113719

Ethical leadership, Moral Disengagement, and Unethical

Pro-organizational Behavior: A Multilevel Moderated

Mediation Analysis

A series of business scandals raised public concerns and prompted researchers

and practitioners to re-advocate the importance of ethical leadership (Brown, Trevio,

& Harrison, 2005). Ethical leadership is a value-driven leadership which can affect

subordinates self-concept and beliefs through role models and the sharing of moral

standards, a process which can result in desirable behavior among subordinates

(Brown et al., 2005; Den Hartog & Belschak, 2012; Liu, Lam, & Loi, 2012). Despite

understanding the effects, Barling and colleagues (2010) argued that much is known

about the outcomes of leadership, but less is known about how and why these effects

occur (p.206). Thus, it is important to explore the effects of the underlying processes

of ethical leadership on employee behaviors.

The present study has two main purposes. First, although many empirical studies

have shown that ethical leaders can reduce followers unethical or negative work

behaviors that are harmful to organizations, such as workplace deviance (e.g., Mayer,

Kuenzi, Greenbaum, Bardes, & Salvador, 2009; Avey, Palanski, & Walumbwa, 2011;

Den Hartog & Belschak, 2012; Neves & Story, in press), counterproductive behavior

2(CWB; e.g., Den Hartog & Belschak, 2012), and withdrawal behavior (e.g., Zhang,

Walumbwa, Aryee, & Chen, 2013), scarce research in the literature has examined the

issue of why ethical leadership can work to prevent subordinates unethical

pro-organizational behavior (UPB) (though an uncommon finding from Miao,

Newman, Yu, & Xu 2013 study showed that there is a curvilinear relationship

between ethical leadership and employee UPB). Umphress and Bingham (2011)

defined UPB as actions that are intended to promote the effective functioning of the

organization or its members and violate core societal values, mores, laws, or standards

of proper conduct (p.622). Scholars have argued that, in general, ethical leadership

can reduce unethical behavior in employees because of the social learning processes.

For example, Brown and colleagues (2005) suggested that subordinates are likely to

avoid unethical behaviors by vicariously emulating the proper behaviors and values of

their ethical leaders. Likewise, Liu and colleagues (2012) pointed out that ethical

leaders help their subordinates to view their jobs as more meaningful and to

strengthen the development of self-regulation, which in turn can reduce the

subordinates deviance behaviors.

Trevio and colleagues (2014) suggested that moral disengagement is a

psychological mechanism which can explain why employees engage in unethical acts.

They defined the mechanism as a process of neutralization techniques in which

3self-censure and moral emotions (e.g., shame and guilt) are disengaged from

behaviors that violate moral standards (p.638-649). To date, the research concerning

moral disengagement has remained limited in the field of organizational study (Beu &

Buckley, 2004; Detert, Trevio, & Sweitzer, 2008; Moore, Detert, Trevio, Baker, &

Mayer, 2012), and empirical research that links ethical leadership to employee UPB

through moral disengagement has not yet been conducted sufficiently (see Liu et al.,

2012; Zhang et al., 2013). The first purpose of the present study is to investigate the

mediating role of moral disengagement on the relationship between ethical leadership

and employee UPB.

Second, as business ethics has become a major concern in society, business

leaders nowadays not only take ethical responsibilities in the face of external social

pressure (Trevio, Hartman, & Brown, 2000; Brown et al., 2005) but also promote

organizational ethical image and reputation for their own personal benefit (Den

Hartog & Belschak, 2012). The relationship between the Machiavellianism (Mach)1

of leaders and their ethical leadership has attracted researchers attention. Wilson and

colleagues (1996) defined Machiavellianism as a strategy of social conduct that

involves manipulating others for personal gain, often against the others self-interest

1

Following Dahling and colleagues (2009), this present study view Mach as the abbreviation of

Machiavellianism and Machs as the abbreviation of Machiavellians (for detail see Dehling et al., 2009,

p.221)

4(p.295). Machiavellians (Machs) are those who focus highly on self-interests and

skillfully employ coercion, manipulative strategy, and impression management tactics

for the sake of personal extrinsic goals (Christie & Geis, 1970; Becker & OHair,

2007; Dahling, Whitaker, & Levy, 2009; Den Hartog & Belschak, 2012). Drawing on

the identity perspective, recent studies showed that Machs may not always enact the

role and express outward behaviors that are in line with their true beliefs and identities

(Wilson, Near, & Miller, 1996; Hawley, 2003). For example, Becker and OHair

(2007, p.248) found that though Machs are not prosocial in nature, they can perform

outward organizational citizenship behavior (OCB) based on their own impression

management motives (e.g., maintaining a positive image or enhancing self-promotion).

In the present study, we argue that Machs will take ethical practices and display

ethical behaviors if they view these actions as a necessary means to improve

self-image and reputation (see Dan Hartog & Belschak, 2012). High Mach leaders

may be more motivated to make their ethical leadership effective in reducing

employee unethical behavior. Therefore, the second purpose of this study is to

examine the moderation influence of leaders Machiavellianism on the relationship

between their ethical leadership and subordinates moral disengagement and UPB.

