Ethical leadership is defined 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, Treviño, & Harrison, 2005, p. 120). In proposing the theory of ethical leadership, Brown et al. (2005) suggested that ethical leadership behavior plays an important role in promoting enhanced employee attitudes and behaviors. In support, prior work has linked ethical leadership to prosocial and negatively deviant behaviors (e.g., Avey et al., 2010, Brown et al., 2005, Mayer et al., in press, Mayer et al., 2009 and Walumbwa and Schaubroeck, 2009).
However, relatively few studies have tested how and why ethical leadership relates to task performance, and if so, the mechanisms through which ethical leadership relates to task performance. An important exception is recent research by Piccolo, Greenbaum, Den Hartog, and Folger (2010) that examined the roles of task significance, autonomy, and effort in the relationship between ethical leadership and task performance. Piccolo et al. (2010) found that ethical leadership increases task significance, which, in turn, results in improved performance. Accordingly, the primary goal of the present research is to extend this early and more recent research by examining the role of leader–member exchange (LMX) as a social exchange process, self-efficacy as a social learning process, and organizational identification as a social identity process in the ethical leadership–performance relationship.
Leader–member exchange is defined as the quality of exchange between a supervisor and an employee ( Graen & Scandura, 1987). These exchanges are posited to fall along a continuum. For example, leaders may form high-quality social exchanges that are based on trust, open communication, information sharing, and liking of followers, whereas with others, they may form lower-quality, economic exchanges that do not extend beyond the employment contract ( Erdogan et al., 2006 and Sparrowe and Liden, 1997). Self-efficacy is defined as individuals’ perceptions of their ability to execute a specific task and is a major component of social learning theory ( Bandura, 1977, Bandura, 1986 and Bandura, 1997). Organizational identification refers to a feeling of oneness or belongingness to a particular group or institution ( Smidts et al., 2001, van Knippenberg et al., 2004, van Knippenberg et al., 2002 and van Knippenberg and van Schie, 2000), and is derived primarily from social identity theory ( Tajfel, 1981). Together, we argue that the reason why ethical leadership predicts performance is that ethical leadership behavior enhances high-quality LMX, employees’ self-efficacy, and identification with the organization. In turn, high-quality LMX, self-efficacy, and organizational identification improve employee performance.
Our contribution is to further increase understanding of the complex relationship between ethical leadership and employee performance by drawing on three major traditions in testing mediation in leadership research. We view identification and self-efficacy as representing two major themes in self and identity (i.e., self-construal and self-evaluation) perspectives as mediators. Additionally, LMX represents both the social exchange and trust perspectives as psychological states that mediate the ethical leadership effect on follower performance. Until now, the ethical leadership literature focused solely on social learning and social exchange explanations for the effects of ethical leadership. Thus, we contribute to the ethical leadership literature by integrating social identity theory and including organizational identification in our theoretical model. However, some research regarding social exchange and social identity suggests that LMX and identification may not be independent influences. For example, Sluss, Klimchak, and Holmes (2008) argued that LMX and perceived organizational support are precursors to identification, suggesting that identification mediates the influence of LMX. Similarly, van Knippenberg, van Dick, and Tavares (2007; see also Hogg et al., 2005) argued that identification and LMX may interact in predicting performance. Specifically, van Knippenberg et al. (2007) found that supervisor and organizational support interact with identification such that social exchange becomes less important with higher identification. However, to our knowledge, we are aware of no prior research that has simultaneously tested these perspectives to explain the influence of leadership on employee performance. Building on and extending the above research, we believe it is worthwhile to draw from the distinct advantages of each perspective to provide a more comprehensive understanding of the underlying mechanisms that link ethical leadership to follower performance.
Attention to the mediating mechanisms in the ethical leadership–follower performance relationship also highlights important practical benefits. For example, if research can specify the proximal processes through which ethical leadership works to increase performance, it could provide organizations with a framework to enhance performance through ethical leadership training. Finally, research on ethical leadership has not been conducted in China. Considering its rapid industrialization and the increased diversity in values held by Chinese people (Xie, Schaubroeck, & Lam, 2008), China provides an ideal setting for extending ethical leadership research and its practical utility.
