Research Paper

O R I G I N A L P A P E R

How Does Ethical Leadership Trickle Down? Test of an Integrative Dual-Process Model

Zhen Wang1 • Haoying Xu1 • Yukun Liu2

Received: 29 April 2016 / Accepted: 13 October 2016 / Published online: 20 October 2016

� Springer Science+Business Media Dordrecht 2016

Abstract Although the trickle-down effect of ethical

leadership has been documented in the literature, its

underlying mechanism still remains largely unclear. To

address this gap, we develop a cross-level dual-process

model to explain how the effect occurs. Drawing on social

learning theory, we hypothesize that the ethical leadership

of high-level managers could cascade to middle-level

supervisors via its impact on middle-level supervisors’ two

ethical expectations. Using a sample of 69 middle-level

supervisors and 381 subordinates across 69 sub-branches

from a large banking firm in China, we found that middle-

level supervisors’ ethical efficacy expectation and unethi-

cal behavior–punishment expectation (as one form of eth-

ical outcome expectations) accounted for the trickle-down

effect. The explanatory role of middle-level supervisors’

ethical behavior–reward expectation (as the other form of

ethical outcome expectations), however, was not sup-

ported. The theoretical and practical implications are

discussed.

Keywords Ethical leadership � Ethical efficacy expectation � Ethical outcome expectation � Social learning theory

Introduction

Recent years have seen an onslaught of cases relating to

corporate fraud and scandals, inflicting great pain on

organizations and society. Against this background, an

increasing amount of attention has been paid to the topic of

ethical leadership in organizational research (Brown and

Treviño 2006; Treviño et al. 2014). Being defined as ‘‘the

demonstration of normatively appropriate conduct through

personal actions and interpersonal relationships, and the

promotion of such conduct to followers through two-way

communication, reinforcement, and decision making’’

(Brown et al. 2005, p. 120), ethical leadership has been

found to be positively related to a wide range of beneficial

outcomes, including task performance, citizenship behav-

iors, ethical conducts, and so forth (for systematic reviews,

see Bedi et al. 2015; Ng and Feldman 2015). Given these

positive outcomes, both researchers and practitioners have

engaged in identifying the antecedents of ethical leadership

and thus have accumulated a considerable body of evi-

dence (den Hartog 2015; Treviño and Brown 2014).

Among several streams of research, there is one suggesting

a ‘‘trickle-down’’ effect of ethical leadership, which argues

that ethical leadership of high-level leaders could cascade

downward and influence the ethical leadership of middle-

level supervisors (Mayer et al. 2009; Ruiz et al. 2011a, b;

Schaubroeck et al. 2012).

However, these accumulated studies on the trickle-down

effect of ethical leadership are limited in a critical way.

Although almost all studies have relied on social learning

& Yukun Liu [email protected]

Zhen Wang

[email protected]

Haoying Xu

[email protected]

1 Department of Organization and Human Resources

Management, Business School, Central University of Finance

and Economics, 39 South College Road, Haidian District,

Beijing 100081, People’s Republic of China

2 Department of Management and Organization, NUS Business

School, National University of Singapore, B2-03, Biz 2

Building, 1 Business Link, Singapore 117592, Singapore

123

J Bus Ethics (2018) 153:691–705

https://doi.org/10.1007/s10551-016-3361-x

theory to explain the mechanisms underlying the effect,

none of them has used social learning-related constructs to

test this account. As noted in a recent article by Sumanth

and Hannah (2014, p. 46), ‘‘in investigating the effects of

ethical leadership of higher level organizational leaders on

lower level leaders…though frequently theorized, we are not aware of any research that has actually tested social

learning as a mediator in the cascading process.’’ The lack

of such research results in an unclear understanding of the

intermediate process through which the trickle-down effect

occurs. Given this research gap, the current study intends to

continue the momentum of research on the trickle-down

effect of ethical leadership and advance further to examine

its underlying mechanism, aiming to provide a better

understanding of how ethical leadership cascades from

high-level managers to middle-level supervisors within an

organization.

Specifically, we propose ethical efficacy expectation and

ethical outcome expectation 1

as mediators to disentangle

the cascading process of ethical leadership. Social learning

theory emphasizes the importance of individual’s cognition

in the regulation of human behaviors and posits that ‘‘most

external influences affect behavior through intermediary

cognitive processes’’ (Bandura 1977, p. 160). In particular,

the changes in efficacy expectation and outcome expecta-

tion are the most important intermediate cognitive pro-

cesses that link external influences to behavioral changes

(Bandura 1977; Manz and Sims 1981). Given that our

focus is on the ethical realm, we concentrate on ethical

efficacy expectation and ethical outcome expectation in the

current research. Ethical efficacy expectation (i.e., ethical

efficacy) refers to ‘‘individuals’ belief in their ability to

mobilize the motivation, cognitive resources, and courses

of action necessary to execute ethical behavior’’ (Mitchell

and Palmer 2010, p. 92); ethical outcome expectation

represents ‘‘individuals’ perception of the likelihood that

an [ethical/unethical] behavior will lead to a particular

[reward or punishment] outcome’’ (Ashkanasy et al. 2006,

p. 450). Social learning theory holds that an individual’s

efficacy expectation and outcome expectation are suscep-

tible to the influence of role models (e.g., leaders) through

a vicarious learning process (Manz and Sims 1981). Thus,

it is reasonable to suggest that, the ethical leadership of

high-level managers, who oftentimes are regarded as role

models, will exert an influence on the ethical efficacy

expectation and ethical outcome expectation of middle-

level supervisors, which will in turn elicit their ethical

leadership behaviors.

