Integrating leadership styles and ethical perspectives

Integrating leadership styles and ethical perspectives

Edward Aronson


This paper reviews two major ethical theories and the manner in which the values they espouse are associated with the directive, transactional, and transformational leadership styles. A model of ethical leadership is proposed which relates the dimensions of these styles to the level of the leader’s moral development. Transformational leadership appears to be most closely connected to deontology, while transactional leadership would seem to be related more to teleological ethics, and directive leadership to ethical egoism, a category of teleology. The paper concludes with some suggestions for future research.


Cette etude passe en revue deux theories principales d’ethiques et la facon dont les valeurs qu’elles comprennent sont likes aux styles de leadership directif transactionnel, et transformationnel L’auteur presente un modele de leadership ethique dans lequel les dimensions de ces styles sont associees au niveau de developpement moral du leader. Le leadership transformationnel semble etre lie plus etroitement a la deontologie tandis que le leadership transactionnel serait associe plutot a l’ethique teliologique et le leadership directif a l’egoisme ethique, une categorie de la teleologie. L’etude se termine par quelques suggestions de recherches ulterieures.

Milton Friedman (1970) referred to a campaign to induce the General Motors Corporation to study its performance in the area of public safety and pollution as “pure and unadulterated socialism,” adding: “Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society” (p. 32). According to Mulligan’s (1986) critique of Friedman’s article, acting with social responsibility in business can imply financial cost, but does not necessarily mean a neglect of return on investment, budget considerations, employee compensation, or market competitiveness. Several authors have spoken of the “I” of the corporation, referring to the leader’s responsibility to the firm and its owners or shareholders versus the “We”, pertaining to the company’s personnel, customer base, suppliers, and to society in general. In the light of this distinction, Clarkson (1991) defined corporate social responsibility as a function of its two major elements: profits and ethics.

When the value system of a corporation explicitly acknowledges the importance of human values by granting them parity with the values of profit and technology, then economic responsibilities will be balanced with moral responsibilities, the corporation will seek to balance the interests of the stakeholders without sacrificing its economic responsibilities, and the responsibilities of its managers will be not only to the corporation and its shareholders but also to other stakeholders. The corporation’s economic orientation will not come at the expense of its social, or moral, orientation. Profits and ethics coexist. The “I” and the “We” are integrated into the strategic planning and decision making of the corporation. (pp. 193-194)

Bowie (1991) extended the “I” and “We” analysis to a discussion of the firm as a moral community in which management will be carried out from a moral perspective provided that leaders take into account the interests of all the stakeholders.

Capitalism may be considered to be the economic basis for prosperity in democratic countries, but it is subject to criticism from an ethical perspective. The issue for capitalists is to be aware that while inefficient firms will be mercilessly eliminated due to free market forces, “the moral sentiments of man will only gradually and uncertainly penalize immoral ones. But, while the quick destruction of inefficient corporations threatens only individual firms, the slow anger at immoral ones threatens capitalism-and thus freedom-itself” (Wilson, 1995, p. 60). In order to help maintain the long-term success of the firm and ultimately of capitalism and democracy, it is therefore incumbent upon corporate leaders to earn the confidence and loyalty of their followers and the esteem of society at large via ethical behaviour, which may essentially be described as behaviour which is good as opposed to bad or right as opposed to wrong.

Ethical behaviour on the part of the leader would appear to be a necessary condition for the establishment of an ethical organization, but this alone is not sufficient. Ethical leadership is required. CEOs are obliged to set a moral example for organizational members and to demarcate the constant striving for increased profits from those activities which may be detrimental to the values of society in general. Leaders must establish the spirit, set the ambience, and determine the boundaries of acceptable behaviour. Difficulties arise when leaders’ attention is diverted by operational issues and they neglect the provision of an effective ethical infrastructure (Navran, 1997).

But ethical leadership encompasses more than the fostering of ethical behaviour. It may also be viewed as effective leadership. “Ethical business leadership requires not only harvesting the fruit we can pluck today, not only investing in the small trees and experimental hybrids that won’t yield a thing in this quarter or the next, but also caring for the soil that allows us to produce such a rich harvest in the first place” (Butcher, 1997, p. 6). According to Ciulla (1995), good leadership refers not only to competence but also to ethics. All instances of leadership are essentially concerned with influencing followers to do something. Differences exist, however, in the way in which this influence is exercised by the leaders and these variations have normative implications. Any empirical information obtained from the “scientific” study of leadership will always be deficient if the moral implications are ignored (Ciulla, 1995).

What are the moral implications of leadership behaviour? How are different leadership styles related to ethics of conduct? What are the factors that determine ethical leadership? The purpose of this paper is to attempt to answer these questions by exploring the theories of ethics and leadership and attempting to relate the various leadership styles to extant ethical viewpoints. The paper begins with a brief review of the leadership literature and the specification of a range of leadership styles. This will be followed by a discussion of current views on ethical leadership and the identification of a potential problem that does not recognize the moral nature of leadership styles other than transformational leadership. A possible solution will be suggested by first discussing the diverse ethical theories and then proposing a new model of ethical leadership which combines the dimensions of the leadership styles with the leader’s level of moral development. The paper will conclude with some suggestions for future research.

