The Association Between Ethical

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EJBO Electronic Journal o Business Ethics and Organization Studies Vol. 14, No. 1 (2009)

21 http://ejbo.jyu.i/

The Association Between EthicalLeadership 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 fi-nancial 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 under-

lying these corporate scandals is

the failure of corporate leadershipto 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 asso-

ciation between ethical leadership

behaviour and employee outcomes.

This study attempts to explore the

impact of ethical leadership behav-

iour on employee attitudinal out-

comes such as employees organi-

zational 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 leader-

ship behaviour has a positive impact

on employee organizational commit-

ment and employee trust in leaders.

The study provides empirical support

for the theorized notion that ethical

leadership behaviour is positivelyassociated with employees organi-

zational commitment. This study also

provides empirical support for the

theorized notion that ethical leader-

ship behaviour is positively associat-

ed with employees trust in leaders.

Keywords

Ethical leadership, organizational

commitment, trust in leader

Cyril H. Ponnu

Girindra Tennakoon1. Introduction

With the increasing trend o commercialcrimes being committed in Malaysia, thequestion o ethical leadership has becomea heated issue, gaining attention o acad-emicians, managers, proprietors and evenpoliticians (Zabid & Alsago, 1993). Forinstance, rom 1997 to the year 1994, thetotal number o commercial crimes com-

mitted in the country has increased rom1,981 cases to 4,229 cases, which is an in-crease o 113% rom 1977. Moreover, thenumber o commercial crime cases hasalmost tripled between 1994 and 2003,with criminal breach o trust and misap-propriation o unds orming the bulko cases. In the year 2003, about 11,714cases were reported relative to 4,229 casesin 1994, and thus reporting an increase o491% rom 1977. The amount involved in-creased almost our-old, rom RM153.8

million in 1994 to RM570 million in2003 (Royal Malaysian Police, 2004).Stunningly, as per the latest reported g-ures in Malaysia Crime Watch (2007), inthe year 2006, commercial crime cases hasincreased rom 171,604 to 198,622 casescompared to year 2005, and thus account-ing or 10% o all reported crimes duringyear 2006.

The common thread underlying thesecorporate scandals/commercial crimesis the ailure o corporate leadership todemonstrate ethical leadership and its

consequent negative impact on employeeoutcomes. However, despite its theoreti-cal and practical signicance, empiricalresearch on the ethical dimensions oleadership and leaders ethical behav-iour on employees level o commitmentto their organization is lacking, more soin the case o Malaysia. In other words,though there have been studies that haveexamined the individual and group deter-minants o ethical leadership behavioursand the consequences o such ethical be-

haviours at the organizational level (Hol-mes, Langord, Welch & Welch, 2002;Honeycutt, Glassman, Zugelder, &Karande, 2001), how ethical leadershipinfuences individual behaviour or theemployees attitudinal outcomes has not


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been thoroughly explored, especially in the Asian context.Hence, this paper empirically examined the impact o ethi-

cal leadership behaviour on employee attitudinal outcomes suchas employees organizational commitment and trust in leaders.Thus, the three-old objectives o this study were to:

1. Measure employee perception o their leaders/immedi-ate authority gures in terms o ethical leadership behaviour.

2. Identiy the association between employee perceptiono their leaders ethical behaviour and employee commitment.

3. Identiy the association between employee perceptiono their leaders ethical behaviour and employee trust in the lead-er.

However, as this is the rst empirical study on the impact oethical leadership behaviour on employee outcomes in Malaysia,the researchers did not intend to set the parameters within aparticular industry. Thereore, this study was a cross sectionalstudy o the corporate sector in Malaysia. Further, in order todraw meaningul conclusions, the scope o the study was limitedto intermediate managerial level employees. Because character-istically, it is at this level that specic operational matters arisewhich may test the easibility o implementing general ethics

principles in particular instances. It is also within the group ordepartment that many o the interactions occur which governsemployees interpretation o what is or is not acceptable behav-iours.

Even though, a prior theoretical study (Zhu, May & Avolio,2004) has proposed an advanced conceptual model with twomoderating variables such as employee psychological empower-ment and authenticity o ethical leader behaviour, due to ewreasons, the researchers did not intend to test the role o suchmoderating variables in this study. Firstly, the proposed advancedmodel is a theoretical model, which has not been empiricallytested; secondly, this study is considered to be the rst empirical

study in Malaysia in this area, and lastly, due to the time con-straints within which the study should be completed.Hence, this paper explored only the impact o ethical lead-

ership behaviour on employee commitment and the trust inleader, which in turn contributes to organizational perormance.Thus, as this study was aimed to explore the impact on ethicalleadership behaviour on employee outcomes, the construct oethical leadership behaviour was considered as the independentvariable whereas employee organizational commitment and em-ployee trust in leader were considered as criterion variables.

