Yuhyung Shin (2012) , "CEO Ethical Leadership, Ethical Climate, Climate Strength,and Collective Organizational Citizenship Behavior", Journal of Business Ethics; Jul2012, Vol. 108 Issue 3, p299-312, 14p.Web Accessed June 20.
Recent downturns in the economy ,subsequent to collapse of major corporations owing to unethical practices by top management,point to the reality that an organization's success is not dependent solely on their pursuit of profitability . A company's continued economic success also depends on how well the company is functioning in harmony with its stakeholders, and a sense of belonging can arise only when employees have a shared commitment and value positive interactions with all stakeholders. The author of the paper " CEO Ethical Leadership, Ethical Climate, Climate Strength, and Collective Organizational Citizenship Behavior" , Yuhyung Shin, defines the relationship between the Chief Operating Officer (CEO) ethical leadership and ethical climate. He also explores the moderating effect of climate strength ,defined as agreement in climate perceptions, on the relationship between ethical climate and collective organizational citizenship behavior(OCB).
Among the theories the study draws from, the Carlson and Perrewe (1995) work on "Institutionalization of organizational ethics through transformational leadership" which provides the premise that CEOs set the standards for ethical norms and practices of a company. Another important theory ,among others that the study is based on is the theory of organizational climate (Ozcelik et al. 2008; Walumbwa et al. 2010) . Additionally , the study conducts hypotheses on the two dimensions of OCB , categorized previously as " interpersonally directed OCB" (OCBI) and "organizationally directed OCB" (OCBO) (Williams and Anderson 1991).
The study is developed via hypothesis testing based on a firm based analysis , using self-report data collected from Chief Operating Officers from 223 companies from varying sizes and industries and across 6,021 employees, all from South Korea.
The first hypothesis uses hierarchical regression analysis to establish the positive relationship between the ethical leadership of the CEO and ethical climate. The second hypothesis proposes that the relationship between ethical climate and collective OCBI is higher when ethical climate is higher than when it is low .Extending this to OCBO ,the third hypothesis proposes that a similar pattern exists for OCBO as well and that ethical climate positively correlates with collective OCBO.
While considerable research has been done in the field of ethical climate ,this study is the first to establish an empirical relationship between the ethical leadership of the CEO and ethical climate .One of the key findings of the paper is that it goes beyond individual ethical considerations to a more comprehensive theory of ethics by defining this relationship between ethical climate and CEO , collective OCB and climate strength.
It is also of considerable significance that impact of ethical leadership on an organization in an emerging market is to such a tangible degree, since corruption and unethical practices are seemingly more widespread in these markets compared to those of developed countries.
However ,the author does point out the limitations of the paper in that it is based on self report data ,which may be subject to some bias. Additionally, the findings are based on the shared perceptions of employees which can also be subjective. Although further work may be needed to extend this study based on what some would perceive an inadequate sample size of Korean employees before a generalized implementation, the study nevertheless, has some direct and useful practical applications. Firstly , since the positive relationship between CEO's and the ethical climate is well established, it would prompt the company to either hire an ethical CEO or alternately adopt rigorous training on ethics for CEOs .Furthermore ,the author rightly points out that it can act as a catalyst for CEOs to undertake proactive measures on building higher ethical standards in addition to profitability targeting initiatives.
References :
Yuhyung
Shin (2012) , "CEO Ethical Leadership, Ethical Climate, Climate
Strength,and Collective Organizational Citizenship Behavior", Journal of Business Ethics; Jul2012, Vol. 108 Issue 3, p299-312, 14p
Carlson, D. S., & Perrewe, P. L. (1995). Institutionalization of organizational ethics through transformational leadership. Journal of Business Ethics, 14, 829–838.
Ozcelik, H., Langton, N., & Aldrich, H. (2008). Doing well and doing good: The relationship between leadership practices that facilitate a positive emotional climate and organizational performance. Journal of Managerial Psychology, 23(2), 186–203.
Walumbwa, F. O., Hartnell, C. A., & Oke, A. (2010). Servant leadership, procedural justice climate, service climate, employee attitudes, and organizational citizenship behavior: A cross-level investigation. Journal of Applied Psychology, 95(3), 517–529.
I think your first paragraph points out a very interesting point about that the paper made. The fact that a company is profitable will not make them successful if this is shouldered on unethical behavior. I think we have all seen similar situations here in the state with such companies as Enron, WorldCom, etc… these are prime example where CEOs were engaged in unethical behavior. Another interesting point that was brought up was how Ethics of the CEO do not seem to play such a large role in emerging markets, does the paper elaborate on this? From my personal perspective it might be due in large part that governmental regulations in emerging markets are more lax and there might be a higher degree of government corruption.
ReplyDeleteI think this would be an intersting article. In an ethics class that I had we talked alot about the "tone at the top." This suggest that if the CEO and other executives show a lack of ethics or any other characteristic that are important to the success of a company, then that behavior will be passed all the way down the chain of command. I agree that there is more to being a successful business than simply turning a large profit. As the past has shown through companies such as Enron and WorldCom, cheaters never win. Eventually the wrong doings will catch up to you.
ReplyDeleteThank you for your comments .
ReplyDeleteI agree with both Mark and Jason .The paper points out to a crucial element that goes into setting the ethical tone of the company .
@Jason - I was curious about emerging markets as well . However this paper does not really have a detailed discussion on that front . I did however read a little bit on this from this paper which discussed this very issue - " Business ethics in emerging markets: Evidence from Mongolia " ( Tae-Hee Choi, Boldmaa Zuzaan , 2011 )
http://www.rljae.org/article.asp?issn=2013-8393;year=2011;volume=1;issue=2;spage=89;epage=120;aulast=Choi
Interestingly, maturity of markets certainly seems to have a significant impact on ethical behavior of management.
Hi there! this is such an informative post. Thank you for sharing. Cheers!
ReplyDelete- The family business governance