Leadership Theories

Behavioural scientists have attempted to discover what traits, abilities, behaviours, sources of power, or aspects of the situation determine how well a leader is able to influence followers and accomplish group objectives. In other words, the predominant concern of researchers in the area has been leadership effectiveness (Yuki, 1994). In the early part of the 20th century, leadership research was focused on the trait approach. The essential attributes examined by investigators are physical characteristics, abilities such as level of intelligence and skills, and personality factors (Bass, 1990; Bryman, 1992). By the late 1940s, however, the inability to prove consistently that individual traits are the sole antecedents of good leadership caused a shift in emphasis to leader style or behaviour. This approach essentially states that it is what leaders do that makes them effective. Within this context, the investigation of leadership effectiveness centred on the two major concepts of task orientation and the interpersonal elements of the leader-follower relationship (Bryman, 1992). In the late 1960s, another point of view began to predominate. Style alone was considered insufficient as a determinant of effectiveness. It was therefore postulated that it is the situation that creates the conditions appropriate for leader efficacy. This is known as the contingency approach. The first major work in this area was Fiedler’s (1967) contingency theory, which was succeeded by several models such as the path-goal theory of House (1973), situational leadership of Hersey and Blanchard (1969), and Kerr and Jermier’s (1978) leadership substitutes. These contingency approaches identified situational conditions under which a leader’s taskand/or interpersonal-oriented role behaviours would be effective or ineffective. Another contingency approach was developed by Vroom and Yetton (1973) around the leader’s decision-making role behaviours that ranged from autocratic or directive to consultative and participatory styles. These approaches to leadership role behaviours and situational contingencies fell out of favour in the 1980s essentially due to the fact that they were limited to studying leadership as supervision of small groups and ignored the larger issue of leading entire organizations into the future (Conger & Kanungo, 1998). As a consequence of the dissatisfaction among scholars with the limitations of these approaches, the early 1980s marked the emergence of the “new leadership perspective” (Bryman, 1992). In this new phase, a number of researchers explored the charismatic leadership phenomenon (Conger & Kanungo, 1988) and related it to the transformational and transactional leadership influence processes postulated by Burns (1978).

The leadership literature, in general, suggests that organizational leaders demonstrate three major ways of influencing followers: (a) the directive mode of influence (ranging from directive to participatory), (b) the transactional mode of influence, and (c) the transformational mode of influence. A short description of these three types of leadership influence is given below.

Directive Leadership

Flamholtz (1990) describes this mode of influence as a continuum extending from a very directive leadership style to one which is essentially nondirective. He specifies the following categories: (a) autocratic-“I’ll tell you what we are going to do because I’m the boss”; (b) benevolent autocratic-“I’ll tell you what we are going to do because it will be best for all concerned”; (c) consultative-“I’ll decide, but I’ll discuss it with you to get your opinions”; (d) participative-“We’ll decide together, but not all votes are equal”; (e) consensus (team)– “We’ll all meet and discuss it until everyone agrees on a decision”; and (f) laissez-faire-“Do whatever you want to do.” (p. 265). These leadership styles are considered to be best employed in situations most appropriate to the required level of task or relationship orientation.

Transactional Leadership

According to Burns (1978), transactional leadership involves an exchange between leader and subordinate such that each receives something from the other in return for something else. Conger and Kanungo (1998) claim that transactional leadership is not leadership at all but rather “managership”, implying an emphasis on maintaining the status quo of the organization and ensuring the stable administration of practices and resources essentially via strategies of control. They assert that these transactional strategies enable the leader to develop a quid pro quo relationship with followers. In this mode: there is no attempt to change subordinates’ attitudes or values or to enhance internalization of the organization’s mission, leaders are not concerned with enhancing the growth and development of subordinates, and the effectiveness of the influence is generally limited to the motivational “life span” of the strategies employed. This type of leadership is characteristic of the greatest number of leader-follower relationships and is thus more widely observed than its transformational counterpart (Burns, 1978). Bass (1998) has identified the following manifestations of transactional leadership: (a) contingent reward-the leader specifies or obtains agreement from followers on the tasks to be accomplished and issues rewards in exchange for their successful completion; (b) management-by-exception (MBE)-this component is corrective and generally less effective than contingent reward. (MBE may be active, where the leader takes steps to follow closely any divergence from planned results and makes corrections as required, or passive, in which case the leader does not monitor the subordinate’s progress but waits for deviations before taking action to redress the situation); and (c) laissez-faire leadership-this type, which cannot really be considered transactional, indicates non-leadership, where the leader avoids or declines to exhibit any leadership behaviour whatsoever, neglecting decisions, responsibilities, and authority.

