The mechanism between ethical leadership and employees’ ethical behavior in partial fulfillment of the requirements of the degree of bachelor of arts in business administration

TABLE OF CONTENTS2.2.3 Ethical Leadership, Employee’s Ethical Behavior and Coworker’s Ethical 2.2.4 Ethical Leadership, Employee’s Ethical Behavior and Perceived... The current research

VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

SCHOOL OF BUSINESS

The mechanism between ethical leadership and employees’ ethical behavior

In Partial Fulfillment of the Requirements of the Degree of

BACHELOR OF ARTS in BUSINESS ADMINISTRATION

Student name: Ton Nu Hoang Uyen

ID: BABAIU17081

Advisor: Assoc Prof PhD Nguyen Van Phuong

Ho Chi Minh City, Viet Nam

2021

The mechanism between ethical leadership and employees’ ethical behavior

APPROVED BY: Advisor APPROVED BY: Committee

Nguyen Van Phuong, Assoc Prof

PhD

Nguyen Van Phuong, Assoc Prof.PhD., Chairman

Ngo Hoai Son, M.A, Secretary

Tran Tien Khoa, Assoc Prof PhD

Huynh Thi Ngoc Hien, Ph.D

THESIS COMMITTEE

ACKNOWLEGEMENT

First and foremost, I would like to express my deepest respect and gratitude to myadvisor, Assoc Prof Dr Nguyen Van Phuong, who has given me great guidance andsupport towards completing my graduation thesis He is one greatest teacher, the trueinspiration due to his devotion and passion in teaching and researching over the years Heencourages and supports me to my fullest potential, and even to achieve further targets in

my academic path It is needless to say that I am so blessed to have such an incredibleteacher in my life

In addition, I would also want to send my genuine appreciation for my family,

my friends, my colleagues and every wholesome individual who have given mefeedbacks and suggestions, as well as devoted their time to help me with my datacollection procedure There are inevitable obstacles during the way of completion, butyou have fulfilled me with strengths, helping hands and even compassion I would nothave come this far without any of you

Lastly, I am thankful for all the memorable experience and lessons in four years

of study in International University These lessons also play significant roles as they wellequip me with sufficient knowledge and efficient tools for this graduation thesis

TABLE OF CONTENTS

2.2.3 Ethical Leadership, Employee’s Ethical Behavior and Coworker’s Ethical

2.2.4 Ethical Leadership, Employee’s Ethical Behavior and Perceived

Organizational Politics 15

2.2.5 Ethical Leadership, Employee’s Ethical Behavior and Organizational

CHAPTER VI: CONCLUSION AND LIMITATIONS 49

LIST OF TABLES

Table 6 Heterotrait-Monotrait Ratio (HTMT) criterion 37

LIST OF FIGURES

Figure 4 Outer loadings and Cronbach's Alpha after elimination 33

Employees’ unethical conduct has remained a relatively concerning issueregarding business ethics and organizational performances Given its detrimental effectsand high frequencies in developing countries, studies on this problem would serve asfundamental empirical document that clarifies the dynamics around employee’s integrityand further implies solutions for future ethical management The current research aims atinvestigating the mechanism linking ethical leadership to employees’ ethical behaviorswith the inclusion of coworker ethical behavior, perceived organizational politics andorganizational commitment Applying Social learning and Social exchange theories, thestudy will comprehensively examine correlations among these variables

Design/Methodology/Approach: Quantitative methodology is applied with

online questionnaire distributed using snowball and convenience sampling techniques.The target respondents comprise of employees who are working in joint stock companies

in Ho Chi Minh City of Vietnam For analyzing the collected data, the study first utilizesSPSS to obtain statistical descriptions, then Smart-PLS software with PLS-SEMapproach to conduct Confirmatory Factor Analysis and Structural Equation Modeling

Findings: From 222 valid observations, the study’s findings reveal significant

effects of ethical leadership on enhancing employees’ ethical conducts, widely sharedmorality by their coworkers, individual’s emotional attachment to the organizational aswell as creating more ethical working climate where perception of organizational politics

is minimized Employees are therefore encouraged to behave ethically in accordance withothers’ supportive actions and the organizational bonds developed out of leaders’ genuinecare for subordinates’ well-being and advancement Surprisingly, in the presence ofpolitical practices, employees are found pressured to behave ethical yet not challenge thecircumstance so that they do not provoke any influential individuals

Implications: The study sheds lights on comprehensive understanding about the

positive correlation between ethical leadership and employees’ ethical conducts by

including coworker ethical behavior, perceived organizational politics and organizationalcommitment to the theoretical model The findings also signal implementation of ethicaltrainings and selection for managers, transparent organizational regulations, convenientmethods for open discussion, honest report as well as sufficient support for employees’development.

