Authentic ethical leadership
Every business leader worth his or her salt likes to be thought of as ethical. Right-thinking shareholders should be equally keen that their assets are governed by ethically driven leaders. In the wake of the 2008 financial crisis, ethics have never been higher on the agenda of research centres and boardrooms alike. All this labour and discussion overwhelmingly shows that ethical leadership results in a host of desirable outcomes, from better workplace engagement and organisational citizenship to higher morale and a sense of purpose on the shop floor. But in an age when every CEO makes much of their moral calibre, how can you know who means it and who is faking it? And does it matter either way?
This fascinating paper seeks to answer both these important questions through the lens of what the authors term “productively deviant workplace behaviour”. To be clear, the term “deviant” here is used to denote atypical activities – of which positive ethical conduct, especially when it goes against the grain of culturally accepted unethical norms, is included. Particular focus is given to moral decision-making by leaders in “critical situations”. Think the dilemma of a huge contract being lost if a “facilitation payment” isn’t made. Or sticking to a moral principle even if it might cost you your job. When the rubber hits the road, that’s when leaders’ true colours show. And the research demonstrates a key divide between those who assume ethical leadership as a “social role” (i.e. copying the current fashion, taking a utilitarian or even Machiavellian approach to ethical adoption) and those whose commitments are born from deeply engrained moral principles (what the literature refers to as “moral identity”). The former flake at the moment of truth; the latter stand firm.
The paper concludes: “If leaders’ ethical leadership is not based on an internalized moral identity, they are unlikely to show appropriate conduct themselves, or to act as appropriate role models for others, if they encounter one of the critical situations.” For a church minister or rabbi, this is basic stuff. So it should be for a business ethicist, especially with the empirical weight this research brings. What’s left hanging is how leaders acquire such a solid moral identity and, as importantly, how to weed out the role-players before an ethical dilemma hits.
Skubinn R and Herzog L (Jan 2016), “Internalized Moral Identity in Ethical Leadership”, Journal of Business Ethics, 133:249–260
Integrative responsible leadership
As standard echelon theory suggests, those at the top of an organisation matter. There resides the power and control, which in turn determine how decisions are made and how organisations act. And with more people looking to the private sector to fill the governance gaps and global challenges that today’s world faces, those who run large corporations matter all the more. If they favour a proactive role in society (what the authors define as a social welfare-orientated, “integrative” approach to responsible business), then the organisations they govern are more likely to adopt a hands-on, ambitious Corporate Social Responsibility (CSR) policy. If their focus is narrower and more conventionally shareholder-orientated (an “instrumental” approach, dominated by fiduciary duty), then expect the company’s CSR position to be far more restrictive.
How a leader perceives his or her moral obligations (their so-called “value orientation”) predicts which of these two styles they – and subsequently their companies – adopt. “Style” is important because it is how internal attitudes and beliefs are externalized, and thus observed by others and consequently reflected in their decision-making.
With respect to companies’ changing political role, the paper concentrates on corporate responses to two specific expressions of political CSR: engaging in multisector initiatives (to plug governance gaps) and investing in second-order social innovation (to resolve society’s unmet challenges). Integrative leaders throw themselves and their companies into both; their instrumental peers do not.
Obviously, CSR advocates would prefer an integrative chief executive. But even then, their actions are moderated by circumstantial factors. These are multilevel: individual (how good are CEOs at dealing with complexity); organisational (how companies’ home country economic and political system influences CEOs’ ability to distribute profit); and societal (how a given culture engages with business leaders). The paper examines each in turn, probing issues such as cognitive and social complexity in individual responsible leadership, the role of corporate governance in aligning CEO behaviour with wider stakeholder interests, and the distance between power-holders and external stakeholders. The message? Responsible leaders can, with an integrative responsibility style, negotiate all of these moderating contingency factors.
A welcome contribution to our understanding of CEOs’ value orientation and its relationship to the micro-foundations of political CSR.
Maak T, Pless N and Voegtlin C (Jan 2016), “Business statesman or shareholder advocate? CEO responsible leadership styles and the micro-foundations of political CSR”, Journal of Management Studies, 48: 899–931.
The 2016 International Conference on Sustainable Development, Business & Economics will be held in Amsterdam, Netherlands, on 16-18 June 2016.
The Cambridge Institute for Sustainability Leadership, linked to Cambridge University’s Judge Management Institute, ran its first workshop in Colombia on 24-27 February. The three-day training event was organised in cooperation with the Universidad de los Andes.Business News Academic news shareholders ethical leadership CSR Responsible Business economy political corporate responsibility