Theory and hypotheses development

Ethical leadership

5Ethical leadership is the demonstration of normatively appropriate conduct

through personal actions and interpersonal relationships, and the promotion of such

conduct to followers through two-way communication, reinforcement, and

decision-making (Brown et al., 2005, p.120). Ethical leadership is a form of

value-driven leadership style that concerns and promotes normally appropriate

conduct in subordinates (Brown et al., 2005; Brown & Mitchell, 2010). Ethical

leaders set ethical standards for and communicate the importance of ethics to their

subordinates (Brown et al., 2005; Brown & Trevio, 2006), and they shape their

subordinates cognitions, attitudes, and behaviors toward the meaning of ethics

(Shamir, House, & Arthur, 1993; Den Hartog & Belschak, 2012) by serving as role

models of ethical conduct while rewarding appropriate behaviors and impeding

unethical behaviors of subordinates (Brown et al., 2005; Brown & Trevio, 2006).

Social learning theory (Bandura, 1986) has been used as one of the explanations for

the influence of ethical leadership on subordinates behaviors (Brown et al., 2005;

Miao et al, 2013; Zhang et al., 2013). According to the social learning theory,

individuals learn what to do and what not to do through vicarious learning (Bandura,

1986), a process referring to learning by observing the behaviors of others (i.e., peers

and supervisors) and the positive or negative consequences resulted from the observed

behaviors (Bandura, 1986; Brown et al., 2005; Liu et al., 2012; Zhang et al., 2013). As

6employees learn to behave in an ethical manner, they will commit less unethical acts

while performing their jobs. In the following section, we will elaborate on why ethical

leadership can work to reduce employees UPB.

Ethical leadership and unethical pro-organizational behavior

Over the recent years, a number of researchers have verified the negative

relationship between ethical leadership and employees unethical behavior (Mayer et

al., 2009, 2010; Stouten et al., 2010; Miao et al., 2013). For instance, Mayer and

colleagues (2009, 2010) found that ethical leadership is negatively related to

group-level deviance behavior and the misconduct of subordinates through the

trickle-down effect of ethical leadership and the formation of ethical organizational

climate. Stouten and colleagues (2010) found a negative relationship between ethical

leadership and workplace bullying. Den Hartog and Belschak (2012) showed that

ethical leadership has a negative effect on employee CWB through the mediation of

employees social connection at their work. In the above trend of research, however,

few studies have examined the relationship between ethical leadership and employees

UPB (Miao et al., 2013; Umphress & Bingman, 2011; Umphress et al., 2010).

In this study, we argue that subordinates under higher levels of ethical leadership

will be less likely to engage in UPB for the following reasons. First, according to

Bono and Judge (2003), individuals will not work for goals which are not in line with

7their own personal interests and values. Since ethical leaders serve as role models for

guarding ethical values for their subordinates, create the normative standards at work,

and use reward and punishment to keep their subordinates accountable for their

ethical performance, the subordinates will be more likely to ensure that their

behaviors are consistent with ethical standards and be less likely to engage in

unethical behaviors that conform to organizational expectations but are inconsistent

with the moral standards ascertained by their leaders (e.g., falsifying documents and

lying to stakeholders; Miao et al., 2013).

Second, according to the identity theory, leaders are organizational agents who

use power to transform employees values and cognitions in general (van

Knippenberg, van Knippenberg, De Cremer, & Hogg, 2004; Trevio & Brown, 2005).

When subordinates identify with leaders who are ethical, the subordinates will make

their values, attitudes, and self-concept consistent with the moral image of the leaders,

which in turn can prevent the subordinates from committing UPB (Brown et al., 2005;

Walumbwa et al., 2011; Miao et al., 2013). Thus, we hypothesize that ethical

leadership can prevent subordinates UPB.

Hypothesis 1. Ethical leadership is negatively related to employee UPB.

Ethical leadership and moral disengagement

Bandura (1999) stated that moral disengagement as the cognitive processes

8consists of eight inter-related mechanisms, whereby moral self-sanctions are

selectively disengaged from inhumane conduct (p.193). These eight mechanisms can

be further categorized into three broad dimensions of moral disengagement. First,

individuals may utilize a set of cognitive re-construal processes (e.g., moral

justification, euphemistic labeling, and advantageous comparison) to cognitively

distort the outcomes of unethical conducts so that they can make these conducts seem

less harmful and unethical (Bandura, 1986, 1991, 1999; Bandura, Barbaranelli,

Caprara, & Pastorelli, 1996). For instance, subordinates may feel that utilizing

organizational resources for personal purpose is not unethical because coworkers may

do the same thing, which in reality eventually incurs a high cost to the organization.