We tested our theoretical model using a sample from a

large banking firm. Results generally provided support to

our hypotheses. By conducting this research, we contribute

to the extant literature in three ways. First, this study

advances the existing research on the trickle-down effect of

ethical leadership by delineating the underlying mecha-

nisms. By considering ethical efficacy expectation and

ethical outcome expectation as mediators, the present study

provides a direct examination of the trickle-down effect of

ethical leadership from the social learning perspective.

Second, this study extends the research on ethical efficacy

by providing further insights into its nomological network.

In the early 1990s, Bandura (1991) suggested that moral/

ethical beliefs could be applied to ethical situations, sug-

gesting the existence of ethical efficacy. It is only recently,

however, that a few studies have formally conceptualized

and operationalized this construct and studied its relevance

to ethics (Arnaud and Schminke 2012; Hannah and Avolio

2010). Even so, research on ethical efficacy still remains

largely in its infancy, and thus warrants further investiga-

tion (Hannah et al. 2011). This said, the present study

addresses this call and enriches our understanding of eth-

ical efficacy. Third, this study also highlights the role of

ethical outcome expectation and advances the literature by

contextualizing it in the ethical leadership context (Ash-

kanasy et al. 2006; Treviño and Youngblood 1990), illu-

minating another important psychological mechanism that

could explain the function of ethical leadership. Taken

together, using social learning theory as a theoretical

framework, our research aims to answer the question how

ethical leadership of high-level managers trickles down to

influence the ethical leadership of middle-level supervisors.

Our research model is depicted in Fig. 1 as shown below.

Theory and Hypotheses

Manager Ethical Leadership and Supervisor Ethical

leadership

Social learning theory is based on the idea that an indi-

vidual learns by paying attention to and emulating the

attitudes, values, and behaviors of role models (Bandura

1977). As to the learning of ethical conducts in organiza-

tions, although individuals can rely on organization’s for-

mal regulations or norms to gain ethics-related knowledge,

they can also learn ethical conducts via a modeling process,

in which they look for role models in the organization and

emulate their ethical attitudes, values, and behaviors

(Brown et al. 2005). This modeling process not only

applies to followers who regard their leaders as role

models, but also applies to leaders themselves, who also

learn from their role models. Indeed, as Brown and Treviño

1 Consistent with the common practices in the management field

(e.g., Mitchell and Palmer 2010; Treviño et al. 2006), we used the

terms ethical and moral interchangeably in this paper.

692 Z. Wang et al.

123

(2006, p. 600) highlighted, ‘‘followers are not the only ones

who learn from models. Leaders learn from models too. By

observing an ethical role model’s behavior as well as the

consequences of their behavior, leaders should come to

identify with the model, internalize the model’s value and

attitudes, and emulate the modeled behavior.’’ Then it

comes to the question who would be leaders’ ethical role

models. A few studies have answered this question and

suggested that top managers or top executives in an orga-

nization could serve as ethical role models for middle-level

supervisors (see examples in Mayer et al. 2009; Ruiz et al.

2011a). The reasons supporting supervisors as ethical role

models for frontline employees, as suggested by existing

studies (Brown et al. 2005; Brown and Treviño 2006),

could also be extended to the dyadic relationships between

high-level managers and middle-level supervisors, in

which supervisors become followers of high-level man-

agers. Just like supervisors, having power, status, and the

control over the reward/punishment system, as well as

having personal characteristics such as being honest and

trustworthy, high-level managers are legitimate, attractive,

and credible to be regarded as ethical role models, from

whom supervisors could emulate the ethical conducts

(Bandura 1977). Based upon the above reasoning as well as

the findings in several existing studies (e.g., Mayer et al.

2009; Ruiz et al. 2011a, b; Schaubroeck et al. 2012), we

propose the trickle-down effect of ethical leadership of

high-level managers on their immediate supervisors. By

using high-level managers, we refer to managers whom

middle-level supervisors work closely and communicate

frequently with, but not those distant top executives. Our

rationale is that ethical role modeling is a ‘‘side by side’’

phenomenon (Weaver et al. 2005), and middle-level

supervisors have more chances to observe and imitate

ethical behaviors of their intimate leaders (i.e., high-level

managers), rather than those of top or executive managers

(Brown and Treviño 2014). We propose that:

Hypothesis 1 High-level managers’ ethical leadership

relates positively to middle-level supervisors’ ethical

leadership.

The Mediating Effect of Ethical Efficacy

Expectation

As an ethical cognition (Schaubroeck et al. 2012), ethical

efficacy expectation (i.e., ethical efficacy) represents indi-

viduals’ confidence in their ability to execute ethical

behaviors (Hannah and Avolio 2010; Mitchell and Palmer

2010). Unlike the trait-like general efficacy expectation

which is more stable, ethical efficacy expectation is more

state-like, which indicates that it could be influenced to

change. Existing research has found that ethical efficacy

expectation is susceptible to external influences (Fischbach

2015; Hannah and Avolio 2010; May et al. 2013) and could

play an important role in ethics-relevant situations (Arnaud

and Schminke 2012; Lee et al. 2015). In the present study, we

consider ethical efficacy expectation as a crucial factor that

contributes to the cascading of high-level managers’ ethical

leadership. We analyze its role from two aspects as follows.

In one aspect, given that an ethical role model plays a

critical role in developing and strengthening one’s ethical

efficacy beliefs (Bandura 1991), we believe that high-level

managers’ ethical leadership would exert a positive influence

on middle-level supervisors’ ethical efficacy expectation.

