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The Institute for Sustainable Leadership promotes the science and practice of sustainable leadership through research and education.

Sustainable leadership refers to those behaviours, practices and systems that create enduring value for all stakeholders of organisations including investors, the environment, other species, future generations and the community.

The honeybee provides inspiration for sustainable leadership. Honeybees are collaborative and add value throughout the eco-chain. They contrast with locusts that, under the right conditions, form huge swarms and self-destruct causing massive damage in the process. Organisational leaders can choose between these two models.

With a strong practical orientation, our models and frameworks have been developed from observations of best practice organisations based in different parts of the world. However, the principles of sustainable leadership are also well supported by evidence gathered by an international network of affiliated university collaborators, including masters and doctoral research students.

Research

We develop and publish scientific research into the theory and practice of sustainable leadership with the aim of helping practising managers.
We conduct two main kinds of research projects:
Academic research
Applied research.
We share the research results through training programs, publications and seminars.
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Conferences

ISL organises seminars and conferences for researchers and practitioners.
Our 2017 seminar covered 'Educational Strategy for a Sustainable Society’
This free event was hosted by Macquarie Graduate School of Management in Sydney and presented research on a remarkable change management project.
Find out more

Pioneering Minds

Listen online to this podcast. It’s a fascinating conversation on sustainable leadership, ISL’s work in Thailand and details on the new book.
Macquarie University have created a podcast of Prof. Gayle Avery being interviewed by Ben Mckelvey as part of Macquarie University’s Pioneering minds series.
Listen now

Newsletter

Keep up-to-date with all of ISL's activities by subscribing to our free ISL Newsletters. We send by email only and publish around 3-4 issues a year.
You can also read the current and past issues online.
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Latest News

Research tidbits: Making ethical decisions

Our selection of useful reading on making ethical decisions in business.

Ethical decision-making theory: an integrated approach 
Ethical decision-making (EDM) descriptive theoretical models often conflict with each other and typically lack comprehensiveness. To address this deficiency, a revised EDM model is proposed that consolidates and attempts to bridge together the varying and sometimes directly conflicting propositions and perspectives that have been advanced.

To do so, the paper is organized as follows:
First, a review of the various theoretical models of EDM is provided. These models can generally be divided into (a) rationalist-based (i.e., reason); and (b) non-rationalist-based (i.e., intuition and emotion).
Second, the proposed model, called ‘Integrated Ethical Decision Making,’ is introduced in order to fill the gaps and bridge the current divide in EDM theory. The individual and situational factors as well as the process of the proposed model are then described.
Third, the academic and managerial implications of the proposed model are discussed.
Finally, the limitations of the proposed model are presented.

Schwartz, M.S. 2016. Ethical Decision-Making Theory: An Integrated Approach.
Journal of Business Ethics, 139(4), 755–776.

 

Ethical competence: empathy, personal values, and the personality in ethical decision-making
The objective of the present research was two-fold: (1) to provide a new definition of ethical competence, and (2) to clarify the influence of empathy, personal values, and the five-factor model of personality on ethical competence.

The present research provides a comprehensive overview about recent approaches and empirically explores the interconnections of these constructs. 366 German undergraduate students were examined in a cross-sectional study that investigated the relationship of empathy, personal values, and the five-factor model of personality with moral judgment competence and counterproductive work behaviour as indicators of moral judgment and behaviour.

The authors found self-transcendence values to be related to both, high levels of empathy and ethical competence, in contrast to self-enhancement values. Multiple mediation analysis revealed unique effects of empathy on ethical competence through values as mediators. Affective (but not cognitive) empathy transmitted its effect on ethical competence through benevolence, conformity, tradition, power, and hedonism. Most importantly, perspective taking lost its predictive power when investigated alongside affective empathy dimensions.

These results converge to an important role of affective empathy, in particular empathic concern, with regard to personal values and ethical competence. Furthermore, the five-factor model of personality explained variance in measures of ethical competence. This research suggests that organizational decision makers should consider the role of empathy, personal values, and the five-factor model in their human resource management in order to select employees with high ethical competence.

Rico Pohling, Danilo Bzdok, Monika Eigenstetter, Siegfried  Stumpf & Anja Strobel. 2016. What is Ethical Competence? The Role of Empathy, Personal Values, and the Five-Factor Model of Personality in Ethical Decision-Making.
Journal of Business Ethics, 137(3), 449-474.

 

How can a deontological decision lead to moral behaviour?
Deontology and utilitarianism are two competing principles that guide our moral judgment. Recently, deontology is thought to be intuitive and is based on an error-prone and biased approach, whereas utilitarianism is relatively reflective and a suitable framework for making decision.

In this research, the authors explored the relationship among moral identity, moral decision, and moral behaviour to see how a preference for the deontological solution can lead to moral behaviour.

In study 1, a Web-based survey demonstrated that when making decisions, individuals who viewed themselves as moral people preferred deontological ideals to the utilitarian framework.

