SuperTutor
$15/per page/Negotiable
03-Kidwell.qxd 10/29/2004 10:23 AM Page 69 CHAPTER 3 The Role of Leaders
in Influencing Unethical
Behavior in the Workplace
Linda Klebe Treviño
Michael E. Brown A fter years of focusing on explaining and predicting positive employee
attitudes (e.g., job satisfaction, employee commitment) and behaviors
(e.g., employee citizenship, work performance), organizational behavior
researchers have increasingly turned their attention to understanding what drives
costly misconduct in organizations (Bennett & Robinson, 2000; Giacalone &
Greenberg, 1997; Robinson & Bennett, 1995; Robinson & O’Leary-Kelly, 1998;
Treviño, 1986; Vardi & Wiener, 1996). Although researchers have used a variety of
terms to describe such employee behavior (e.g., deviance, antisocial behavior,
misbehavior, counterproductive behavior, unethical behavior), all of them share a
concern with counternormative behavior intended to harm the organization or its
stakeholders (O’Leary-Kelly, Duffy, & Griffin, 2000).
Unethical behavior in organizations has been widely reported in the wake
of many recent high-profile corporate scandals. As researchers and practitioners
consider what may be driving such behavior, leaders are coming under increasing
scrutiny not only because many senior executives are accused of having committed
unethical acts but also because of the role that leaders at all levels are thought to
play in managing the ethical (and unethical) conduct of organization members. For
example, Bernie Ebbers, the former chief executive officer of WorldCom, was hailed
as a great leader for growing the company into a telecommunications superpower. 69 03-Kidwell.qxd 10/29/2004 10:23 AM Page 70 70——MANAGING ORGANIZATIONAL DEVIANCE Ebbers, however, was later discredited for his failure to provide moral leadership
as WorldCom became engulfed in financial scandals that resulted in the largest
bankruptcy in U.S. history (for more on Ebbers, see Case 3). As Turner, Barling,
Epitropaki, Butcher, and Milner (2002) suggest, organizational researchers are
increasingly interested in the “moral potential of leadership” (p. 304). The assumption is that a leader who exerts moral authority should be able to influence followers’
ethical behavior.
Theory and research suggest that leaders should, and do, influence organizational ethics. The normative business ethics literature has focused on cases (e.g.,
Donaldson & Gini, 1996) or prescriptions regarding what leaders should do to provide ethical leadership (e.g., Ciulla, 1998; Freeman, Gilbert, & Hartman, 1988; Rost,
1995). The descriptive business ethics literature has reported that executive leaders
set the ethical tone at the top of organizations (Murphy & Enderle, 1995) and shape
their formal and informal ethical cultures (Treviño, 1990; Treviño & Nelson, 2004).
Executive leaders have been found to play an important role in communicating
ethical standards and using rewards and punishments to reinforce normatively
appropriate conduct (Treviño, Hartman, & Brown, 2000). In addition, senior management’s concern for ethics has been shown to influence an organization’s values
or compliance-oriented approach to ethics management and its integration of
ethics into everyday activities such as performance appraisals (Weaver, Treviño, &
Cochran, 1999a, 1999b). Leaders have also been found to influence employees’
ethical conduct. For example, employees’ perception that executives and supervisors
sincerely care about ethics has been associated with the amount of unethical conduct observed in the organization (Treviño, Weaver, Gibson, & Toffler, 1999).
However, despite this evidence suggesting that leaders “matter” when it comes to
organizational ethics, the specific role of leadership in influencing unethical behavior
in the workplace has yet to be fully explicated.
In this chapter, we explore theoretical reasons why leaders should play an
important role in influencing followers’ ethical and unethical behavior. Specifically,
we look at this relationship from cognitive moral development, social learning,
and social exchange perspectives. Next, we consider leadership styles and how
they have been linked to ethics in the leadership literature (e.g., transformational/
charismatic leadership). Next, we discuss our recent research on the development
of an ethical leadership construct. We conclude with recommendations for future
research. Why Leaders Are Important: Insights
From Cognitive Moral Development Theory
To understand why leaders are important for understanding ethical and unethical
behavior in organizations, we first turn to moral psychology and particularly to
cognitive moral development theory (Kohlberg, 1969). Kohlberg’s theory, widely
cited as the leading theory in the field of moral development, focuses on how
individuals reason through ethical dilemmas and how they decide what is right. 03-Kidwell.qxd 10/29/2004 10:23 AM Page 71 The Role of Leaders——71 Although Kohlberg studied the moral development of children and young adults,
his students (e.g., Rest, 1986) and others have studied adults in work settings.