According to the social learning theory, expectations of

efficacy are based on four sources of information: perfor-

mance accomplishments, vicarious experience, verbal per-

suasion, and emotional arousal, and these four sources could

be further influenced by different modes of induction (Ban-

dura 1977). Bandura presented a framework in which many

external factors induce sources of efficacy, which in turn

impacts efficacy. For instance, he argued that participant

modeling, performance desensitization, performance expo-

sure, and self-instructed performance could lead to

Research Model

Manager’s Ethical Leadership

Ethical Efficacy Expectation Supervisor’s Ethical Efficacy Expectation

Ethical Outcome Expectation Supervisor’s Ethical Behavior-Reward Expectation Supervisor’s Unethical Behavior-Punishment Expectation

Supervisor’s Ethical Leadership

Level 2

Level 1

Fig. 1 Research model

How Does Ethical Leadership Trickle Down?… 693

123

individuals’ performance accomplishments, which in turn

increase their efficacy, while suggestions, exhortation, self-

instruction, and interpretive treatments are inducements of

verbal persuasion, which in turn impacts efficacy. That said,

these four sources are not sub-dimensions of efficacy, rather,

they are more like the determinants of efficacy and the

mechanisms through which external factors influence effi-

cacy. In our research, based on this ‘‘mode of induc-

tion ? sources of efficacy ? efficacy’’ framework and the function of ethical leadership as the mode of induction (e.g.,

participant modeling, suggestions), we theorized that ethical

leadership would induce individuals’ performance accom-

plishments, vicarious experience, verbal persuasion, and

emotional arousal, which would ultimately increase their

ethical efficacy.

First, high-level managers’ ethical leadership can

enhance middle-level supervisors’ ethical efficacy expecta-

tion through performance accomplishments. Ethical man-

agers set high moral standards and hold their followers

accountable for ethical issues through using proactive and

effective measures (e.g., using reward systems, conveying

ethics-related messages) (Brown et al. 2005). These tactics

can ultimately help supervisors to achieve ethical perfor-

mance and thus enable them to have more opportunities to

obtain personal attainment and success in an ethics-related

domain. Second, supervisors’ ethical efficacy expectation

can be enhanced through their own vicarious experience

(Bandura 1991). In other words, supervisors can strengthen

their ethical efficacy expectation by vicariously observing

what others do when being faced with an ethics-related issue.

Ethical managers, given their legitimacy, attractiveness, and

credibility, of course are the role models whom supervisors

would learn from when facing an ethical issue (Brown et al.

2005). Third, verbal persuasion from ethical managers can

ameliorate supervisors’ ethical efficacy expectation. Ethical

managers usually would discuss business ethics or values

openly with their immediate supervisors and encourage them

to ask ‘‘what is the right thing to do’’ when making decisions

(Brown et al. 2005). Through this communication process,

ethical managers verbally convey the message to their

immediate supervisors that ethical behaviors are appropriate

and should be encouraged, hence enhancing supervisors’

ethical efficacy expectation (Bandura 1977). Fourth, ethical

managers define success not only by outcomes, but also by

the ways how the outcomes are achieved. This philosophy

helps alleviate followers’ affective concerns (e.g., anxiety or

stress) that usually relate to outcomes and thus enables fol-

lowers to pay more attention to the ethicality of their

approaches in achieving goals (Lee et al. 2015; Walumbwa

et al. 2011). Additionally, ethical managers expect, appre-

ciate, and support their immediate supervisors’ ethical

behaviors. Such expectations, appreciation, and support may

make supervisors feel proud and emotionally delighted when

exhibiting ethical behaviors, thus enhancing their ethical

efficacy expectation. Apart from the above four sources,

Hannah and Avolio (2010) recently added another one,

which involves providing and articulating organizational

support measures that could equip leaders with the confi-

dence to take ethical actions. By setting the ethical tone of the

work unit, stressing the importance of ethical behaviors and

using a reward system to incentivize ethical behaviors, eth-

ical managers can establish a social environment that pro-

vides the necessary support for their immediate supervisors

to adhere to ethical standards and engage in ethical behav-

iors. Such an ethical social environment could boost super-

visors’ confidence to behave ethically, thus enhancing their

ethical efficacy expectation (Schaubroeck et al. 2012).

In the other aspect, we propose that enhanced ethical

efficacy expectation will motivate middle-level supervisors

to exhibit ethical leadership behaviors. According to Ban-

dura (1997), how people behave is better predicted by their

beliefs about their capabilities rather than by their actual

capabilities. The same logic has also been extended to the

realm of moral behavior regulation by Bandura (1991),

who contended that ethical efficacy expectation is a critical

cognitive process for moral thoughts and behaviors. Ethical

efficacy expectation instills in supervisors a sense of con-

fidence in their capabilities to organize and mobilize the

cognitive resources to attain moral performance and regu-

late their behaviors to meet inner moral standards, thus

ensuring that they will engage in ethical behaviors even in

an ethically adverse situation (Hannah and Avolio 2010;

Mitchell and Palmer 2010). Extending to the case of

middle-level ethical supervisors, given that they bear the

‘‘moral manager’’ responsibility to hold followers

accountable for their ethical/unethical behaviors (Brown

et al. 2005), ethical efficacy expectation will be more

necessary for supervisors’ exhibition of ethical leadership

behaviors.

Summarizing the above two aspects of theorizing, we

conjecture that ethical efficacy expectation would serve as

an intermediate factor linking high-level managers’ ethical

leadership and their immediate supervisors’ ethical lead-

ership. We propose that:

Hypothesis 2 The relationship between high-level man-

agers’ ethical leadership and middle-level supervisors’

ethical leadership is mediated by middle-level supervisors’

ethical efficacy expectation.

The Mediating Effect of Ethical Outcome

Expectation

Outcome expectation is the other intermediate cognition in

social learning theory. Distinguished from efficacy expec-

tation, which represents one’s perceived ability to execute

694 Z. Wang et al.

123

a behavior, outcome expectation is one’s judgment con-

cerning the likelihood of outcomes resulting from a specific

behavior (Manz and Sims 1981). According to Bandura

(1977), the consequences of a behavior, which inform

individuals about the benefits of an appropriate conduct

and the costs of an inappropriate conduct, can facilitate

individuals’ learning from their role models. Extending this

notion to the ethical leadership area, we consider ethical

outcome expectation as a key factor in the trickle-down

process of ethical leadership and argue that high-level

managers’ ethical leadership can promote their immediate

supervisors’ ethical leadership through shaping their

expectations of ethical outcomes.

