This chapter reveals the role of ethical leadership in ethical organizations, thus illustrating the theoretical and practical overviews of ethical leadership, organizational ethical culture, and organizational ethical climate; the significance of organizational ethical climate in organizational performance; and the significance of ethical leadership and organizational ethical culture in ethical organizations. The utilization of ethical leadership is crucial for ethical organizations that seek to serve suppliers and customers, increase business performance, strengthen competitiveness, and achieve continuous success in global business. Therefore, it is essential for ethical organizations to explore their ethical leadership applications, promote a strategic plan to systematically evaluate their practical advancements, and urgently respond to the ethical leadership needs of organizational members in ethical organizations. Applying ethical leadership in ethical organizations will greatly improve organizational performance and reach business goals in the social media age.
TopBackground
Ethical issues have been implicitly analyzed as part of cultural characteristics or institutional arrangements (Thorne & Saunders, 2002). Ethics is the foundation for effective leadership (Green & McCann, 2011). Ethics has received a growing interest among leadership and management researchers (Ciulla & Forsyth, 2011; Howard, 2010; Kujala, Lamsa, & Penttila, 2011). Ethical concerns are an important area in business practices and research endeavors in the field of organizational chain management (Svensson & Wood, 2011). Ethics is becoming an element of required business school curricula (Friedland, 2012).
Leadership is a developmental process, which is based on the type of choice that a leader makes (Mostovicz, Kakabadse, & Kakabadse, 2009). Ethical leadership is recognized as the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision making (Brown, Trevino, & Harrison, 2005). Social learning theory suggests that consequences (rewards and punishment) facilitate learning in an anticipatory manner (Bandura, 1986).
Research on organizational ethical context is primarily represented within two constructs: organizational ethical culture and organizational ethical climate (Kaptein, 2008; Trevino & Weaver, 2003). Organizational ethical culture is defined as those aspects and conventions of organizational behavior that either encourage the organization to operate in a sustainable way or deter it from doing so (Kaptein, 2008; Trevino & Weaver, 2003). Organizational ethical climate is viewed as those perceptions and aspects that determine what constitutes ethical conduct (Victor & Cullen, 1988).