According to Kohlberg (1969), people reason at six stages that can be understood
in terms of three broad levels: preconventional, conventional, and principled.
Preconventional individuals (the lowest level) are concerned with avoiding punishment and a “one hand washes the other” kind of reciprocation. Principled individuals (the highest level) make decisions autonomously by looking inside themselves
and are guided by principles of justice and rights. But we know from decades of
research that the large majority of adults reason at the conventional level of cognitive moral development (for summaries of research on moral development, see Rest,
1986; Rest, Narvaez, Bebeau, & Thoma, 1999; for a summary of research on moral
development in the professions, see Rest & Narvaez, 1994). Such conventional-level
individuals look outside themselves to rules and laws and to the expectations of significant others in their environments for guidance when determining the ethically
right thing to do. Because these conventional-level individuals represent the large
majority of workers, immediate supervisors should be among the most important
sources of moral guidance for these employees, and we can expect that they will look
to leaders for cues about what behavior is appropriate and inappropriate.
It is also important to note that moral reasoning has been associated with
ethical and unethical conduct in a number of studies. Individuals at the principled
level of moral development are less likely to engage in negative behaviors such as
cheating and stealing, whereas those at lower levels are more likely to engage in such
behaviors and are more susceptible to outside influences (e.g., Greenberg, 2002; for
a review, see Treviño, 1992). Although other outside influences, such as peers (ZeyFerrell & Ferrell, 1982; Zey-Ferrell, Weaver, & Ferrell, 1979), and formal organizational systems, such as ethics codes and training programs (Greenberg, 2002;
Treviño et al., 1999), affect ethical behavior, leaders should be a key source of
ethical guidance due to the authority role they play. In fact, leaders’ level of moral
reasoning has been shown to influence the moral reasoning used by group
members in their decision making (Dukerich, Nichols, Elm, & Vollrath, 1990), and
leadership style has been shown to influence conformity in ethical decision-making
frameworks in work groups (Schminke, Wells, Peyrefitte, & Sebora, 2002). The next
step, then, is to attempt to better understand some of the theoretical processes by
which leaders are likely to influence such behavior. How Leaders Influence Employee
Ethical and Unethical Behavior
We discuss several theoretical explanations for how leaders influence ethical and
unethical behavior. We offer a social learning perspective to suggest that leaders
influence ethical and unethical conduct through modeling processes, and we offer
a social exchange perspective to suggest that subordinates are likely to reciprocate
with positive behavior when they and their leaders are involved in relationships
that are based on admiration and trust. 03-Kidwell.qxd 10/29/2004 10:23 AM Page 72 72——MANAGING ORGANIZATIONAL DEVIANCE Social Learning
Social learning has been used to understand how leaders influence followers
more generally. House (1977), Bass (1985), and Kouzes and Posner (1987) all have
referred to role modeling as essential leader behavior. In particular, charismatic or
transformational leaders (discussed in detail later) are thought to influence followers, at least in part, through modeling and identification processes (Avolio, 1999;
Avolio, Bass, & Jung, 1999; Kelman, 1958).
A social learning perspective (Bandura, 1977) suggests that leaders influence
their followers by way of modeling processes. Modeling is acknowledged to be
one of the most powerful means for transmitting values, attitudes, and behaviors.
Employees learn what to do, as well as what not to do, by observing their leaders’
behavior and its consequences. Leaders are likely to be models by virtue of their
assigned role, their status and success in the organization, and their power to affect
the behavior and outcomes of followers.
Clearly, modeling by leaders can influence followers to be ethical or unethical.
