Attributes of Ethical Leadership in Leading Good Governance

By Othman, Zaleha; Rahman, Rashidah Abdul | International Journal of Business and Society, June 2014 | Go to article overview

Attributes of Ethical Leadership in Leading Good Governance


Othman, Zaleha, Rahman, Rashidah Abdul, International Journal of Business and Society


ABSTRACT

The aim of this study is to present a practical and rational perspective of corporate governance. Specifically, this study explores the concept of ethical leadership in relation to corporate governance. It introduces morality as a core element in creating good governance practices, starting from the premise that corporate governance is subjective. We must therefore consider the social reality in which corporate governance is based. As such, inquiry about the social reality is required. Based on that premise, qualitative methodology is employed to gather views about the concept of ethical leadership in the context of corporate governance. The socially constructed reality of this study is represented by individuals who were categorised as experts and corporations known to have a high standard of corporate governance. Views from the subjects about ethics in the perspective of corporate governance were gathered. Content analysis was used to analyse the data. Triangulation techniques of data collection were adopted to provide richness and thickness to the data. Interviews, document analysis and observations were used to understand the reality of the research issue. Triangulation techniques support the validation and reliability of data. The research found several ethical leadership attributes that are essential to guide corporate governance practices. They are fundamental elements that have emerged from the data. This paper develops a framework around the dimensions of ethical leadership relative to the Malaysian business environment. The paper advances an understanding of ethical leadership in the Malaysian business environment and offers an agenda for future research in the corporate governance field.

Keywords: Corporate Governance; Ethics; Qualitative; Ethical Leadership; Ethical Culture; Ethical Structure; Ethical Management.

1. INTRODUCTION

Corporate governance is about leadership. As stated in the Kings Report (2002) corporate governance is essentially associated with leadership. The report specifically emphasized the power of leadership in connection with the governance of a corporation, and described it as being about efficiency, probity, responsibility, transparency and accountability. With such traits one would predict the leaders to show exemplary corporate governance practices.

Prediction aside, there are claims linking the survival of a system with leadership. A good leader leads an organization transparently, and sets a good example at all levels of governance (Nnablife, 2010). Also, due to their significant influence in governing corporations, leaders are expected to make ethical decisions (Banerji and Krishnan, 2000). Banerji and Krishnan (2000) also noted the importance of leader beliefs, values, visions and actions that set the tone and standard of governance in corporations. Specifically, leaders are said to influence ethical choice (Banerji and Krishnan, 2000). On top of all this, it is also suggested that ethical corporations depend on the values and moral principles held by individuals, in particular the leaders, in the corporations (Ferrell, Fraedrich and Ferrell, 2000).

The question is, do we see the above traits in 21st century leadership? What we observe in the last two decades is that the credibility of leaders is constantly being scrutinized and questioned. The many infamous stories of corporate scandals reflect the contradicting appeal of leaders. In the cases of Enron, Tyco, and most recently Olympus, unethical leadership was linked to their poor governance practices.

The question is how do we create ethical leadership that can direct and control corporations towards good governance? Abundant literature has been examined the importance of ethical leadership, yet there is no single clear link between ethical leadership and good governance practices. In order to fill the lacuna in understanding this issue, this study attempts to explore aspects of ethical leadership in the context of corporate governance. …

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