Limitations/Future research: Since the study is conducted within a short period

of time with limited variation in organizational types, future work with longitudinalapproach and different respondent groups can make further causal and generalizedinferences Future studies can also collect observation data from managers and colleaguesbesides self-reported evaluation to have more objective measurement

Keywords: Ethical leadership, employees’ ethical behavior, coworker ethical

behavior, organizational commitment, perceived organizational politics, joint stockcompanies

1.1 Background of the Study

1.1.1 Ethics as the rising concern

Living in the Information Age, people are inspired to lean towards being sociallyactive and taking ethical standards into their decisions This, in turn, progressively altersthe notion of a successful organization (Waddock et al., 2015) Companies are put underimmense pressure not only to possess better production, adapt to simultaneous changeand competition but also to operate their business in an ethical manner, delivering greatersustainability and contributing to societies (Al Halbusi, Williams, Ramayah, et al., 2020;

V P Nguyen et al., 2021) Moreover, business scandals such as Apple’s intentionalslowdown of former iPhone devices to enforce customers’ new purchases and Facebook’sinappropriate privacy policy have raised large concern about business ethics forresearchers, practitioners and governments

Nevertheless, this is only the tip of the iceberg as ethical matters can deeply root

in daily business activities Specifically, it has been found that employees may behave

unethically in the pursuit of fulfilling their self-interest objectives and personaladvantages (Brown & Treviño, 2014; Manz et al., 2008; Treviño et al., 2014) Theseunethical behaviors are mostly conducted at the expense of the organization’s internal andexternal stakeholders, causing decreased benefits for the greater group of people (Padilla

et al., 2007; Schaubroeck et al., 2007) According to Thomas (2004), deviant behaviorswill cause the company to suffer higher financial risks and costs, as well as unfavorablereputation, which will consequently lower the value of the firm and stakeholders’ return.Moreover, a study conducted by Henle (2005) discovered that decline in company’sproductivity and performance also occurred due to employees’ misbehaviors (Dunlop &Lee, 2004) These negative impacts will later lead to decrease in firm’s long-termcompetitive strengths and significantly lessen other individuals’ performance Litzky(2006) also reported lower quality of work, damaging public image and expensiveexpenditure for legal matters as additional consequences

Like other emerging countries, Vietnam’s inefficiency of ethical management haslet employees’ misconduct remain an unresolved issue The problem’s infamousexamples include 25 bank staff assisting Nguyen Thi Thanh Ha to appropriate more than

400 billion; Huynh Thi Huyen Nhu of over 4 trillion appropriation from 9 companies, 4banks and 3 individuals; and Do Van Nham of 1.7 trillion appropriation from his owncompany As whether employees act ethically or not can have significant impacts onorganizations, exploration of factors and correlations related to their behaviors shouldshed light on the enhancement of firms’ performance management and societalwell-being Despite witnessed distressing outcomes and importance of the subject, fewstudies have been conducted on the issue, especially in Vietnam Therefore, it is crucialthat we carry out this study to clarify the dynamics and correlation around employees’ethical behaviors

1.1.2 The influence of ethical leadership

Ethics in the workplace is supposed to evolve and be formed by the members of

the organization, in which leaders play critical roles A long-lasting successful workenvironment can be established when leaders exhibit ethical role models and highestmoral behaviors which give subordinates a general moral framework to emulate (Grojean

et al., 2004; Mendonca, 2001; Ofori, 2009; Treviño et al., 2014) On the other hand, whenleaders demonstrate unethical behaviors, not only firm’s reputation and performance aredamaged but employees’ negative attitudes and behaviors will also follow afterwards(Mackey et al., 2017; Simon et al., 2015) Unethical leadership can eliminate the trustsubordinates have in their superiors, causing more perplexity about the standards andprinciples of the organization (Ng & Feldman, 2015; Norman et al., 2010) AdamNeumann - CEO of WeWork faced lawsuits of inappropriate behaviors of alcoholdrinking, sexual harassment and drug use within the workplace Top managers of Toshibaset unrealistic profit targets and encouraged flawed accounting principles in 2015 HuaThi Phan - senior advisor of TrustBank caused a loss of more than 1,300 billion byappropriating firm’s property and deliberately committing practices against the State'sregulations on economic management These are all examples of how leaders’misbehaviors can lead to prejudicial issues for an organization as a whole and itsindividuals Consequently, appropriate forms of leadership are extensively exploredacross nations, and ethical leadership has received particular attention from practitionersand academicians for the past few years (Kalshoven, Den Hartog, & De Hoogh, 2013).Former studies showed that ethical leadership was a fundamental antecedent ofpositive organizational outcomes (Brown & Treviño, 2006; Mayer et al., 2009; Neubert etal., 2009; Treviño et al., 2014) Particularly, earlier research suggests that ethicalleadership can impact on employees’ ethical and unethical behaviors by explicitly settingnormative behaviors at work (Brown & Treviño, 2006; Ko et al., 2018; Mitchell et al.,2017; Wiernik & Ones, 2018) Although several studies confirmed the effect of ethicalleadership on decreasing workers’ tendency of committing workplace misconducts andunethical behaviors (Avey et al., 2011; Mayer et al., 2009, 2010; Stouten et al., 2010),there is lack of solid evidence showing whether employees’ ethical behaviors can be

necessarily increased with this style of leadership.

Furthermore, the organizational climate that employees work in is discovered tohave prominent effect on their ethical behaviors (Al Halbusi & Amir Hammad Hamid,2018; Deshpande & Joseph, 2009; Luria & Yagil, 2008; Treviño et al., 2014) A healthyand positive atmosphere can enforce employees’ positive impression on the firm’spolicies of payment and decision-making system, and they are more likely to act ethicalaccordingly in their daily work (Demirtas & Akdogan, 2015; Lu & Lin, 2014).Contrarily, a negative social condition which permits unethical business practices candeter subordinates from behaving morally High levels of collectivism, power distance aswell as bureaucratic structure found in Vietnamese workplace exemplifies this idea (D T

