Essay: Impact of Ethical Leadership on Innovative Work Behavior – A conceptual framework

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  • Impact of Ethical Leadership on Innovative Work Behavior – A conceptual framework
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Abstract

Innovative Work Behavior forms a crucial source for gaining competitive advantage and its development gives a dominant challenge which is faced by several organizations. In this paper positive role of Ethical Leadership (at individual and collective levels) is proposed to positively impact Innovative work Behavior by employing the theory of decomposed planned behavior. We argue that Ethical Leadership with its focus on Fairness , Power sharing, Role Clarification, People Orientation, Integrity, Ethical Guidance and Concern for sustainability positively strengthens an individual’s positive job attitudes, subjective norms and perceived behavioral controls by affecting the underlying behavioral, normative and control beliefs. In proposing a holistic and multi-level framework linking EL (at individual and collective levels) with Innovative Work Behavior, this paper contributes to both, Positive attitudes and EL literatures. Besides that the components of Ethical Leadership are highlighted, also a comparison of it with other leadership style has been made. The importance of such an article comes at a time when ethical practices or lack thereof seems to be increasingly prevalent in many organizations’ execution and hampering growth of innovation. At the end we have discussed the theoretical and practical implications of the proposed model.

Key words: Decomposed theory of planned behavior, Ethical leadership, Innovative work behavior.

INTRODUCTION

“Ethics is at the heart of leadership” (Ciulla, 2004, p. 8), therefore leaders devoid of ethics may contribute to corporate collapse with inevitable and disastrous social consequences.

Recent past provides plethora of cases of unethical practices carried out by various firms. There has been an increase in the importance attached to corporate social responsibilities and business ethics due to which leaders are more than ever required to act ethically. As a result, ethical leadership has become an area of interest for both academicians and practitioners in the past decade. One question that is frequently asked by managers, employees, students, and the general public at large is that what impact does leadership have on the behavior of the followers?

In the existing literature a huge number of scholars have theoretically and empirically investigated its impact on employees’ work attitudes and behavior and established that ethical leadership was an effectual predictor of job satisfaction, Organization commitment, innovative work behavior, and organizational citizenship behavior (Brown et al. 2005, Brown and Trevin˜o2006) however the relationship of ethical leadership on employee outcomes still remains unexplored. Ethical leadership as a different leadership construct has been presented previously (Brown et al., 2005), but till date only few empirical studies have explored the relationship between ethical leadership and positive job outcomes, the construct being relatively new. Given that empirical investigation on ethical leadership is still in its nascent stage, a number of significant questions remain unanswered. This research focuses on – What are the components of Ethical Leadership and how does it relate to important employee behaviours? Brown and Treviño (2006b) put forward it as a boulevard of future research. In light of the above, the main purpose of this research is to shed light on the construct of ethical leadership by reviewing the relevant literature, and put forward how it relates to positive job outcomes such as Innovative Work Behaviour and Job Involvement.

In this paper the focus is on the transcendental aspects affecting IWB by proposing a linkage between Ethical Leadership (at individual and organizational levels) and intentions to innovate. The article is organized as follows-The first section deals with the prominent literature on EL and IWB highlighting components of EL and differentiating it with other forms of leadership. The next section delineates the Decomposed Theory of Planned Behavior as the basis to investigate the relationship between EL and intentions to innovate. Later on, a conceptual framework along with a set of propositions is outlined. The end section presents a summary of the key arguments, contributions and a discussion of possible ways forward.

RESEARCH GAPS

In particular, this study examines two research gaps: the first gap is that Ethical leadership as a potential predictor has received very little attention; there is need to highlight its components, second very little emphasis has been placed on examining the relationship of Ethical leadership on Innovative work behavior. To this end, we may need an integrated approach, wherein both Ethical leadership and Innovative work behavior are part of. This study endeavors to bridge these gaps by proposing a model, employing the theory of decomposed of decomposed planned behavior where both Ethical leadership and innovative work behavior are considered.