Transformational Leadership

According to Conger (1999), most theorization and empirical studies on charismatic and transformational leadership have been conducted in the area of leader behaviours and their effects, with the bulk having been carried out by three groups of investigators (see Bass & Avolio, 1994; Conger & Kanungo, 1998; Shamir, House, & Arthur, 1993). The theoretical perspectives held by these groups appear essentially to have in common the following elements: (a) influencing followers by establishing a vision for a better future, (b) inspiring followers as opposed to controlling them, (c) leading by example through role modeling, (d) contributing to subordinates’ intellectual stimulation, (e) enhancing meaningfulness of goals and behaviours, (f) fulfilling followers’ self-actualization needs, (g) empowering followers through intrinsic motivation, (h) exhibiting confidence in subordinates’ ability to attain higher levels of achievement, and (i) enhancing collective identity (Conger, 1999). Explicit in the transformational leadership role is, therefore, the transformational influence process, where the leader endeavours to stimulate change in subordinates’ attitudes and values through strategies of empowerment, thus augmenting their self-efficacy beliefs and fostering the internalization of the leader’s vision (Conger & Kanungo, 1998). However, not all characteristics of charismatic/transformational leaders have a favourable influence on followers. In certain cases, this type of leader has created calamitous results for both subordinates and the organization. Conger and Kanungo (1998) describe charismatic leaders as tending to be highly capable of making changes but less proficient with respect to sound management skills, and sometimes beset by serious character defects. House and Howell (1992) differentiate personalized charismatic leaders-characterized as being self-aggrandizing, nonegalitarian, and exploitative-from socialized charismatic leaders–described as collectively oriented, egalitarian, and nonexploitative. While both types of charismatic leader tend to have a high need for power, personalized charismatic leaders generally score higher on Machiavellianism, narcissism, authoritarianism, and have a propensity for low efficacy expectations, low self-confidence, and an external locus of control.

As may be noted above, the various leadership styles differ in terms of the processes by which leaders influence followers. It is the ethical implications of these differences in process that appear to be considered by researchers when investigating ethical leadership. It will be seen, however, in subsequent sections; that this perspective may be problematic.

Current Perspectives on Ethical Leadership

The discussion of the relationship between ethics and leadership appears to be centred on the transactionaltransformational dichotomy begun by Burns (1978), who characterized transforming leadership as ethically superior to its transactional counterpart. With transforming leadership, leaders and followers experience a mutual elevation to increased levels of motivation and morality. By contrast, transactional leadership is seen as restrictive, self-serving, and exploitative of followers, never advancing beyond consideration of the things upon which the exchange is based. Burns implies that without a transforming leader there is no real leadership, in that the transactional leader is content with emphasizing mechanisms rather than broader purposes and being concerned with accomplishing enough to avoid problems rather than maximizing the effectiveness of the organization.

Rost (1991), in a review of approximately 600 books and articles on leadership, distinguishes between leadership and management. In his opinion, management is a relationship between the manager and the subordinate founded upon an authority power base and is transactional in nature. It is therefore concerned only with controlling and directing other people and may be characterized by dictatorial and coercive behaviour. Leadership, however, employs persuasion to influence others and is noncoercive. It is a relationship between leaders and followers who collaborate to bring about meaningful change, and is based on mutual objectives. The implication is that what Rost refers to as leadership is more ethical than management.

In discussing the ethical dimensions of leadership influence processes, Kanungo and Mendonca (1996) compare those observed in transactional and transformational leadership. Transactional leaders are viewed as emphasizing control strategies and seeking the compliance of followers, which may result in “demolishing followers’ self-worth and [lead] to their functioning as programmed robots” (p. 73). This is seen to have an unethical moral implication. Transformational leadership, on the other hand, is considered to be ethical, since it concentrates on strategies of empowerment with the intention of modifying followers’ basic attitudes, beliefs, and values through endeavouring to build their feelings of self-efficacy and self-determination.

Bass (1998) asserts that the leadership of organization founders and their successors tends to create a culture of shared values and assumptions which are determined by the leader’s particular beliefs. Bass portrays the highly transactional culture as being more conducive to personal interest than to that of the organization. In this context, subordinates have little participation in decision-making and are watched closely, coerced, and controlled. In contrast, the transformational organization encourages discourse on goals, vision, and values, and highlights teamwork. Due to the influence of transformational leadership, a moral commitment is developed between leader and followers which unites them in the pursuit of higher level mutual goals.

Overall, this perspective on ethical leadership would appear to indicate that transformational leaders influence their followers in a moral fashion while leaders who employ transactional strategies or are dictatorial are unethical. But there is a problem. The implication that transformational leadership is ethical and other styles are not leaves no room for ethical transactional and directive leaders, when, clearly, these exist. In fact, evidence suggests that many ethically worthwhile projects have been completed through the efforts of individuals employing directive or transactional leadership styles. Bird (1999) gives the following examples:

…paternalistic yet authoritarian executives have helped to create and develop comparatively benevolent business organizations in traditional company towns in North America and modern firms in Japan. Militant yet authoritarian union leaders have led trade union organizations in their fights to create more democratic workplaces. Visionary yet authoritarian political leaders, such as the former president of Singapore or the former king of Jordan, have been able to institute widespread economic and political reforms…. In brief, whether it is morally fitting for particular individuals to lead by commanding depends both, one, on character of cultural traditions, organization forms, and type of issues, and two, on whether and to what degree such leaders respect their followers and serve the common good. (p. 7)