Second, individuals may distort and minimize the role played by moral agent in their

unethical conducts via displacement of responsibility and diffusion of responsibility

(Bandura, 1991, 1999; Bandura et al., 1996). For instance, subordinates view hiding

information about a defective product and giving bribery as an act of obedience to

their supervisors or of conformity to their work groups. Third, dehumanization,

distortion of consequences, and the attribution of blame are also several moral

disengagement practices which enable individuals to reduce identification with other

people (e.g., customers or coworkers), or even to view imposing unethical treatment

on the innocents as rightly deserved outcomes (Bandura, 1991, 1999; Bandura et al.,

91996). For example, employees may scapegoat all faults of the work unit on

underperforming coworkers because they feel that these coworkers deserve to be

punished for their low level of job performance.

To date, there has been a lack of empirical research examining the relationship of

ethical leadership and employee moral disengagement. Liu and colleagues (2012)

qualitative study is the only one that provided some preliminary evidence for

explaining why ethical leadership can weaken subordinates propensity for moral

disengagement. By using cognitive argument, these researchers suggested that ethical

leaders can shape subordinates cognitions of moral standards via practices such as

establishing ethical codes, communicating ethical expectations with subordinates,

being role models of ethical conduct, and using reward and punishment systems for

enforcing ethical requirements. As a consequence of ethical leaders moral

management, their subordinates will become accountable for right or wrong behaviors

through their moral cognitions. They will be less likely to justify their unethical

conducts, shift responsibilities for their wrong doing on others, dehumanize the

victims of their unethical treatment, and distort the consequences of their unethical

conduct. In other words, their propensity for moral disengagement will be reduced,

and they will become more actively involved in taking moral responsibility (Brown et

al., 2005; Brown & Trevio, 2006; Detert et al., 2007). We argue that employees

10

under an ethical leadership will be less likely to disregard the link between their moral

cognitions and the manifestation of ethicality in their conduct. We hypothesize that:

Hypothesis 2. Ethical leadership is negatively related to employees propensity for

moral disengagement.

The Mediation of moral disengagement on the ethical leadership-UPB relationship

Scholars in the literature have raised concerns about the influence of moral

disengagement on employee unethical behavior (Detert et al., 2008; Duffy, Scott,

Shaw, Tepper, & Aquino, 2012; Moore et al., 2012; Johnson and Buckley, in press).

For example, Christian and Ellis (in press) found that employees with a higher level

of moral disengagement are more likely to engage in workplace deviance in situations

with high uncertainty and in high pressure environments. In such situations or

environments, employees identification with their organization and their intent to

reciprocate good treatment from their organization may outweigh their moral

conscience and cause them to choose to act unethically in their decision makings.

Examples of moral disengagement leading to UPB include showing a lack of

self-censure from distorting negative outcomes (e.g., false accounting can benefit the

organization or even boost the stock values) and attributing behaviors to their

supervisors dictates (e.g., I dont really want to conceal information about product

defect and pollution but my supervisor lets me do so) (Moore, 2008; Umphress et al.,

11

2010; Umphress & Bingham, 2011; Moore et al., 2012). As employees propensity for

moral disengagement can be reduced by ethical leadership (Grojean et al., 2004;

Brown et al., 2005), their intent for UPB will likely be attenuated because of the

reduction in their moral disengagement. Therefore, we propose the following

hypothesis:

Hypothesis 3. The influence of ethical leadership on employee UPB is mediated by

employees propensity for moral disengagement.

The moderation of Machiavellianism on the ethical leadership-moral

disengagement-UPB relationship

Wilson and colleagues (1996) defined Machiavellianism as a strategy of social

conduct that involves manipulating others for personal gain, often against the others

self-interest (p.295). According to Christie and Geis (1970), high Mach people tend

to manipulate and persuade others in order to secure personal gains and power

(Wilson et al., 1996; Dahling et al., 2009; Den Hartog & Belschak, 2012). In recent

studies, researchers have considered Mach as a dark side of leadership and suggested

that ethical leadership is negatively associated with a leaders Mach (e.g., Brown &

Trevio, 2006; Dahling et al., 2009; Brown & Mitchell, 2010; Den Hartog &

Belschak, 2012). However, Bass (1998) argued that leaders have complex

personalities that cannot be considered as completely sage or completely rogue.

12

Hawley (2003) argued that an ethical leaders inner values are not necessarily

consistent with their ethical behaviors as perceived by their subordinates. Jones and

Paulhus (2009) argued that high Machs may forgo short-term benefits to achieve

long-term benefits from maintaining their reputations over time (p. 104). Becker and

OHair (2007) showed that when high Machs regard OCB as a means for maintaining

a positive image and for enhancing their self-interest, they will be more likely to be

prosocial. This includes outwardly engaging in ethical behaviors and acting as role

models for ethical behavior as shown by Den Hartog and Belschak (2012, p. 36-39).