Leaders who engage in unethical behaviors create a context supporting parallel
deviance (Kemper, 1966), meaning that employees observe and are likely to imitate
the inappropriate conduct. If leaders are observed “cooking the books,” enriching
themselves at the expense of others, or lying to customers or suppliers, followers
learn that such behavior is expected. If leaders are rewarded for unethical conduct,
the lesson for followers becomes particularly strong. Consider some chief executive
officers, such as WorldCom’s Bernie Ebbers and Enron’s Ken Lay, who were
celebrated by financial analysts and the media as exceptional executive leaders
who defied conventional wisdom as they continually surpassed Wall Street’s
short-term financial expectations. They were publicly hailed and financially
rewarded for achieving extraordinary financial outcomes, and no one seemed to
care what means they used to achieve those outcomes. We should not be surprised
to find that their subordinates followed their leads and became increasingly adept
at inventing new (and sometimes unethical) ways in which to contribute to these
outcomes.
Employees can also learn to be ethical by observing leaders who stand up for
doing what is right, especially if the leaders are successful in doing so. For example,
a chief executive who communicates with employees about a decision not to invest
in a highly corrupt foreign country because it would require employees to engage
in inappropriate behavior such as bribery is sending an important signal about
what is appropriate and expected of followers. Similarly, an executive who shuts
down machinery to ensure employee or product safety makes it clear that doing the
right thing is expected even if it means short-term losses.
Leaders’ power to influence may be particularly effective because leaders make
decisions about the rewards and punishments that are imposed on employees,
and followers learn vicariously by observing what happens to others. People in
organizations pay close attention to rewards and punishments (Arvey & Jones,
1985; Kanfer, 1990; Treviño, 1992), and these contribute to modeling effectiveness
because they are socially salient. Modeling theory argues that consequences 03-Kidwell.qxd 10/29/2004 10:23 AM Page 73 The Role of Leaders——73 (rewards and punishments) facilitate learning in an anticipatory and vicarious
manner. Consequences inform observers about the benefits of modeled ethical
behavior as well as about the negative effects of modeled inappropriate behavior.
So, not only are leaders role models themselves, but they also make others
into models by rewarding appropriate conduct and disciplining inappropriate
conduct (Gini, 1998; Treviño, Brown, & Hartman, 2003). This seems especially
important to the management of unethical conduct. We would not want every
employee to have to personally experience punishment for inappropriate conduct
so as to learn that such behavior is unacceptable. By observing how other employees are rewarded and punished, many employees can learn these important lessons
vicariously.
Relying on justice and social learning theories, Treviño (1992) emphasized the
key social implications of punishment in organizations. Discipline sends powerful
signals about the value of organizational norms and leaders’ willingness to stand
behind them. Employees who are trying to do the right thing expect misconduct
to be punished harshly, and they are disappointed if it is not. For example, if an
employee who downloads pornography to his office computer is quickly terminated, other employees will get the clear message that such behavior will not
be tolerated and that rules against it are being enforced in the organization.
Employees’ sense of retributive justice (Hogan & Emler, 1981) will be satisfied
(Treviño, 1992; Treviño & Ball, 1992), and they will be less likely to engage in such
behavior themselves. However, if such behavior is allowed to continue, employees
will question management’s sincerity and whether the organization’s rules mean
what they say.
Similarly, vicarious rewards can send powerful messages supporting ethical
or unethical conduct. If an employee who pulled the handle to stop a potentially
dangerous machine from harming a coworker is celebrated for his or her caring,
observers learn that such behavior is appropriate, expected, and appreciated in the
organization. Alternatively, if that same employee is punished because stopping the
machine means missing short-term production quotas, employees will learn that
short-term production quotas are more important than employee safety and that
they are expected to behave accordingly. Finally, if a salesperson who is known to
lie to customers is made “Salesperson of the Year,” given a fat bonus, and sent on a
Hawaiian vacation, employees will learn that lying to customers is rewarded,
making such behavior more likely. Thus, employees are susceptible to leaders’
influence to engage in appropriate or inappropriate behavior by learning from the
leaders’ own modeling of such behavior and by learning vicariously from how other
employees’ behavior is rewarded and punished.