The ethical evaluation of the directive leadership style is also influenced by cultural norms in different societies. In western cultures, which tend to be characterized by individualistic and low power distance values, even the benevolent autocratic leader may be seen as less than ethical, since followers are prevented from making decisions for themselves. However, in more collectivistic and high power distance cultures (Hofstede, 1980), the benevolent autocratic leader may be seen as both effective and ethical. An example of this phenomenon may be found in India. Sinha (1995) describes employees in Indian organizations as being excessively dependent, having a preference for hierarchy, and functioning more efficiently under an authoritarian leader. He therefore postulates that the most appropriate leadership style for Indian firms is the nurturant-task style, in which the leader must first be concerned with fulfilling followers’ needs and expectations, and then concentrate on taskorientation with the knowledge that subordinates will follow the specified directives.

According to Bird (1999), transactional leadership appears to be ethically appropriate under certain conditions. For example, these leaders, in emphasizing day-today management rather than leadership, may be instrumental in ensuring that organizations maintain their formal goals and codes of conduct. To the degree that these leaders are seen as acting fairly, followers will tend to feel respected and treated in a just manner and may exhibit higher levels of effort.

The above suggests that ethical leadership does not depend on the leader’s style per se, but rather on his or her level of moral development or the extent to which the influence process employed is motivated by ethical values. The diverse leadership styles do differ, however, in the manner in which these ethical values are expressed. For a proper understanding of the differences, the following section explores the various perspectives in the ethics literature.

Ethical Theories

Ethics is essentially the study of standards for determining what behaviour is good and bad or right and wrong. Various ethical theories exist because throughout the ages philosophers have adopted different perspectives regarding the criteria upon which ethical judgments should be based. However, despite the diverse points of view, one thing does remain constant. Morality is fundamentally concerned with the effects of actions on other people. This point may be illustrated by an anecdote attributed to an incident involving the Jewish scholar Hillel of ancient times. During the reign of King Herod, Rabbis Shammai and Hillel were confronted individually by a man who insisted he be taught the entire Torah while standing on one foot. Shammai repelled the man with the help of a stick, but Hillel did not. Instead he said to him, “Do not do unto others that which you would not have them do unto you. That is the entire Torah; the rest is commentary” (Kaback, 1998, p. 8).

In the literature on business ethics two major perspectives appear to be employed frequently: deontological and teleological. These two viewpoints will be examined next.

Deontological theories. Deontology may be described as the theory or study of moral obligation. The deontological perspective, according to Frankena (1973), states that what is morally right is not dependent upon producing the greatest level of good as opposed to evil, but rather is determined by characteristics of the behaviour itself. According to Hunt and Vitell (1986), the crux of deontological theories is whether or not an act is inherently right. Helms and Hutchins (1992) assert that deontology considers the moral value of a behaviour to be independent of the outcome since the certainty of these outcomes is questionable at the moment of the decision to act. There are two main categories of deontological theories in the literature: rule deontology and act deontology.

Rule deontology holds that in all circumstances individuals should follow a set of predetermined standards or rules, so that behaviour is ethical or unethical not as a consequence of the action, but as compared to the standards themselves (Rallapalli, Vitell, & Barnes, 1998). An ethical judgment is therefore dependent upon some general principle (Garner & Rosen, 1972), and this overall standard may be composed of a series of more particular guidelines, each specifying that individuals should behave in a certain manner in a given set of conditions (Frankena, 1973).

According to act deontology, people act ethically according to their norms, but this is limited to particular behaviours, implying that there may be exceptions to the rule (Rallapalli, Vitell, & Barnes, 1998). Individuals are obliged to behave toward others in a particular manner simply because they are human. There is an obligation to consider their rights and dignity regardless of the consequences, so that the concern is for the moral value inherent in the action itself (White, 1988).

Teleological theories. According to Frankena (1973), the teleological perspective for the criterion of what is ethically right is the nonmoral value that is created. Therefore, an act is moral if it is judged to produce a greater degree of good over evil than any other alternative, and is immoral if it does not do so. In this case nonmoral pertains to the absence of a moral or ethical issue in determining the value. Helms and Hutchins (1992) view the teleological perspective of ethics as stressing the outcome, as opposed to the intent of individual behaviour. There are various classifications of teleological theories in the literature, but the major ones are: ethical egoism, act utilitarianism, and rule utilitarianism.

In the case of ethical egoism, an individual considers an act to be moral or immoral depending upon its likelihood to achieve personal objectives (Rallapalli et al., 1998). All other outcomes are irrelevant to the ethical decision. An act is therefore ethical for a person only if the results of that act for the individual are more advantageous than those of any alternative behaviour (Hunt & Vitell, 1986). It may be that the ethical egoist will consider the interests of others, but this is not the main goal. Others are only a medium through which the ethical egoist’s welfare may be maximized (Shaw & Post, 1993). The egoist’s basic normative judgment is directed not to behaviours, but to his particular end (Marshall, 1992).

