The Association Between Ethical Leadership and Employee Outcomes - the Malaysian Case

Abstract

The topic of ethical leadership has received significant attention in recent years due to the plethora of corporate scandals both in the US and other countries. The shocking financial irregularities that have been uncovered in the executive suites of former Wall Street darlings like Tyco International, WorldCom, Adelphia, HealthSouth, and Enron and more recently Transmile in the case of Malaysia, bring to fore the need for ethical leadership more than ever before. The common thread underlying these corporate scandals is the failure of corporate leadership to demonstrate ethical leadership and its consequent negative impact on employee outcomes. However, despite its theoretical and practical significance, empirical research on the ethical dimensions of leadership and leaders’ ethical behaviour on employees’ level of commitment to their organization is lacking, more so in the case of Malaysia. Hence, this paper investigates the association between ethical leadership behaviour and employee outcomes. This study attempts to explore the impact of ethical leadership behaviour on employee attitudinal outcomes such as employees’ organizational commitment and trust in leaders. The study uses primary data collected from 172 intermediate managerial level employees from the corporate sector in Malaysia. Results indicate that ethical leadership behaviour has a positive impact on employee organizational commitment and employee trust in leaders. The study provides empirical support for the theorized notion that ethical leadership behaviour is positively associated with employees’ organizational commitment. This study also provides empirical support for the theorized notion that ethical leadership behaviour is positively associated with employees’ trust in leaders.