Based on the impression management and the self-serving intentions of high

Mach individuals, we argue that leaders with a higher level of Mach will practice

pro-social ethical management at work to fulfill social expectations and create an

ethical image for the purpose of achieving personal or organizational gain (Hawley,

2003). Given subordinates awareness of the ethicality of leadership, high Mach

leaders may use manipulative tactics (Becker & OHair, 2007) to make their

subordinates behave in accordance with strict ethical codes and standards in order to

create a positive image and ethical reputation in the eyes of others (Christie & Geis,

1970, p.312; Ramanaiah, Byravan, & Detwiler, 1994; Wilson et al., 1996).

Overall, we argue that because high Mach leaders view ethical management as a

means to help them reach personal goals and attain organizational benefit, they will

13

likely foster and coerce their subordinates into enhancing moral self-regulation and

being accountable for the moral responsibilities in behaviors, making them less

morally disengaged. Thus, the Mach of the leaders can actually reinforce the negative

influence of ethical leadership on employees propensity for moral disengagement. As

the influence is strengthened, the mediation effect of moral disengagement on the

ethical leadership-UPB relationship will also become greater. Thus, we propose the

following hypotheses:

Hypothesis 4. A leaders Machiavellianism moderates the effect of ethical leadership

on employees propensity for moral disengagement such that the effect is stronger

when the leader has a higher level of Machiavellianism.

Hypothesis 5. The mediation of the employees propensity for moral disengagement

on the ethical leadership-employee UPB relationship is moderated by the leaders

Machiavellianism such that the mediation effect is stronger when Machiavellianism is

higher.

INSERT FIGURE1 ABOUT HERE

Method

Sample and procedure

14

To enhance the generalizability of research findings, the present study used a

large sample of respondents from a variety of organizations. We collected data from

56 different for-profit organizations and three non-profit organizations, in which 160

supervisors and 800 full-time employees responded to a three-phase,

supervisor-subordinate dyadic questionnaire survey.

To avoid common method variance (CMV), the present study followed the

procedural and statistical remedies of Podsakoff and colleagues (2003, 2012). The

procedures of separate data sources and time lags for collecting measures of different

variables were employed. For the supervisor-rating questionnaire, 160 supervisors

were requested to rate their own Mach personality and demographic characteristics in

the phase-1 survey. In order to aggregate individual-level data to the workgroup level,

we needed to obtain a sufficient number of qualified samples. By doing so, we asked

these supervisors to invite four or more subordinates to participate in this study

(Richardson & Vandenberg, 2005; Mayer et al., 2009). Each questionnaire in the same

supervisor-subordinates combination was assigned the same code number for

matching purposes. Three weeks after the phase-1 survey, eight-hundred participating

employees were asked to provide an assessment of the ethical leadership of their

leaders, their own propensity for moral disengagement, and their demographics. Six

weeks later, those who had completed the phase-2 survey were asked to evaluate the

15

extent to which they had engaged in UPB previously. Hermans one-factor test

(Podsakoff et al., 2003) was adopted as a statistical remedy for CMV.

A total of 124 and 665 completed questionnaires were received from direct

supervisors and their subordinates in the phase-1 and phase-2 surveys respectively,

resulting in response rates of 77.5 % and 83.1%. Of the 665 useful questionnaires, 618

were returned in the phase-3 survey due to voluntary turnover. This yielded a response

rate of 92.9%. To increase the representativeness of the data structure and aggregate

measurement, we excluded missing data, including respondents who had worked less

than three months and workgroups with fewer than three employees (Hofmann, 1997).

Afterwards, the sample consisted of 595 full-time employees from 124 workgroups.

The valid response rates were 77.5 % for supervisors and 74.4 % for employees. Of

the 595 full-time employees, 40.3% were men and 59.7% were women; the highest

level of education attained consisted of 8.1% high school or below, 12.3% junior

college, 61.2% university, 18.3% MA, and 0.2% PhD. The age of respondents (i.e.,

employees) ranged from 20 to 65 years old, with an average of 32.55 years (SD =

7.59). The average dyadic tenure of the respondents (i.e., employees) with their

immediate supervisors was 3.03 years (SD = 3.20).

Measures

Except for the control and demographic variables, the 7-point Likert scale (1 =

16

strongly disagree; 7 = strongly agree) was used on all other variables to ask

respondents to rate the items of the variables on how strongly they agree or disagree

with the statements in the items. Since the measurement scales used were originally

developed in the English, a translation and back-translation procedure (Brislin,

Lonner, & Thorndike, 1973) was used to ensure both the semantic accuracy and the

content validity of the Chinese translation of the scales (Schwab, 2005).

Ethical leadership

Ethical leadership was assessed using the multidimensional 38-item Ethical

Leadership at Work questionnaire (ELW) developed by Kalshoven and colleagues

(2011). It includes seven subscales, consisting of people orientation, fairness, power

sharing, concern for sustainability, ethical guidance, role clarification, and integrity. A

sample item is: My supervisor is genuinely concerned about my personal

development. The Cronbachs alpha of the questionnaire was .97. To acquire the

workgroup-level ethical leadership, the perceived ethical leadership was aggregated

into the group level for each workgroup (Chan, 1998).