Utilitarianism in its basic form may be seen as the aggregation of two principles (Quinton, 1989): the consequentialist principle that deciding whether an act is right or wrong is based upon whether the consequences of the act are good or bad, and the hedonist principle that only pleasure is inherently good and only pain inherently bad. These may be combined into a single statement termed “the greatest happiness principle: the rightness of an action is determined by its contribution to the happiness of everyone affected by it” (p. 1). According to the original formulation by Bentham (1996),

By the principle of utility is meant that principle which approves or disapproves of every action whatsoever, according to the tendency which it appears to have to augment or diminish the happiness of the party whose interest is in question…. An action then may be said to be conformable to the principle of utility … when the tendency it has to augment the happiness of the community is greater than any it has to diminish it” (p. 12).

In the words of John Stuart Mill, “All action is for the sake of some end, and rules of action, it seems natural to suppose, must take their whole character and color from the end to which they are subservient” (Bentham & Mill, 1973, p. 402). Good or utility may be considered to be on a continuum, with good and bad being relative, so there is no distinction between providing the most good and avoiding the most bad (Baron, 1999). What is right or wrong from an ethical point of view is therefore essentially determined by endeavouring to create the greatest overall weighing of good over evil (Frankena, 1973).

Act utilitarianism states that each behaviour is evaluated in terms of its potential to produce the greatest amount of good for the largest number of people (Rallapalli et al., 1998; Regan, 1980). According to Frankena (1973), act utilitarians maintain that the determination of whether an action is right or obligatory must be derived from the principle of utility, that is by attempting to evaluate which of the available options may be expected to result in the highest level of good as opposed to evil in the universe. Act utilitarianism is independent of rules, whether or not they are referred to. Rules may serve as a guide but do not strictly form part of the ethical decision.

Rule utilitarianism postulates that persons conform to sets of rules to act in a way which will again give the highest degree of good for the greatest number of people (Rallapalli et al., 1998). These rules should ensure the most favourable results possible if they are universally fulfilled (Regan, 1980). The perspective is not that a given action is morally correct because it has a positive outcome in a specific situation, but because the action is of the type that has positive outcomes in general. This category of behaviour tends to contribute to happiness and as such cannot be considered as an individual act which is a single occurrence having a specific set of consequences. Also, from an effectiveness point of view, ethical decisions frequently must be made in a rapid manner with little time available for deliberation. In this circumstance it is appropriate to depend upon a set of rules for swift action (Quinton, 1989). These rules must be chosen, upheld, and modified or replaced as required on the sole basis of their utility. The maxim of utility remains the absolute criterion, but applies in terms of rules rather than according to specific evaluations.

In concluding the discussion of ethical theories, some comments on the distinction between deontology and teleology would appear to be in order. That the differentiation is considered important is evident simply by virtue of the extensive attention it is given in the ethics literature. However, the manner in which it may best be put to use in the study of business ethics is less clear. The traditional perspective pits deontology and teleology in opposition to each other and as mutually exclusive. This may not necessarily be the case. In fact, Brady (1985) states that they are actually complementary. He uses the analogy of the two-faced head of Janus, the Roman god of gates, to depict deontologists as looking principally to the past in terms of cultural and religious tradition for the establishment of ethical guidelines, while teleologists are seen as forward looking and endeavouring to find solutions that will lead to the most positive outcomes for all. Ethical problems are thus resolved most effectively by employing both points of view simultaneously. According to Woller (1998), people are neither entirely deontological nor entirely teleological in their moral points of view, since the human disposition is motivated both by a sense that certain principles of right and wrong do exist and at the same time by a concern for the consequences of behaviour. Macdonald and Beck-Dudley (1994) assert that what is lacking in the traditional deontological-teleological dichotomy is a consideration of traditional teleology, often termed virtue ethics. While utilitarianism is concerned with maximizing good or pleasure and minimizing bad or pain, making no reference to any independent evaluation of right or wrong desires, traditional teleology’s perspective seeks the most favourable outcome, but within the context of virtues such as prudence, courage, temperance, and justice, thus avoiding immoral behaviour. Traditional teleology is therefore not deontological in its method of evaluation, but it does operate within what may be called a deontological moral framework providing the best of both deontology and teleology.

A Model of Ethical Leadership

It was mentioned earlier in the paper that according to current perspectives on ethical leadership, transformational leaders influence their followers in a moral fashion while leaders who employ transactional or directive strategies are unethical. In fact, some authors indicate that transformational leadership tends to be characterized by high moral development, while transactional and directive approaches tend to be associated with lower levels of moral development (see Kuhnert & Lewis, 1987; Petrick & Quinn, 1997). However, it is postulated here that transformational, transactional, and directive are separate leadership dimensions all based on different influence processes. The level of moral development does not determine the style of leadership, only how ethical it is. The style of ethical leadership will rather reflect the ethical perspective adopted by the leader, based upon his or her values.

How then should the various theories of leadership and ethics be integrated in order to reflect realistically the fact that an individual leader will likely display a range of leadership styles and call upon a combination of moral perspectives in arriving at ethical judgments? Figure 1 represents a model that links ethics to leadership. It depicts the position of various leadership styles in threedimensional space, but separately for high and low levels of moral development as expressed in a leader’s intent or motive for actions.