In study 2, the authors investigated the effect of moral identity and moral decision on moral behaviour in an experimental study. The results showed that when deontology was coupled with the motivational power of moral identity, individuals were most likely to behave morally.

Xu, Z.X. & Ma, H.K. 2016. How Can a Deontological Decision Lead to Moral Behavior? The Moderating Role of Moral Identity.
Journal of Business Ethics, 137(3): 537-549.

 

Mental models and ethical decision making: the mediating role of sensemaking 
The relationship between mental models and ethical decision making (EDM), along with the mechanisms through which mental models affect EDM, are not well understood. Using the sensemaking approach to EDM, the authors empirically tested the relationship of mental models (or knowledge representations about an ethical situation) to EDM.

Participants were asked to depict their mental models in response to an ethics case to reveal their understanding of the ethical dilemma, and then provide a response, along with a rationale, to a different ethical problem. Findings indicated that complexity of respondents’ mental models was related to EDM, and that this relationship was mediated by sensemaking processes (i.e., cause and constraint criticality, and forecast quality). The implications of these findings for improving integrity training in organizations, as well as ultimately understanding the role of mental models in EDM, are discussed.

Bagdasarov, Z., Johnson, J.F., Macdougall, A.E. Et Al. 2016. Mental models and ethical decision making: the mediating role of sensemaking. 
Journal of Business Ethics, 138(1), 133–144.

 

Board composition and corporate social responsibility: the role of diversity, gender, strategy and decision making 
This paper aims to critically review the existing literature on the relationship between corporate governance, in particular board diversity, and both corporate social responsibility (CSR) and corporate social responsibility reporting (CSRR) and to suggest some important avenues for future research in this field. Assuming that both CSR and CSRR are outcomes of boards’ decisions, this paper proposes that examining boards’ decision making processes with regard to CSR would provide more insight into the link between board diversity and CSR.

Particularly, the paper stresses the importance of studies linking gender diversity and CSR decision making processes, which is quite rare in the existing literature. It also highlights the importance of more qualitative methods and longitudinal studies for the development of understanding of the diversity–CSR relationship.

Rao, K. & Tilt, C. 2016. Board Composition and Corporate Social Responsibility: The Role of Diversity, Gender, Strategy and Decision Making.
Journal of Business Ethics, 138(2), 327–347.

 

Code of ethics and compliance 
Ethical codes have been hailed as an explicit vehicle for achieving more sustainable and defensible organizational practice. Nonetheless, when legal compliance and corporate governance codes are conflated, codes can be used to define organizational interests ostentatiously by stipulating norms for employee ethics. Such codes have a largely cosmetic and insurance function, acting subtly and strategically to control organizational risk management and protection.

In this paper, Adelstein and Clegg conduct a genealogical discourse analysis of a representative code of ethics from an international corporation to understand how management frames expectations of compliance. Their contribution is to articulate the problems inherent in codes of ethics, and the authors make some recommendations to address these to benefit both an organization and its employees. In this way, the authors show how a code of ethics can provide a foundation for ethical sustainability, while addressing management intentions and employees’ ethical satisfaction.

Adelstein, J. & Clegg, S. 2016. Code of Ethics: A Stratified Vehicle for Compliance.
Journal of Business Ethics, 138(1), 53–66.

Research tidbits: Leader characteristics

Some interesting articles we’ve been reading on leadership characteristics:

Ethical leadership: A meta-analytic review
A growing body of research suggests that follower perceptions of ethical leadership are associated with beneficial follower outcomes. However, some empirical researchers have found contradictory results. In this study, Bedi and colleagues use social learning and social exchange theories to test the relationship between ethical leadership and follower work outcomes.

Results suggest that ethical leadership is related positively to numerous follower outcomes such as perceptions of leader interactional fairness and follower ethical behaviour. Furthermore, the authors explore how ethical leadership relates to and is different from other leadership styles such as transformational and transactional leadership.

Results suggest that ethical leadership is positively associated with transformational leadership and the contingent reward dimension of transactional leadership. With respect to the moderators, the results show mixed evidence for publication bias. Finally, geographical locations of study samples moderated some of the relationships between ethical leadership and follower outcomes, and employee samples from public sector organisations showed stronger mean corrected correlations for ethical leadership–follower outcome relationships.

Bedi, A., Alpaslan, C.M. & Green, S. 2016. A Meta-analytic Review of Ethical Leadership Outcomes and Moderators.
Journal of Business Ethics, 139(3), 517–536.

 

How ethical leaders influence employee voice and exit intentions
Given the importance of voice in ethical leadership theory, Lam and colleagues analyse the relationship of ethical leadership to employee voice and the relationship of voice to exit intentions. Building on the theory of work engagement, the researchers further hypothesise that cognitive engagement mediates these proposed relationships.