N Nguyen et al., 2020) Unequal distribution of power accompanied by hierarchy mayalter one’s perception of organizational politics and consent of counterproductivebehaviors, leaving greater psychological distress among employees and littleencouragement on actions beneficial for others (D T N Nguyen et al., 2019) In thisregard, it should be noted that organizational climate is highly correlated with attributes

of the leader as leaders significantly define the culture and ethics that shape the climate(Aryati et al., 2018) Nevertheless, there has been scarcity of research on how ethicalleaders can exercise their influence on subordinates’ ethical behaviors through theorganizational climate, specifically perceived organizational politics There is also limitedinvestigation on how this political condition can impact employees’ behaviors.Given the literature gaps above, it is critical that we initiate this innovative studywhich incorporates perceived organization politics in the conceptual model to clarify thedynamics between ethical leadership style and employee’s ethical behaviors We furtherinclude organizational commitment and coworker’s ethical behavior to obtaincomprehensive perspectives on mechanism affecting ethical conducts, ranging from theworkers’ internal self to possible external influences from colleagues and the surroundingworking environment

1.2 Research Objectives

Despite the importance of employees’ ethical behaviors, research on this topic islimited, especially in Vietnam Furthermore, there is lack of studies that considercoworker ethical behavior, perceived organizational politics, organizational commitment

as the underlying mechanisms between ethical leadership and employee’s ethicalbehavior Hence, this paper aims to clarify the variables’ correlations with the followingobjectives:

- To determine the importance of ethical leadership and provide insights aboutits correlation with employee’s ethical behavior

- To investigate the relationship between perceived organizational politics,coworker ethical behavior, organizational commitment with ethicalleadership and employees’ ethical behaviors

- To provide practical guidelines on how mangers and leadership canencourage their subordinates to have behave more ethically in the workplace

1.3 Research Questions

In accordance with the objectives mentioned above, the research questions arelisted as follow:

- What is ethical leadership, and does it affect employee’s ethical behavior?

- Does ethical leadership influence coworker ethical behavior?

- Does coworker ethical behavior influence employees’ ethical behaviors?

- Does ethical leadership influence perceived organizational politics?

- Does perceived organizational politics influence employees’ ethicalbehaviors?

- Does ethical leadership influence organizational commitment?

- Does organizational commitment influence employees’ ethical behaviors?

- What are the practical implications and improvements that organizationscan apply to enforce employees’ ethical behaviors?

1.4 Significance of the Study

Previous studies have suggested the positive impacts of ethical leadership inenhancing employees’ ethical behaviors However, the degree of effect as well as themechanisms of how this form of leadership can affect employees are notably unexplored.This study helps to respond the literature gaps by several ways First, as employees’ethical management has been considered an understudied matter in emerging countries,research on this area brings new insights on understanding about impacts as well aspossible determinants enhancing ethical behaviors among Vietnamese companies.Second, the current study offers new theoretical framework in studying the mechanismsaround ethical conducts It examines the effect of ethical leadership on employee’s ethicalbehavior with inclusion of coworker ethical behavior, perceived organizational politics,organizational commitment to deliver more comprehensive perspectives It should bementioned that there is no similar research in Vietnam that has considered perceivedorganizational politics to be a factor related to subordinates’ ethical behaviors Lastly,findings of this study contribute as empirical evidence for the subject and offermanagerial implications and practices to improve workers’ ethical behaviors, whichorganizations, governments and practitioners can benefit from

1.5 Scope and Limitations

This research focuses on analyzing the effect of ethical leadership on employee’sethical behaviors with additional variables of coworker ethical behavior, perceivedorganizational politics and organizational commitment incorporated into the researchmodel Additionally, it is only conducted within the area of Ho Chi Minh city, and therespondents are comprised of employees working in joint stock companies For jointstock firms, ethical matters not only impose effects on organizational values and workersinside, but they also influence other stakeholders and public investors In addition, giventhe immense operation and company sizes with various levels of management, theinteractions between leaders and followers are far more relevant Hence, we have decidedjoint stock companies as the applicable targets after ample consideration andconsultation

Furthermore, due to constraints in time and resources, data is distributed for ashort period of time through online survey Therefore, the study is limited to includerespondents with living in various provinces or cities and observations over long ofperiods of time Moreover, future research can further expand to other group ofemployees working in private companies or non-profit organizations to deliver moreaccurate and objective results

1.6 Structure of the Study

Chapter I: IntroductionThis first chapter comprises of background information of the topic and theresearch gap After that, the direction of the study is determined by the addressedresearch objectives and questions In addition, contribution and structure of the study aswell as its scope and limitation are mentioned in detail

Chapter II: Literature ReviewThe framework theories related to the research are provided in this chapter Alongwith that, concepts and hypothesis development about the relationship between ethicalleadership and ethical behaviors will also be given Subsequently, literature on coworkerethical behavior, perceived organizational politics, organizational commitment and willalso be discussed Lastly, the study’s model with all proposed hypotheses will beillustrated.

Chapter III: MethodologyThis chapter gives a detailed description of research design and method applied inthis study, as well as sampling techniques, target respondents, data collection methodprocedure and questionnaire design Tools and method for data analysis are alsomentioned as the last part

Chapter IV: Data AnalysisData analysis process is performed with SPSS to achieve descriptive statistics.Then, Smart-PLS is applied to obtain reliability and validity testing, as well as examinecorrelations between Ethical Leadership and Ethical Behavior, and with other variables ofcoworker ethical behavior, perceived organizational politics and organizationalcommitment

Chapter V: Discussion and ImplicationsBased on the outcomes of data analysis in Chapter 4, the study offers severaltheoretical contributions to the existing literature regarding ethical matters as well asmanagerial practices which practitioners and organizations can benefit from

Chapter VI: Conclusion and LimitationsThis final chapter summarizes the significant findings of the research Limitationsare also addressed along with direction for future studies.