The social learning approach suggests a mostly instrumental understanding of
what drives unethical behavior in organizations. It argues that because of leaders’
authority role and the power to reward and punish, employees will pay attention to
and mimic leaders’ behavior, and they will do what is rewarded and avoid doing
what is punished in the organization. The rewards and punishments need not be
direct but also can be learned vicariously by observing how others in the organization are rewarded and disciplined. 03-Kidwell.qxd 10/29/2004 10:23 AM Page 74 74——MANAGING ORGANIZATIONAL DEVIANCE Social Exchange
Instrumental exchange is not the only way in which leaders can influence
followers’ ethical and unethical behavior. The quality of the interpersonal treatment
that employees receive from leaders is also likely to be an important factor.
Typically, high-quality leader–employee relationships are characterized as social
exchanges as opposed to transactional ones. According to Blau (1964), transactional
exchanges are characterized by quid pro quo logic and are governed by contract
so that all terms and obligations are specified in advance and are enforceable by
third parties. As a result, obligations governed by transactional exchange have a
contractual tone and do not depend on trust between the parties. In a transactional
exchange relationship, a supervisor relies on legitimate power to influence employees through the use of rewards or punishments, and employees can be expected to
perform their duties as directed but to do little more.
In contrast, social exchange relationships entail future obligations that are
unspecified and are enforced by norms of reciprocity (Gouldner, 1960). Without
the protection of contractually specified obligations, the perceived trustworthiness
of the partners and the fairness of the exchange become important for developing
and maintaining lasting relationships. With social exchange, the obligation to reciprocate is voluntary (i.e., not contractually specified), and the benefits obtained
may be nonmonetary. The rewards exchanged may be spontaneous (e.g., attraction,
gratitude, respect). In addition, individuals in social exchange relationships tend to
identify with the other parties in the exchange relationships. Parties engage in social
exchange willingly, and reputation plays an important role in ensuring that the
norms of fairness governing the exchange are not violated. Although the risks of
exploitation and one-sidedness are high, a social exchange relationship develops
over time with increased trust (Whitener, Brodt, Korsgaard, & Werner, 1998) and
can be mutually beneficial for the parties involved as well as for the larger organization in which they work. Typically, leaders engage in both social and transactional
exchanges with subordinates (Bass, 1985). Studies have shown that these two
dimensions are strongly correlated (Avolio, 1999), although the dimensions can
lead to different outcomes. Perceived Fairness
Perceived fairness is particularly important for the development of a social
exchange relationship (Konovsky & Pugh, 1994), especially in the context of a
leader–subordinate relationship (Pillai, Schriesheim, & Williams, 1999). When
employees believe that they are treated fairly in a social exchange relationship
(Konovsky & Pugh, 1994), they are motivated to give more of themselves—
affectively, cognitively, and/or behaviorally—in support of their supervisor and the
group or organization that he or she represents. Fair treatment engenders satisfaction and loyalty among employees, making it less likely they will be motivated to
harm their supervisor, group, or organization.
Social exchange is closely linked to both procedural and interactional fairness
(Moorman, Blakely & Niehoff, 1998; Pillai et al., 1999). Interactional fairness refers 03-Kidwell.qxd 10/29/2004 10:23 AM Page 75 The Role of Leaders——75 to employees’ perceptions of the degree to which they are treated with respect and
dignity by authority figures (Bies & Moag, 1986). Perceived interactional justice
should be particularly important to the development of a social exchange relationship between supervisors and subordinates because supervisors interact with their
subordinates and make decisions that affect them every day. Although immediate
supervisors may have little impact on the development of organizational procedures (procedural justice), they are likely the most important influence on employees’ perceptions of whether the employees are treated with dignity and respect in
the organization. When leaders treat employees well, they initiate social exchange
processes, creating a sense of obligation among subordinates and motivating them
to reciprocate. Subordinates may reciprocate by way of organizational citizenship
behaviors, particularly those aimed at their supervisor (Malatesta & Byrne, 1997;
Masterson, Lewis-McClear, Goldman, & Taylor, 2000; Niehoff & Moorman, 1993;
Wayne, Shore, Bommer, & Tetrick, 2002), or by refraining from behaviors aimed at
harming their leader, work group, or organization.