To test these propositions, they conducted a field study to relate ethical leadership of supervisors, measured at time 1, to employees’ cognitive job engagement, measured at time 2. The analyses show that the relationship between these variables can account for supervisory ethical leadership’s association with employee voice and exit intentions. In a supplementary study using a different sample, the authors find that supervisory ethical leadership is related to exit intentions through voice. They discuss how these findings contribute to the literature on ethical leadership, employee voice, and exit.

Read the full text for free: Lam, L. W., Loi, R., Chan, K.W. and Liu, Y. 2016. Voice More and Stay Longer: How Ethical Leaders Influence Employee Voice and Exit Intentions.
Business Ethics Quarterly, 26(3), 277-300. 

 

Does leader corruption depend on power and testosterone?
Yes, according to Samuel Bendahan and his team. They used incentivized experimental games to manipulate leader power — the number of followers and the discretion leaders had to enforce their will. Leaders had complete autonomy in deciding payouts to themselves and their followers. Although leaders could make prosocial decisions to benefit the public good they could also abuse their power by invoking antisocial decisions, which reduced the total payouts to the group but increased the leaders’ earnings.

In Study 1 (N = 478), the researchers found that both amount of followers and discretionary choices independently predicted leader corruption. In Study 2 (N = 240), Bendahan et al. examined how power and individual differences (e.g., personality, hormones) affected leader corruption over time; power interacted with endogenous testosterone in predicting corruption, which was highest when leader power and baseline testosterone were both high. Honesty predicted initial level of leader antisocial decisions; however, honesty did not shield leaders from the corruptive effect of power.

Samuel Bendahan, Christian Zehnder, François P. Pralong, John Antonakis.  2015. Leader corruption depends on power and testosterone.
The Leadership Quarterly, 26(2), 101–122.

 

Born to lead? A twin design and genetic association study of leadership role occupancy 
Jan-Emmanuel De Neve and his colleagues addressed leadership emergence and the possibility that there is a partially innate predisposition to occupy a leadership role. Employing twin design methods on data from the National Longitudinal Study of Adolescent Health, they estimated the heritability of leadership role occupancy at 24%. Twin studies did not point to specific genes or neurological processes that might be involved. The researchers therefore also conducted association analysis on the available genetic markers.

The results showed that leadership role occupancy is associated with rs4950, a single nucleotide polymorphism (SNP) residing on a neuronal acetylcholine receptor gene (CHRNB3). They replicated this family-based genetic association result on an independent sample in the Framingham Heart Study. This is the first study to identify a specific genotype associated with the tendency to occupy a leadership position. The results suggest that what determines whether an individual occupies a leadership position is the complex product of genetic and environmental influences, with a particular role for rs4950.

Read this Open Access paper for free: Jan-Emmanuel De Neve, Slava Mikhaylov, Christopher T. Dawes, Nicholas A. Christakis, James H. Fowler.  2013. Born to lead? A twin design and genetic association study of leadership role occupancy.
The Leadership Quarterly, 24(1), 45–60.

 

Are male leaders penalised for seeking help?
This study draws on research derived from role congruity theory (RCT) and the status incongruity hypothesis (SIH) to test the prediction that male leaders who seek help will be evaluated as less competent than male leaders who do not seek help.

In a field setting, Study 1 showed that seeking help was negatively related to perceived competence for male (but not female) leaders. In an experimental setting, Study 2 showed that this effect was not moderated by leadership style (Study 2a) or a gender-specific context (Study 2b). Study 2b further showed that the cognitive tenets of RCT rather than the motivational view espoused by the SIH explained the findings. Specifically, leader typicality (perceptions of help seeking as an atypical behaviour for male leaders; the RCT view), and not leader weakness (a proscribed behaviour for male leaders; the SIH view), mediated the predicted moderation.

Ashleigh Shelby Rosettea, Jennifer S. Muellerb, R. David Lebel. 2015. Are male leaders penalized for seeking help? The influence of gender and asking behaviours on competence perceptions.
The Leadership Quarterly. 26(5), 749–762.

 

Mismeasuring psychopathy using Boddy’s PM-MRV?
Boddy and his colleagues have published several articles on “corporate psychopathy” using what they refer to as a Psychopathy Measure—Management Research Version (PM-MRV). They based this measure on the items that comprise the Interpersonal and Affective dimensions (Factor 1) of the Hare Psychopathy ChecklistRevised (PCL-R), a widely used copyrighted and controlled instrument.

The PM-MRV not only misspecifies the construct of psychopathy, but also serves as an example of the problems associated with an attempt to form a “new” scale by adapting items from a proprietary scale. The PCL-R measures a superordinate construct underpinned by four correlated dimensions or first-order factors, not just the two in the PM-MRV. The other two dimensions are Lifestyle and Antisocial, which together form Factor 2 of the PCL-R. As defined by the PCL-R, psychopathy requires high scores on both Factor 1 and Factor 2.

