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Leaders’ Core Self-evaluation, Ethical Leadership, and Employees’ Job Performance: The Moderating Role of Employees’ Exchange IdeologyJaehyung Ahn1 • Soojin Lee2 • Seokhwa Yun1Received: 13 November 2013 / Accepted: 18 January 2016 / Published online: 27 January 2016? Springer Science+Business Media Dordrecht 2016Abstract With the increasing demand for ethical stan-dards in the current business environment, ethical leader-ship has received particular attention. Drawing on self-verification theory and social exchange theory, this studyinvestigated the effect of leaders’ core self-evaluation onthe display of ethical leadership and the moderating role ofemployees’ exchange ideology in the relationship betweenethical leadership and employees’ job performance (i.e.,task performance and organizational citizenship behavior).Consistent with the hypotheses, the results from a sampleof 225 dyads of employees and their immediate leadersshowed a positive relationship between leaders’ core self-evaluation and ethical leadership. Moreover, the resultsshowed that ethical leadership mediates the effects ofleaders’ core self-evaluation on employees’ job perfor-mance. Furthermore, we found that employees’ exchangeideology moderates the relationship between ethical lead-ership and job performance. The theoretical and practicalimplications of these findings are discussed.Keywords Core self-evaluation ? Ethical leadership ? Exchange ideology ? Job performance ? Social exchange theoryIntroductionGiven the prominent ethical scandals that have occurred andtightening of ethical standards in the workplace, theimportance of ethical behavior has become more evidentand in recent years, burgeoning research has been conductedto investigate (un)ethical behaviors among individuals (e.g.,Gino et al. 2010; Gino and Margolis 2011). As leaders’ethics and moral responsibility are crucial in establishing anethical organizational environment (Schaubroeck et al.2012), scholars have paid increasing attention to the con-struct of ethical leadership and have defined it as ‘‘thedemonstration of normatively appropriate conduct throughpersonal actions and interpersonal relationships, and thepromotion of such conduct to followers through two-waycommunication, reinforcement, and decision-making’’(Brown et al. 2005, p. 120). Since ethical leaders treat theiremployees in fair and ethical ways, they are more likely tobuild high-quality social exchange relationships with theiremployees (Blau 1964; Trevin?o et al. 2006). In particular,their followers are likely to feel trust, receive personalconsideration within social exchange processes, and, in turn,put extra effort into their in-role and extra-role behaviors(Dirks and Ferrin 2002). In line with this reasoning, priorresearch on ethical leadership has demonstrated that high-quality social exchange relationships that derive from ethi-cal leadership have a positive impact on organizationaloutcomes such as voice behavior, whistle-blowing, organi-zational citizenship behavior (OCB), and so forth (e.g.,Mayer et al. 2013; Piccolo et al. 2010; Shin et al. 2015).& Seokhwa Yun syun@snu.ac.krJaehyung Ahnajaehyung@gmail.comSoojin Leeinsis98@gmail.com1 College of Business Administration, Seoul NationalUniversity, 599 Gwanangno, Gwanak-gu, Seoul 151-916,Korea2 College of Business Administration, Chonnam NationalUniversity, 77 Yongbong-ro, Buk-gu, Gwangju 61186,Korea123J Bus Ethics (2018) 148:457–470https://doi.org/10.1007/s10551-016-3030-0Although ethical leadership has received substantialresearch attention, several issues have yet to be fullyexplored. First, not enough studies have examined theantecedents of ethical leadership (Jordan et al. 2013).Recognizing this issue, this study investigates the rela-tionship between leaders’ positive self-concept, specificallycore self-evaluation (CSE; Judge et al. 1997), and ethicalleadership. CSE refers to ‘‘fundamental premises thatindividuals hold about themselves and their functioning inthe world’’ (Judge et al. 1998, p. 161) and comprises theoverlap of four well-established traits: self-esteem, self-efficacy, emotional stability, and locus of control. EachCSE trait has been studied in the personality literature andhas been found to have a positive relationship with moralconduct and ethical decision-making (Aronson and Mettee1968; Hsu and Kuo 2003; Judge et al. 2002; Trevin?o 1986).Since CSE constitutes a personality trait that represents thefavorability of an individual’s overarching self-concept, ithas been considered a potent and parsimonious predictor ofindividual behaviors. In particular, recent research hasdemonstrated that CSE is positively related to strategicdecision-making (Hiller and Hambrick 2005) and trans-formational leadership (Resick et al. 2009).Second, the findings regarding the relationship betweenethical leadership and employees’ behavior have not beenconsistent (Detert et al. 2007; Dineen et al. 2006; Mayeret al. 2009); the results have implied that the effects ofethical leadership may depend on context (Avey et al. 2011;Yukl 2010). However, little is known about the boundaryconditions that influence the relationship between ethicalleadership and its outcomes. Therefore, it would be worth-while to examine the situational factors that may affect therelationship between ethical leadership and its conse-quences (Avey et al. 2011). In the present study, we suggestthat the employee orientation toward exchange can play animportant role in the relationship between ethical