The bold arrow extending across the bottom of Figure 1 represents the level of moral development of the leader. As has been mentioned previously, morality is fundamentally concerned with the effects of actions on other people. According to Kanungo and Mendonca (1996), altruism may be defined as a regard for the wellbeing of others, with moral altruism described as a helping concern for others with no regard for the cost to oneself. In their words, “The values inherent in the choice of `others before myself’ or moral altruism are universal and form part of the heritage of all cultures” (p. 40). They believe that it is essential for leaders to be motivated by a desire to benefit others. The moral development arrow may therefore also be seen as a parallel dimension of altruistic versus egotistic leader motivation. The threedimensional model is therefore shown separately for high and low levels of moral development. The horizontal axis (TF) of the model represents the level of transformational leadership behaviour. The vertical axis (TA) represents the level of transactional leadership behaviour. This may range from a high level of contingent reward, through active management-by-exception, and finally to passive management-by-exception. The transversal axis (DR) of the model represents the degree of directive leadership behaviour, extending from high directive or autocratic to nondirective. The model may thus be seen to be comprehensive in that it takes into account simultaneously the extent to which the leader influences followers by attempting to stimulate change in their attitudes and values, the degree to which the leader is concerned with the exchange of resources with followers, and the extent to which the leader’s influence is directive or participative while dealing with subordinates with respect to their role in decision-making, all at various levels of moral development or altruism of the leader.

The essential determining factor as to whether the leadership behaviours are ethical or not is the level of moral development or altruism of the leader. For this reason, the high end of the moral development arrow is referred to as the ethical leadership zone. This zone is consistent with theories of personality and ethical behaviour which show that individuals may be predisposed to different degrees of altruism depending upon various stages of moral development, as indicated by Kanungo and Conger (1990). These authors state that from the developmental point of view, Piaget (1948) emphasizes the autonomous morality that stems from the mutual respect people have for each other and which is exhibited in terms of reciprocal rights and obligations. Kohlberg (1969) extended Piaget’s work to propose a six-stage framework of moral development (see Kegan, 1982, for details). In stages 5 and 6, ethical behaviour is dependent upon beliefs concerning the responsibility to meet social commitments due to a utilitarian social contract as well as a belief that these acts are in themselves morally correct, implying a deontological point of view. These beliefs correspond to the reciprocity and responsibility norms underlying altruistic actions (Kanungo & Conger, 1990).

Kegan (1982) postulated a constructive/developmental theory of personality which explicates the beliefs forming the basis of the personality structure which may foster altruistic behaviour. He asserts that at higher levels of development, adults’ needs will first be adjusted to the needs of others in an interpersonal transactional manner. However, later in the development process, people behave entirely as a function of their own internal principles of moral responsibility. The moral development literature also appears to indicate that individuals will act in a more altruistic fashion, the higher their level of moral development (Rushton, 1980).

As will now be shown, the actions exhibited by leaders at diverse levels on the various dimensions will be different depending upon whether or not they are located in the ethical leadership zone.

Directive Leadership

The ethical theory corresponding most closely to directive leadership would appear to be ethical egoism, a category of teleological ethics. For the ethical directive leader then, a decision is moral depending upon the probability it will lead to the achievement of personal objectives and the extent that it takes into account the interests of subordinates. However, the goals and strategies for the attainment of personal objectives and subordinates’ interests are the leader’s alone.

As was seen earlier, directive leadership may be described on a continuum ranging from very directive or autocratic, with no consideration of the followers’ opinions, to completely nondirective or laissez-faire. In the ethical leadership zone (refer to transversal axis DR on the right side of Figure 1), these styles may be observed as follows:

1. Benevolent autocratic-This is the highest degree of directive leadership and would be displayed by leaders who make decisions for followers, but genuinely act in their best interests. An example of this type would be nurturant-task leadership (Sinha, 1995), discussed earlier. Other cases may be found such as the military or in situations of crisis where followers defer to and even welcome their authority because it is seen as just (Bird, 1999).

2. Consultative-This next level of directive leadership would be exhibited by the leader who listens to subordinates’ points of view but nevertheless makes decisions alone. This style may be seen with directive leaders of ethical business firms, directive trade union leaders fighting for the rights of their members, and often with directive politicians working tirelessly in the interest of their constituents.

3. Participative-Lower on the directive leadership dimension are found those leaders who encourage followers’ participation in decision-making, so that they actually contribute to the development of ideas rather than simply voicing their opinions on the leader’s suggestions. The ethical participative leader may therefore encourage subordinates to draw on their talents and experience to propose solutions, but reserves the right to make the final decision.

4. Consensus-This lowest level of directive leadership is similar to the participative style, but in this case the leader does not insist on making the final decision. Rather, he or she stresses the importance of arriving at a consensus with all members of the group (Flamholtz, 1990).