Lack of validity aside, even if the PM-MRV were to be a useful measure of Factor 1, it would not discriminate between psychopathy and other “dark personalities,” such as Machiavellianism and narcissism, which, along with psychopathy, form the Dark Triad. This lack of discrimination stems from the fact that each of these personalities shares features measured by Factor 1 and, by implication, by the PM-MRV. Research findings based on the PM-MRV may have some meaning with respect to dark personalities in general, but their relevance to psychopathy, as measured with the PCL-R, is tenuous at best.

Jones, D.N. & Hare, R.D. J 2016. The Mismeasure of Psychopathy: A Commentary on Boddy’s PM-MRV.
Journal of Business Ethics, 138(3), 579–588.

 

Authentic leadership as an antecedent of helping behaviour
Hirst and colleagues develop and test a trickle-down model of how authentic leadership at the department level flows down the organisational hierarchy to encourage team leader authentic leadership and consequently, promotes team and individual-level supervisor-directed helping behaviour.

Analyses of multi-level and multi-source data collected from a total of 487 employees comprising 122 teams, 47 departments, and 4 different working areas of a major public sector organisation in Taiwan show that team leaders’ authentic leadership mediates the relationship between departmental authentic leadership and individual-level leader–member exchange (LMX).

The researchers also found that intra-team trust completely mediates the influence of team authentic leadership on both team helping behaviour and individual-level supervisor-directed helping behaviour. Finally, the results reveal that self-concordance mediates the influence of team authentic leadership on individual-level supervisor helping behaviour as well as the influence of individual-level LMX on individual-level supervisor-directed helping behaviour. Theoretical and practical implications of these findings are discussed.

Hirst, G., Walumbwa, F., Aryee, S. et al. 2016. A Multi-level Investigation of Authentic Leadership as an Antecedent of Helping Behavior.
Journal of Business Ethics, 139(3), 485–499.

Research tidbits: The dark side of leadership

Here’s our latest pick of interesting articles considering the darker side of leadership.

Workplace Bullying: Considering the Interaction Between Individual and Work Environment
There has been increased interest in the “dark side” of organisational behaviour in recent decades. Workplace bullying, in particular, has received growing attention in the social sciences literature. However, this literature has lacked an integrated approach. More specifically, few studies have investigated causes at levels beyond the individual, such as the group or organisation.

Extending victim precipitation theory, Samnani and Singh present a conceptual model of workplace bullying incorporating factors at the individual-, dyadic-, group-, and organisational-levels.

Based on the authors’ theoretical model, a number of propositions are offered which emphasize an interactionist, multi-level approach. This approach provides a valuable stepping stone and framework to guide future empirical research. Theoretical and practical implications are discussed.

Samnani, AK. & Singh, P. 2016.  Workplace Bullying: Considering the Interaction Between Individual and Work Environment.
Journal of Business Ethics, 139(3), 537–549.

 

Antecedents of Abusive Supervision: a Meta-analytic Review
Recent studies of organisational behaviour have witnessed a growing interest in unethical leadership, leading to the development of abusive supervision research. Given the increasing interest in the causes of abusive supervision, this study proposes an organizing framework for its antecedents and tests it using meta analysis.

Based on an analysis of effect sizes drawn from 74 studies, comprising 30,063 participants, the relationship between abusive supervision and different antecedent categories are examined. The results generally support expected relationships across the four categories of abusive antecedents, including: supervisor related antecedents, organisation related antecedents, subordinate related antecedents, and demographic characteristics of both supervisors and subordinates.

In addition, possible moderators that can also influence the relationships between abusive supervision and its antecedents are also examined. The significance and implications of different level factors in explaining abusive supervision are discussed.

Zhang, Y. & Bednall, T.C. 2016. Antecedents of Abusive Supervision: a Meta-analytic Review.
Journal of Business Ethics, 139(3), 455–471. 

 
Political Connectedness, Corporate Governance, and Firm Performance
In this paper, Domadenik and colleagues present and test a theory of how political connectedness (often linked to political corruption) affects corporate governance and productive efficiency of firms. Their model predicts that underdeveloped democratic institutions that do not punish political corruption result in political connectedness of firms that in turn has a negative effect on performance.

The researchers test this prediction on an almost complete population of Slovenian joint-stock companies with 100 or more employees. Using the data on supervisory board structure, together with balance sheet and income statement data for 2000–2010, the authors show that a higher share of politically connected supervisory board members leads to lower productivity.

Domadenik, P., Prašnikar, J. & Svejnar, J. Political Connectedness, Corporate Governance, and Firm Performance.
Journal of Business Ethics, 139(2), 411–428.

 

Team conflict, politics and employee performance in China
The present study expands on the growing literature concerning organisational politics (OP) by assessing the impact of team-level OP on employee performance outcomes as well as investigating the degree to which these effects are mediated by team conflict.