Moral disengagement

This variable was measured with a short version of the eight item scale

developed by Moore and colleagues (2012) to measure the propensity for moral

disengagement. An example item is: Taking something without the owners

17

permission is okay as long as youre just borrowing it. In addition, Bandura and

colleagues (1996) suggested that moral disengagement should be expected to measure

as a single higher-order construct. Thus, we followed the suggestion of Detert and

colleagues (2008) and took the average score of the eight items as a measure of the

overall construct of moral disengagement. Its Cronbachs alpha was .79.

Unethical pro-organizational behavior

We took the 6-item scale developed by Umphress and colleagues (2010) to

assess the extent to which subordinates intend to engage in UPB. An example item is:

If it would help my organization, I would misrepresent the truth to make my

organization look good. Its Cronbachs alpha was .89.

Leaders Machiavellianism (Mach)

Dahling and colleagues (2009) developed a 16-item Machiavellian Personality

Scale (MPS) which was validated against a robust combination of self-report

measures, performance tests, and supervisor ratings (p. 246). We used this scale to

ask supervisors to rate their own characteristics of Mach. A sample item from the

scale is: I like to give the orders in interpersonal situations. The Cronbachs alpha

was .89.

Control variables

We took gender (1 = male, 2 = female), age, education, and dyadic tenure (in

18

years) measured at Time 2 as the individual-level control variables, which might

relate to moral disengagement (Detert et al., 2008) and UPB (Miao et al., 2013).

Analysis

We conducted a series of hierarchical linear modeling (HLM ; Hofmann, 1997;

Hofmann & Gavin, 1998; Raudenbush & Bryk, 2002) to test the cross-level mediation

and moderation effects both at the individual level (i.e., gender, age, education, dyadic

tenure, moral disengagement, and UPB) and at the workgroup level (i.e., ethical

leadership and leaders Mach) based on the following considerations. First, we

intended to explore whether the workgroup-level ethical leadership affected the

subordinates UPB. Since subordinates working in the same work unit may share a

consensus perception of leadership of their superior (Yammarino & Bass, 1990;

Nielsen & Daniels, 2012), we treated ethical leadership as a group-level phenomenon.

To verify the appropriateness of the HLM analysis, we used a null model (e.g., moral

disengagement or UPB was a dependent variable and no independent variables were

considered) to determine whether the individual-level variables of UPB and moral

disengagement had significant proportions of variance that were derived from

between-workgroup differences. The results indicated that the between-workgroup

residual variance of intercept in UPB ( = .28, Chi-square = 287.14, df = 123, p

< .001) and moral disengagement ( = .07, Chi-square = 183.54, df = 123, p < .001)

19

was significant. Also, ICC (1) for UPB was .22, which showed that 22% of the

variance in UPB existed between work groups, whereas 78% of the variance existed

within work groups. On the other hand, ICC (1) for moral disengagement was .10,

which provided evidence of significant between-work unit variance. Based on the

above findings, it was justifiable for us to use HLM as a suitable analytic technique in

this study (Snijders & Bosker, 1999).

To test a cross-level mediation effect (i.e., Hypotheses 3), we used the

procedures of Baron and Kenny (1986), which consisted of three steps. First, we

examined whether ethical leadership (the group-level independent variable) was

related to UPB (the individual-level dependent variable). Second, we examined

whether ethical leadership was significantly related to moral disengagement (the

individual-level mediator) and whether moral disengagement was related to UPB.

Finally, we evaluated the correlation between ethical leadership and UPB while

controlling for moral disengagement. If the correlation was attenuated, we then

concluded that there was a significant mediation effect (Mathieu & Taylor, 2007).

Prior to testing the cross-level mediation effect, we followed Hofmann and Gavins

(1998) suggestions to center the measure of ethical leadership on its grand mean in

order to avoid the multicollinearity problem in HLM (Mathieu & Taylor, 2007). In

addition, rather than using the Sobel test to assess the significance of the mediation

20

effect (MacKinnon, Lockwood, & Williams, 2004; Preacher & Hayes, 2008), we used

the bootstrapping procedures of Bauer and colleagues (2006) and Hayes (2013) to test

the significance of the mediation effect of moral disengagement on the ethical

leadership-UPB relationship by calculating Monte Carlo CIs with 5000 bootstrapping

repetitions.

