capital E logo) can be laid at the feet of company founder Kenneth Lay, his successor Jeffrey Skilling, chief financial officer Andrew Fastow, and Fastow’s top assistant Michael Kopper. Each failed to meet important ethical challenges or dilemmas of leadership (Johnson, 2001). Their failures included:

Abuse of Power

Both Lay and Skilling could wield power ruthlessly. The position of vice-chair was known as the “ejector seat” because so many occupants were removed from the position when they took issue with Lay or appeared to be a threat to his power. Skilling, for his part, eliminated corporate rivals and intimidated subordinates. Abdication of power was also a problem at Enron. At times, managers did not appear to understand what employees were doing or how the business (which was literally creating new markets) operated. Board members also failed to exercise proper oversight and rarely challenged management

decisions. Many were selected by CEO Kenneth Lay and did business with the firm or represented non-profits that received large contributions from Enron (Associated Press, 2002; Cruver, 2002).

Excess Privilege

Excess typified top management at Enron. Lay, who began life modestly as the son of a Baptist preacher turned chicken salesman, once told a friend, “I don’t want to be rich, I want to be world-class rich” (Cruver, 2002, p. 23). At another point he joked that he had given wife Linda a $2 million decorating budget for a new home in Houston which she promptly exceeded (Gruley & Smith, 2002). The couple borrowed $75 million from the firm that they repaid in stock. Linda Lay fanned the flames of resentment among employees when she broke into tears on the Today Show to claim that the family was broke. This was despite the fact that the Lays owned over 20 properties worth over $30 million (Eisenberg, 2002).

During Enron’s heyday, some of the perks filtered down to followers as well. Workers enjoyed such benefits as lavish Christmas parties, aerobic classes, free taxi rides, refreshments, and the services of a concierge ( Enron excess , 2002; How Enron let down its employees , 2002).

Enron officials manipulated information to protect their interests and to deceive the public, although the extent of their deception is still to be determined. Both executives and board members claim that they were unaware of the extent of the company’s off-the-books partnerships created and operated by Fastow and Kopper (Eisenberg, 2002). However, both Skilling and Lay were warned that the company’s accounting tactics were suspect (Duffy, 2002). The Senate Permanent Subcommittee on Investigations, which investigated the company’s downfall, concluded, “Much that was wrong with Enron was known to the board” (Associated Press, 2002). Board members specifically waived the conflict of interest clause in the company’s code of ethics that would have prevented the formation of the most troublesome special partnerships (Cruver, 2002).

Employees were quick to follow the lead of top company officials. They hid expenses, claimed nonexistent profits, deceived energy regulators and so on.

Inconsistent Treatment of Internal and External Constituencies

Enron’s relationships with both employees and outsiders were marked by gross inconsistencies. Average workers were forced to vest their retirement plans in Enron stock and then, during the crucial period when the stock was in free fall, were blocked from selling their shares. Top executives, on the other hand, were able to unload their shares as they wished. Five-hundred officials received “retention bonuses” totaling $55 million at the same time laid off workers received only a fraction of the severance pay they had been promised (Barreveld, 2002).

Enron treated its friends royally. In particular, the company used political donations to gain preferential treatment from government agencies. Kenneth Lay was the top contributor to the Bush campaign and officials made significant donations to both Democratic and Republican members of the House and Senate. In return, the company was able to nominate friendly candidates for the Security Exchange Commission (SEC) and the Federal Energy Regulatory Commission (FERC). Federal officials intervened with foreign governments to promote Enron projects, and company representatives played a major role in setting federal energy policy that favored deregulation of additional energy markets (Fox, 2003). Anyone perceived as unfriendly to Enron’s interests could expect retribution, however. In one instance, Lay withdrew an underwriting deal to pressure Merrill Lynch into firing an analyst who had downgraded Enron stock (Smith & Raghaven, 2002). Skilling called one analyst an “asshole” when he questioned the company’s performance during a conference call (Cruver, 2002).