The results, based on multilevel structural equation modelling with a sample of 349 employees from 78 firms in China, lent support for a cross-level mediating role for team conflict between political climate and employee performance. Further, moderator analyses demonstrated that political climate acted as a condition for task conflict to trigger relationship conflict.

Thus, the results of this study contribute to both the political climate literature and the conflict literature by clarifying the processes by which climate can influence employee performance.

Bai, Y., Han, G.H. & Harms, P.D. Team Conflict Mediates the Effects of Organizational Politics on Employee Performance: A Cross-Level Analysis in China.
Journal of Business Ethics, 139(1), 95–109.

 

Fraud in sustainability departments? 
While sustainability is largely associated with do-gooders, this article discusses whether and how fraud might also be an issue in sustainability departments. More specifically, transferring the concept of the fraud triangle to sustainability departments the author discusses possible pressures/incentives, opportunities, and rationalisations/attitudes for sustainability managers to commit fraud.

Based on interviews with sustainability and forensic practitioners, the findings suggest that sustainability managers face mounting pressure and have opportunities to manipulate due to an immature control environment. Whether a presumably morality-driven attitude may prevent them from committing and easily rationalizing fraud remains controversial. Even though cases of fraud happening in sustainability departments are still widely unknown, the interview analysis reveals that sustainability fraud is likely to occur at least to some extent—and presumably remains undetected.

The study brings to light the importance of a clear commitment from executives to sustainability to prevent sustainability fraud and demonstrates adverse developments driven by external stakeholders, specifically the bonus relevancy of sustainability index scores. In particular, the study shows a lack of awareness for potential fraud in sustainability departments.

Steinmeier, M. 2016. Fraud in Sustainability Departments? An Exploratory Study.
Journal of Business Ethics, 138(3), 477–492.

 

Corporate Social Responsibility in a dysfunctional institutional environment
Drawing on institutional and signalling theories, this study examines how environmental corporate social responsibility (ECSR) affects firm performance in a dysfunctional institutional environment. The authors extend the ECSR literature by suggesting that ECSR indirectly influences firm performance through the mediating effects of business and political legitimacy.

Based on a dataset of 238 firms in China, they find that ECSR affects business and political legitimacy followed by firm performance. Moreover, legal incompleteness weakens and legal inefficiency strengthens the effects of ECSR on business and political legitimacy.

Wei, Z., Shen, H., Zhou, K.Z. et al. 2017. How Does Environmental Corporate Social Responsibility Matter in a Dysfunctional Institutional Environment? Evidence from China. 
Journal of Business Ethics, 140(2), 209–223.

 

Joy of another’s misfortune: Schadenfreude
Despite growing interest in emotions, organisational scholars have largely ignored the moral emotion of schadenfreude, which refers to pleasure felt in response to another’s misfortune. As a socially undesirable emotion, it might be assumed that individuals would be hesitant to share their schadenfreude. In two experimental studies involving emotional responses to unethical behaviours, the authors find evidence to the contrary.

Study 1 revealed that subjects experiencing schadenfreude were willing to share their feelings, especially if the misfortune was perceived to be deserved (i.e., resulting from unethical behaviours).

Study 2 extends this work by incorporating schadenfreude targets of different status (CEO versus employee). Consistent with the “tall poppy syndrome,” subjects were more willing to share schadenfreude concerning high status targets than low status targets when the perceived severity of the target’s misconduct was low.

This status effect disappeared at higher levels of perceived deservingness, however. Reported willingness to share schadenfreude was strongest at these levels but did not differ significantly between high and low status targets. These findings build on the social functional account of emotions, suggesting that sharing schadenfreude may signal normative cues to others regarding workplace behaviours that are deemed to be unethical.

Dasborough, M. & Harvey, P. 2017. Schadenfreude: The (not so) Secret Joy of Another’s Misfortune.
Journal of Business Ethics, 141(4), 693–707.

Research tidbits: Stakeholder trust

Here’s our latest pick of interesting articles covering stakeholder trust.

Is fair treatment enough? Fairness and stakeholder behaviour 
Fairness and justice are core issues in stakeholder theory. Although such considerations receive more attention in the ‘normative’ branch of the stakeholder literature, they have critical implications for ‘instrumental’ stakeholder theory as well. In research in the instrumental vein, although the position has seldom been articulated in significant detail, a stakeholder’s inclination to take action against the firm or, conversely, to cooperate with it, is often taken to be a function of its perceptions concerning the fairness or unfairness (or equity or inequity) of the treatment it receives in its relationship with the firm. Thus, from various works in this domain can be distilled what might be termed a ‘fairness-based perspective on stakeholder behaviour’.

This perspective, as it currently stands, assumes a high degree of homogeneity in stakeholders’ responses to fair, unfair, or munificent treatment by the firm. This supposition is itself typically based on a presumption that stakeholders consistently and uniformly adhere to norms of equity and reciprocity in their relationships with firms. However, research developments in equity theory and social exchange theory suggest that such assumptions are likely untenable.