The moderation effect of leaders Mach on the ethical leadership-UPB

relationship in Hypothesis 4 was tested using the interaction term of ethical leadership

and Mach in the cross-level regression. The moderated mediation analysis (Preacher,

Rucker, & Hayes, 2007) was then used to verify the conditional mediation effect

stated in Hypothesis 5, which concerned the influence of leaders Mach on the

mediation of moral disengagement on the ethical leadership-UPB relationship. The

moderated mediation analysis consisted of a two part regression analysis. First, we

obtained the coefficient (i.e., a) of the negative relationship between ethical leadership

and moral disengagement under high and low levels of leaders Mach (i.e., +1/-1 SD

from the mean of leaders Mach). Second, we estimated the coefficient (i.e., b) of the

relationship between moral disengagement and UPB under high and low levels of

Mach while controlling for ethical leadership. We then followed the practice of Aiken

and West (1991, p.16) to calculate the coefficient of the effect of ethical leadership on

UPB through the mediation of moral disengagement (i.e., a x b) under the conditions

21

of high and low levels of Mach. Last, we used Monte Carlo CIs with 5000

bootstrapping repetitions to test whether the moderated mediation was significant.

Results

Descriptive statistics

The means, standard deviations, zero-order correlations, and reliabilities of all

variables are shown in Table 1.

INSERT TABLE 1 ABOUT HERE

Validity of the measures

To examine the discriminant and convergent validities of all variables, we used a

series of confirmatory factor analyses (CFA). Following the fit indices recommended

by Hu and Bentler (1999), we used the maximum likelihood as estimation method and

the various goodness-of-fit indices to determine the measurement model that was a

better fit than others. The cut-off values we used for CFI and NNFI was above .90,

below .08 for SRMR, and below .06 for RMSEA (Bentler, 1990; Hu & Bentler, 1999).

The results of the CFA (see Table 2) indicated that the four-factor model (including

supervisors self-rated Mach at Time-1, subordinate rated ethical leadership and moral

disengagement at Time-2, and subordinates self-rated UPB at Time-3) was a better fit

than the alternative models. The chi-square test also showed that the four-factor model

22

was a significantly better fit than other alternative models (2(269) = 928.41, p < .01;

CFI = .95; NNFI = .95; SRMR = .06; RMSEA = .06). These results indicated that the

four-factor model had attained satisfactory discriminant validity. The results from

Harmans one-factor test (Podsakoff, et al., 2003) also showed that the four-factor

model was a better fit for the data than the one-factor model, suggesting that there was

no significant effect of CMV. The factor loadings of all variables in the hypotheses

were above .50, which implied that the measurement items of each variable achieved

a satisfactory internal consistency.

INSERT TABLE 2 ABOUT HERE

Data Aggregation of ethical leadership

Since we intended to investigate whether group-level ethical leadership

influences the subordinates UPB, particularly when the leader has a higher level of

Mach, we aggregated the measure of ethical leadership into the group-level before

testing the hypotheses (Chan, 1998). To do so, we conducted a series of ANOVA to

justify the existence of a between-group variance of ethical leadership in our sample

and calculated ICC (1) and ICC (2) (Bliese, 2000) of the variable. The results showed

that ICC (1) was .33 (F = 3.40, p < .001), greater than the cutoff standard of .12

23

(Bliese, 2000; Klein et al., 2000). ICC (2) was .71, greater than the desired value

of .70 (Klein et al., 2000). Furthermore, because the data aggregation was based on

the direct consensus model (Chan, 1998), we calculated r to estimate the inter-rater

agreement within workgroups (James, Demaree, & Wolf, 1984). The results showed

that the mean of r for the 124 workgroups was .93, greater than the criterion of .70,

indicating a high level of agreement among the group members (James et. al, 1984;

Castro, 2002). Hence, the measure of ethical leadership can be aggregated from the

individual-level to the group-level.

Hypotheses Testing

Model 6 in Table 3 showed that ethical leadership is significantly negatively

related to UPB ( = .505, p < .001), and Model 2 in the table showed that ethical

leadership was significantly negatively related to moral disengagement ( = .342, p

< .001), supporting Hypotheses 1 and 2 respectively. The results from Model 7

showed that moral disengagement is positively related to UPB ( =.475, p < .001),

and the negative effect of ethical leadership on UPB becomes smaller ( = .350, p

< .001) after accounting for the effect of moral disengagement. These two results

suggested a mediation effect from moral disengagement on the ethical

leadership-UPB relationship. We then used the bootstrapping method (see Preacher &

Selig, 2012) to verify whether the indirect effect of ethical leadership on UPB through

24

moral disengagement was significant. The results indicated that the 95%

bootstrapping CI (LLCI = -.244, ULCI = -.091) did not contain zero, demonstrating

that the indirect effect ( = -.342 x .475 = -.163) was significant. Our hypothesis was

supported.

INSERT TABLE 3 ABOUT HERE

Model 4 (see Table 3) showed that ethical leadership was significantly related to

moral disengagement ( = .350, p < .001) and that the interaction of ethical

leadership and leaders Mach on moral disengagement was significant ( = .227, p

< .001). In line with our expectation, the significant interaction terms showed that

leaders Mach strengthened the negative relationship between ethical leadership and

moral disengagement, a result supporting Hypothesis 4. Consequently, we followed

the procedures of Cohen and Cohen (1983) and of Preacher and colleagues (2006) to

plot the relationship of ethical leadership and moral disengagement based on lower or

higher leaders Mach ( 1 SD below or above the mean of leaders Mach). The results

(see Figure 2) showed that the negative relationship between ethical leadership and

moral disengagement was stronger when leaders Mach was high, whereas the

negative relationship became weaker under a lower level of leaders Mach.