Misplaced and Broken Loyalties

Enron officials put their loyalty to themselves above those of everyone else with a stake in the company’s fate — stock holders, business partners, rate payers, local communities, foreign governments, and so on. They also betrayed the trust of those who worked for them. Employees apparently believed in the company and in Lay’s optimistic pronouncements. In August 2001, for example, he declared “I have never felt better about the prospects for the company” (Cruver, 2003, p. 91). In late September, just weeks before the company collapsed, he encouraged employees to “talk up the stock” because “the company is fundamentally sound” (Fox, 2003, p. 252). These exhortations came even as he was unloading his own shares. The sense of betrayal experienced by Enron employees only added to the pain of losing their jobs and retirement savings.

Irresponsible Behavior

Enron officials acted irresponsibly by failing to take needed action, failing to exercise proper oversight, and failing to shoulder responsibility for the ethical miscues of their organization. CEO Lay downplayed warnings of financial improprieties and some board members did not understand the numbers or the company’s operations. Too often company managers left employees to their own devices, encouraging them to make their numbers by any means possible. After the collapse, no one stepped forward to accept blame for what happened. Lay and Fastow claimed Fifth Amendment privileges against self-incrimination when called before congressional committees; Skilling testified but claimed he had no knowledge of illegal activity.

The unethical behavior of Enron’s leaders appears to be the product of both individual and situational factors. Greed was the primary motivator of both managers and their subordinates at Enron (Cruver, 2002). Optimistic earnings

reports, hidden losses and other tactics were all designed to keep the stock price artificially high. Lofty stock values justified generous salaries and perks, deflected unwanted scrutiny, and allowed insiders to profit from their stock options. Greed was not limited to top Enron executives, however. Meeting earnings targets triggered large bonuses for managers throughout the firm, bonuses that were sometimes larger than employees’ salaries. Rising stock prices and extravagant rewards made it easier for followers as well as leaders to overlook shortcomings in the company’s ethics and business model.

Hubris was also a major character flaw at the Crooked E, a fact reflected in the company banner that declared: FROM THE WORLD’S LEADING ENERGY COMPANY — TO THE WORLD’S LEADING COMPANY (Cruver, 2002, p.

3). Skilling, who lacked the social and communication skills of Ken Lay, best exemplifies the haughty spirit of many Enron officials. At the height of the California energy crisis he joked that the only difference between the Titanic and the state of California was that “when the Titanic went down, the lights were on” (Fusaro & Miller, 2002. p. 122).

Even the so-called “heroes” of the Enron debacle failed to demonstrate enough virtue to delay or to prevent the company’s collapse. Former company treasurer Clifford Baxter complained about Fastow’s financial wheeling and dealing, but then retired without going public with his complaints. Vice-president of corporate development Sherry Watkins outlined her concerns about the firm’s questionable financial practices in a letter and in a meeting with Lay ( A Hero , 2002). Later she discussed the same issues with an audit partner at Anderson. While these are commendable acts, in her letter she recommended quiet clean up of the problems rather than public disclosure. She stopped short of talking to the press, the SEC and other outside agencies when her attempts at internal reform failed (Zellner, 2002).

The destructive power of individual greed and pride was magnified by Enron’s corporate culture that encouraged creativity and risk taking. Employees invented a host of new commodity products which earned Enron top ranking six straight years on Fortune magazine’s list of most innovative companies (Fusaro & Miller, 2002). Ken Lay was fond of telling the story of how Enron employees in London started its on-line trading business (which later carried a quarter of the world’s energy trades) without the blessing or knowledge of corporate headquarters in Houston (Stewart, 2001). The cost of freedom, however, was pressure to produce that created a climate of fear. Enron’s atmosphere was similar to that of an elite law firm where talented young associates scramble to make partner (Fusaro & Miller, 2002).

Adding to the stress was the organization’s “rank and yank” evaluation system. Every six months 15% of all employees were ranked in the lowest category and then had a few weeks to find another position in the company or be let go (Cruver, 2002). Workers in the next two higher categories were put on notice that

they were in danger of falling into the lowest quadrant during the subsequent review. This system (a harsher variant of one used at many companies) encouraged cutthroat competition and silenced dissent. Followers were afraid to question unethical and or illegal practices for fear of losing their jobs. Instead, they were rewarded for their unthinking loyalty to their managers (who ranked their performance) and the company as a whole (Fusaro & Miller, 2002).

Lack of controls, combined with an intense, competitive, results-driven culture made it easier to ignore the company’s code of ethics which specifically prohibited conflicts of interest like those found in the SPEs and to seek results at any cost (Hill, Chaffin, & Fidler, 2002). Anderson auditors signed off on its questionable financial transactions for fear of losing lucrative auditing and consulting contracts with Enron.