Accordingly, in this work, after outlining the fairness-based perspective on stakeholder behaviour, the author undertakes to augment it by presenting propositions concerning the possible influences of stakeholders’ equity preferences and exchange ideologies on their propensities to sanction or support the firm. Incorporating these stakeholder traits into the fairness-based perspective should enhance the predictive validity of its propositions concerning stakeholder behaviour in response to fairness or unfairness in the firm–stakeholder relationship.

Hayibor, S. 2017. Is fair treatment enough? Augmenting the fairness-based perspective on stakeholder behaviour.
Journal of Business Ethics, 140(1), 43–64. 

 

Managers’ moral obligation of fairness to (all) shareholders: Investors over others? 
Drawing on ethical principles of fairness and integrative social contracts theory, moral obligations of fair dealing exist between the firm and all shareholders. This study investigates empirically whether privileged investors of publicly traded firms engage in legal, but morally questionable, trading that at the expense of non-privileged institutional or atomistic investors.

In this context, the authors define privilege as the access to material, nonpublic earnings surprise information. The results show that the opportunity for procedural unfairness (e.g., the likelihood of an earnings surprise and information asymmetry) increases with the presence of privileged investors. However, this procedural unfairness does not appear to lead to distributive unfairness even though the level of abnormal trading also increases with the presence of privileged investors. That is, the findings suggest that other shareholders are in fact better off from an outcome perspective given that the abnormal stock price returns upon the announcement of an earnings surprise are either more positive (in response to a favourable surprise) or less negative (in the case of an unfavourable surprise) when the firm has a high proportion of privileged investors.

The researchers extract the important implications of their study for future research on the fairness of capital markets and information asymmetry amongst classes of investors, as well as for public policy.

Evans, J.D., Perrault, E. & Jones, T.A. 2017. Managers’ moral obligation of fairness to (all) shareholders: does information asymmetry benefit privileged investors at other shareholders’ expense?
Journal of Business Ethics, 140(1), 81–96. 

 

Consumer trust in green products: The case of organic food 
Consumer trust is a key prerequisite for establishing a market for credence goods, such as “green” products, especially when they are premium priced. This article reports research on exactly how, and how much, trust influences consumer decisions to buy new green products. It identifies consumer trust as a distinct volition factor influencing the likelihood that consumers will act on green intentions and strongly emphasizes the needs to manage consumer trust as a prerequisite for the development of a market for green products.

Specifically, based on a mixture of qualitative and quantitative methods, it is found that lack of consumer trust is a barrier for the development of a market for organic food in Thailand. Two focus groups and ten in-depth interviews revealed low knowledge about and low trust in organic food, certification, control, and labelling.

Further, a mall-intercept survey (N = 177) revealed that lack of (especially) system trust reduces consumer expectations about benefits of buying organic food, and it makes them less likely to buy organic food. Mistrust in the control system and in the authenticity of food sold as organic has a significant negative impact on self-reported buying behaviour. Implications for policy and future research are discussed.

Nuttavuthisit, K. & Thøgersen, J. 2017. The Importance of Consumer Trust for the Emergence of a Market for Green Products: The Case of Organic Food. 
Journal of Business Ethics, 140(2), 323–337.

 

Trust and distrust constructing unity and fragmentation of organisational culture 
While the coexistence of trust and distrust has been acknowledged in previous literature, the understanding of their connection with organisational culture is limited. This study examines how trust and distrust construct the unity and fragmentation of organisational culture.

Productive working relationships can be characterised by high trust, but strong ties and high trust may also account for false organisational unity. This study shows that trust and distrust can co-exist and distrust may even increase trust in particular situations. Moreover, Kujala, Lehtimäki and Pučėtaitė describe how the cognitive and affective components of trust and distrust relate to the unity and fragmentation of organisational culture. These authors present an empirical case study of a company where tension and distrust between top management, middle management and shop stewards affected the organisational culture.

The study contributes to earlier research by discussing trust as a multidimensional and dynamic phenomenon. The study shows how the affective and cognitive components of trust and distrust constitute the unity and fragmentation of organisational culture. The authors propose that if an organisation is willing to improve its ethics, it should rely on fragmentation rather than unity.

Kujala, J., Lehtimäki, H. & Pučėtaitė, R. 2016. Trust and Distrust Constructing Unity and Fragmentation of Organisational Culture. 
Journal of Business Ethics, 139(4), 701–716.

 

Are there benefits in third party employment branding like “best places to work”? 
Yes, according to Brian Dineen and David Allen. “Best Places to Work” (BPTW) and similar competitions are a proliferating form of third party employment branding. Little is known, however, about how single or repeated third party employment branding occurrences relate to key human capital outcomes. Extending signalling theory by considering signal credibility and comparability, Dineen and Allen use archival and survey data from 624 BPTW participants in 16 competitions across a three-year period to develop and test hypotheses linking BPTW certifications to collective turnover rates and key informant perceptions of applicant pool quality.