CHAPTER 2

LITERATURE REVIEW

This chapter demonstrates key theoretical frameworks theories used in the study.Furthermore, it also discusses literature, concepts and hypotheses development forcorrelation between ethical leadership, employee’s ethical behavior and other relatedfactors

2.1 Theoretical framework

2.1.1 Social learning theory

This study is developed upon the basis of Social Learning Theory (Bandura,1986) According to Social Learning Theory (Bandura, 1986), individuals learn to behaveappropriately by observing and imitating the norms in the social context View as criticalframework to explain the influence of ethical leadership on followers’ behaviors(Kalshoven, Den Hartog, & de Hoogh, 2013), the theory suggests that leaders areperceived to be the credible role models as they demonstrate high levels of integrity andvalue-driven behaviors (Brown et al., 2005) Employees, in turn, pay close attention tothese role models and adopt desirable behaviors that they have observed (Brown &Treviño, 2006) Furthermore, leaders can impact followers’ behavior in bothinformational and motivational ways (Bandura, 1977) Not only leaders equip employeeswith the role models and instruction on how to act properly, they also directly givepunishments or rewards to encourage the desired activities

In addition to Social Learning Theory, former researchers proposed SocialExchange theory as prevalent theoretical framework underlining the relationship betweenethical leadership and subordinates’ ethical behaviors (Newman et al., 2014) According

to Social Exchange Theory expressed by Blau (1964), the social exchange between twoparties in a relationship is rationalized based on two criteria, economic exchange (alsoknown as transactional) and interpersonal behavior exchange (also called socioemotional)(Aryati et al., 2018) When individuals perceive given benefits either transactional orsocioemotional from others, they have tendency to feel the obligation to reciprocate bygiving back (Gouldner, 1960) In other words, when leaders, colleagues, organizationalprocedures and climate exhibit favorable behaviors or concern for the employees’well-being, employees would perceive those relationships to have high levels of trust andfairness (Kalshoven, Den Hartog, & de Hoogh, 2013; Mayer et al., 2009) As a result,they value and maintain these relationships by committing themselves to acting ethicallyand displaying behaviors that are beneficial to these people and their organization inreturn (Brown et al., 2005; Brown & Treviño, 2006; Mayer et al., 2009)

2.2 Hypothesis Development

2.2.1 Ethical Leadership

Leaders along with their style of leading may lay critical foundation for ethics inthe workplace to evolve and form Ethical leadership refers to the style in which theleader displays appropriate behaviors in their personal activities, interpersonalrelationships with other employees, and passes integrous norms and values tosubordinates through communication, decision-making or reinforcement (Brown et al.,2005) These ethical leaders embrace the importance of being virtuous and honest in the

decisions and actions, along with the provision of ethical examples and good practices forother individuals and the whole organization (Murphy & Enderle, 1995) Therefore, theyare perceived to maintain effective working conditions pertaining to high levels ofintegrity, morality, justice and sincere concern for others (Mayer et al., 2009; Ofori, 2009;Trevino et al., 2000) It is stated that there are two key aspects related to this form ofleadership, which are moral personal factor and moral manager factor (Brown et al.,2005; Trevino et al., 2000) The moral person aspect refers to virtuous traits that theleader possesses, which are integrity, trustworthiness, fairness, justice and concern forother individuals The other dimension, moral manager, relates to behaviors and effortsthat the leader executes to encourage subordinates’ ethical conducts, mainly through rolemodelling, rewards, punishment or communication of ethical standards It has been alsonoted that the moral manager aspect of ethical leadership indicates higher levels ofinteraction in influencing employee’s behaviors (Lin et al., 2019; Mayer et al., 2009).Furthermore, it is important that ethical leadership be differentiated from otherforms of leadership, such as authentic or transformational (Kalshoven, Den Hartog, & DeHoogh, 2013; Stouten et al., 2013) While transformational leaders put much emphasis onrole models to improve followers’ performance, ethical leaders tend to incorporate theapplication of disciplines and other forms of reinforcement to enhance employee’s ethicalconducts (Brown et al., 2005; Stouten et al., 2013) In addition, ethical leadership alsodistinct itself as it gives more attention to ethical behaviors instead of relationaltransparency or self-awareness as in the authentic leadership (Stouten et al., 2013) Inshort, although these three kinds of leadership share several similarities, ethicalleadership gives the highest priority and exclusive prominence for ethical behaviors(Mayer et al., 2009).

Previous studies have suggested ethical leadership’s inherent association withpositive workplace outcomes Leaders with ethical manners were discovered to positivelyaffect followers’ motivational processes in which employees are more willingly to giveextra effort in their work (Yidong & Xinxin, 2013) Ethical leadership is also found to be

significantly related to various dimensions of leadership effectiveness, boosting theemployee’s job satisfaction, performance, promotability evaluations and commitment(Kacmar et al., 2013; Letwin et al., 2016; Mo & Shi, 2018; Ofori, 2009) Notably, ethicalleadership can increase probability of ethical problems reporting or whistleblowing as itgives subordinates a sense of interactional justice and creates the perception of an ethicalworking climate (Brown et al., 2005; Neubert et al., 2009).