Enron was also a victim of larger social and cultural factors. Publicly traded firms in the United States are judged by their quarterly earnings reports. Obsession with short-term results encourages executives to do whatever they can to meet these expectations. Enron’s explosive growth took place during the economic boom of the 90s. All the major stock indices soared and billions were wasted on Internet start-ups that never had a realistic chance to make a profit. During this period the Cult of the CEO emerged. Business leaders achieved rock star status, gracing the covers of national magazines and best selling biographies (Elliott & Schroth, 2002, p. 125). In this heady climate, government regulators and investors felt little need to study the operations or finances of apparently successful companies led by business superstars. The recent spate of corporate scandals and the accompanying market crash may be the penalty that society must pay for the excesses and inattention of the last decade.

Implications for Leadership Educators

The lessons of Enron extend beyond the accounting and market reforms instituted in the wake of the scandal. Leadership educators can gain important insights about how to treat the topic of ethics in the classroom from the moral shortcomings of Enron’s top executives. The pedagogical implications of Enron include:

Educators Must Share Some of the Blame

Academics find it easy to distance themselves from the sins of Enron. The college and university classroom seems a world away from the high flying, gun slinging mentality of the former energy giant. Few professors can begin to comprehend the level of privilege and influence enjoyed by the company’s C level executives.

Those who study and teach ethics believe that they would exhibit the virtues that Lay, Skilling, and Fastow seemed to lack.

Disassociating oneself from Enron may be comforting, but this maneuver conveniently overlooks the fact educators must shoulder at least some of the blame for the company’s moral failure (Kavanaugh, 2002). As college graduates, Enron managers undoubtedly enrolled in leadership and ethics courses. Many were also products of Harvard and other top MBA programs. Followers armed with bachelor and masters degrees served as willing soldiers in the army of public relations experts who helped the company maintain its veneer of profitability, lobby government official, and attack its critics. What Enron’s top leaders, lower level managers, and front line employees learned in university classrooms was not enough to prevent ethical tragedy.

Strive for Ethical Integration

Enron is a classic example of a company whose ethical pronouncements were “decoupled” from the rest of its operations (Weaver, Trevino, & Cochran 1999). The key values of the company were respect, integrity, communications, and excellence. Enron also had an extensive code of ethics. Unfortunately, these values and policies had little impact on how Lay, Skilling, and their underlings did business. By the time of its collapse in 2001, the company had been manipulating its books and misleading investors for several years.

Unfortunately, the teaching of ethics, like the practice of ethics at Enron, is typically decoupled from the rest of the curriculum. Discussions of ethics often stand alone, limited to a single unit or to one course in the entire leadership curriculum. Further, the placement of ethical material also diminishes its importance. Ethics units and text chapters sometimes appear to be an afterthought, introduced at the end of a course or book and therefore likely to be eliminated if the professor falls behind during the quarter or semester. To be effective, ethical considerations should be part of every unit, class, and set of readings.

Highlight Leadership and Followership Duties and Responsibilities

Many students study leadership in hopes of achieving the kind of heroic stature that, until recently, they saw reflected in press reports about famous business figures and other prominent leaders. Power, perks, financial security, and recognition all seem to come with an executive title. Instructors cater to this motivation when they act as cheerleaders for prominent business leaders like Jack Welch or Kenneth Lay. They overlook the fact that the same qualities and strategies so often praised in business and other leadership literature can lead to disaster. Enron is a case in point. The company’s leaders did many things right according to the leadership and management literature. Lay and his colleagues had a clear vision and values, pursued excellence, and fostered an extraordinary degree of creativity and innovation. Sadly, their vision was unrealistic, their stated values took back seat to unstated ones (e. g., make the deal at whatever the cost and generate constant profits and growth), and their drive for innovation led them into a host of unprofitable markets that even their management team did not

completely understand. Followers also lost sight of their personal values as well as their commitment to society.

Altruism is a universal value that is particularly important to leaders who, by virtue of their roles, are to exercise influence on behalf of others. Leaders cannot articulate the concerns of followers unless they first understand their needs (Kanungo & Mendoca, 1996). Leaders driven by altruism pursue organizational goals rather than personal achievement and are more likely to give power away. Leaders seeking self-benefit focus on personal achievements, and control followers through coercion and reward.