The researchers find that certifications are associated with lower turnover rates, and in addition, propose competing crystallisation and celebrity hypotheses that model turnover trajectories with repeated certifications, finding diminishing marginal turnover reductions across multiple certifications.

The authors also examine company size and industry job opening moderators, finding that as certifications increase, applicant pool quality is: (1) higher in smaller companies, and (2) higher when job openings are scarcer. Finally, beyond being certified or not, they find supplemental evidence for effects of the specific certification level achieved (e.g., 2nd versus 15th). This investigation advances theory related to collective turnover, applicant pool quality, and employment branding, and is relevant to company decisions about seeking or re-seeking third party certifications.

Brian R. Dineen & David G. Allen. 2016. Third Party Employment Branding: Human Capital Inflows and Outflows Following “Best Places to Work” Certifications.
Academy of Management Journal, 59(1), 90-112.

 

 

What’s behind employer branding – in addition to trust? 
This study reviewed and analysed the phenomenon of employer branding. It began with a review of recent research in employer branding. Next, drawing the theoretical knowledge from OB, HRM, and marketing, a framework is developed depicting the antecedents of employer branding and its impact on the company performance.

For this, primary data were collected administering a questionnaire survey on 347 top-level executives in 209 companies in India, and secondary data were collected on financial performance. The results revealed that realistic job previews, perceived organisational support, equity in reward administration, perceived organisational prestige, organisational trust, leadership of top management, psychological contract obligations, and corporate social responsibility influence employer branding, which in turn impact non-financial and financial performance of companies.

Furthermore, leadership of top management is the most potent predictor of employer branding. Greater deviation of the existing state from the ideal state of antecedents adversely affects employer branding. Management can use this framework for developing strategy towards implementation of employer branding.

Mukesh K. Biswas & Damodar Suar. 2016. Antecedents and Consequences of Employer Branding.
Journal of Business Ethics, 2016, 136(1), 57-72.

 

 

Greenwashing and a trust crisis among Chinese energy companies 
For many energy companies in China, green brand strategy is becoming an important approach to enhance competitive advantage. However, greenwashing behaviours result in a crisis of trust. Existing research focuses on green marketing, but is silent on the institutional view of the trust crisis resulting from greenwashing by energy brands. Thus, this study takes a decoupling perspective from institutional theory and considers legitimacy, energy policy management, and green brand theories to shed light on the path from the decoupling of an energy brand from green promise (DEBG) to green energy brand trust (GEBT) and the role of brand legitimacy and brand loyalty.

It then analyses survey data to conclude that DEBG not only has a direct negative effect on GEBT but also has an indirect influence through the vital mediating role of green energy brand legitimacy. Moreover, brand loyalty is a moderating factor and can alleviate the energy brand trust crisis. These findings not only can enrich the theories of energy brand management and green marketing but also offer important implications for energy policy management.

Guo, R., Tao, L., Li, C.B. et al. 2017. A Path Analysis of Greenwashing in a Trust Crisis Among Chinese Energy Companies: The Role of Brand Legitimacy and Brand Loyalty. 
Journal of Business Ethics, 140(3), 523–536.

Research tidbits: Moral values in leadership

Here’s our latest pick of interesting articles covering moral values in leadership.

 
How proximity affects moral reasoning
Wildermuth, De Mello e Souza and Kozitza report the results of an experiment designed to determine the effects of psychological proximity—proxied by awareness of pain (empathy) and friendship—on moral reasoning. Their study tests the hypotheses that a moral agent’s emphasis on justice decreases with proximity, while his/her emphasis on care increases. The study further examines how personality, gender, and managerial status affect the importance of care and justice in moral reasoning.

The authors find support for the main hypotheses. They also find that care should be split into two components, one related to protection (or compassion) and the other to the preservation of relationships. Although gender does not affect moral reasoning directly, they find that it does so indirectly via personality, controlling for age, professional status, and professional background.

The researchers do not find a significant effect of managerial status on ethics of justice, but do find that holding a managerial position has a negative impact on ethics of care. Regarding personality, they detect significant positive effects of conscientiousness on ethics of justice and of neuroticism on ethics of care.

Wildermuth, C., De Mello e Souza, C.A. & Kozitza, T. 2017. Circles of ethics: the impact of proximity on moral reasoning.
Journal of Business Ethics, 140(1), 17–42.

 

Servant leadership and the effect of the interaction between humility, action, and hierarchical power on follower engagement 
Servant leadership has been theorized as a model where the moral virtue of humility co-exists with action-driven behaviour. This article provides an empirical study that tests how these two apparently paradoxical aspects of servant leadership interact in generating follower engagement, while considering the hierarchical power of the leader as a contingency variable. Through a three-way moderation model, a study was conducted based on a sample of 232 people working in a diverse range of companies.