OBJECTIVES

The objectives of the paper include providing components of the construct of Ethical Leadership,

Second objective is to describe an ethical leader’s personality also differentiating it from other forms of leadership.

Furthermore objective is to propose a model showcasing the positive role of Ethical Leadership (at individual and collective levels) on intention to innovate by employing the theory of decomposed planned behavior

LITERATURE REVIEW

Ethical Leadership

Leadership can be defined as an art of persuading a follower to want to do the things, activities, as per the goals set by the leader. The role of leaders is therefore in the process of directing the individual’s behavior towards a desired goal. Leaders differ based on the individual leadership style that develops from individual’s personality characteristics. The literature indicates that personal qualities such as integrity would be significant to perceptions of leadership effectiveness. For instance survey research has associated perceived leader effectiveness with perceptions regarding the leader’s honesty, integrity, and trustworthiness (Posner & Schmidt, 1992, Kouzes & Posner, 1993, Den Hartog et al., 1999). Spiritual values and practices related to leadership effectiveness. The Leadership Cognitive trust has been linked with effective approaches of leadership as well (Dirks & Ferrin, 2002). Building on this, Treviño et al. (2003) carried out an exploratory research premeditated to recognize what the term ethical leadership means to immediate observers of executives. In the course of structured interviews with twenty senior executives and twenty compliance officers in a multiple industries, the researchers asked informants to imagine about an ethical leader to whom they were well-known, and answer the broad questions related to the characteristics, behaviors, and motives of that leader.

Leading ethically is about enquiring and asking questions about what is right and what is wrong, developing a mode of conduct and setting the example for followers and others about the rightness or wrongness of particular actions. Ethical leadership as described by Brown et al. (2005) differs from other forms of leadership such, such as transformational (Burns, 1978), authentic (Luthans & Avolio 2003), and spiritual (Fry, 2003) leadership. Without a doubt all of these forms of leadership consist of attributes such as fairness, integrity, trustworthiness, concern for others etc. However, these attributes depict only a part of ethical leadership. A second significant feature of ethical leadership, termed by Treviño et al. as the moral manager, highlight more on the transactional efforts to influence follower’s ethical behaviour. Brown et al. (2005) presented a new conceptualization of ethical leadership and identified three important building blocks of ethical leadership. The building blocks are-1.Being an example of ethicality. 2. Treating people with fairness and 3. Managing morality. The first two building blocks are revealed in being the moral person component of ethical leadership in which ethical leaders have enviable qualities such as being fair and trustworthy. The last building block deals with the moral manager component in which ethical leaders support normative behavior and put off unethical behavior on the part of their subordinates (Brown and Treviño 2006a).

Ethical leadership is also expected to have an effect on subordinates in the course of social exchange processes (Blau, 1964). Social exchange stands on the norm of reciprocity (Gouldner, 1960), which states that if one exchange partner does something beneficial for the other, that generates a responsibility to give in return good faith behavior. Ethical leadership differs from other forms of leadership .One way it diverges from other leadership styles is that while some theories of leadership such as transformational leadership contain an ethical component the focus on ethics is subsidiary and denotes only one aspect of the leadership style. In disparity, ethical leadership focuses solely and explicitly on the ethical aspect of leadership. One more way in which ethical leadership differs from related leadership constructs is that it emphasizes not only the traits such as integrity, concern for others, being just etc of ethical leaders it also draws on social learning theory (Bandura, 1977, 1986) which states that people learn from modeling the behavior of attractive role models.

Dimensions / Components of Ethical Leadership

Literature review of the ethical leadership literature suggests that there are several behavioral dimensions of ethical leadership in organizations. For considering dimensions we have build on work by Brown and Treviño as well as others as theoretical bases for differentiating these behaviors. Three dimensions of ethical leadership (i.e., fairness, power sharing, and role clarification) were distinguished by De Hoogh and Den Hartog (2008) this related the content dimensions by Brown et al. (2005). Besides fairness, power sharing and role clarification, we have also included people oriented behavior, integrity, ethical guidance, and concern for sustainability as other dimensions found in the ethical leader behavior literature. Considering the work of De Hoogh and Den Hartog (2008), we have included the first three dimensions as fairness, power sharing and role clarification. Which are also reflected in the work by Brown et al. (2005).