According to the social learning perspective, individuals

form their ethical outcome expectations through two ways:

(1) being rewarded for their own ethical behaviors or pun-

ished for their own unethical behaviors (direct learning) and

(2) observing or hearing about the consequences of others’

ethical or unethical behaviors in the workplace (vicarious

learning). The latter way, which stresses the role of models

in the process of learning, is the primary learning approach

(Bandura 1977). Having said that ethical leaders would

serve as role models for supervisors to learn ethical con-

ducts and given the above arguments on ethical outcome

expectations, we reason that ethical managers would play a

crucial role in affecting immediate supervisors’ ethical

outcome expectations. First, being ethical role models for

their immediate supervisors, ethical managers would lead

them to believe that managers’ ethical leadership has been

rewarded in the past. Indeed, as Bandura suggested, which

was also noted in Weiss (1977), a role model’s (i.e., leader)

attributes such as status, power, or perceived competence

would lead observers (i.e., followers) to believe that the

model’s behaviors have been rewarded in the past or are

appropriate in the situation, and this information would

affect observers’ expectations that engaging in similar

behaviors would lead to eventual rewards. Second, ethical

managers will shape immediate supervisors’ ethical out-

come expectations through rewarding those who behave

ethically and punishing those who behave unethically in the

workplace (Detert et al. 2007). When supervisors observe

the consequences of ethical behaviors and unethical

behaviors, they will learn what is considered appropriate

and inappropriate concerning ethical issues in the organi-

zation (Davis and Luthans 1980; Manz and Sims 1981). In

other words, these social cues would convey a message to

supervisors that behaving ethically is appropriate and will

be rewarded, whereas behaving unethically is inappropriate

and will be punished (Brown et al. 2005; Brown and Tre-

viño 2006). Accordingly, these outcome expectations

would facilitate supervisor’s learning in an anticipatory

ethical manner and influence them to engage in more ethical

leadership behaviors.

To summarize, the reasoning above suggests that the

relationship between high-level managers’ ethical leader-

ship and middle-level supervisors’ ethical leadership could

be mediated by the ethical outcome expectations of middle-

level supervisors. To examine this mediating mechanism in

more depth, we further differentiate ethical outcome

expectation into two types: ethical behavior–reward

expectation, which refers to the perceived likelihood of

getting rewards for ethical behaviors; and unethical

behavior–punishment expectation, which refers to the

perceived likelihood of getting punished for unethical

behaviors. We propose that:

Hypothesis 3 The relationship between high-level man-

agers’ ethical leadership and middle-level supervisors’

ethical leadership is mediated by middle-level supervisors’

ethical behavior–reward expectation.

Hypothesis 4 The relationship between high-level man-

agers’ ethical leadership and middle-level supervisors’

ethical leadership is mediated by middle-level supervisors’

unethical behavior–punishment expectation.

Method

Sample and Procedure

We collected multilevel and multi-source data from a large

banking company in China. This banking company has 120

sub-branches and 976 employees (including front desk

clerks and back office staff) in total. At the most basic level

of the bank, each sub-branch runs independently as a

standard operating team that consists of one supervisor

(i.e., middle-level supervisor in the organizational hierar-

chy) and several subordinates. Each sub-branch is under

the control of a high-level manager from the corresponding

regional branch of the bank. We chose to conduct the

research in the banking industry for a few reasons. First, it

provides a suitable context for researchers to do ethics-

related research. The banking industry is more likely to

induce employees to conduct unethical behaviors than

other industries because it is characterized by higher stress

and less regulation (Ruiz-Palomino et al. 2013). Although

ethics in this industry has garnered tremendous public

attention and urged government to adopt strict regulation

measures, the number of fraud and scandals is still on the

rise (Boatright 2010). As ethical leadership has been rec-

ognized as an effective way to restrain unethical conduct

and elicit ethical behaviors in the banking industry (e.g.,

Ruiz-Palomino et al. 2011, 2013; Sims and Brinkman

2002; Walumbwa and Schaubroeck 2009), it would be

meaningful to examine why and how ethical leadership

behavior cascades downward to shape a collective ethical

How Does Ethical Leadership Trickle Down?… 695

123

leadership culture in such an industry (Treviño et al. 2003).

Second, although most banking firms have ethics-related

policies, norms, or codes that regulate supervisors’

behaviors (Treviño et al. 2003), the boundaries between

ethical and unethical behaviors in many banks are still

quite vague, which makes supervisors more likely to learn

from their direct leaders (i.e., high-level managers) about

what is right and what is wrong in the organization. This

said, the cross-level influences of leadership on employees’

ethics become very relevant a phenomenon in banking

firms. Third, most banking firms have a typical hierarchical

structure in which managers in charge of higher-level

branches have control over resource allocation, goal set-

ting, and reward/punishment system, while supervisors in

charge of lower-level branches report directly to these

managers. This difference in authority between higher-

level managers and lower-level supervisors, along with the

frequent interactions between them, meet the prerequisite

of social learning process, making the trickle-down effect

of ethical leadership possible in the context of banking

firms.

Through personal social network and alumni contacts,

we approached 79 sub-branches. Our research assistants

communicated with the branch directors by phone and

explained the purpose of the survey in the hope of

obtaining their support. Three sub-branches refused to

participate, resulting in 76 sub-branches that participated.