2.2.2 Employee’s Ethical Behavior

Ethical behaviors refer to the behaviors considered right, legal and moral thatpeople should adopt in accordance with the agreed principles and standards (Arnold etal., 2019) In other words, individuals are considered to be ethical in their behaviors whenthey conform to a set of rules or codes that generally direct people towards honesty,equity and justice in particular situations (Lewis, 1985) Former research suggests thatsuch ethical conducts in any business are influenced by six main elements: individual’spersonal value, coworkers’ behaviors, the influence from leaders and managers, financialposition, ethics-related policies of the organization, and ethical practices of the industrywhich the individual is working in (Pio & Lengkong, 2020) Considering the abovefactors, companies can encourage employees’ ethical conducts by establishing a moreethical climate in which mutual care among individuals, objective principles and clearcodes of ethics are present

Numerous empirical studies advocated ethical leadership as crucial antecedent inshaping employees’ ethical behaviors (Brown et al., 2005; Dickson et al., 2001; Koh &El’Fred, 2001; Mayer et al., 2009; Ofori, 2009; Viswesvaran et al., 1998) Being therepresentative of an organization, a leader is supposed to significantly induce individuals’behaviors within the firm (Burns, 1998; Stead et al., 1990) In their studies, Brown andTreviño (2006) explained that leaders can enhance beneficial behaviors amongemployees by frequent communication and encouragement towards those ethicalbehaviors Leaders are also stated to have the ability of transforming the workforce’s

moral concept and behaviors by giving practical and moral guidance to followers(Albaum & Peterson, 2006; Babalola et al., 2019; Demirtas, 2015; Karim & Nadeem,2019; Neves et al., 2018) Hence, ethical managers who demonstrate positive personalvalues, regulated conducts with active management can inspire ethical attitudes andconducts among employees (Al Halbusi, Williams, Mansoor, et al., 2020).

The link between ethical leaders and employees is further explained by Sociallearning theory and Social exchange theory Drawing from Social learning theory,employees tend to emulate the norms that they observe in the workplace, especially fromhigher authority (Bandura, 1986) In line with the aspect of moral person in ethicalleadership, leaders are regarded as the role models that demonstrate appropriate behaviorsand moral values (Brown et al., 2005; Gan, 2018; Mayer et al., 2012) Consequently,followers are influenced to engage in identical ethical behaviors, making their values andattitude consistent with the role models Resick et al (2011) also noted that the moresimilar the leaders’ ethical conducts are to the common ethical traits in that particularculture, such as being accountable, honest, considerate, fair and respectful of others, themore likely employees would follow In addition to moral person, the moral manageraspect of ethical leadership also allows leaders to exercise their authority in settingethical guidelines and regulations, rewarding employees who comply and discipliningthose who do not Subordinates are then kept more accountable for their behaviors andmore inclined to take up ethical conducts (Brown et al., 2005; Gan, 2018)

Additionally, Social exchange theory hints individuals’ tendency to reciprocatethe actions and benefits that they receive from the other person (Blau, 1964; Gouldner,1960) By showing sincere consideration for the employees’ well-being and benefits,leaders have created a socioemotional exchange with their followers (Mayer et al., 2009).Perceiving high levels of trust and fairness from higher authority and organizationalpractices, employees will be more convinced to behave in favor of their leaders andorganization In order words, they are more willing to behave ethically in return (Brown

et al., 2005; Brown & Treviño, 2006; Kalshoven, Den Hartog, & de Hoogh, 2013)

Therefore, from the discussion above, we propose:

H1: Ethical leadership has a positive correlation with employee’s ethical behavior.

2.2.3 Ethical Leadership, Employee’s Ethical Behavior and Coworker’s Ethical Behavior

On the basis of Social Learning and Social Exchange theories, employees’coworkers are identically directed towards integrous and moral conducts as they sharesimilar experience under superior’s ethical leadership Among the company’s workforce,colleagues are induced to follow ethical guidelines, role models as well as reciprocatewhen acknowledging beneficial social exchange in the workplace (Al Halbusi, Williams,Ramayah, et al., 2020)

The aforementioned theories also suggest coworkers as additional vital learningsources for appropriate acts In accordance with Social Learning perspectives, socialcontexts mold individuals’ behaviors with moral standards demonstrated by the collectivegroup (Bandura, 1986; Barrick et al., 2013) Coworkers, being an approachableembodiment of eligibility, offer situational cues on desirable traits and expectedbehaviors at work (Robinson et al., 2014) They can influence individuals either throughdirect interaction or indirect established social norm (Kim et al., 2017) As individualsface uncertainty in determining whether to behave ethically, colleagues act as contextualsigns for employees to imitate as well as ancillary encouragement towards ethical choices(O’Fallon & Butterfield, 2012) Additionally, in line with Social Exchange perspectives,workers may emulate others’ behaviors and make ethical decisions out of desire toestablish social compatibility and strengthen mutual relationships with others (Afsar &Umrani, 2020; Blau, 1964) For instance, observation of economical consumption ofcompany’s resources (such as electricity, commuting services or office supplies) amongother workers would guide individuals to behave economical accordingly Although some

of ethical behaviors may not necessarily result in serious sanctions if individuals do not

comply (such as turning off lights and equipment when not using), application of theseethical conducts help them to fit in the organizational culture and norms Hence, ascoworkers place social guidance toward ethical selections, employees would attempt toalign themselves with observed preferences and values by displaying frequent ethicalbehaviors From the discussion above, we propose the following:

H2: Ethical leadership has a positive correlation with coworker’s ethical behavior.

H3: Coworker’s ethical behavior has a positive correlation with employee’s ethical behavior.