2. Literature Review

2.1 Ethical Leadership BehaviourIn spite o the recent high prole corporate scandals that hasshaken the corporate world, evidence rom the empirical re-search suggests that the leaders are not as concerned about eth-ics as perhaps they should be. The Christian & Timbers surveyo 180 executives disclosed that only 13 percent o the big-com-pany top executives thought, having strong ethical values is themost important leadership needed by CEOs (Business Week,Sep. 12, 2005 as cited in Stango, 2006).

Brown, Trevino and Harrison (2005) has dened ethicalleadership as the demonstration o normatively appropriateconduct through personal actions and interpersonal relation-

ships, and the promotion o such conduct to ollowers throughtwo-way communication, reinorcement and, decision-making(pp.120). As per Brown et al (2005), the rst component o thisdenition, demonstration o normatively appropriate conductthrough personal actions and interpersonal relationships im-plies that leaders, who are perceived to be ethical, models con-

duct that ollowers consider to be normatively appropriate (e.g.,honesty, trustworthiness, airness and care), making the leader alegitimate and credible role model. The next part o the deni-tion, promotion o such conduct to ollowers through two-waycommunication suggests that ethical leaders not only drawattention to ethics and make it salient in the social environmentby explicitly talking to ollowers about it, but also provide ol-lowers with voice, a procedurally or interpersonally just process(Bass & Steidlmeier, 1999; Howell & Avolio, 1992 as cited inHolmes et al., 2002). The component o the reinorcementin the denition, implies that leaders who are perceived to beethical, set ethical standards, reward ethical conduct and disci-pline those who dont ollow the standards (Trevino, Brown &Hartman, 2003) contributing to vicarious learning. Further, thenal element o the denition that relates to decision-makingmirrors the act that ethical leaders are mindul o the ethicalconsequences o their decisions, and make principled and airchoices that can be ollowed by others (Howell & Avolio, 1992as cited in Holmes et al., 2002).

Similarly, Ciulla, (2004) [as cited in Resick et al 2006] ob-served that undamentally, ethical leadership involves leading

in a manner that respects the rights and dignity o others. Asleaders are by nature in a position o social power, Aronson(2001) pointed out that leaders are obligated to urnish a moralexample or their subordinates and to demarcate the constantstriving or increased prots rom those activities, which may bedetrimental to the values o the society in general. As Zhu et al(2004) contended leaders exhibit ethical behaviours when theyare doing what is morally right, just, and good, and when theysupport ollowers to elevate their ethical awareness and moralsel-actualization. As Butcher (1987) has noted the ethical be-haviour and leadership are intertwined and inseparable. Thus,leaders cannot shrink rom their obligations to set a moral ex-

ample or those they lead (Butcher, 1997; Enderle, 1987) Theymust draw the line between on the one hand, the perpetual pushor higher prots and on the other, actions antagonistic to thevalues o the larger society.

Put in another way, ethical leadership entails more than oster-ing o ethical behaviour. Butcher (1987) mentioned that, ethicalbusiness leadership requires not only investing in the small treesand experimental hybrids that wont yield a thing that in thisquarter or the next, but also caring or the soil that allows us toproduce such a harvest in the rst place (pp. 5-6). Thus, ethicalleaders must ocus more eort on creating the right conditionsand organizational culture, which is also the organizational soil,to oster the development o ethical behaviour than on building a

compliance inrastructure. In other words, they must make eth-ics the cornerstone o how they conduct business by practicingethical behaviour in their personal lie, in their business, and intheir relationships (Sims & Brinkmann 2002). Drucker (1974)quotes Hippocrates when presenting the minimal standard oethical behaviour or all managers in all business circumstances:Primum Non Nocere Above all, not knowingly do harm.(as cited in Cordeiro, 2003). In addition, many researches havedeveloped a list o acceptable and unacceptable behaviours ormanagers (Dalton & Cosier, 1982). Thus, in determining whatappear to characterize ethical leadership Resick et al (2006)ound that our components that characterize ethical leadership

in western societiesCharacter/Integrity, Altruism, CollectiveMotivation, and Encouragementare universally supported,and viewed as behaviours and characteristics that contribute to aperson being an eective leader across cultures. In the same vein,Goodpaster (1983) [as cited in Cordeiro, 2003], presented a listor managers that he calls moral common sense: avoid harm-


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ing others, respect the rights o others, do not lie or cheat, keeppromises and contracts, obey the law, prevent harm to others,help those in need, be air, and reinorce these imperatives inothers. In short, it can be said that ethical leaders emphasizethe importance o being perceived as having a people orienta-tion, as well the importance o engaging in visible ethical action(Trevino, Brown & Hartman, 2003).