To ensure the effectiveness of the survey, with the branch

supervisor’ help, we distributed and collected the ques-

tionnaires in person. Date collection was conducted during

the regular early meeting before business hours. Before

completing the questionnaires, all respondents were

informed of the research purpose and assured of confi-

dentiality. To reduce common method bias, we adminis-

tered two different sets of questionnaires, one for sub-

branch supervisors and the other one for their subordi-

nates. Specifically, sub-branch supervisors reported their

perceived ethical leadership of high-level managers, their

own ethical efficacy expectation and ethical outcome

expectation, whereas subordinates reported their perceived

ethical leadership of sub-branch supervisors. After com-

pleting the survey, each respondent forwarded his or her

questionnaire (enclosed in a sealed envelope) to the

researchers.

After excluding responses from seven sub-branches with

only one or two subordinates, we finally collected a sample

of 69 sub-branch supervisors (57.5 % of all sub-branch

supervisors) and 381 subordinates (39.0 % of all employ-

ees). In this matched sample, the average number of par-

ticipating subordinates per sub-branch supervisors was

5.52. Of the 69 supervisors, 47.8 % were women, 81.2 %

had a college degree, the average age was 39.61 years

(SD = 5.97), and the average tenure as a sub-branch

supervisor was 2.33 years (SD = 1.22). Among the sub-

ordinates, 61.9 % were women, 79.0 % had a college

degree, the average age was 31.49 years (SD = 6.37), and

the average dyadic tenure with the supervisor was

2.32 years (SD = 1.14).

Measures

Except for ethical outcome expectation, all other measures

in the study were originally in English. Applying the

standard translation and back-translation procedure (Brislin

1986), we translated the English scales into Chinese ver-

sions. Unless otherwise indicated, the measures were rated

by the respondents on a five-point Likert-type scale. The

anchors for the scale were from strongly disagree (1) to

strongly agree (5).

Manager Ethical Leadership and Supervisor Ethical

Leadership

To capture leadership in the eyes of beholders, we asked

followers to rate the ethical leadership behaviors of their

immediate leaders. Specifically, high-level manager’s eth-

ical leadership was rated by middle-level supervisors (i.e.,

sub-branch supervisors); middle-level supervisor’s ethical

leadership was evaluated by their immediate subordinates.

This approach has been used in a number of leadership

studies (e.g., Li and Sun 2015; Liu et al. 2012). We used

the six-item version (Detert et al. 2007) of the ethical

leadership scale (ELS; Brown et al. 2005) in this study (see

Appendix). We chose to use this short version instead of

the original 10-item version as we found that some of the

items (e.g., has the best interests of employees in mind, can

be trusted) in the original 10-item scale are redundant and

have obvious content overlapping with some other con-

structs such as consideration and trust, and this has been

pointed out by a few recent studies (Mayer et al. 2012;

Yukl et al. 2013). We concurred with these studies and

believed that we should use the most representative items

for ethical leadership in our current study. Sample items for

the six-item scale include ‘‘My leader defines success not

just by results but also by the way that they are obtained’’

and ‘‘My leader disciplines employees who violate ethical

standards.’’ As supervisor ethical leadership scores were

essentially aggregated based on subordinates’ ratings in the

multilevel analyses, we calculated the ICC(2) and mean of

Rwg for supervisors’ ethical leadership, which were .84 and

.91, respectively, and were above the suggested cutoff

point (Bliese 2000; James et al. 1993), supporting the

aggregation for supervisor ethical leadership in the multi-

level analyses. The Cronbach’s as were .89 for manager ethical leadership and .93 for supervisor ethical leadership.

696 Z. Wang et al.

123

Ethical Efficacy Expectation

Ethical efficacy expectation was measured with a five-item

moral efficacy sub-scale from the Moral Potency Ques-

tionnaire (MPQ) developed by Hannah and Avolio (2010). 2

Sample items include ‘‘I am confident that I can confront

others who behave unethically to resolve the issue’’ and ‘‘I

am confident that I can determine what needs to be done

when I face moral/ethical decisions.’’ In the present study,

the Cronbach’s a of the scale was .89.

Ethical Outcome Expectation

Since there was no existing scale of ethical outcome

expectation in the organizational context, we developed the

items based on the theory. Specifically, ethical behavior–

reward expectation was measured through three items,

including ‘‘In our work unit, those who behave ethically

will be rewarded,’’ ‘‘In our work unit, those who follow

ethical standards will be given priority in promotion,’’ and

‘‘In our work unit, those who follow ethical principles will

be respected by others,’’ Unethical behavior–punishment

expectation was measured via another three items,

including ‘‘In our work unit, those who behave unethically

will be punished,’’ ‘‘In our work unit, it will be difficult for

those who violate ethical standards to get promoted,’’ and

‘‘In our work unit, those who violate ethical principles will

be despised by others.’’ The anchors for both measures

ranged from 1 (very unlikely) to 5 (very likely). The

Cronbach’s as were .90 and .73, respectively. To check the construct validity, we performed exploratory factor analy-

sis using the principal component method with the number

of factors not specified. The results based on oblimin

rotation revealed the emergence of two distinct dimensions

of ethical outcome expectation, with items loaded nicely on

the two proposed factors, without any cross-loadings. The

two factors explained 77.22 % of the total variance in

ethical outcome expectation.

Control Variables

We controlled for middle-level supervisor’s age, gender,

education, and position tenure. Age and position tenure

were measured by the number of years. Gender was coded

as 1 = male and 2 = female. Education was coded into

four categories (1 = high school or lower, 2 = associate’s

degree, 3 = bachelor’s degree, 4 = master’s degree or

higher).

Analysis Strategy

Given the nested nature of the data, to account for potential

non-independence effects, we conducted multilevel mod-

eling to test the hypotheses. Specifically, we tested

Hypothesis 1 through hierarchical linear modeling using

HLM 6.08 (Raudenbush and Bryk 2002). Following the

recommendations of Hofmann and Gavin (1998), we cen-

tered the predictor according to its grand mean in per-

forming these analyses to control for multicollinearity.

