Do Leaders Affect Ethical Conduct?

Abstract

Abstract:We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct-prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders' strategies reveals that leaders' statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders' propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.

The Leadership Quarterly: State of the journal

“…However, even more intriguing is that leadership is being studied in more distant areas of the social sciences including economics, which now recognizes that principals influence agents by means other than contracts (Acemoglu & Jackson, 2015;d'Adda, Darai, Pavanini, & Weber, 2017;Hermalin, 1998;Jones & Olken, 2005). The appeal and impact of leadership research is now so prevalent that such research is even being published in the natural sciences (e.g., Edelson, Polania, Ruff, Fehr, & Hare, 2018;Powers & Lehmann, 2014;Smith et al, 2016).…”

Corruption and Technological Innovation in Private Small-Medium Scale Companies: Does Female Top Management Play a Role?

“…[30,31]. Likewise, the experimental evidence states that immoral behaviors by top managers can induce cheating action in subordinates [32]. Another study, for example, made known that male top managers engaging in corruption are inclined to rationalize their behaviors as a necessity for being competitive [2].…”