2.2 Ethical Theories

More specically, ethics requires an individual to behave ac-cording to the rules o a moral philosophy with an emphasis onthe determination o right and wrong [Gundlach and Murphy,1993 as cited in Roman & Munuera (2005)]. Similarly, Hurley(1972) [as cited in Cordeiro, 2003] has dened ethics as a proc-ess by which individuals, social groups and societies evaluatetheir actions orm a perspective o moral principles and values(pp.265). Moreover, review o the literature in business ethicssignies that Frankena (1973) has outlined two o the majortheoretical perspectives in the ethics eldwhich are reerredto as deontological and teleological theories.

Deontology may be described as the theory or study o moral

obligation. The deontological perspective, according to Frank-ena (1973), states that what is morally right is not dependentupon producing the greatest level o good as opposed to evil,but rather is determined by characteristics o the behaviour it-sel. This perspective views it as our duty as human beings todo good to ourselves and to others. Alternatively, the teleologi-cal perspective emphasizes the outcomes or consequences o anaction when evaluating whether the act is moral. To Frankena(1973), the teleological perspective or the criterion o what isethically right is the nonmoral value that is created. Thereore,an act is moral i it is judged to produce a greater good over evilthat any other alternative, and is immoral i it does not do so.

Another perspective oten discussed in organizational andbehaviour and philosophy literature is the justice or airness oa decision (Weiss, 2003). There are two types o organizationaljusticedistributive and procedural. Distributive justice reersto the airness o a managerial decision based on the allocationo outcomes such as pay, rewards, recognition and promotionrelative to an employees input as well as retribution. Proceduraljustice addresses the impartiality o the methods relative inputrom employees regarding the standards used to make and applymanagerial decisions (George & Jones, 2006). In terms o theteleological versus deontological categorization discussed above,distributive justice may best be thought o as a teleological theo-ry o airness due to its ocus on outcomes, while procedural jus-

tice is best considered a deontological theory because o its ocuson the means o making decisions. Nevertheless, employees per-ception o one orm o justice may spillover to their perceptionso the other orm o justice [Lind (1992) and Lind, Kulik, Am-brose, and de Vera Park (1993) as cited in Zhu (2004)].

Hence, rom an applied management point o view, it is ex-pected that ethical leaders will treat their employees airly andin an unbiased and impartial manner, i.e. using both distribu-tive and procedural justice to guide their leadership behaviours.Because empirical evidence rom the organizational behaviourliterature shows that ollowers perception o being treated airlyaect both their job attitudes, such as satisaction and commit-

ment, and organizational outcomes (Dailey & Kirk, 1992; Koh& Boo, 2001).

2.3 Ethical Leadership Behaviour andEmployee Organizational Commitment

The concept o organizational commitment has grown in popu-

larity and received a great deal o attention in the organizationalbehaviour and industrial psychological literature (Mathieu &Zajac, 1990). It has been suggested that gaining a better under-standing o the individual, group and organizational processesthat are related to organizational commitment has signicantimplications or employees, organizations, and society (Mathieu& Zajac, 1990; Spreitzer, 1995, 1996; Mowday, Steers & Por-ter, 1979). Although, there is no clear relationship between in-dividual organizational commitment attitude (and subsequentbehaviour) and individual perormance, there is evidence o astrong relationship between the organization-wide level o em-ployee commitment and the perormance o an organization asa whole (Adams, 1965; Evans, 1977 as cited in Liang, 1987). Or-ganizational commitment o individual employees in the organi-zation is thereore important or the success and the continuityo an organization. Moreover, Buchanan (1974) reasoned thatemployee organizational commitment is important in the ab-sence o ownership as a motive or concern or the organizationwell being, the organization has to resort to deliberate creationand protection o committed elites.