leadershipand employees’ job performance. Some reasons for thiscontention are as follows. First, as the interactional frame-work of leadership suggests, employees’ traits can serve assignificant situational moderators (Yukl 2010; Yun et al.2005; Yun et al. 2006). Second, social exchange theorypostulates that supervisors are critical exchange partners foremployees in the workplace and that the relationshipbetween supervisors and employees is based on socialexchange processes. Moreover, considering the fair treat-ment and two-way communication ethical leadership mayfacilitate, employees’ orientation toward exchange cancondition their interpretation of leader behaviors. Thus, wesuggest that employees’ exchange ideology moderates theeffects of ethical leadership on job performance, whichincludes both task performance and OCB.By addressing these important issues, this study offersseveral contributions. Above all, this study extends ourunderstanding of ethical leadership by exploring an ante-cedent of ethical leadership. Moreover, we investigate notonly the influence of ethical leadership on employees’ jobperformance but also whether the effects of ethical lead-ership differ depending on the characteristics of the fol-lower (i.e., exchange ideology). Furthermore, byexamining CSE’s value as a predictor of ethical intent andbehavior, the present study extends the research on CSEinto the ethical domain. In addition, this study may bebeneficial for both social exchange theory and the literatureon exchange ideology in that we test how individual dif-ferences work in social exchange processes.In summary, this study has three major research pur-poses. First, drawing on self-verification theory (Swannand Hill 1982), which posits that self-verifiers behave inconsistent ways to demonstrate a stable self-view to others,we investigated an antecedent of ethical leadership bytesting whether leaders with a positive self-view (i.e.,leaders with high CSE) were more likely to exhibit ethicalleadership. Second, we examined the consequences ofethical leadership by applying social learning theory(Bandura 1977) and social exchange theory (Blau 1964).The specific outcomes we examined included both in-role(i.e., task performance) and extra-role behaviors (i.e.,OCB). Finally, by investigating the role of employees’exchange ideology, we also explored a boundary conditionof ethical leadership that moderates the relationshipbetween leaders’ ethical behaviors and employees’ jobperformance behaviors. The results of this study have boththeoretical and managerial implications.Theory and Hypotheses DevelopmentEthical LeadershipAlthough ethical leadership and leaders’ moral responsi-bility have long been discussed by many philosophers andscholars, the empirical examination of the construct and itseffectiveness remains at an early stage (Jordan et al. 2013).At the initial stages of the development of ethical leadershipas a construct, Trevin?o et al. (2000, 2003) conducted aninterview-based study of executives and demonstrated thatleaders with trustworthiness, honesty, and fairness wereperceived as ethical leaders. Moreover, they suggested thatsuch ethical leaders work as role models for morallyappropriate behaviors such as by making fair decisions,setting moral principles, and punishing unethical behaviorsamong their followers. Based on this work, Brown et al.(2005) specified a definition for ethical leadership anddeveloped an instrument to measure the construct.Subsequently, substantial research has been conducted onethical leadership and many scholars have demonstrated its458 J. Ahn et al.123effectiveness. In particular, drawing on role-modeling pro-cess (i.e., social learning theory; Bandura 1977) and thesocial exchange perspective (e.g., Blau 1964), many empir-ical studies have demonstrated that followers of ethicalleaders are more likely to put extra effort into their jobs andengage less in deviant behaviors (e.g., Mayer et al. 2009,2012; Walumbwa et al. 2011). However, relatively fewstudies have been conducted regarding the antecedents andboundary conditions of ethical leadership. For instance,Mayer et al. (2009) examined the trickle-down effect ofethical leadership and found that ethical leadership amongtop management is positively related to supervisory ethicalleadership. In their study investigating the relationshipbetween organizational culture and leadership, Toor andOfori (2009) found that transformational (transactional)culture was positively (negatively) related to ethical leader-ship. Mayer et al. (2012) showed that leaders’ moral identitysymbolization and internalization were positively relatedwith ethical leadership. Moreover, with data from a stateagency in the southern US, Kacmar et al. (2012) demon-strated that political skill moderates the direct and indirecteffects of ethical leadership. In line with these studies, thegoal of this study was to enrich the knowledge about ethicalleadership by investigating the antecedents and boundaryconditions of ethical leadership. The conceptual model ofthe current study is presented in Fig. 1.Leaders’ CSE and Ethical LeadershipIt has long been a tradition in the social sciences to explainbehaviors based on individual characteristics (Ajzen 1988).In particular, Beu and Buckley (2001) demonstrated thatindividuals’ ethical intentions and behaviors are related totheir individual characteristics. Moreover, self-esteem isknown to play a crucial role in determining individuals’attitudes and behaviors (Erez and Judge 2001; Kammeyer-Mueller et al. 2009). In their effort to understand howindividuals broadly evaluate themselves, Judge et al. (1997)introduced the concept of CSE, which is based on individ-uals’ four core traits: (a) self-esteem, (b) self-efficacy,(c) locus of control, and (d) emotional stability. Resick et al.