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The Link Between Corporate Culture and Ethical Leadership

The early 21st century is the time of deep-rooted concern about the unethical behavior of business leaders and business enterprises, in general. Admittedly, the lack of trust toward business in terms of ethical conduct was always an issue. Making money is the primary goal of any business enterprise stands in fundamental contradiction with the demand to make the most ethical choices. However, as noted by Alvesson and Einola (2019), the corporate scandals of the 2000s have caused a particularly widely spread mistrust in large businesses even when compared to other periods in history.

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These circumstances produce a consistent demand for ethical leadership in all fields and, in particular, ethical leadership in business. Thus, the study of how one may incorporate ethics into leading a business enterprise not only retains the overall theoretical value but is also especially important under present conditions.

The concept of ethical leadership is inextricably linked to corporate culture. The notion of leadership itself presumes that there is an organization to lead, and the goal of this process is to impact its performance positively. Thus, ethical leadership should theoretically transcend to embedding ethical behavior as the organization’s core value and influencing its members’ conduct and actions (Ouma 2017).

There are different perspectives on how a business enterprise should be governed to promote ethical decision-making as an integrated part of its corporate culture, and one of these perspectives is authentic leadership. Authentic leadership resides on the premise that a leader’s behavior should be consistently ethical both inside and outside the workplace context, and, under these circumstances, it will promote a more ethical organizational culture. While not without flaws, the theory of authentic leadership remains a viable way of approaching ethical leadership and corporate culture.

Authentic Leadership: Pros and Cons

As noted above, the purpose of a business enterprise is, first and foremost, producing an income, and a form may only function insofar as it successfully achieves this goal. Therefore, the primary criterion to judge the applicability of any leadership style to a business setting is its impact on organizational performance. In this respect, authentic leadership seems to produce modestly positive results. Based on their review of scholarly literature, Khan, Khan, and Rasheed point out that authentic leadership has a generally positive effect on the organization’s efficiency (2019). In particular, it improves knowledge management organization wise while also boosting the creativity and initiative among the employees (Khan et al., 2019).

Apart from that, the successful implementation of authentic leadership results in greater employee wellbeing, which is, in turn, conducive to productivity. This body of research suggests that the organizations that use ethical leadership benefit from a more creative and productive workforce that manages its common intellectual resources with increased efficiency. Based on this, one may assume that authentic leadership impacts the performance of a business enterprise positively.

Another argument in favor of authentic leadership is the fact that it promotes socially responsible behaviors among the employees. De Roeck and Farooq (2018) offer interesting insights into this matter in their study of ethical leadership as connected to the employees’ conduct and actions. According to them, organizations may succeed in promoting socially responsible behaviors among their employees and even make them a part of the corporate culture. However, it requires a corresponding approach to leadership, as leaders would have to reproduce “a consistent image of the organization regarding its contribution to social welfare” (De Roeck & Farooq, 2018, p. 934).

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In simpler words, the leaders’ conduct should be consistent with the company’s ethical message on the importance of socially responsible behaviors, and then it will promote a shift in organizational culture. Unless the leader actually embodies the values the company claims to profess, the attempts to promote the desired code of ethical conduct within the organization will likely be futile. This research offers direct support to the notion of authentic leadership by demonstrating that it is often a necessary prerequisite of making ethical behaviors an integrate part of the corporate culture.

There is, however, an opposing perspective that points to the flaws and deficiencies of the theory of authentic leadership as a way to integrate ethical decision-making into the corporate culture of a given business enterprise. One of the arguments against it is the fact that authentic leadership is problematic in its basic premise. It requires the merging of ethical behavior inside and outside of the work context, which, according to Alvesson and Einola (2019), produces a direct contradiction.

The functions one performs in the workplace constitute a role, while one’s actual self consists of actions one performs with no role assigned from the outside. However, this seems a mere extension of the afore-mentioned contradiction between making money and behaving morally that permeates the idea of ethical leadership per se. Thus, unless one is willing to surrender the idea of ethical leadership as a whole, one should not hold the apparent conflict between the workplace role and the authentic self against authentic leadership theory.

Another objection against the theory of authentic leadership is that it might be an order of the day rather than a consistent and thoroughly developed approach to managing an organization. As mentioned above, the corporate scandals of the early 21st century resulted in a widespread crisis of trust, causing a general tendency to view business leadership as inherently unethical. Alvesson and Einola (2019) stress that “the quest for authenticity becomes especially pronounced in extreme situations that include not only personal and external, but also significant social, economic and historical crisis” (p. 386). Thus, the emergence of authentic leadership may be due to the trending demand for authenticity rather than its merits as an approach.

Still, the same authors agree that leadership studies as a field tend to follow fashions and trends and rely on the dominant ideologies and discourses rather than theoretical breakthroughs (Alvesson & Einola, 2019). Therefore, while the theory or authentic leadership is definitely a product of a particular cultural and historical environment, it does not make it less applicable than any other one.

Finally, scholars also caution against overreliance on authentic leadership by pointing out that its implementation in practice may affect the leader adversely. Alvesson and Einola (2019) note that perceiving one’s workplace functions as a role may actually serve as a protective mechanism. However, if a leader poses not as performing a role, but as translating his or her authentic self, all repercussions of the leadership impact him or her directly. As a result, implementing authentic leadership results in increased vulnerability for the leaders, which may reflect badly on their wellbeing and, by extension, performance. This concern is valid, and one should keep this potential disadvantage in mind when weighing the potential effect of authentic leadership on the employees and the leader alike.

Conclusion

As one can see, the questions of how leadership may promote ethical actions and conduct within a business enterprise and make them an inherent part of the corporate culture are of current interest. This development is, to a considerable degree, due to the overall crisis of trust in business caused by the high-profile corporate scandals of the early 21st century.

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While the primary goal of making money is not perfectly consistent with doing the right thing, there is a broad consensus that leadership should be ethical and fair in all settings, including running a business. One of the approaches to ethical leadership that promotes corresponding values in corporate culture is authentic leadership that stresses the leader’s genuine adherence to the ethical principles professed by the company.

Under present circumstances, implementing authentic leadership theory seems the right thing to do to promote the corporate culture of ethical decision-making and social responsibility. Research suggests that authentic leadership reflects positively on the employee’s willingness to engage in socially responsible behaviors, even outside the workplace context. Apart from that, it leaves a modestly positive impact on the organization’s efficiency and performance, which is essential for a business.

There are deficiencies in the authentic leadership, ranging from the issues with its basic premise and its order-of-the-day popularity to rending the leaders more personally vulnerable. However, many of these downsides are characteristic of leadership studies and the notion of ethical leadership in general. With this in mind, one may conclude that authentic leadership is a valid, if imperfect, approach to managing a business enterprise in an ethical way and promoting the corresponding corporate culture within the organization.

References

Alvesson, N., & Einola, K. (2019). Warning for excessive positivity: Authentic leadership and other traps in leadership studies. The Leadership Quarterly, 30(4), 383-395.

De Roeck, K., & Farooq, O. (2018). Corporate social responsibility and ethical leadership: Investigating their interactive effect on employees’ socially responsible behaviors. Journal of Business Ethics, 151, 923–939.

Khan, J., Khan, S., & Rasheed, F. (2019). Authentic leadership, employee wellbeing and employee creativity: The mediating role of knowledge sharing. Market Forces, 14(2), 21-35.

Ouma, C. (2017). Ethical leadership and organizational culture: Literature Perspective. International Journal of Innovative research and development, 6(8). Web.

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