As such, over the decades, the researches have developed a

plethora o denitions on the concept o employees organiza-tional commitment. However, in general, organizational com-mitment can be reerred to an individuals attachment to his orher organization, and is refected in the relative strength o theindividuals identication and involvement with it. ( Jaramillo,Mulki, and Marshall 2005 as cited in Jaramillo, Mulki & Solo-mon 2006). Denitions o commitment can be classied as atti-tudinal commitment or behavioural commitment (Staw, 1977).Thus, the concept o commitment has been used to describetwo quite dierent phenomena. More specically, commitmentas the process by which employees come to identiy with thegoals and values o the organization and desirous o maintain-

ing membership is termed as attitudinal commitment whereas,commitment as the process by which an individuals past behav-iour serves to bind him or her to the organization is termed asbehavioural commitment. Nevertheless, in this study, attitudinalcommitment as dened by Mowday et al (1979) is adopted. Itis dened as the relative strength o an individuals identicationwith and involvement in a particular organization. As such thisdenition encumbers three main actors such as: (1) A strongbelie in and acceptance o the organizations goals and values.(2) A willingness to exert considerable eort on behal o theorganization. (3) A strong desire to maintain membership in theorganization. Additionally, the anecdotal literature suggests thatthe antecedents o organizational commitment can be divided

into three broad categories: organizational actors, personal ac-tors and work experiences (Eby, Freeman, Rush & Lance, 1999;Meyer & Allen, 1997 and Mowday et al., 1982 as cited in Zhu2004). In that, Mowday et al. (1979) has indicated supervisionas one o the critical organizational actors that can infuenceemployee commitment to the organization.

In the leadership literature, a number o authors have suggest-ed creating an ethical climate/culture as one o the main respon-sibilities o a leader ( Jaramillo et al, 2006; Carrillo, 2005; Sims& Brinkmann, 2002; Minkes, Small & Chatterjee, 1999; Dat,2005). Similarly, Chen, Sawyers and Williams (1997) [as citedin Liang, 1987], has recommended that top executives must

live up to the ethical standards they are espousing and suggestethical behaviours in others. This position assumes that leader-ship can make a dierence in creating an ethical or unethicalorganizational climate. More specically, it is the leaders o theorganization, who play the dominant role in creating and main-taining climates regarding ethics. In addition, the leaders per-


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sonal values and ethics are embedded in and shape the emergingclimate regarding ethics, as well as the climate that is maintained(Grojean, Resick, Dickson & Smith 2004). Previous empiricalresearch has shown that ethical climate results in lower role con-fict and role ambiguity and higher satisaction, which in turn,leads to lower turnover intention and organizational commit-ment or salespeople ( Jaramillo et al 2006; Valentine & Barnett,2003). Similarly, Sims and Kroeck (1994) ound that ethical twas signicantly related to turnover intentions and employeecommitment. In addition, Trevino et al (2000) suggests thatethical leadership contributes to employee commitment, satis-action. Along these lines, Mathieu and Zajac (1990) suggestedthat leadership dimensions such as employee empowerment,initiating structure, consideration, communication, and par-ticipative leadership are all antecedents o organizational com-mitment at individual level. In other words, prior research hasshown that organizational commitment is greater or employeeswhose leaders encourage their participation in decision-making(e.g., Jermier & Berkes, 1979), who treat them with considera-tion (e.g., Bycio, Hackett, & Allen, 1995), airness (e.g., Allen &Meyer, 1990) and are supportive o them (e.g., Allen & Meyer,

1990; Mottaz, 1988). Also, Mize (2000) proposed that there is apositive relationship between ethical behaviour and employeeslevel o commitment. Similarly, Brown et al (2005) ound, romseven studies conducted on various sample groups such as MBAstudents, employees rom large, multi-location nancial services,doctoral students and others, that ollowers o an ethical leaderare willing to put extra eort into their work (job dedication/job commitment).

2.4 Ethical Leadership Behaviour and Employee Trust in LeadersThe construct o trust has received signicant attention in theorganizational sciences literature, evidenced by an abundance

o published work attempting to understand the phenomenonrom a variety o perspectives (Mayer & Davis, 1999); in partdue to the consequences it has or organizational eectivenessand perormance (Zhu, 2004). Also, this variable has been iden-tied as an important component o eective leadership (Ben-nis and Nanus, 1985) and is a central component o ollowersperceptions o eective leadership (Hogan & Hogan, 1994).It is suggested that employee trust in leaders will boost theircompliance with organizational rules and laws, ampliy theirzones o indierences and thus acilitate the implementation oorganizational change (Van Zyl & Lazeny, 2002). In the samevein, Robbinson (1996) asserts that employee trust in leadersdirectly infuences their contributions to the organization in

terms o perormance, intent to remain and civic virtue behav-iour. Moreover, Dirks and Ferrin (2002) suggest that trust inleaders is important or building relationships between leadersand subordinates and creating condence in the leaders charac-ter (Dirks, 2000).

Despite its importance or both theoretical and practical rea-sons, there is some evidence that suggests that trust levels ormanagement in many organizations are dwindling [Farnam,(1989) as cited in Mayer et al, 1999]. Some researchers havenoted that organizations routinely violate what the employeesbelieve are the employers obligations, leading to a general ero-sion o trust or employers (Robinson & Rousseau, 1994).