2.2.4 Ethical Leadership, Employee’s Ethical Behavior and Perceived Organizational Politics

Organizational politics depicts deliberate use of tactics and powers that canenhance individual’s or group’s obtainment of self-interested benefits and advantages(Başar et al., 2018) Such conducts can take place in various organizational internalprocesses (such as promotion, decision-making, performance valuation) with myriadforms to execute, for example degrading and blaming others, getting close with superiorsand influential individuals, creating allies, and giving compliments and praises forimpression management In this regard, perceived organizational politics (POP) refers tothe employees’ subjective assessment of how political and illegitimate their workingenvironment is (Bergeron & Thompson, 2020) As one’s perception of an issue givesbetter guidance on reactions rather than the reality itself , it would be more relevant toinvestigate employees’ behaviors on the basis of their perspectives (Cheng et al., 2019).Interpretation of organizational politics are vastly negative due to the self-servingand manipulative characteristics, which are usually at the expense of others and even thefirm (Rosen et al., 2014) Although political activities can offer benefits for those who

exercise, they are generally referred as unethical and immoral as these behaviors directpeople towards inequality, unfairness and injustice in decision making and managerialpractices (Başar et al., 2018) Besides frustration and damaged exchange relationshipbetween employees and the organization, high levels of POP may increase inefficientworking performances since individuals are now encouraged to participate in the politicalgames instead of concentrating on their actual work value to earn rewards andrecognition (Vigoda-Gadot, 2007; Vigoda, 2001) In other cases, when employees do nothave the capability to join the game or deal with perceived politics, the situation mayimpose threats to their well-being and working position, which will lead to lowerproductivity, higher stress and ultimately, job resignations The results of study byAsrar-ul-Haq et al (2019) provide support for this rationale as they demonstrate thesignificant correlations between POP and subordinates’ work stress and turnoverintentions.

An environment with ambiguous and unclear decisional guidelines would makeroom for ethical dilemmas and political execution (Gotsis & Kortezi, 2010) High levels

of politics are also common in high power distance countries where employees arereported to experience low degrees of organizational fairness and immensely rely ontheir bosses for career advancement and salary increase (Lau et al., 2017) Despitehighlights on collectivism and harmonious relationships among members, benefits andrewards may be favorable distributed to certain groups or individuals at the cost of others

in these nations (Kennedy, 2002)

Leaders may pose certain influences on the organizational climate shaped undertheir attributes and guidelines (Aryati et al., 2018) As leader significantly representsentity’s image, ethical leaders who are highly associated with transparency, honesty andjustice allow subordinates to learn about the firm’s preferences for integrity, rather thanpolitical competition Such realization helps to decrease levels of POP among workers(Cheng et al., 2019) On the other hand, when managers demonstrate lower frequency ofmoral choices and act opportunistically, employees are persuaded to believe in

organization’s political tendency and, certainly, higher levels of POP.

In addition, ethical leadership can actively diminish the necessity to join politicalgames in the workplace Since employees’ performance, rewards and promotion aremerely evaluated based on fair standards and the work contributed itself, there would be

no need for subordinates to exercise political tactics so they can gain certain priority andbiased benefits from superiors Ultimately, ethical leaders outspread emphasis onemployees’ work performance and value delivered, while giving the indication thatself-serving activities are not welcome in this firm Former studies by Kacmar et al.(2013) and Kacmar et al (2011) affirmed these ideas as they discovered significantlynegative impacts of ethical leadership on POP In other words, ethical leaders can create afar more equal and transparent working climate that employees would associate it withlower levels of organizational politics Therefore, being consistent with previousresearch, the current study puts forward:

H4: Ethical leadership has a negative correlation with POP.

Different social contexts were identified to generate different individuals’engagement in ethical behaviors (Caruso & Gino, 2011; Gino et al., 2011; Kish-Gephart

et al., 2010; Lau et al., 2017) A reliable and collegial climate as well as merit-based payincrease promotes workers’ manners to support others and organization’s well-being,including offering advice and feedbacks, or helping and praising ethical contributions(Paillé et al., 2015) In contrast, strongly political culture presses these encouragements.Since subordinates’ advantages and benefits are highly linked to their relationships withcertain political parties, individuals would lose trust in fair organizational rewards whilenot being motivated for ethical intentions and solutions (Cheng et al., 2019)

The correlation between POP and employees’ ethical behaviors can further beexamined from the perspective of Social Exchange theory Favoritism and sense ofadversity in political settings would lead to feelings of unfairness, exhaustion and

organizational unconcern for their well-being (Huang et al., 2003; Karatepe et al., 2012;Rosen et al., 2006) Hence, application of political tactics obstructs expected mutualbeneficial exchange between employees and the firm, leaving less incentives forindividuals to reciprocate and display ethical behaviors that can benefit others Contrarily,transparent working climate with hardly any political practices stimulates tendency forethical conducts From these reasonings, we infer:

H5: POP has a negative correlation with employee’s ethical behavior.

