Do Leaders Affect Ethical Conduct?

Abstract

Abstract:We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct-prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders' strategies reveals that leaders' statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders' propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.

Behavioral Foundations of Corporate Culture

“…If leaders fail to live up to the normative demands of a cooperative culture -for instance, by creating doubts about their willingness to go the extra mile, or by ignoring obvious misconduct -they cannot expect their employees to do better. This is also supported by experimental evidence [10][11][12] and the study mentioned above 5 that reports higher financial performance in those companies where employees perceive their leaders to be trustworthy and ethical in their business practices.…”

Exploring the unfathomable causes of dysfunctional behaviours in the Ghanaian public service: perspectives of social capital

“…Others are corrupt and commit all the other unethical acts contrary to laid-down rules and regulations (Kumasey, 2017). Leaders tend to influence the ethical conduct of their subordinates through their statements, use of incentives and precedents they have set (d'Adda et al , 2017; Bowman and West, 2014). Their actions may be influenced by how they got into this position.…”

Economic perspectives on leadership: Concepts, causality, and context in leadership research

“…As a final observation, this literature is highly theoretical and much of the empirical research on leadership involves very abstract lab-experiments. These experiments are a valuable tool for establishing causal relationships regarding how a leader influences followers' behavior (Brandts & Cooper, 2007;d'Adda et al, 2017), but by definition ignore the real-world context in which leaders operate. 3 This observation raises the more general issue of what economic research has to offer when we turn to leadership outside the lab, in more complex field settings.…”