As Calder (1977) observed, the study o topics such as trust,which belong to the world o everyday explanation, (pp.182)leads to a prolieration o approaches to understanding them, asthere are plenty o connotations o the terms involved. None-theless, the literature on trust has converged on the belies that(a) trust is an important aspect o interpersonal relationships

(b) trust is essential to the development o managerial careersand (c) trust in a specic person is more relevant in terms opredicting outcomes (Butler, 1991). The literature on this con-struct shows that most perspectives o trust acknowledge that aleaders words must accurately predict his/her uture actions inorder to create a necessary, although not sucient, condition orthe development o trust. Ethical/moral leaders are those whohave the moral courage to transorm their moral intentions intobehaviours despite pressures to do otherwise (Dat, 2005). Suchleaders believe in virtues such as honesty and attempt to practiceit in daily lives. Hence, we expect that the behavioural consist-ency between such leaders words and actions will be relativelyhigh and consequently they will be trusted by their workmates.At the same time, several other scholars have ocused their de-initions o trust on the notion that an individual believes theperson who he/she trusts will behave in a way that is avourableto the person. (i.e. benevolence). For instance, George & Jones(2006) dene trust in general as a persons condence and aithin another persons goodwill (pp. 694) while Robbinson (1996)concludes trust as ones expectations o belie about the likeli-hood that anothers uture actions will be benecial, or at least

not detrimental, to ones interest (pp.576). However, this studyadopts Mayer, Davis & Schoormans (1995) [as cited in Mayeret al, 1999] denition o trust, which stipulates as willingnessto be vulnerable to the actions o another party (pp.124). Thisconceptualization dierentiates trust itsel rom its outcomes,which are various types o risk-taking in the relationship withthe trustee (e.g. to be trusted party). Trust dened in this man-ner does not involve risk per se, but is a willingness to engage inrisk-taking with the ocal party. Such outcomes could includecooperation, sharing sensitive inormation, and voluntarily al-lowing the trustee control over issues that are important to thetrusted party.

Further, based on the organizational as well as leadership lit-erature, it is evident that an ethical leader is one who does notseek to accomplish his/her own sel-interest at the expense oothers, but who genuinely looks ater the groups interest. Ideally,such a leader bases his/her behaviour on moral principles thatrespect the rights o others and treats them airly. Also, ethi-cal leaders involve their employees in decision-making withintheir rms to enhance procedural justice and autonomy overtheir work lives the employees experience. Such involvementacilitates not only the well-being and potential growth o theemployees, but also the amount o trust that employees placedon their leader. Moreover, Brown et al (2005) observed that ethi-cal leadership is positively related to the aective trust in leader,

while Argyris (1964) [as cited in Mayer et al, 1999] theorizedthat trust or management is tied to important productivity-related outcomes. Given this, this area o trust in leader is im-portant or both theoretical and practical reasons.

Thus, based on the preceding review o the literature and theresearch questions posed in this study, it is proposed that theconceptual ramework or this study is as ollows:


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EthicalLeadershipBehaviour

EmployeeOrganizationalCommitment

Employee Trustin Leader

Figure 1

3. Hypotheses

Based on the preceding literature review and the conceptual

ramework above, we propose the ollowing;H11 : There is a signicant relationship between ethical lead-

ership behaviour and employees organizational commitment.H21 : Ethical leadership behaviour is positively associated

with employees trust in leaders.

4. Methodology

4.1 Selection of Measures4.1.1 Ethical Leadership Scale (ELS)Employees perception o the ethical leadership behaviour otheir superior/immediate authority gure was measured with

the Ethical Leadership Scale (ELS), adopted rom Brown et al,(2005), which ollowed the steps advocated in the psychometricliterature (e.g. Ghiselli, Campbell & Zedeck) and summarizedby Hinkin (1998) [Brown et al, 2005]. This scale consists o 10Likert items that are represented on a 5-point continuum (1 =strongly disagree, 5 = strongly agree) with higher scores indicat-ing greater ethical leadership behaviour. These survey items weredesigned to tap the ull domain o ethical leadership that couldapply to both ormal and inormal leaders () and to leaders atall organizational levels (Brown et al, 2005, pp.123).

Results rom prior studies on exploratory actor analysis(EFA) or validity has indicated a one-actor solution with allitems loaded strongly on this actor, 0.5 and above. Thus, ethi-

cal leadership, as measured by these 10 items, has ormed a co-herent construct. Reliability estimates has indicated that ELShas demonstrated excellent internal consistency and were stableover 3 studies as < = .92, N = 127; < = .91, N = 184; < = .94, N= 87 respectively. Further supporting the high internal consist-ency, the Cronbach alpha coecient in the current study was.89 (N = 174).