Alternatively, perceived unfair treatment can provoke strong negative reactions
from employees. Greenberg (1990) found that employees reacted to perceived
unfair pay cuts and interpersonally insensitive explanations from management by
stealing from the organization, just one of many studies that have linked perceived
unfairness with counterproductive employee behaviors (Konovsky, 2000). In
response to perceived injustice, employees may engage in interpersonal and organizationally directed retaliation, including sabotage (Ambrose, Seabright, &
Schminke, 2002; Bennett & Robinson, 2000; Robinson & Bennett, 1997; Treviño &
Weaver, 2001) in an attempt to rebalance the scales of justice. One might expect an
employee to target the source of the injustice, but an employee will be unlikely to
retaliate against a leader overtly because such retaliation will most likely lead to formal sanction or punishment. Instead, we expect that employee retaliation will be
covert and broader, including behaviors such as falsifying expense reports, abusing
sick time, lying to the supervisor, and misusing company time and other resources.
Research has found that unfair treatment by an individual, especially by a supervisor, can result in retaliation against either the person or the organization as a whole
(Ambrose et al., 2002; Rupp & Cropanzano, 2002). Trust in Supervisor
Social exchange relationships between leaders and followers are built on trust.
Trust in leaders is especially important for employees due to their weak and subordinate positions relative to their supervisors (Kramer, 1999). Furthermore, leaders
influence important outcomes such as pay, promotion, and satisfying work conditions. Employees face uncertainty about these outcomes and whether their leaders
will allocate them fairly (Kramer, 1996). Furthermore, employees are dependent
on their supervisors as representatives of higher organizational authority. When
employees trust their leaders, the employees are more willing to engage in voluntary behaviors that benefit the organization (Podsakoff, MacKenzie, Paine, &
Bachrach, 2000). A recent meta-analysis found that employees’ trust in their leaders was associated with many positive outcomes (Dirks & Ferrin, 2002), including 03-Kidwell.qxd 10/29/2004 10:23 AM Page 76 76——MANAGING ORGANIZATIONAL DEVIANCE citizenship behaviors (Konovsky & Pugh, 1994) such as altruism, civic virtue,
conscientiousness, courtesy, and sportsmanship as well as job satisfaction and
satisfaction with their leaders. We can think of citizenship behaviors (which help
the work group and organization) as representing the opposite of organizationally
and interpersonally harmful behaviors. Therefore, as citizenship behaviors increase,
unethical behaviors should decrease. Negative outcomes should be lower if employees trust their leaders because, as argued earlier, the leaders represent the organization to direct reports. Furthermore, although trust has been found to be more
strongly related to work attitudes than to job performance (Dirks & Ferrin, 2002),
the relationship of trust with unethical employee behaviors is likely to be strong
because, theoretically, trust is more closely related to such behaviors than to more
general job performance. Liking and Affection for Supervisor
The leader–member exchange literature has focused on the importance of highquality relationships between employees and their leader (Dansereau, Graen, &
Haga, 1975; Graen & Cashman, 1975). In this literature, high-quality relationships
are frequently characterized by employee liking and admiration of their leader
(Schriesheim, Castro, & Cogliser, 1999). When employees have a high-quality relationship with their manager, they have been found to be less likely to engage in
retaliation (Liden, Sparrowe, & Wayne, 1997). Alternatively, when employees have a
poor exchange relationship with their supervisor, negative outcomes can result
(Fairhurst, 1993). Some have argued that if employees dislike or are frustrated with
a supervisor, they will retaliate in surreptitious ways by harming the organization
through sabotage or by being aggressive with coworkers (Fairhurst, 1993; Liden
et al., 1997; Zahn & Wolf, 1981). Again, we expect that employees will be less likely
to engage in overt retaliation against a supervisor who they dislike because doing so
would most likely lead to formal sanction or punishment. Rather, such frustration
and dislike for a supervisor is likely to lead to covert (i.e., “behind-the-back”) harmful behaviors aimed at coworkers or the organization (Bennett & Robinson, 2000). Leadership Styles and
Employee Ethical/Unethical Behavior
Now that we know something about the theoretical processes that are important
to leaders’ influence on followers’ ethical and unethical behavior, we turn to the
leadership literature to see what it can tell us about this relationship. Transformational and Charismatic Leadership
The organizational leadership literature has addressed leadership’s moral
dimension primarily through the transformational and charismatic leadership
dimensions (Kanungo & Mendonca, 1996). In the broader leadership literature, 03-Kidwell.qxd 10/29/2004 10:23 A...
Attachments: