Abstract

Purpose – With the growing demand for ethical standards in the prevailing business environment, ethical leadership has been under increasingly more focus. Based on the social exchange theory and social learning theory, this study scrutinized the impact of ethical leadership on the presentation of ethical conduct by employees through the ethical climate. Notably, this study scrutinized the moderating function of the person organization fit (P-O fit) in relation to ethical climate and the ethical conduct of employees. Design/methodology/approach – To evaluate the research hypotheses, two-wave data were collected from 295 individuals who are currently employed in various Iraqi organizations (i.e. manufacturing, medical, and insurance industries). Findings – In line with the hypotheses, the outcomes from a sample of 295 workers working in different Iraqi entities exhibited a positive relationship between the ethical behavior of leaders and the ethical conduct of employees in the ethical climate. Moreover, it was observed that the P-O fit of employees moderated the relationship between ethical climate and the ethical conduct of employees such that the relationship was more robust for those with a high P-O fit in comparison to those with a low P-O fit. Research limitations/implications – The primary limitation of this study is in the data, which was obtained from a single source. Although the study conducted two surveys and utilized a mediation and moderation variables model that was less likely to be influenced by common method bias (CMB) (Podsakoff et al., 2012), one cannot completely rule out CMB. Apart from the potential effects of the CMB, the consistency of the empirical findings could have also been compromised since self-reported data were utilized in measuring ethical behavior, which can be a very complex and sensitive issue. For this reason, the social desirability response bias cannot be ruled out completely. When possible, future studies must gather data from multiple sources. Furthermore, supervisors must evaluate the ethical behavior of employees. Another limitation was that the findings of this study were based on a sample in a Middle Eastern cultural context such as in Iraq. Perhaps, the particular cultural features of this context, which encompassed, among other things, strong adherence to religious values (Moaddel, 2010), could have influenced the findings of this study. It is true that the effects of differences (P–O fit) are highly likely to replicate across cultural contexts (Triandis et al., 1988). However, it can be seen that further studies are needed to evaluate the context-sensitivity of these findings (Whetten, 2009) by analyzing other cultures, where the importance of religiosity is on the decline (i.e. in Western countries, Ribberink et al., 2018) or where the cultural features are very much different from those that apply to Iraq. Lastly, other external factors were not taken into account by this study as it tried to explain ethical behavior. Ethics is a highly complex subject and is influenced by numerous variables at the organizational, individual, and external environment levels. Thus, caution must be observed when making inferences from the present study which, to a certain degree, offered a simplified version of ethical behavior by concentrating on a few variables such as the Arab culture’s traditional ideology, which dominates even science (Abu Khalil, 1992). In addition, there are political conflicts in the Middle Eastern cultural context such as what is happening in Iraq (Harff, 2018). Thus, it is important to include such aspects in future researches. Practical implications – In terms of management, the findings send a clear signal to those in the upper echelon that, without ignoring the issue of ethics in organizations, employees are a critical aspect to be taken into account to encourage ethical behavior at the workplace. This study has important practical implications. First, this study determined that ethical leadership (here, of the supervisors) positively influences the behavior of subordinates (refers to the supervisors here); this, in turn, further improves the ethical behavior of employees. It is vital that managers or supervisors are motivated to practice ethical leadership because they directly influence the employees. It has been suggested that top managers, especially chief executive officers, have the ability to shape the ethical climate, which also influences the ethical behavior of employees further. This study offered several feasible ways that managers can apply to achieve that. In particular, top managers may utilize the ethical climate as a way of communicating the ethical values that they have to their subordinates, thereby serving as a motivation for the subordinates to adopt ethical behavior. It was also suggested by this study that ethical climate and the P–O fit may, to some degree, substitute each other as they influence the ethical behavior of employees. Therefore, firms that were identified to have a low level of ethical standards, practices, and policies, at least from the employees’ perspective, are better poised to conduct ethical issues in order to construct the ethical behavior of their subordinates. More importantly, it is highly essential that the value congruence between an organization and its followers be considered. Social implications – This study highlighted the notion of ethics and how it’s essential for society. Ethics refers to the norms, standards, and values that direct the behavior of an individual. Ethical behavior is vital in society because we need to be treated with respect as human beings. Originality/value – This study responds to recent calls for more research to identify factors that may strengthen or mitigate the influence of ethical behavior in the workplace such as ethical leadership, ethical climate, and Person–Organization.