4.1.2 Organizational Commitment Questionnaire (OCQ)OCQ, which was dopted by Mowday et al (1979) is an instru-ment that assesses individuals commitment towards his/herwork organization. Although the original instrument composed

o 15 items, where by 6 items were negatively phrased and re-verse scored in an eort to reduce response bias, a nine-itemshortened version o the OCQ utilizing only positively wordeditems adopted by Mowday et al (1979) was used or this study.Empirical research results have yielded that the short orm othe OCQ (using only the nine positively worded items) may

be an acceptable substitution or the longer scale in situationswhere questionnaire length is a consideration (Mowday et al,1979; pp. 244). Moreover, the questionnaire, which was origi-

nally, 7-point Likert scale anchoring rom strongly agree, mod-erately agree, slightly agree, neither agree nor disagree, slightlydisagree, moderately disagree to strongly disagree, was modiedin this study to a ve-point Likert scale response categories asollows: 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 =agree, 5 = strongly agree. And the high scores indicate behav-iours and attitudes typically associated with highly committedemployees/individuals were utilized in this study.

The analyses o the psychometric properties o the instru-ment across nine samples revealed that reliability coecient was consistently very high, ranging rom .82 to .93, with a medi-an o .90. Further, actor analysis with Kaisers varimax solution

resulted in a single-actor solution conrms the homogeneity othe OCQ items. Also, prior results suggested that the overallmeasure o organizational commitment was relatively stableover short periods o time (r = .53, .63 and .75 over 2-, 3-, and4-months period. In the current study, the Cronbach alpha coe-cient was .88 (N = 174).

4.1.3 Trust Scale (TS)The our items used by Schoorman et al, (1996a) [as cited inMayer and Davis, 1999] to measure trust were used to evaluatethe employees trust in leader. The Trust Scale is a 4-item meas-ure with a 5-point Likert-type response ormat. The responsechoices are Strongly Disagree, Disagree, Neither Disagree nor

Agree, Agree and Strongly Agree; with higher scores indicatinggreater employees trust in the leader except or the two itemsthat are inconsistent with employees trust and are reversed-scored. Alphas or this scale were .82, .59 and .60 or the rst,second and third waves respectively. And Cronbach alpha coe-cient or the current study is reported to be .86 (N = 174).However, or the present study, the items were altered slightlyto refect a ocus on the superior/immediate authority gure,instead o the top management.

4.2 Sampling DesignA total number o 227 questionnaires were distributed or this

study. Respondents were rom companies that were located inthe Klang Valley, representing a variety o industries in the cor-porate sector. O this number, 188 were returned and 174 wereound usable. A non-probabilistic sampling method, namelyconvenience sampling was used in drawing samples or thisstudy. The sample included 77 males (44.3%) and 97 emales


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(55.7%). The range o ages o the respondents is rom 20 to 53years, with a mean o 31.52 and standard deviation o 6.421. Othe 174 respondents, 61 or 35.1% are Malays; whereas Chineseand Indians are 76 (43.7%) and o 32 (18.4%) respectively. A mi-nority o respondents, whose representation in the total samplewas only 2.9%, was categorized as Others. The educational levelo the respondents is high with 84% holding bachelors or postgraduate degrees (MBA/PhD). Slightly more than hal (50.6%)o the respondents report that they hold the position o Execu-tive; whereas 17.8% are Assistant Manager; and 13.8% Manag-ers. The respondents were kept nave as to the exact nature othe research purpose; being told only that the study investigatedthe employees perception about the ethical leadership behav-iour o their supervisors/immediate authority gures.

4.3 Data Collection ProcedurePrimary data was collected or this study with the use o a sel-administered questionnaire distributed among MBA/MMstudents, all o whom were working or had work experience,and also among employees, who represented many dierentindustries and also who were easily accessible. The question-

naire consists o 5 parts where rst three parts comprise o ELS,OCQ and TS respectively. Section 4 is designed to gather dataon leaders/superiors prole whereas the last section ocuses inobtaining the respondents demographic prole. However, noidentiying data were obtained on employees.

The respondents were asked to evaluate their current/recentimmediate supervisor and also indicate their level o commit-ment to the organization and the trust in leader by completingthe entire questionnaire. The researchers distributed the ques-tionnaires among colleagues, who volunteered to administer thequestionnaire. In addition to the researchers, eight individualsadministered the questionnaires, but in dierent settings and

returned the completed questionnaires to the researchers. Thus,over a period o 3 weeks, 188 completed questionnaires werereturned to the researchers, representing an overall o 82.8%percent response rate. However, o the 188 respondents, 13 or6.91% were rejected, as their place o work was not within theKlang Valley.