2.2.5 Ethical Leadership, Employee’s Ethical Behavior and Organizational Commitment

Besides external factors arising from superiors, associates and workplace climate,employees’ behavior is further determined by internal values and feelings withinthemselves (Pio & Lengkong, 2020) Organizational commitment represents thepsychological bond between employees and the firm, comprising senses of attachment,loyalty and faith in organizational values (Tran et al., 2020; Yang & Wei, 2018) Itconsists of three dimensions, which are normative (obligatory), continuance (cost-related)and affective (feelings-related) (Allen & Meyer, 1990) However, the current studyfocuses on affective commitment as it is the most studied and robust dimension whichprovides finest comprehension of how employees’ behaviors are formed (Lau et al.,2017; Usman et al., 2021) Conceptually, affective commitment illustrates employee’semotional attachment that results from personal involvement as well as interests andvalues shared with the company (Tang & Vandenberghe, 2020) It can be exceptionallyinfluential in determining employees’ workplace behaviors and decisions, such as jobretention or turnover intention, punctuality, organizational citizenship behaviors as well

as work efficiency and performance (Dhar, 2015; Hunter & Thatcher, 2007; Jaiswal &Dhar, 2016; Khan et al., 2018; Pool & Pool, 2007; Wasti & Can, 2008)

Ethical leaders can positively uplift employees’ workplace attitudes andattachments (Asif et al., 2020) Once again, social learning and social exchange theories

offer baselines for how ethical leaders shape followers’ commitment Leaders’ rolemodels of trustworthiness, justice and devotion to organizational values standardizeaffiliated feelings with the company among subordinates (Brown et al., 2005; Zhang &Jiang, 2020) Reciprocity attribute of social exchange additionally drives employees’loyalty and emotional bond in response to leader’s courtesy and attentiveness tofollowers’ well-being (Blau, 1964; Gouldner, 1960) In line with these expectations, astudy conducted by Beeri et al (2013) found positive impacts ethical leaders imposed onemployees’ organizational commitment Similarly, in an experiment by Aryati et al.(2018), organizational commitment was discovered to develop out of ethical leadershipand act as a mediator between ethical leadership and employees’ organizationalcitizenship behavior Therefore, in accordance with former research, we make thefollowing hypothesis:

H6: Ethical leadership has a positive correlation with organizational commitment.

According to former research, employees’ emotional attachment catalyzes faith inorganizational objectives and values, as well as strong engagement in supportivebehaviors beyond obligation that benefit the company (Rhoades & Eisenberger, 2002).Organizational commitment also promotes continuous advancement and development inworkplace practices such that they can contribute to the firm’s productivity andadvantages (Wasti & Can, 2008) Hence, we can expect that subordinates with high levels

of commitment would have greater tendency to carry out ethical conducts for thewell-being of their firms Besides suggested negative relationship between employees’commitment and their unethical conducts (Aryati et al., 2018; Usman et al., 2021),empirical research has confirmed the positive association between organizationalcommitment and workers’ desirable behaviors, such as organizational citizenship andpro-social behaviors (Meyer et al., 2002; Vandenberghe et al., 2004; Yang & Wei, 2018)

Hence, from these descriptions, we reason that:

H7: Organizational commitment has a positive correlation with employee’s ethical behavior.

2.3 Research Model

Figure 1 The research model

CHAPTER 3

METHODOLOGY

This chapter gives detailed descriptions of the research approach applied in thisstudy, including sampling techniques, target respondents, data collection methodprocedure, questionnaire design and measurement items Tools and method for dataanalysis are also mentioned as the last part

2.1 Research Design and Process

3.1.1 Research Design

It is essential that research design be first determined as it gives the generalstrategy and direction for the study Quantitative method is the approach which involvesnumerical data collection and analysis to examine the relationships and interactionsamong studied variables It is highly applicable in examining relationships betweenvariables and testing prespecified concepts and hypotheses Since the current studyconcentrates on analyzing correlations between ethical leadership, employees’ ethicalbehaviors, and other related variables including coworker’s ethical behavior, POP andorganizational commitment, quantitative approach suits the nature of the study and can beused for testing the proposed hypotheses

3.1.2 Research Process

In addition to research design, research process is developed for systematic steps

the study takes to carry out the experiment The figure 1 below demonstrates the researchprocedure given its quantitative approach.

First, research gap, questions, objectives as well as purposes are well addressed

to indicate the study’s direction Next, literature on former theoretical frameworks,

concepts and linkages among related variables is thoroughly reviewed, ensuring sufficientdescription, evaluation and understanding of the topic Given the subject’s literature

review and authors’ reasonings, hypotheses are then proposed along with the presented research model Subsequently, questionnaire is drafted with the adoption of measurement items from previous studies A sample of approximately 50 respondents

are then collected for pilot test and to gather comments on necessary adjustments of thesurvey questions and wordings From these feedbacks and the pilot’s results on reliability

and validity, questionnaire is revised and further distributed until the study obtains the sample size of more than 200 respondents After the data is sufficiently collected, SPSS and Smart-PLS softwares are utilized for data analysis, achieving results on descriptive

statistics, reliability, convergent and discriminant tests, and ultimately Structure EquationModel (SEM) The research findings are then discussed for its theoretical and practicalimplications Lastly, conclusions and recommendations for future research are also given

finance:

Research process

In addition to research design, research process is developed for systematic stepsthe study takes to carry out the experiment The figure 1 below demonstrates the researchprocedure given its quantitative approach

First, research gap, questions, objectives as well as purposes are well addressed

to indicate the study’s direction Next, literature on former theoretical frameworks,

concepts and linkages among related variables is thoroughly reviewed, ensuring sufficientdescription, evaluation and understanding of the topic Given the subject’s literature

review and authors’ reasonings, hypotheses are then proposed along with the presented research model Subsequently, questionnaire is drafted with the adoption of measurement items from previous studies A sample of approximately 50 respondents

are then collected for pilot test and to gather comments on necessary adjustments of thesurvey questions and wordings From these feedbacks and the pilot’s results on reliability

and validity, questionnaire is revised and further distributed until the study obtains the sample size of more than 200 respondents After the data is sufficiently collected, SPSS and Smart-PLS softwares are utilized for data analysis, achieving results on descriptive

statistics, reliability, convergent and discriminant tests, and ultimately Structure EquationModel (SEM) The research findings are then discussed for its theoretical and practicalimplications Lastly, conclusions and recommendations for future research are also given