To test the cross-level mediation effects (Hypotheses

2–4), we conducted multilevel path analyses using Mplus

7.0 (Muthén and Muthén 1998–2012). Specifically, we

followed the method suggested in Zhang et al. (2009) and

estimated the indirect effects based on a 2–2–1 path-ana-

lytical model (2 refers to variables at level 2, while 1 refers

to variables at level 1). To examine the significance of each

indirect effect we estimated, we followed Selig and

Preacher’s (2008) method and conducted a Monte Carlo

simulation (i.e., a form of parameter bootstrapping) with

20,000 replications, which provided an estimate of the

confidence interval (CI) for each effect.

Results

Discriminant Validity Tests

Before hypotheses testing, we conducted a series of con-

firmatory factor analyses to examine the distinctiveness of

the four supervisor-reported variables (manager’s ethical

leadership, ethical efficacy expectation, ethical behavior–

reward expectation, and unethical behavior–punishment

expectation). As shown in Table 1, the theorized four-

factor model provided an acceptable fit to the data

(v2 = 186.32, df = 113, CFI = .93, TLI = .91, SRMR = .08) and showed a significantly better fit than the

three-factor model (Dv2ð3Þ = 73.46, p \ .01), the two-factor

model (Dv2ð5Þ = 179.51, p \ .01), and the single-factor

model (Dv2ð6Þ = 432.75, p \ .01). Given these results, the theorized four-factor model was superior in fit to all

alternative models, and therefore, we can continue to

examine these variables as distinct constructs.

To provide further support for the discriminant validity

of the constructs, we also computed the square root of

average variance extracted, another widely used index for

establishing the discriminant validity of constructs (Fornell

and Larcker 1981). As was shown in Table 2, the square

root of AVEs for all major constructs in our study was

above .81, which was higher than any of the inter-construct

correlations, suggesting that all constructs have good dis-

criminant validity.

2 The MPQ (copyright 2010 by Sean T. Hannah and Bruce J. Avolio)

was used with the permission of Mind Garden, Inc. All rights

reserved.

How Does Ethical Leadership Trickle Down?… 697

123

Descriptive Statistics

The means, standard deviations, and correlations among

variables are presented in Table 2. As shown in the table,

high-level managers’ ethical leadership was positively

related to middle-level supervisors’ ethical efficacy

(r = .56, p \ .01) and unethical behavior–punishment expectation (r = .38, p \ .01). Additionally, middle-level supervisors’ ethical efficacy (r = .62, p \ .01) and uneth- ical behavior–punishment expectation (r = .51, p \ .01) were positively related to their ethical leadership (aggre-

gated from subordinates’ ratings). In what follows, we

develop a multilevel model to test the hypotheses.

Hypotheses Testing

Hypothesis 1 predicted that high-level managers’ ethical

leadership would be positively related to the middle-level

supervisors’ ethical leadership. Before testing this

hypothesis, we examined whether there was significant

between-group variance in subordinates’ perceived ethical

leadership of middle-level supervisors. The results revealed

a significant between-group variance [r2 = 0.21, s00 = 0.19, v2 = 404.69, p \ .01; ICC(1) = .48, indicat- ing that 48 % of the variance can be attributed to level 2],

justifying the appropriateness of the use of hierarchical

linear modeling to test the hypotheses.

To test Hypothesis 1, we estimated an intercepts-as-

outcomes model in HLM 6.08, in which we used high-level

managers’ ethical leadership (level 2 predictor) to predict

the intercept of middle-level supervisors’ ethical leadership

(level 1 outcome). As shown in Table 3, after controlling

for middle-level supervisors’ age, gender, education, and

position tenure, high-level managers’ ethical leadership

related positively to middle-level supervisors’ ethical

leadership (B = 0.40, p \ .01). Thus, Hypothesis 1 was supported.

Hypotheses 2–4 proposed that middle-level supervisors’

three ethical expectations (level 2) would mediate the

relationship between high-level managers’ ethical leader-

ship (level 2) and middle-level supervisors’ ethical

leadership (level 1). We tested these three mediation

effects simultaneously in the same multilevel path-analyt-

ical model, in which there were three level 2 paths linking

high-level managers’ ethical leadership and middle-level

supervisors’ three ethical expectations (paths a1, a2, and a3,

respectively), and another three level 1 paths linking

middle-level supervisors’ ethical expectations and ethical

leadership (paths b1, b2, and b3, respectively). The pro-

posed mediation effects were examined by estimating the

three indirect effects linking high-level managers’ ethical

leadership and middle-level supervisors’ ethical leadership:

a1b1, a2b2, and a3b3, respectively. As shown in Table 4, the

indirect effect of high-level managers’ ethical leadership

on middle-level supervisors’ ethical leadership through

middle-level supervisor’s ethical efficacy expectation was

0.13, with a 95 % Monte Carlo CI being [0.01, 0.26],

which did not include zero, suggesting that the indirect

effect was significant, supporting Hypothesis 2. The indi-

rect effect through unethical behavior–punishment expec-

tation was also significant (estimate = 0.09, 95 % Monte

Carlo CI [0.01, 0.18]). Thus, Hypothesis 4 was supported.

However, the indirect effect through ethical behavior–re-

ward expectation was not significant (estimate = -0.02,

95 % Monte Carlo CI [-0.07, 0.01]), which did not sup-

port Hypothesis 3.