Communitarianism emphasizes the need for individual and corporate responsibility (Etzioni, 1993). Citizens and institutions have obligations to the larger community. When making decisions, leaders and followers must look beyond the immediate interests of themselves and their organizations to the needs of the local community and society as a whole.

Servant leadership is a model that puts the needs of followers first (Greenleaf, 1977; Spears, 1998). Servant leaders continually ask themselves what would be best for their constituents and measure their success by the progress of their followers. Driven by a concern for people, they seek to treat others fairly and recognize that they hold their positions in stewardship for others.

Address Both Individual and Contextual Variables

Training can help individuals develop sensitivity to moral issues and improve ethical reasoning skills (Rest, 1993). To prevent future Enrons, faculty must help current and future leaders and followers equip themselves with the values, principles, and skills they need to make reasoned moral choices. Nonetheless, an individual focus does not address organizational forces – group culture, high forced turnover, reward system – that played a significant role in Enron’s moral failures. In addition, society’s fixation on short term profits and daily market moves also increased the pressure to manipulate results and to hide financial bad news.

• What organizational controls should be put on innovation?
• How can employees be rewarded in a way that promotes ethical behavior?
• What are the dysfunctional consequences of the rank and yank evaluation system?
• What are reasonable limits on executive compensation?
• What is a corporate board’s role in overseeing the operations of an organization?
• What should be the composition of a board’s membership?
• How should the performance of companies be judged?
• How can society develop a long-term perspective on financial results?

Recognize the Importance of Credibility

Since Aristotle, scholars have examined the factors that make a source believable to an audience, an interest based on the strong correlation between credibility and influence (Hackman & Johnson, 2001, chap. 6). The Enron debacle and subsequent scandals demonstrate that credibility, specifically trustworthiness, is more important than ever. Stock values declined nearly 40% from market highs in July1998 due largely to investors’ loss of confidence in the integrity of publicly held corporations. Employees are increasingly skeptical as well. A 2002 survey by the Ethics Resource Center found that 43% of respondents believed that their bosses fail to model integrity and felt pressure to compromise their own ethical standards at work (Wee, 2002). Modern technology, which enables the rapid, worldwide dissemination of information, makes credibility more important now than in the time of Plato and Aristotle. Leadership faculty need to help students consider not only how credibility is built and maintained, but also how trust is destroyed and at what cost to individuals and organizations.

Followers are Also Accountable

Lay, Skilling, Fastow and other high level executives deserve most of the blame for what went wrong at Enron. It was they who created the company’s culture, approved dubious partnerships, attacked critics, and, in the end, abandoned employees while enriching themselves. Nevertheless, followers, ranging from second tier officials down to receptionists and mailroom clerks, share some of the blame. Many willingly bought into the get rich quick mentality of the Crooked E. During the company’s 15 years of rapid growth, few stopped to question the company’s tactics. They were “bought off” by the generous perks and the thrill of being part of one of the most sophisticated and innovative companies in the world. The constant threat of termination undoubtedly convinced others to keep their doubts to themselves and to support their bosses.

According to Chaleff (1995), courage – the willingness to accept a higher level of risk – is the most important virtue for organizational followers. Such courage was sorely lacking at Enron. Few had the courage to challenge authority. Few had the courage to leave when faced with ethical violations. Apparently no member of the firm had the courage to bring the misbehavior of Lay and his subordinates to the attention of the public before the crisis erupted (Cruver, 2002).

Unfortunately, cowardice is not limited to Enron. Nearly two-thirds of those who witness ethical violations in their companies refuse to report them, believing that reporting problems would not do any good ( Chief Executive , 2002). The final lesson of Enron, then, is that both instructors and students have the responsibility to confront moral failure whenever and wherever it appears, regardless of whether they function in a leadership or in a followership role.

In summary, top officials at Enron abused their power and privileges. They manipulated information while engaging in inconsistent treatment of internal and external constituencies. These leaders put their own interests above those of their employees and the public, and failed to exercise proper oversight or shoulder responsibility for ethical failings. Sadly, the followers were all too quick to follow their example.