25

INSERT FIGURE2 ABOUT HERE

To verify the moderated mediation hypothesis, we used procedures from

previous studies (i.e., Aiken & West, 1991, p.16; Loi, Chan, & Lam, 2014, p.52) to

calculate the simple slope of the indirect (mediation) effect of moral disengagement at

high vs. low levels of leaders Mach. We found that at high levels, the negative

indirect effect of ethical leadership on UPB through moral disengagement was

significant (the conditional indirect effect = -.547 x .475 = -.260; 95% bootstrapping

CI: LLCI = -.220 and ULCI = -.039). However, at low levels of leaders Mach, the

indirect effect was not significant (the conditional indirect effect = -.153 x .475 =

-.073; 95% bootstrapping CI: LLCI = -.113 and ULCI =.042, ns). Based on these

findings (see Table 4), we concluded that Hypothesis 5 was supported.

INSERT TABLE 4 ABOUT HERE

Discussion

Based on social learning and impression management perspectives, we aimed to

examine how ethical leadership influences subordinates UPB. Recently, Miao and

colleagues (2013) found a curvilinear relationship between ethical leadership and

employees UPB in their empirical study. In contrast, our study found a negative

26

relationship between ethical leadership and employee UPB. It is likely because the

measure of ethical leadership was aggregated into the group-level, which is different

from the individual-level measure in the Miao et al. study. Under a moderate

individual-level perceived ethical leadership, the stimulated identification with leaders

and intent for reciprocation to the organization in employees may override concern

about the ethicality of their behaviors, and they may be more prone to UPB as a result.

The present study also contributes to the literature by showing that moral

disengagement is a mechanism that explains the influence of ethical leadership on

employee UPB. Ethical leadership can prevent employees UPB because it can reduce

their propensity for moral disengagement.

The results of this study also showed that leaders Mach is negatively correlated

with ethical leadership (r = -.23), a result similar to Brown and Trevios (2006).

According to Den Hartog and Belschak (2012), there is a cognitive inconsistency

between leaders outward behaviors and inner personal values, especially when they

are higher in Mach (p.44). For example, Mach leaders tend to regard their behaviors

as window dressing whereby they can build their reputation and desirable images

for ethical leadership in the eyes of subordinates (Trevio et al., 2000; Den Hartog &

Belschak, 2012). In other words, though Mach leaders may show less ethical

leadership, they may perform ethical management for their own benefits and purposes.

27

The present study found that subordinates are more likely to reduce their propensity

for moral disengagement when their leaders are higher in Mach and consequently the

subordinates intent for UPB will be reduced. This finding contributes to the literature

by demonstrating that ethical leadership performed by Mach leaders is more effective

than low Mach leader in reducing subordinates moral disengagement and curtailing

their UPB.

We failed to find a mediation effect of moral disengagement on the ethical

leadership-UPB relationship when leaders are lower in Mach. Accordingly, low Mach

leaders may not be able to affect employees UPB through the mechanism of moral

disengagement, whereas high Mach leaders can use this mechanism to prevent

employee UPB. Future studies can be conducted to uncover the underlying causes for

this result.

Practical implications

The results of our study provide some managerial implications for business

practitioners. According to our findings, ethical leadership is one essential way for

attenuating subordinates propensity for moral disengagement and restraining them

from involving in UPB. As employees may engage in UPB for the sake of their

organizations, ethical leadership is important for preventing such behaviors. Thus,

managers need to pay more attention to ethical management and provide ethical

28

training to their employees in the workplace.

Our findings show that high Mach leaders are more effective in reducing

employees propensity for moral disengagement through their ethical leadership.

Though high Mach leaders may perform ethical management for promoting their own

reputation and self-image, nevertheless, they can help to prevent employees UPB by

reducing their propensity for moral disengagement. As organizations may provide

training in ethical management to their managers (leaders) for improving

organizational ethical performance, an incentive system which rewards their ethical

leadership may enhance the effectiveness of ethical management in reducing

employee propensity for moral disengagement and their UPB.

Limitation and future research

This research has some inherent limitations. First, since we took the measures of

ethical leadership and moral disengagement at the same point of time (Time-2), we

could not exclude the possibility for reversed direction of causality in these two

variables. Our respondents might give higher ratings of their superiors ethical

leadership while their propensity for moral disengagement is low. Future studies need

to be conducted to rule out this possibility. Second, though we suspected that Mach

leaders practicality in their ethical management and their intention for self-benefit

might cause their ethical leadership to be more effective in reducing employees

29

propensity for moral disengagement, our study did not give evidence to validate these

conjectures. Future studies can be conducted to validate these explanations for the

effectiveness of Mach leaders ethical leadership.