The first finding is that humble leaders showed the highest impact on follower engagement regardless of their hierarchical position. Less humble leaders in lower hierarchical positions seem to be able to compensate for that through a strong action-oriented leadership style. Most notably for leaders in high hierarchical positions, the moral virtue of humility seems to strengthen the impact of their action-oriented leadership the most. These findings provide empirical support and a better understanding of the interplay between the moral virtue of humility and the action-oriented behaviours of servant leadership.

Read the full article for free: Sousa, M. & van Dierendonck, D. 2017. Servant Leadership and the Effect of the Interaction Between Humility, Action, and Hierarchical Power on Follower Engagement.
Journal of Business Ethics, 141(1), 13–25. 

 

Ethical leadership and employee moral voice 
Despite the general expectation that ethical leadership fosters employees’ ethical behaviours, surprisingly little empirical effort has been made to verify this expected effect of ethical leadership. To address this research gap, Lee et al. examine the role of ethical leadership in relation to a direct ethical outcome of employees: moral voice. Focusing on how and when ethical leadership motivates employees to speak up about ethical issues, the authors propose that moral efficacy serves as a psychological mechanism underlying the relationship, and that leader–follower value congruence serves as a boundary condition for the effect of ethical leadership on moral efficacy.

They tested the proposed relationships with matched reports from 154 Korean white-collar employees and their immediate supervisors, collected at two different points in time. The results revealed that ethical leadership was positively related to moral voice, and moral efficacy mediated the relationship. Importantly, as the relationship between ethical leadership and moral efficacy depended on leader–follower value congruence, the mediated relationship was effective only under high leader–follower value congruence. Theoretical and practical implications are discussed.

Lee, D., Choi, Y., Youn, S. et al. 2017. Ethical Leadership and Employee Moral Voice: The Mediating Role of Moral Efficacy and the Moderating Role of Leader–Follower Value Congruence. 
Journal of Business Ethics, 141(1), 47–57.

 

Authentic leadership influences team performance via team reflexivity 
This study examines how authentic leadership influences team performance via the mediating mechanism of team reflexivity. Adopting a self-regulatory perspective, the authors propose that authentic leadership will predict the specific team regulatory process of reflexivity, which in turn will be associated with two outcomes of team performance, effectiveness and productivity.

Using survey data from 53 teams in three organisations in the United Kingdom and Greece and controlling for collective trust, Lyubovnikova et al.  found support for the stated hypotheses with results indicating a significant fully mediated relationship. As predicted the self-regulatory behaviours inherent in the process of authentic leadership served to collectively shape team behaviour, manifesting in the process of team reflexivity, which, in turn, positively predicted team performance.

The authors conclude with a discussion of how this study extends theoretical understanding of authentic leadership in relation to teamwork and delineate several practical implications for leaders and organisations.

Lyubovnikova, J., Legood, A., Turner, N. et al. 2017. How Authentic Leadership Influences Team Performance: The Mediating Role of Team Reflexivity. 
Journal of Business Ethics, 141(1), 59–70.

 

Mutual recognition respect between leaders and followers affects job performance and well-being 
There has been limited research investigating the effects of the recognition form of respect between leaders and their followers within the organisation literature. Clarke and Mahadi investigated whether mutual recognition respect was associated with follower job performance and well-being after controlling for measures of liking and appraisal respect.

Based on data collected from 203 matched leader–follower dyads in the Insurance industry in Malaysia, they found mutual recognition respect predicted both follower job performance and well-being. Significantly, appraisal respect was only found to be positively associated with job performance. These findings suggest mutual recognition respect is an important form of respect in workplace relationships that can bring benefits to both the individual and the organisation.

Clarke, N. & Mahadi, N. 2017. Mutual Recognition Respect Between Leaders and Followers: Its Relationship to Follower Job Performance and Well-Being. 
Journal of Business Ethics, 141(1), 163–178.

 

How do subordinates perceive pseudo-transformational leadership? 
Based on attribution theory, this research defines pseudo-transformational leadership to be driven by the interaction between transformational leadership and the subordinates’ perception of their supervisor’s manipulative intention. The researchers investigate the effects of pseudo-transformational leadership on contextual performance through organisational identification.

The results of hierarchical linear modelling using a sample of 214 subordinates reporting to 66 supervisors show that when subordinates perceive that their supervisor has a high level of manipulative intention, the impact of group-level transformational leadership on the subordinates will be reduced. More specifically, when subordinates perceive the manipulative intention of transformational leadership, they are less likely to identify with the organisation, which ultimately limits their willingness to demonstrate contextual performance activities. The implications of these findings for theory as well as managerial practice are discussed.

Lin, CS., Huang, PC., Chen, SJ. et al. 2017. Pseudo-transformational Leadership is in the Eyes of the Subordinates.
Journal of Business Ethics, 141(1), 179–190.

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