On the low moral development side (refer to transversal axis DR on the left side of Figure 1), the leader is concerned only with satisfying his or her own egotistical needs and has no concern for the well-being of followers. The directive leadership dimension in this case may therefore be characterized as:

Autocratic-despotic-Here, at the highest directive level, may be found leaders who distort the mission and goals of the organization and abuse resources by using them to further their own interests. These leaders may secure the acquiescence of subordinates by threatening to and actually employing manifest force (Bird, 1999), or

Laissez-faire-The nondirective end of the scale would be typified by nonleadership, where the individual in the position of authority exerts no effort to forward the organization’s performance, and is content to attend to his or her own needs with no significance attached to the activities of followers. There is, of course, a range of degrees of authoritarianism between these two poles, but any interest the leader may have in followers’ participation in decision-making or in any other of the followers’ needs will be strictly limited to the extent the leader deems them advantageous to the advancement of his or her own ends.

Transactional Leadership

As was indicated in the section on leadership, this style involves a quid pro quo exchange between leader and follower. It thus corresponds to utilitarian ethical theory which states that decisions are moral if they lead to the greatest degree of benefit for all concerned. This category of teleological ethics is therefore concerned only with the consequences of actions.

It was stated earlier that various levels of transactional leadership exist. In the ethical leadership zone (refer to vertical axis TA on the right side of Figure 1), they may display the following characteristics:

Contingent reward. For leaders of high moral development, contingent reward would imply negotiation (Bird, 1999) in good faith, with the leader and subordinate agreeing on objectives, so that the leader, while not being concerned with followers’ higher order needs, changing their attitudes, or enhancing their internalization of the organization’s mission, will nevertheless possess values of honesty, truth, fairness, and trust, and these values will be manifested in all aspects of the leader-follower relationship. In fact, for this type of ethical leadership, the leader will emphasize subordinates’ training and stay in close contact with them thus contributing to their ability to attain the agreed upon goals.

Active management-by-exception (MBE-active). At this level, the transactional leader will devise a system to prevent any deviation from standards, and on a constant basis take the steps required to keep followers on course. This style may be appropriate, for example, in situations where the personal safety of employees is at risk (Bass, 1998). Although less emphasis is placed on goal-setting and leader-follower contact than with contingent reward, the relationship remains characterized by ethical values.

Passive management-by-exception (MBE-passive). Here the leader will tend to stand by and apply corrective measures only after the divergence from standards has occurred. An example of the possible need for this style is the case where a great number of subordinates report directly to an individual leader (Bass, 1998). The ethical leader may therefore lack sufficient time for personal attention to followers’ needs but will nonetheless operate with a genuine concern for their well-being and a desire for them to succeed. Generally, ethical transactional leadership may be appropriate in situations where employees have negotiated specific contracts containing conditions in which they may obtain greater benefits through the application of extra effort. This leadership style may also be effective in organizations structured around impersonal rules connected to well delineated tasks and where rewards are dependent upon specific results (Bird, 1999).

On the low moral development side (refer to vertical axis TA on the left side of Figure 1), a high level of transactional leadership may still imply the use of contingent reward. In this case, however, there is no concern for followers and no emphasis on the ethical values mentioned above. Subordinates are seen strictly as resources or means to achieve the leader’s objectives, with rewards issued only to the extent required to maintain sufficient effort and sanctions applied without concern for followers’ needs. Transactional leadership may be exercised as “rigid, mindless management” (Bird, 1999, p. 9). Leaders may also adjust the rules and procedures of the organization and use their power to serve their own needs. Progressively lower levels of transactional leadership may exist on the low moral development end to the point where there is no leadership and the person in charge adopts a laissez-faire attitude, characterized by egotistical values and no emphasis on the needs of followers, or the organization itself, for that matter.

Transformational Leadership

According to Ciulla (1995), the transforming leadership theory proposed by Burns (1978) is based on a set of ethical assumptions pertaining to the leader-follower relationship. She states that Burns’ theory is clearly a prescriptive one about the nature of morally good leadership…. transforming leaders have very strong values. They do not water down their values and moral ideals by consensus, but rather they elevate people…. Transforming leadership is concerned with end-values, such as liberty, justice and equality. Transforming leaders raise their followers up through various stages of morality and need. They turn their followers into leaders and the leader becomes a moral agent. (p. 15)

Clearly then, true charismatic/transformational leaders operate out of a genuine concern for others. They are ethical by nature and appear to be guided by a set of moral values that are highly principled and concerned with doing the right thing. They thus appear to make ethical decisions from a deontological perspective.

The ethical leadership zone therefore includes genuine charismatic/transformational leaders (refer to horizontal axis TF on the right side of Figure 1). According to Kanungo and Mendonca (1996), these leaders demonstrate ethical leadership when they are guided by altruistic values, attempt to influence subordinates through empowerment rather than control, and strive to develop their own virtues. They are sincerely motivated by a consideration for others often at significant personal sacrifice, and lead subordinates toward the attainment of objectives that are in the interest of the entire organization, its members, and the outside community. Authentic transformational leaders are viewed by Bass and Steidlmeier (1999) as often placing the interests of others before their own personal concerns. The patterns of behaviour identified by Bass and Avolio (1994), and described earlier, may now be seen in terms of the values by which authentic transformational leaders are guided: (a) charisma or idealized influence is characterized by morally uplifting values in developing a vision for a better future, exuding confidence, and setting high standards for emulation; (b) inspirational motivation emphasizes the best qualities in people-concord, generosity, and good deeds; (c) intellectual stimulation refers to environmental analysis, vision creation, and implementation strategies in a spirit of openness and cooperation; and (d) individualized consideration is altruistic in nature, manifested by giving emphasis to followers’ personal growth through coaching and mentoring (Bass & Steidlmeier, 1999). From the perspective of House and Howell (1992), the socialized charismatic leader is guided by the values of a collective orientation, egalitarianism, refraining from taking advantage of others, and influencing followers by developing and empowering them.