Numerous implications for teaching leadership ethics can be gleaned from the Eron situation. Educators must share some of the blame for what happened at Enron. It is important to integrate ethics into the rest of the curriculum.

Leadership educators need to highlight the responsibilities of both leaders and followers along with addressing both individual and contextual variables that encourage corruption. The importance of trust and credibility in the leader- follower relationship must be recognized. And, finally, educators must hold followers as well as leaders accountable for ethical misdeeds.

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Time , pp. 16-22.

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Eisenberg, D. (2002, February 21). Ignorant & Poor? Time , pp. 37-39.

Elliott, A. L, & Schroth, R. J. (2002). How companies lie: Why Enron is just the tip of the iceberg . New York: Crown Business.

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An earlier version of this paper was presented at the 2002 National Communication Association convention, New Orleans, LA.

The Ethical Leadership Case Study Collection

The Ted Rogers Leadership Centre’s Case Collection, developed in collaboration with experienced teaching faculty, seasoned executives, and alumni, provides instructors with real-life decision-making scenarios to help hone students’ critical-thinking skills and their understanding of what good leaders do. They will be able to leverage the theories, models, and processes being advanced. Students come to understand that workplace dilemmas are rarely black and white, but require them to think through and address competing claims and circumstances. Crucially, they also appreciate how they can, as new leaders and middle managers, improve decisions by creating realistic action plans based on sound stakeholder analysis and communication principles. These case studies are offered free of charge to all instructors.

Cases come in both long and short forms. The long cases provide instructors with tools for delving deeply into subjects related to a variety of decision making and organizational development issues. The short cases, or “minis,” are quick in-class exercises in leadership.

For both the long cases and the minis, teaching-method notes are provided, which include not only recommended in-class facilitation methods, but also grading rubrics, references, and student feedback.

Testimonials

“I have been invited to judge the Leadership Centre’s Annual Ethical Leadership National Case Competition since its inception. Each year, competitors are given a Centre’s case to analyze and present. These cases are like nothing else. They bring the student into the heart of the situation. To excel, students must not only be able to cogently argue the options, but also demonstrate how to implement a decision based on a clear-eyed stakeholder analysis and an understanding of the dynamics of change.” Anne Fawcett, Special Advisor, Caldwell Partners

“I have worked with the Ted Rogers Leadership Centre to both develop and pilot test case materials. Feedback consistently shows that the Centre’s cases resonate with students, providing them with valuable learning experiences.” Chris Gibbs, BComm, MBA, PhD, Associate Professor

"As a judge in the recent national Ted Rogers Ethical Leadership Case Competition, I was very impressed with the quality of the case study prepared by the Leadership Centre. It was brief but well-composed. It exposed the students to ethical quandaries, of the sort they may well face in their business careers. It not only tested their reasoning, but it challenged them to develop a plan of action when faced with incomplete information and imminent deadlines.” Lorne Salzman, Lawyer

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Home — Essay Samples — Business — Business Ethics — XYZ Pharmaceutical Company Case Study

Xyz Pharmaceutical Company Case Study

• Categories: Business Ethics Corporate Governance

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Published: Mar 16, 2024

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Table of contents

Ethical concerns, reputation management, recommendations.

• Transparency and Accountability: XYZ Pharmaceuticals should prioritize transparency in its marketing and promotional activities, ensuring that all communications accurately represent the approved indications and potential risks of its products. The company should also establish clear guidelines for interactions with healthcare professionals and disclose any financial arrangements that may influence prescribing behaviors.
• Compliance and Governance: XYZ Pharmaceuticals must strengthen its compliance programs and governance structures to prevent unethical practices and ensure adherence to regulatory requirements. This includes implementing robust monitoring and reporting mechanisms to detect and address any misconduct within the organization.
• Ethical Leadership: The company's leadership team should exemplify ethical conduct and integrity, setting the tone for ethical decision-making across the organization. By fostering a culture of ethics and accountability, XYZ Pharmaceuticals can instill confidence in its stakeholders and demonstrate its commitment to responsible business practices.
• Stakeholder Engagement: XYZ Pharmaceuticals should engage with key stakeholders, including healthcare professionals, patient advocacy groups, and regulatory authorities, to address their concerns and gather feedback on its ethical initiatives. Building trust through open dialogue and collaboration can help the company rebuild its reputation and strengthen its relationships with stakeholders.

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