4.4 Data Analysis TechniqueSPSS Version 14.0 was used to analyze the data and test theaorementioned hypotheses.

Preliminary data analyses were perormed to test or normal-ity o the research variables, and to obtain descriptive statisticson demographic prole and the general characteristics o the re-

spondents as well as superiors/immediate authority gures.Correlation matrix was created to determine the relationships

among constructs. Furthermore, reliability analysis was carriedout on all sets o variables to determine whether they orm anadditive scale. This was to provide means to simpliy the analy-sis and reporting the data by showing that a group o variables,possibly all, orm a scale that is reliable to measure a construct.Finally, allowing or correlation among actors, exploratory ac-tor analysis (EFA) using principle components (PCA) with anoblique rotation was conducted on ELS, OC and TS instru-ment to identiy variables that were most important in measur-ing each construct. Although the trend now is to perorm an

EFA using PFA (principal axis actoring) to meet theoreticalconsiderations, the results are oten similar.

5. Research Findings

5.1 Summary StatisticsThe data was examined to check or accuracy o data entry,missing values, the normality o distributions, and outliers. Thevalues or skewness and kurtosis tted into an appropriate range(i.e., below the absolute value o 2), indicating the normal dis-tribution o the scores across all variables o interest (Heppner,2004). Some o the variables were ound to have univariate out-liers; the relevant scores were checked to ensure that those scoreswere within the range o possible scores or those variables. Fur-thermore, in order to check how much o infuence these out-liers have on the mean, the original mean o each variable wascompared against the respective 5% Trimmed Means (Pallant,2005). Given the act that the two mean values or each variableo interested were not too dierent to the remaining distribu-tion, those cases with outliers were retained or the analysis.

5.2 Analysis of MeasuresA set o new variables called TOTELS, TOTOC and TOTTSwas created by adding total scores or each subject under each

construct in order to acilitate urther analysis. However, priorto conducting advance statistical analysis to explore relationshipsamong variables, the new variables were again tested or skew-ness and kurtosis. Histograms and boxplots were plotted to en-sure that the assumption o normality was not violated. Also, inorder to ensure that the employed scales measured consistentlywhat they were intended to measure, the Cronbach alpha coe-cient was computed to check or reliability. Though, there wereno extreme points, one extreme case was detected as a univariateoutlier in TOTELS variable and thus was deleted, leaving 174cases or analysis. Descriptive statistics and the Cronbach alphacoecients or the above mentioned new variables are shown in

the Table [4.2] below.


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Table 4.2: Summary of Descriptive Statistics and Reliability Scores

Variable /Scale

No. oItems

N Mean SD 5% T.Mean

Skewness Kurtosis CronbachAlpha

TOTELS 10 174 35.62 6.505 35.72 -0.377 -0.273 0.888

TOTOC 9 174 31.76 5.523 31.66 0.277 -0.056 0.877

TOTTS 4 174 11.25 3.217 11.23 0.220 -0.521 0.852

As shown in Table [4.2] above, the skewness and kurtosis val-ues are well below the absolute value o 2 and thus indicate thatthe scores or three variables have not violated the assumptiono normality (Heppner, 2004). This assumption is urther sup-ported by the dierences between the original mean value and5% trimmed mean value or each the variables, which are not sig-nicant (Pallant, 2005). Furthermore, as per Nunnally (1978), ascale is deemed to be reliable, i its Cronbach alpha is more than0.5 ( = > 0.5). Hence, the Cronbach alpha coecient valuesshown in Table [4.2] above, which are much higher than 0.5, in-dicate that the three scalesELS, OCQ and TSare reliable.

In addition, an exploratory actor analysis with an orthogonalvarimax rotation and a Kaizer-Guttman criterion o eigenvaluegreater than 1.00 was conducted or the 10-item ELS; 9-itemOCQ and 4-item TS ((Pallant, 2005). For 10-item EthicalLeadership Scale (ELS) two components (or actors) with ei-genvalue greater than 1.00 were extracted. The total varianceexplained by the 2 actors was 60.9% and as Hair, Anderson,Tatham and Black (1995) suggest that or social science stud-ies, it is not uncommon to consider a solution o about 60 percent as satisactory. However, the general criterion o eigenvaluegreater than 1.00 may misjudge the most appropriate numbero actors (Gorsuch, 1983), thus the scree plot was careully

examined. The scree plot was also conned to 2 actors. To a-cilitate easy interpretation, these actors were then rotated usingthe varimax criterion or orthogonal rotation. Only statements/items with actor loadings o 0.50 and above in the rotated actormatrix was considered as signicant in interpreting the actors.Table [4.6] shows the actor matrix indicating the actor load-ings and communality estimates (h2) o every variable on thesetwo actors. Factor 1 (F1) and Factor 2 (F2) comprised o sixand ve items, respectively. By analyzing the items in the actors,some dimensions was identied and thus, Factor 1 was labeledas The Demonstration o Ethical Conduct (e.g.: honesty, trust-worthiness, air and care) whereas Factor 2 (F2) as The Pro-motion o Ethical Conduct to Followers.

