Doing Well by Doing Good? Analyzing the Relationship Between CEO Ethical Leadership and Firm Performance

Doing Well by Doing Good? Analyzing the Relationship Between CEO Ethical Leadership and Firm Performance.

Business ethics and firm economic performance have traditionally often been regarded as mutually exclusive ends. The researchers of this study  challenge this “either-or” belief and analyze when and how ethical firm leadership and firm performance may harmonize well.

In extension of earlier research on ethical leadership and performance at the individual and team level, this research studies the context-dependency of the organization level relationship between CEO ethical leadership and firm performance. The researchers propose a moderated mediation model of the link between CEO ethical leadership and firm performance, identifying mediating (organizational ethical culture) and moderating (organizational ethics program) variables unique to the organization-level of analysis.

CEO ethical leadership is argued to work through organizational ethical culture which promotes firm performance under the condition that there is a strong corporate ethics program in place. Results from a multisource cross-sectional study, in which the authors surveyed 145 participants from 32 organizations and validated organizational performance ratings by objective performance data, showed support for our conceptual model.