Academic journal article Journal of East European Management Studies

The Impact of Leaders' Ethical Behavior on Certain Individual and Organizational Effects: The Serbian Case *

Academic journal article Journal of East European Management Studies

The Impact of Leaders' Ethical Behavior on Certain Individual and Organizational Effects: The Serbian Case *

Article excerpt

1 Introduction

In recent years, people have been talking more and more about leadership, and ethical leadership is being encouraged because of the significant number of scandals which have arisen as the consequence of the unethical behavior of leaders (Kalshoven/Den Hartog 2009). Such scandals have attracted both the attention of the public and researchers addressing the issue of ethical leadership. In addition, the ethical behavior of leaders is placed on the priority list of organizations, primarily due to the strong impact on the trust and reputation of an organi- zation and its leaders (KalshovenlDen Hartog/De Hoogh 2011; Mendonca 2001), which significantly affects the recruitment of new employees (Ogunfowora 2014).

Organizations have begnn a program of ethics and integrity in order to prevent the occurrence of scandals in the future (Resick/Hanges/Dickson/Mitchelson 2006). The same authors state that the incidence of unpleasant events has resulted in raised awareness and public attention, but also the development of the need for research into ethical leadership in different cultures. According to (Resick et al. 2006), studies dealing with diversity in cultures show that there is a likelihood of the various aspects of ethical leadership being viewed as a contribution or an obstacle to efficient management. The business practice accepted in one country may be contrary to the Code of Ethics or way of doing business in other countries (Resick et al. 2006; Jackson 2001).

Production and profitability usually stand out as the primary goals of the leader. However, on the other hand, leaders also have a responsibility to ensure standards about moral and ethical behavior (Resick et al. 2006; Cullen/Victor! Stephens,1989). Authors Resick et al. (2006) suggest that the responsibility of leaders to ensure ethical and moral leadership is not a new concept, but a topic of discussion that is centuries old. However, the number of empirical studies of ethical leadership behavior is limited, and up to date multilevel research is in this area is rare (Den Hartog/De Hoogh 2009). According to Daft (2011), in addition to their jobs, ethical leaders have to care for their employees, customers, suppliers, communities, and shareholders as well as themselves. It is clear that leaders' ethics has an impact on a number of organizational and business performances. Of particular importance to this work are the impacts of leaders' ethics on job satisfaction, organizational commitment and financial performance.

Job satisfaction is largely dependent on the leaders' ethics. Having ethical leaders who take care of the interests of their employees, thus establishing a spirit of openness and fairness in decision making, results in employees who trust and are satisfied with their leader. In this situation the employees are satisfied with the way the leader treats them, and the manner in which the leader punishes those who act wrongly. The employees' satisfaction with their leader has a positive effect on the commitment of the employees in the workplace, the level of their performance, and satisfaction with pay and promotion (Brown/Trevino! Harrison 2005; Dirks/Ferrin 2002). Numerous studies show that the job satisfaction of employees is higher if the level of leaders' ethics is higher (Yates 2014; Ghahroodi/Zulkifli bin Tan Sri Mohd Ghazali/Ghorban 2013; Kim/Brymer 2011; Kalshoven et al. 2011).

Organizational commitment is a topic that has attracted the attention of researchers who deal with the attitudes of employees towards work and employee behavior (Meyer/Stanley/Herscovitch/Topolnytsky 2002). The research results indicate that the level of leaders' ethics has an impact on the organizational commitment of employees, or some dimensions of commitment (Yates 2014; Ghahroodi et al. 2013; Kim/Brymer 2011; Zhu/May/Avolio 2004; Kalshoven et al. 2011). The results of a study about the relationship of ethical leadership and organizational commitment components show the positive influence of ethical behavior on the affective and normative component and the negative impact on the continuance component (Den Hartog/De Hoogh, 2009). …

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