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