Fairness is seen as imperative form of ethical leader behavior. Ethical leaders treat others in fair manner. They do not practice favoritism and are trust worthy and honest. They also take responsibility for their own actions (Brown et al., 2005; De Hoogh &Den Hartog, 2008; Treviño et al., 2003). Second, power sharing is also an ethical leader behavior. Ethical leaders involve subordinates in decision making and listen to their ideas and concerns. Resicket al. (2006) mentions empowering the employees which is also an aspect of ethical leadership. Similarly, Brown et al. (2005) suggest that ethical leaders provide followers with voice. Sharing power allows subordinates more control and makes them less dependent on their leaders (Yukl, 2006). Third, ethical leaders are transparent and engage in open communication (Brown et al., 2005). Similar to this DeHoogh and Den Hartog (2008) refer to the importance of transparency in clarifying performance goals and expectations and mark role clarification as a very essential component of ethical leadership. Ethical leaders elucidate responsibilities, expectations, and performance goals, so that subordinates’ know what is expected from them and understand when their performance is up to par. There is no unnecessarily worry about unclear expectations and knowing how to meaningfully contribute to achieving organization’s goals.

Theoretical background also highlights additional ethical leader behaviors.-An important one is having a true concern for people or being people oriented. This aspect is one of the most frequently mentioned facet of ethical leadership in Treviño et al.’s (2003) qualitative study. People-oriented feature of Ethical leaders is also described by Resick et al. (2006). It is all about genuinely caring about, respecting, and assisting subordinates and where possible ensuring that their needs are met (Treviño et al., 2003). Integrity is practiced by leaders fulfilling their promises (i.e., word-deed alignment) and being fair with consistent behavior. Ethical guidance is the manner by which leaders impart about ethics, explain ethical rules, and encourage and reward ethical conduct among employees. Concern for sustainability is about environmental orientation that encloses how leaders pay attention to sustainability issues, make sure the development of other members in the environment takes place, and consider the effect of actions beyond self-interest and caring about the welfare of the society.

As summarized in table I, Ethical Leadership is conceptualized as comprising seven dimensions, namely – Fairness , Power sharing, Role Clarification, People Orientation, Integrity, Ethical Guidance and Concern for sustainability.

Table 1 : Components of Ethical Leadership taken from Literature

Transformational, spiritual, and authentic leadership-Similarities and Differences with Ethical Leadership

This section includes a brief discussion of majorly three leadership theories that seem to overlap the ethical leadership domain-Transformational, spiritual and authentic theories of leadership deal with the moral prospective of leadership in some way.

Transformational Leadership-Bass (1985) suggested that depending upon the motivation transformational leaders could be ethical or unethical. Bass & Steidlmeier (1999) further took this position and distinguished between authentic and pseudo transformational leadership styles. There is overlap between Transformational leadership and ethical leadership relating their focus on personal characteristics. Both type of leaders concern about others, act always with their moral principles (i.e. integrity), consider the ethical results of their decisions, and are ethical role models for others. Although theory and research propose that ethical leadership and transformational leadership are also dissimilar constructs (Brown et al., 2005; Treviño et al., 2003). Authentic leaders are the ones who are deeply conscious of how they think and behave and are recognized by others as being conscious of their own and others’ moral perspective, knowledge, and strengths.

Authentic leadership

Similar to the transformational leadership authentic leadership emerge to overlap with ethical leadership predominantly in terms of individual features. Both the authentic as well as ethical leaders share social motivation. Both are reasonably principled leaders who think about the ethical consequences of their decisions.

