Impact of ethical leadership on organizational commitment & productivity in India.

AuthorSaini, Damini
PositionReport - Abstract


Repetitive incidents of frauds and scams in the large corporate houses and industries have made researchers, practitioners and academicians to reflect upon the prevalent leadership styles and practices and to find the missing link. The top executives of corporate organizations contributed to the recent credit crisis by resorting to fraudulent decisions that artificially inflated profits to increase compensation (Bello, 2012). For instance, WorldCom's Bernie Ebbers; Ken Lay, Andrew Fastow and Jeffrey Skilling of Enron; Dennis Koslowski of Tyco and Ramalinga Raju of Satyam, are some leaders, who led their organizations to financial scandals (Shirur, 2011). Hence, it is important to guide managers by articulating and communicating unambiguously regarding what is right and what is not (Maheshwari & Ganesh, 2006). They must decide concerning what is "right" or ethical to do. That is one of the reasons why the emphasis upon ethical behavior in organizations is quite noticeable over the recent years. Ethical behavior in business is a complex interaction of organizational factors, personality characteristics, and societal information signs which have a positive effect on long-term profitability (Herndon, Fraedrich & Yeh, 2001). Such a perceived ethical context should prompt positive employee attitudes that reflect greater contentedness with job tasks, duties, and responsibilities (Hunt, Wood, & Chonko, 1989). Consequently, developing an ethical environment should be a key approach for enhancing employees' connections with work and positive employee attitudes and behaviors are impending signs of increased job performance (Tanner, Brugger, Van Schie & Lebherz, 2010). Despite these, ethical leadership and job attitudes are interrelated and still subject to investigation in different settings. Consequently, this study investigated the impact of ethical leadership on perceived productivity of organization. In addition, the relationships between ethical leadership, positive job attitude (organizational commitment) and productivity were explored in a separate partial mediated model.

Leadership & Ethics

Upadhyay & Singh (2010) concluded that leadership is the most important factor to implement ethical policies in the organization. Marcy, Gentry and McKinnon (2008) recommended that a leader should nourish a specific strategy to virtuously influencing the followers. In the literature available one can find the innumerable definitions of leadership. Leadership in the organizational context is defined as, "ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organizations of which they are members" (House, Wright & Aditya, 1997:184). This definition is almost the crux of the different leadership definitions in general.

Often, due to the conflicting interests of diverse stakeholders, managers in organizations face the dilemma of recognizing the righteous decision as perceived by the stakeholders. "Ethics" in simplest terms means moral conduct for living a 'good' life in a 'good' society (Singh, 2001:9). More specifically, Poulton (2005:4) demarcated ethics as, "a societal discussion of what ought to be considered for overall human well-being, including the broader concepts of fairness, justice and injustice, what rights and responsibilities are oper-able under certain situations, and what virtues a society admires and wants to emphasize.

In order to face the dilemma of identifying the righteous decision due to conflicting interests of different stakeholders, then to guide by articulating and communicating clearly, concerning what is right and what is not, appropriate structures and policies are required (Maheshwari& Ganesh 2006). These guiding policies come under business ethics. It emerges from a series of ethical discussions that began in the early 1970s in the United States about the social responsibilities of business (Green & Donovan, 2010).Business ethics examines ethical principles and moral or ethical problems that arise in a business environment (Solomon, 1991). According to De George (2011:16), "Business Ethics as a field is defined by the interaction of ethics and business. Business ethics is as national, international or global as business itself, and no arbitrary geographical boundaries limit it". When the leader demonstrates the morality in actions the employees follow the blueprints and organization also gets recognition for its ethicality towards society. The related perspective phenomenon of ethicality carries the prominence in creating an ethically strong business atmosphere for sustainable social and economic growth.

Ethical Leadership

Leaders are the most renowned faces of the organization, wear the crown of success and bear the responsibility of failures on their shoulders (Saini & Singh-Sengupta, 2016). Matters like having power on enduring matters, determining the organization policies, control over rewards and punishments, influencing employees put leadership into a responsible zone. For this reason ethically sensitive leaders are needed in time of financial crises, global injustice, climatic change, cultural insensitivity, employee racial and sexual discrimination and in the period of corporate financial irregularities (Bello, 2012).

An ethical leader is a person with "right values" and "strong character" that set examples for others and withstand temptations (Freeman & Stewart, 2006:2).Furthermore, Trevino and Brown (2005:80) specified that ethical leaders are likely to influence their followers to engage in ethical conduct and to refrain from unethical conduct by way of multiple processes that rely on both transformational and transactional approaches to leadership. More precisely the term was defined by Brown, Trevino and Harrison (2005:120) as "Demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement and, decision-making".

This earlier dialogue about ethical leaders show that they clearly give messages to their followers about the expected behavior, and it is also consistent with the social learning and social exchange perspective (Trevino & Brown, 2005). Thomas Aquinas (as cited in Knights & O'Leary, 2006) suggested that all moral questions will lead to a virtue analysis, leading back to character and organizationally ethical leadership includes a deliberated scheduling process so that polices decision making processes, consultation, accountability and ethical standard and ongoing assessment and monitoring are in place to ensure ethical practice by the leader and the follower.

Organizational Commitment

Organizational commitment has been demarcated and measured in several methods. "Attitudinal organizational commitment is the strength of an individual's identification with, and involvement in, a particular organization (Leong, Furnham & Cooper, 1996)."Further Ongori (2007) described...

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