(2009) argued that CSE encompasses fundamental evalua-tions that people make about themselves and their func-tioning in the environment. Moreover, in their review ofCSE, Johnson et al. (2008) proposed that as a construct, CSEmight provide a comprehensive conception of individuals’beliefs about their self-regulatory and behavioral capacities.Specifically, individuals with a favorable CSE cope withenvironmental constraints successfully, show a high level ofself-regulation, and pursue intrinsically motivating goals.Supporting this suggestion, a handful of studies havedemonstrated a link between CSE and work-related out-comes such as setting intrinsic goals and job performance(Erez and Judge 2001). Moreover, several studies havesuggested that an executive’s CSE significantly affects hisor her strategic decision-making and leadership style (Hillerand Hambrick 2005; Resick et al. 2009). Considering thatethical leadership can emerge from a leader’s strong ethicalstandards and moral decision-making, it is plausible thatethical leadership is positively related to a leader’s CSE.The effects of leaders’ CSE on ethical leadership can beexplained by the self-verification theory. Self-verificationtheory postulates that individuals have their own views aboutthemselves, which may or may not be accurate, and thatindividuals try to confirm their views. In other words, one ofthe basic motives underlying individuals’ interpersonalLeaders’ Core Self-Evaluation(Leader Rating)Ethical Leadership (Employee Rating)Task Performance(Leader Rating)Organizational Citizenship Behavior(Leader Rating)Employees’ Exchange Ideology(Employee Rating)Fig. 1 Conceptual modelLeaders’ Core Self-evaluation, Ethical Leadership, and Employees’ Job Performance… 459123behavior is a desire to verify their existing self-view and suchself-concepts are particularly validated when other people’simage of them reflects the way they see themselves (Swann1983; Swann et al. 2003). Consequently, it is important tomaintain a stable self-view and, in order to facilitate theprocess of self-verification, people are apt to demonstratesufficient cues consistent with their self-view (Burke andStets 1999). For all of these reasons, individuals try to vali-date their self-concepts, and they do so by working to makeothers understand and verify their self-views (Swann et al.2004). Thus, we expected leaders with a positive self-view tostrive to display behaviors consistent with their positive self-concepts by maintaining high ethical standards. In otherwords, we expected a leader with a high CSE to be likely todemonstrate ethical leadership. Likewise, Mayer et al.(2012) proposed that leaders with a moral identity are likelyto engage in ethical leadership because people try to achieveself-consistency (Blasi 2004) and reduce dissonance.Given that CSE captures the overlap of four fundamentalhuman traits, inferring the relationship between each com-ponent and ethical leadership would be beneficial. First, self-esteem, which is conceptually the central component of CSE,refers to the overall value that one places on oneself as aperson (Harter 1990). Individuals with high self-esteem areexpected to engage in ethical behaviors because they placehigh value on them. Previous research has demonstrated thepossibility that self-esteem is positively related to ethicalbehaviors. For example, Aronson and Mettee (1968)demonstrated that people with high self-esteem are apt tobehave honestly, while people with low self-esteem are likelyto cheat. Hsu andKuo (2003) showed that organization-basedself-esteem has a positive relationship with subjective normsregarding ethical behavior and ethical intention. Thus, weexpect that leaders’ self-esteem, a major component ofleaders’ CSE, is positively related to ethical behaviors.Second, self-efficacy is defined as ‘‘beliefs in one’scapabilities to mobilize the motivation, cognitive resources,and courses of action needed to meet given situationaldemands’’ (Wood and Bandura 1989, p. 408). In other words,self-efficacy is related to judgments of how well one canexecute the courses of action required to deal withprospective situations (Bandura 1982). Individuals with ahigh level of generalized self-efficacy were expected to beoptimistic about their ability to cope with challenging situ-ations. Indeed, MacNab and Worthley (2007) demonstratedthat self-efficacy directly influences the propensity forinternal whistle-blowing behaviors, which implies that peo-ple with high self-efficacy are more likely to object tounethical behaviors. In contrast, low self-efficacy is relatedto unethical behaviors. For instance, several studies haveshowed that individuals with low self-efficacy are morelikely to use coercive power (Goodstadt and Kipnis 1970),accept cheating (Elias 2008), and make poor organizationaldecisions (Mumford et al. 1993). Thus, we expected leaders’self-efficacy to be positively related to ethical behaviors.Third, emotional stability, one of the ‘‘Big Five’’ per-sonality traits (Costa and McCrea 1992), is also known asthe converse of neuroticism. Individuals who score low onemotional stability (high on neuroticism) are described asanxious, fearful, depressed, irritable, stressed, and moody

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