Spiritual leadership

Spiritual leadership comprises of “the values, attitudes, and behaviours that are considered necessary to inherently motivate one’s self and others in order to develop a sense of spiritual survival through calling and membership” (Fry, 2003). Spiritual leadership has also been explained as direction taking place when an individual in a leadership position symbolizes spiritual values such as integrity, humility and honesty, creating the self as an example of someone who can be trusted, relied upon, and admired.

Table 2 : Similarities and Differences between EL and other leadership styles

Innovative work behaviour

Innovative work behaviour can be defined as the purposeful creation, introduction, and application of the new ideas within a work role, group or organization, in order to assist role performance, the group, or the organization”. Furthermore, he recommended that the Innovative work behaviour process consists of three main behavioural phases: idea generation, idea promotion, and idea realization (Janssen ,2004) .In order to initiate innovation, employees can create novel ideas by engaging themselves in actions to seek opportunities, discover the performance gaps, and generate useful solutions (Axtell et al., 2000; Basadur, 2004). Discontinuities and incongruities may be the source of new ideas – things that do not fit expected patterns, such as problems in existing working methods, unfulfilled needs of customers, or indications that trends may be changing. To initiate innovations employees can generate ideas by engaging in behaviours to explore opportunities, identify performance gaps or produce solutions for problems. Employees can play valuable role in the innovation process by engaging in the implementation phase demonstrating application-oriented behaviour, ex: employees who have a strong personal commitment to a particular idea may be able to convince others of its value. Employees can also devote considerable effort in initializing, testing and commercialising an idea. Several studies have inspected the role that leadership style and organizational climate plays in controlling the innovative behaviour of the employees (Oldham & Cummings, 1996). The studies established that when the organizational climate and the leadership style seem to be psychologically empowering and encouraging, together with open and transparent communication, innovative work behaviour was encouraged (Martins & Terblanche, 2003).

THEORY AND PROPOSED MODEL

In literature, the intention to innovate is explained keeping the basis of the theory of reasoned action (TRA), a socio-psychological theory proposed by Ajzen and Fishbein (1975), which stands on the assumption that actual behaviour is anticipated by the behavioural intention (BI) of the action (Pavlou & Fygenson, 2006). Intention is about an individual’s willingness to carry out the action and the extent of efforts an individual puts in while performing the action. Stronger the intention to perform the action stronger would be the likelihood of its execution (Ajzen, 1991).

Behavioural intention is affected by the attitude towards the behaviour of interest and the subjective norms (SN) of the referent group (Bock et al., 2005). As per Ajzen (1991), attitude towards behaviour gets affected by some behavioural beliefs that an individual has about the attributes of the behaviour or its outcomes. The more the value an individual attaches to the outcome of the behaviour stronger would be the behavioral beliefs.

Subjective norms are operated by normative beliefs (Chennamaneni et al., 2012), which hold an individual’s beliefs about the support or resistance applied by significant referent individuals or groups to perform the behaviour in focus (intention to innovate in this case) (Ajzen, 1991). ‘The influence of each normative belief is multiplied by individual’s motivation to act in accordance with the referent in question, and the subjective norm (SN) is directly proportional to the sum of the resulting products across the salient referents’ (Ajzen, 2002).

TRA was reassessed and got extended to the theory of planned behaviour (TPB) by addition of a third predictor to BI, which is perceived behavioural control (PBC) to defeat the volitional assumption underpinning TRA. PBC means an individual’s ‘perception of the control over performance of a behaviour’ (Ajzen, 2002).According to Taylor and Todd (1995) the decomposed theory of planned behaviour (DTPB) decomposes attitude, subjective norms and PBCs in order to highlight the related behavioural, normative and control belief structures forming the foundation of them, and the crossovers between the belief structures. In this paper DTPB is chosen because it focuses on specific beliefs structures and considers their crossover effects, which will build up the descriptive power of our proposed model.

In the following section, we have proposed a conceptual framework linking Ethical Leadership with Intention to innovate (see Figure 1). It is maintained that EL (at individual and collective levels) creates Fairness, Power sharing, Role Clarification, People Orientation, Integrity, Ethical Guidance and Concern for sustainability and thereby strengthen the underlying belief structures towards innovating.