Table 4.3: Scale Items, Component Loading andCommunality Estimates for Two-Factors of EthicalLeadership Scale

Item Factor Loadings h

F1 F2

Factor 1: The Demonstration oEthical Conduct

Listens to what employees have tosay

0.540 0.445 0.490

Has the best interest o employees

in mind

0.820 0.017 0.672

Makes air and balanced decisions 0.793 0.277 0.705

Can be trusted 0.808 0.268 0.725

Discusses business ethics or valueswith employees

0.594 0.443 0.549

Sets an example o how to do thingsthe right way in terms o ethics

0.614 0.544 0.674

Factor 2: The Promotion o EthicalConduct to Followers

Disciplines employees who violate

ethical standards

-0.002 0.757 0.573

Conducts his/her personal lie in anethical manner

0.234 0.700 0.545

Denes success not just by resultsbut also the way that they areobtained

0.444 0.662 0.636

When making decisions, asks, Whatis the right thing to do?"

0.358 0.624 0.518

Eigenvalue 5.035 1.051

Percent o Variance 50.348 10.510

Cumulative Percent 50.348 60.858

h2 = Communality Estimates

Similarly, an exploratory actor analysis with principal com-ponent analysis was conducted on OCQ and TS respectively.However, the results or both o these scales has shown whatThurstone (1947) reerred to as simple structure in which eacho the variables loaded strongly on only one component, and eachcomponent being represented by a number o strongly loadingvariables (Pallant, 2005). Moreover as the general criterion o

eigenvalue greater than 1.00 may misjudge the most appropriatenumber o actors (Gorsuch, 1983), thus the scree plot was alsocareully examined. A steep break in the both scree plots (OCQand TS) between the rst and second actor (eigenvalues o4.635 and .807 respectively or OCQ; and eigenvalues o 2.783and .609 respectively or TS), indicated a one-actor solution. As


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illustrated in below Table [4.4], or both scales, all items loadedstrongly on this one-actor, .5 and above.

Table 4.4: Scale Items and Component Loadingfor One-Factor of Organizational CommitmentQuestionnaire (OCQ) and Trust Scale (TS)

Item Factor Loadings

F1

Organizational Commitment Questionnaire

Factor 1: Employee Organizational Commitment

I am willing to put in a great deal o eort beyondthat normally expected in order to help thisorganization be successul.

0.628

I talk up this organization to my riends as a greatorganization to work or.

0.762

I would accept almost any type o job assignment

in order to keep working or this organization

0.546

I nd that my values and the organizations valuesare ver similar.

0.669

I am proud to tell others that I am part o thisorganization.

0.775

This organization really inspires the very best in mein the way o job perormance.

0.756

I am extremely glad that I chose this organizationto work or over others I was considering at thetime I joined.

0.828

I really care about the ate o this organization. 0.723

For me this is the best o all possible organizations

or which to work.

0.732

Eigenvalue 4.635

Percent o Variance 51.503

Cumulative Percent 51.503

Trust Scale

I I had my way, I wouldnt let my superior have anyinfuence over issues that are important to me.

0.848

I would be willing to let my superior have completecontrol over my uture in this company.

0.842

I really wish I had a good way to keep an eye onmy superior

0.802

I would be comortable giving my superior a taskor problem which was critical to me, even i I couldnot monitor their actions.

0.804

Eigenvalue 2.783

Percent o Variance 69.577

Cumulative Percent 69.577

Thus, it is evident rom the above table that both organiza-tional commitment and trust in leader, as measured by those9-items and 4-items respectively, ormed coherent constructs.

5.3 Testing of HypothesesCorrelation analysis was perormed to test the strength anddirection o the linear relationship between two variablesethical leadership behaviour and employees organizationalcommitment; ethical leadership behaviour and employees trustin leader. Further, the preliminary analyses were perormed toensure no violation o the assumptions o normality, linearityand homoscedasticity.

As per the results, there was a medium (Cohen [1988]), posi-tive correlation between the two variables [r = .46, n = 174, p

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