Discussion

Although past research has recognized the trickle-down

effect of ethical leadership, the underlying mechanism

delineating the cascading process still remains largely

unclear. Building upon social learning theory, which sug-

gests that a role model influences an observer’s behaviors

through shaping his or her cognitive expectations (Bandura

1977; Manz and Sims 1981), we proposed and tested an

integrative dual-process model in which the trickle-down

effect of high-level managers’ ethical leadership on mid-

dle-level supervisors’ ethical leadership was mediated by

middle-level supervisors’ cognitive expectations about

their ethical efficacy and the potential outcomes of their

Table 1 Results of confirmatory factor analyses

Models Factors v2 df Dv2 SRMR CFI TLI

Model 0 Theorized four factors 186.32 113 .08 .93 .91

Model 1 Three factors ethical behavior–reward expectation and unethical behavior–

punishment expectation were merged as one factor (ethical outcome expectation)

259.78 116 73.46** .14 .88 .86

Model 2 Two factors ethical efficacy expectation, ethical behavior–reward expectation, and

unethical behavior–punishment expectation were merged as one factor (ethical

expectation)

365.83 118 179.51** .13 .80 .77

Model 3 One factor: all variables were merged as a single factor 619.07 119 432.75** .16 .71 .66

** p \ .01

698 Z. Wang et al.

123

ethical or unethical behaviors. Results from a survey study

of 69 middle-level supervisors and 381 subordinates from a

large banking company largely supported the model we

proposed. We discuss the implications, limitations, and

future directions of our findings as follows.

Theoretical Implications

First, through exploring the mediating roles of ethical

expectations, we disentangled the intermediate psycho-

logical processes underlying the trickle-down effect of

Table 2 Means, standard deviations, and correlations among variables

M SD HAVE 1 2 3 4 5 6 7 8

(1) Supervisor age 39.61 5.97 –

(2) Supervisor gender 1.48 0.50 – -.04

(3) Supervisor education 2.99 0.44 – -.35** -.04

(4) Supervisor position tenure 2.33 1.22 – .40** -.19 -.02

(5) Manager’s ethical leadership 3.99 0.67 .84 -.03 .14 -.05 -.14

(6) Supervisor’s ethical efficacy expectation 3.88 0.62 .82 -.21 .31** -.02 -.23 .56**

(7) Supervisor’s ethical behavior–reward

expectation

4.41 0.59 .89 -.22 .05 -.15 -.01 .19 .32**

(8) Supervisor’s unethical behavior–punishment

expectation

4.20 0.66 .81 -.01 -.05 .13 .12 .38** .41** .41**

(9) Supervisor’s ethical leadership (aggregated) 4.12 0.49 .92 -.08 .09 .01 -.14 .61** .62** .15 .51**

HAVE square root of the average variance extracted (AVE)

** p \ .01, * p \ .05

Table 3 Results of cross-level regressions

Variables Mediators and dependent variables

Supervisor’s

ethical

leadership

Supervisor’s ethical

efficacy expectation

Supervisor’s ethical

behavior–reward

expectation

Supervisor’s unethical

behavior–punishment

expectation

Supervisor’s

ethical

leadership

Control variable

Supervisor age -0.002 -0.02 �

-0.04* -0.002 -0.001

Supervisor gender -0.01 0.27* 0.03 -0.09 -0.06

Supervisor education 0.04 -0.07 -0.36* 0.22* -0.04

Supervisor position tenure -0.02 -0.03 0.08 0.09 -0.02

Independent variable

Manager’s ethical

leadership

0.40** 0.47** 0.17 �

0.41** 0.21*

Mediators

Supervisor’s ethical

efficacy expectation

0.27*

Supervisor’s ethical

behavior–reward

expectation

-0.12

Supervisor’s unethical

behavior–punishment

expectation

0.21*

Level 2 residual variance 0.12** 0.23** 0.29** 0.35** 0.09**

Nlevel 2 = 69, Nlevel 1 = 381

B unstandardized regression coefficients, level 2 residual variance unexplained variance at level 2. The smaller the level 2 residual variance, the

greater amount of variance explained by the model

** p \ .01, * p \ .05, � p \ .10

How Does Ethical Leadership Trickle Down?… 699

123

ethical leadership. Resonating with several recent studies

on ethical leadership (Mayer et al. 2009; Ruiz et al.

2011a, b; Schaubroeck et al. 2012), our study also revealed

a positive relationship between high-level managers’ ethi-

cal leadership and middle-level supervisors’ ethical lead-

ership, providing further support for this trickle-down

effect of ethical leadership. Going beyond that, the sig-

nificant mediating effects of ethical expectations as we

found in the current study clearly delineated the underlying

mechanism of how ethical leadership cascades downward

in an organization. Specifically, we found that high-level

managers’ ethical leadership could facilitate middle-level

supervisors’ exhibition of ethical leadership behaviors

through influencing their ethical efficacy expectation and

unethical behavior–punishment expectation. According to

social learning theory, efficacy expectation and outcome

expectation are the two major cognitive processes influ-

encing human functioning (Bandura 2012; Manz and Sims

1981). Our research extended the expectation-related per-

spectives of social learning theory into the ethical leader-

ship context and thus provided a novel and meaningful

understanding of the social learning process of ethical

leadership. As theorized in the current study, ethical effi-

cacy expectations instill followers with a ‘‘can-do’’ moti-

vation for their ethical behavior regulations, while ethical

outcome expectations instill them with a ‘‘reason-to-do’’

motivation. The findings of our research, to some extent,

provided direct support for the well-recognized social

learning account of the trickle-down effect of ethical

leadership.

Second, we contributed to the growing, yet still limited,

body of literature on ethical efficacy. To explain an indi-

vidual’s ethical behaviors, earlier studies have highlighted

the importance of moral judgment (Blasi 1980; Kohlberg

1969). The association between moral judgment and ethical

behaviors, however, remains weak and inconsistent. This is

also called as the ‘‘judgment-action gap’’ (Jennings et al.