Innovative Attitude

Behavioral

Beliefs

Beliefs

EL at Individual level

EL at Group level

Subjective Norms

IWB

Intention to Innovate

Normative

Beliefs

Beliefs

Perceived Behavioral Control

Control Beliefs

Figure 1 : Conceptual Framework exploring the Impact of EL on IWB using DTPB (We aim to explore the relationships marked in ‘Blue lines’.Linkages that are marked in ‘solid lines’ have been accepted and established earlier.)

Source: Authors’ own.

Several studies have empirically highlighted the existence of a positive relationship between ethical leadership and innovation behavior. These findings are consistent with the findings of Kalshoven, Hartog, and De Hoogh (2011) who found that ethical leadership plays critical role in influencing the behaviour of the employees towards being more innovative and did re-establish the encouraging influence of ethical leadership in influencing employees’ outlook and attitude in a positive way in the workplace. The positive relationship between ethical leadership and innovative behavior has lead to several suggestions such as when ethical leaders emphasize the outcomes of job on the organization, encourage open communication, promote people to take initiatives, give job autonomy, offer opportunities for workers to put across their views and contribute their opinions (Brown & Trevi~no, 2006), the followers reciprocate by innovative behavior in the workplace. Hence the following hypothesis have been formulated-

Hypothesis 2: Ethical leadership will be positively related to innovative work behaviour.

The dimensions of El at individual level and group level will positively affect the behavioral beliefs (of perceived joy and connectedness through Involvement) underpinning attitude for Innovation.

The dimensions of El at individual level and group level will positively affect the normative beliefs (of perceived joy and connectedness through Involvement) underpinning attitude for Innovation.

The dimensions of El at individual level and group level will positively affect the control beliefs (of perceived joy and connectedness through Involvement) underpinning attitude for Innovation

DISCUSSION AND IMPLICATION

The study is an attempt to propose an extension of ethical leadership literature into creating intention to innovate. A model has been proposed highlighting the role of ethical leadership in influencing innovative behaviour of employees. Innovation forms the basis of an organization’s success and performance, which resides primarily with the employees. Designing of systems and processes is necessary for organizations to succeed for this they need innovative workforce. Leaders high on ethical grounds tend to view life from a larger perspective characterized by unity and bonding with all. Such individuals tend to transcend the ‘me’ and ‘them’ distinction and show more helping behaviors (innovative in our case) that give them joy, fulfillment and connectedness with others. At a collective level, Ethical Leadership focuses on positive organizational values such as humanism, mutuality, respect among others, which create an environment and experience of meaningfulness, interconnectedness and camaraderie. In order to facilitate innovative behaviors, leaders must enrich experience of employees by providing an organizational climate identified by values like a sense of higher purpose, trust, humility, respect etc.

We encourage researchers to test the proposed framework empirically and investigate the proposed linkages in greater depth. A scale to measure Ethical Leadership in Indian context needs to be developed to to differentiate between leaders on ethical grounds. Further research is needed to assess other ways in which ethical leader behavior can be perceived as effective or have their lasting and positive impact on followers and ultimately the organization. Even though the significance of ethics and ethical leadership is well-understood and unquestionable, there is a requirement for policy measures for not only hiring ethical leaders but also promoting ethical leadership among employees. For it at the time of recruitment and selection only the ethical back ground could be utilized as an explicit criterion for assessing the potential candidates. In order to advance professionals for their future role as ethical leaders, there should be training on ethical leadership for the heads of departments and team leaders. Ethics should be one of the components of the training modules and courses. Besides it even the induction, orientation and socialization of new employees must strongly have an ethical orientation. For the internalization of the organizational value system role modeling, mentoring and frequent interaction with seniors could be encouraged . For the creation of ethical climate social learning theory could be applied by strategies such as mentoring, and ethics training .

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