Figure 2 The Research Process

2.2 Research Method and Tools

Given the statistical characteristic in quantitative approach, survey method alongwith questionnaire distribution is an appropriate choice for obtaining primary data andanalyzing the results Questionnaire is a suitable mean for producing numericrepresentations of the study and is also one common tool for convenient and quick datacollection when there is time limitation With the support of numerous social mediaplatforms (such as Facebook and Zalo), and other online instruments (emails and googledrive), the questionnaire was first developed under Google Form and later delivered tothe target population

2.3 Research Sampling

3.3.1 Target Respondents

It is vital that suitable population be selected for research in the business andmanagement fields (Bell et al., 2018) Since the current study aims to clarify how ethicalleaders as well as perception of organizational politics, coworkers and employees’ owncommitment to the organization affect their ethical behaviors, employees are thereforethe most appropriate respondents It should be noted that workers were carefully selectedbased on their current job positions, in which only people holding titles of middlemanagers and below were chosen

As the theme is about ethical behaviors, we have decided joint stock firms as theapplicable targets after ample consideration and consultation For joint stock companies,ethical matters not only impose effects on organizational values and workers inside, butthey also influence other stakeholders and public investors In addition, given theimmense operation and company sizes with various levels of management in joint stockfirms, the interactions between leaders and followers are far more relevant

The target companies vary in their business fields, ranging from banking,manufacturing to logistics and services industries, etc By collecting data from variousorganizations, the study achieves great numbers of respondents and offers morecomprehensive and reflective results than studies with restricted data collection in feworganizations (Zehir & Erdogan, 2011) This approach also allows examination ofsensitive topics such as ethical behavior as it reduces influences of social desirability onaltering the results (Al Halbusi, Williams, Mansoor, et al., 2020).

of 222 valid observations from 240 questionnaires successfully distributed (92.5%response rate) , the study’ size is close to the optimal one and lies within the acceptablerange as suggested by Hair et al (2010)

2.4 Questionnaire Design and Measurement Items

3.4.1 Questionnaire Design

The questionnaire was adapted from previous empirical research regarding thetopic of ethical leadership and employees’ ethical behaviors After attentive and carefultranslation from English to Vietnamese for the target population, all questions were againreviewed by professionals in social science research and further modified by managersand employees of the target companies, guaranteeing the most understandablequestionnaire and avoiding any undesirable confusion The survey was then distributed tothe target respondents over the course of three consecutive months (from January toMarch in 2021) There are two parts forming the questionnaire structure In the first part,respondents were asked to provide some demographic and general information, includingage, gender, the company they were working, job position, years of experience and level

of education Subsequently, in the second part, they were asked to fill in questions onethical leadership, employee’s ethical behavior, coworker’s ethical behavior, POP andorganizational commitment on the basis of 5-point Likert Scale (See Appendix)

3.4.2 Measurement Items

Five points Likert-scale was applied to measure the variables in the researchmodel, from 1 representing for strongly disagree to 5 for strongly agree All measurementitems were adapted from previous empirical research and had been extensively used bymany scholars (see Table 1 below)

Ethical Leadership (EL) We adopted 7 items from Cheng et al (2019), whose

research had also adapted questions from Brown et al (2005) to assess levels of ethicsamong leaders in organizations One of these items is “My manager makes fair andbalanced decisions”

Ethical Behavior (EB) This variable was measured using 7 items selected out of

study by Al Halbusi, Williams, Ramayah, et al (2020) so that the chosen questions are

appropriate for Vietnamese respondents A sample item is “I use company servicesappropriately and not for personal use”.

Coworker Ethical Behavior (CEB) We further adopted 3 items from Mayer et al.

(2013) to reflect how ethical the respondents’ colleagues are A sample item may include

“My coworkers carefully consider ethical issues when making work-related decisions”

Perceived Organizational Politics (POP) We again utilized 4 items from Cheng

et al (2019) to demonstrate the employees’ perception of political levels in theirorganizations A sample item is “People in this organization attempt to build themselves

up by tearing others down”

Organizational Commitment (OC) We adopted 4 items from Meyer et al (1993)

showing the affective commitment that individuals feel towards their firms A sampleitem includes “I feel a strong sense of belonging to my organization”

Table 1 Measurement Items

Ethical

Leadership

My manager…

Cheng et al.(2019), Brown et

al (2005)

EL1 Listens to what department employees have to say

EL2 Conducts his/her personal life in an ethical manner

EL3 Has the best interests of employees in mind

EL4 Makes fair and balanced decisions

EL5 Can be trusted

EL6 Discussesemployees. business ethics or values with

EL7 Sets an example of how to do things the right wayin terms of ethics.

Ethical Behavior

EB1 I take responsibility for my own errors

Al Halbusi,Williams,Ramayah, et al(2020)

EB2 I use company services appropriately and not forpersonal use

EB3 I keep confidential information confidential

EB4 I take the appropriate amount of time to do a job

EB5 I report others’ violation of company policies andrules

EB6 I lead my subordinates to behave ethically