30

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Figure 1. The hypothesized model.

Table 1. Means (M), standard deviations (SD), reliabilities, and correlations of the variables.

Variable M SD 1 2 3 4 5 6

Individual-Level measures (n=595)

1. Gender a

1.60 .49 --

2. Education b

2.90 .79 -.09* --

3. Age 32.55 7.59 -.17** -.17** --

4. Dyadic tenure c

3.03 3.20 -.03 -.09* .43** --

5. Moral disengagement (Time-2) 2.37 .85 -.05 .01 -.13** -.13** (.79)

6. UPB (Time-3) 2.66 1.11 -.02 -.01 .01 -.02 .39** (.89)

Workgroup-Level measures (N=124)

1. Ethical leadership (Time-2) 5.14 .62 --

2. Mach (Time-1) 3.23 .87 -.23* --

Note. n = 595; N=124. Values in parentheses are the reliability of the variables (Cronbachs alpha). UPB = unethical pro-organizational behavior.

Mach = Machiavellianism.a.

dummy coded variable: 1= male, 2 = female.b.

1 = below high school, 2 = college, 3 = university (BA), 4 = MA, 5 = PhD.

c.Unit: year (Subordinates tenure with his/her supervisor). *p< .05; **p< .01; ***p< .001 (two-tailed t test).

39

Table 2. Results of confirmatory factor analysis

Model 2

df CFI NNFI SRMR RMSEA 2(df)

1. Four-factor model 928.41 269 0.95 0.95 0.06 0.06 --

2. Three-factor model 1a

1679.29 272 0.91 0.90 0.09 0.09 750.88 (3) ***

2. Three-factor model 2b

2683.78 272 0.88 0.87 0.12 0.12 1755.37 (3) ***

4. Two-factor model c

3434.57 274 0.84 0.83 0.13 0.14 2506.16 (5) ***

5. One-factor model d

6738.88 275 0.72 0.69 0.16 0.20 5810.47 (6) ***

Note.2

and df denote differences between the three-factor model and other models. CFI = comparative fit

index; NNFI = non-normed fit index; SRMR = standardized root mean square residual; RMSEA = root mean

square error of approximation.a.

This model combines ethical leadership and Machiavellianism (Mach) into one factor.b.

This model combines ethical leadership and moral disengagement into one factor.c.

This model combines ethical leadership, moral disengagement, and Machiavellianism (Mach) into one factor.d.

This model combines ethical leadership, moral disengagement, Machiavellianism (Mach), and unethical

pro-organizational behavior (UPB) into one factor.

Table 4. Results of the moderated mediation analysis

LevelConditional

indirect effect

Bootstrapping 95% CI

Boot LLCI Boot ULCI

MachLow (Mean-1 SD) -.073 -.113 .042

High (Mean+1 SD) -.260 -.220 -.039

Note. Df = 120; Mach = Machiavellianism. Bootstrapping with a sample size (repetition) of 5000, using Monte

Carlo Bootstrapping method (as see http://www.quantpsy.org/medmc/medmc.htm).

Figure 2. The cross-level moderating effect of Machiavellianism (Mach) on the ethical leadership and-moral

disengagement relationship.

40

Table 3. Results of hierarchical linear model analysis of cross-level mediation of moral disengagement

Moral disengagement (Time-2) UPB (Time-3)

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7

Level-1 (n =595)

Intercept 3.029*** 3.209*** 3.150*** 3.152*** 2.934*** 3.018*** 2.716***

Gender a

-.097 -.126* -.118 -.122 -.023 -.037 .003

Age -.012* -.016*** -.015** -.014** -.005 -.007 -.001

Education b

-.015 -.021 -.019 -.033 -.010 -.010 -.007

Dyadic tenure c

-.024* -.021* -.022* -.023* -.010 -.009 .003

Moral disengagement .475***

Level-2 (N =124)

Ethical leadership -.342*** -.325*** -.350*** -.505*** -.350***

Mach .038 .033

Ethical leadership x Mach -.227***

Within-group variance .644 .648 .647 .644 .962 .966 .814

Between-groups variance .061** .015 .017 .009 .288*** .189*** .200***

.013 .005 .007 .012 .001 -.004 .154

.780 .751 .872 .316 .277

d

.022 .079 .078 .093 -.009 .068 .181

Change .057 -.001 .015 .077 .113

Note. n = 595; N=124. MD = moral disengagement.

a. dummy variable. 1= male, 2 = female.

b. 1 = high school or below, 2 = junior college, 3 = university (BA), 4 = MA, 5 = PhD.

c.Unit: year (Subordinates tenure and his/her superiors).

d.

=

(1 [1]) +

(1), where ICC(1) is .223 for UPB and .095 for moral disengagement.

*p< .05; **p< .01; ***p< .001.