On the low moral development side (refer to horizontal axis TF on the left side of Figure 1) may be found the artificial transformational leaders. These are the egotistical leaders that may be prone to narcissism, who may exhibit exaggerated behaviour and a concern only for personal gain (Conger & Kanungo, 1998). The pseudo-transformational leaders described by Bass and Steidlmeier (1999) also exhibit the behaviours of idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration referred to above, but they operate from a set of values totally distinct from those of their authentic counterparts. Pseudo-transformational leaders care about their own personal power and status, often depending on conspiracies and excuses, and resorting to distortion of truth and manipulation of followers for their own ends. They also tend to be concerned with perpetuating followers’ dependence on them. Personalized charismatic leaders (House & Howell, 1992) are driven by self-aggrandization and nonegalitarianism, and will not hesitate to take advantage of others. When these leaders assume positions of authority in organizations, there is serious risk that the power that is now theirs to wield will be used essentially to further their own interest at the expense of their subordinates and the organization itself.

In summary, this model of ethical leadership provides an overall view of diverse leadership styles and the manner in which they manifest the values stemming from the various ethical perspectives. As was seen, ethical leadership may be exhibited by an entire range of leadership styles, provided they are located in the ethical leadership zone. The same types of leadership located in the low moral development area will display quite different characteristics.


It appears evident that there is a growing demand for the business community to conduct its affairs with greater regard for ethical considerations and that it is essential for corporate leaders to earn the confidence and loyalty of their followers and the esteem of society at large via ethical actions. It is also vital that these leaders cultivate ethical behaviour in the firm. Since appropriate values are at the root of moral conduct, the business leader of today must possess a set of values that will not only enhance a favourable perception in the eyes of both internal and external stakeholders, but also lead to greater effectiveness and efficiency of organizational members.

As was seen in the discussion of ethical theories, many perspectives are possible for ethical values, and although all may contribute to ethical behaviour in general, indications are that moral judgments will usually be based on some combination of deontological and teleological evaluation, with the proportion of each likely determined simultaneously by the personal characteristics of the moral agent and the prevailing contextual factors. Similarly, as was indicated earlier, any leader will likely display a composite of several styles, again depending upon personal factors and situational requirements. It is hoped that the model presented in this paper will aid in clarifying the concept of ethical leadership which, it can now be said, may be manifested over a range of leadership types. The determining factors are the levels of moral development and altruism of the leader.

From an applied management point of view, the proposed model of ethical leadership may be of significant use to organizations. As has been mentioned, certain types of leadership will presumably be more effective in specific kinds of firms, and it may be advantageous to recruit leaders who possess a desired combination of leadership styles and ethical values. By evaluating prospective CEOs along the dimensions of the model it may be possible to locate the particular leader in the ethical leadership zone and to determine if the fit is suitable.

From a research standpoint, it will be useful to test hypotheses concerning the relationship between transformational leadership and deontological ethical values, as well as between directive and transactional leadership and teleological values. It will also be helpful to test empirically the extent to which leaders make ethical judgments based on a combination of deontological and teleological evaluation, and the relative importance of these types of ethical values for predominantly directive, transactional, or transformational leaders. It will also be of interest to examine the effects of ethical leaders on followers and the relationships between the various styles of ethical leadership and the performance, efficiency, and satisfaction of organizational members.

Methodologically, the Conger-Kanungo Scale of Charismatic Leadership (Conger & Kanungo, 1998), the Leadership Questionnaire for measuring transformational and transactional leadership (Bass, 1985), and the Perceived Leader Integrity Scale (Craig & Gustafson, 1998) may be of aid in measuring leadership dimensions. With respect to ethical decision-making, Hunt and Vitell (1986, 1993) elaborated a general theory of marketing ethics. A number of measures have been developed to validate this theory (Vitell & Ho, 1997). The reference to marketing ethics is due to the fact that their research was conducted in the marketing area, but the measures and the theory may apply equally well to other domains. These instruments may be employed in the empirical investigation suggested above.

There appears to be a growing acknowledgment in the business community of the need for “good” leadership, implying both effectiveness and morality. It is hoped that by conducting research in the area of ethical leadership, a contribution will be made toward increasing the quality of organizational life which may have a positive influence on both members of the organization and the wider community.


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Edward Aronson*

McGill University

*Faculty of Management, McGill University, 1001 Sherbrooke St. West, Montreal, QC, Canada H3A IG5. E-mail:

Copyright Administrative Sciences Association of Canada Dec 2001

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