2015; Walker 2004). As such, an individual’s judging a

situation as ethical or unethical and understanding of what

should be done and what should not be done does not

necessarily translate into ethical behaviors. In this sense,

understanding how to motivate ethical behaviors is criti-

cally important (Treviño et al. 2006). Defined as individ-

uals’ beliefs about their abilities to execute ethical

behaviors, ethical efficacy is a relevant construct that could

help address the ‘‘judgment-behavior gap’’ (Hannah and

Avolio 2010; Hannah et al. 2011; Mitchell and Palmer

2010; Sweeney et al. 2015). However, despite its close

relevance with ethical behaviors, insofar only a few studies

have investigated the role of ethical efficacy in the ethics

domain. For instance, Schaubroeck et al. (2012) found that

ethical leadership could influence followers’ ethical effi-

cacy through ethical culture. Lee et al.’s (2015) recent

research found that followers’ ethical efficacy could

mediate the effect of ethical leadership on followers’ moral

voice behaviors. By providing support for the intermediary

role of ethical efficacy in the trickle-down process of high-

level managers’ ethical leadership, the current research

added to the ongoing exploration of ethical efficacy in the

organizational ethics context, advancing the knowledge of

ethical efficacy’s antecedents and consequences. However,

it should also be noted that the research on ethical efficacy

is still in its infancy, and thus more research is needed to

further the understanding of this construct.

Third, we contributed to the research on ethical outcome

expectation by extending it to the area of ethical leadership.

Despite its important role in the regulation of moral

behaviors (Ashkanasy et al. 2006; Treviño and Young-

blood 1990), expectations of ethical outcomes received

little attention from researchers. Drawing on earlier work

by Treviño and Youngblood (1990), we took a pioneering

step to differentiate two important types of ethical outcome

expectations: the expectation of getting rewards for ethical

behaviors and the expectation of getting punished for

unethical conducts. Furthermore, we found evidence sup-

porting the intermediary role of middle-level supervisor’s

unethical behavior–punishment expectation in the cascad-

ing process of high-level managers’ ethical leadership,

which suggested that ethical leaders could influence their

followers to become ethical leaders through shaping their

expectations that behaving unethically would be punished.

However, the study lent no support to the mediating effect

of ethical behavior–reward expectation. We argue that

there might be three possible reasons for this unsupported

effect. First, prior research suggested that, in the short term,

using rewards to elicit ethical behaviors may be frustrating.

As posited by Treviño and Brown (2004, p. 79), ‘‘Can we

really reward ethical behavior? In the short term, we

probably cannot. For the most part, ethical behavior is

simply expected, and people don’t expect or want to be

Table 4 Results of the mediating effects of ethical

expectations

Indirect effects via Estimates t test Monte Carlo 95 % CI

Low end High end

Path 1 ethical efficacy expectation 0.13 p = .048 0.01 0.26

Path 2 ethical behavior–reward expectation -0.02 p = .299 -0.07 0.01

Path 3 unethical behavior–punishment expectation 0.09 p = .027 0.01 0.18

700 Z. Wang et al.

123

rewarded for doing their jobs the right way.’’ Second, it has

been posited that a transactional leadership approach,

characterized by managing by exception and contingent

reinforcement, is more likely to draw followers’ attention

to oughts, duties, and losses (Kark and van Dijk 2007), thus

making them more sensitive to behaviors that they should

not do. Given that ethical leaders usually use a transac-

tional approach to hold followers accountable (Brown et al.

2005; Treviño and Brown 2014), it could be reasoned that

supervisors working under ethical managers might pay

more attention to losses, such as punishments for behaving

unethically, rather than to gains, such as rewards for

behaving ethically. In indirect support of our finding, Shao

et al. (2011) suggested that ethical leadership is more likely

to induce employees’ ethical prevention focus, a construct

that to some extent is similar to unethical behavior–pun-

ishment expectation. Finally, the unsupported mediating

role of ethical behavior–reward expectation might also be

attributed to the measurement of ethical leadership in the

current research. Although Brown et al. (2005) contended

that ethical leaders use rewards and punishments to hold

followers accountable for their conducts, the ELS (Brown

et al. 2005; Detert et al. 2007) we used only captured the

‘‘punishment’’ component (e.g., disciplining employees

who violate ethical standards), yet neglected the ‘‘reward’’

component.

Fourth, as a reply to a recent study by Wo et al. (2015),

the present study defended the legitimacy of using social

learning theory to explain trickle-down effects in organi-

zation studies. Wo et al. explored the mechanisms under-

lying the cascading process of interactional justice

perception through three perspectives: social learning,

social exchange, and displaced aggression. Through two

studies, they found no support for the social learning per-

spective, thereby casting doubt on its validity in explaining

the trickle-down effect. Responding to their call for a re-

evaluation of the social learning perspective, we used

ethical efficacy expectation and ethical outcome expecta-

tion, two core variables rooted in social learning theory, to

examine the validity of this theory in explaining the cas-

cading effect of ethical leadership. Based on our findings,

the current research defended the legitimacy of using social

learning theory in explaining the trickle-down effect.

Indeed, different theories may have different power in

explaining the trickle-down process of an organizational

phenomenon. According to our observations, when study-

ing the trickle-down effect of behaviors (e.g., leadership

behaviors, citizenship behaviors, creativity), researchers

primarily used social learning theory (e.g., Jaussi and

Dionne 2003; Li and Sun 2015; Liu et al. 2012; Yaffe and

Kark 2011); when explaining the trickle-down effect of

exchange relationships (e.g., leader–member exchange,

perceived organizational support) or justice perceptions

(e.g., Aryee et al. 2007; Tepper and Taylor 2003;

Venkataramani et al. 2010), social exchange theory was

mostly used; the displaced aggression perspective is mainly

adopted to account for the cascading effect of negative

leaderships (e.g., abusive supervision) and injustice per-

ception (e.g., Aryee et al. 2007; Hoobler and Brass 2006;

Tepper et al. 2006). Taken together, it could be reasoned

that social exchange theory and displaced aggression per-

spective might have stronger power than social learning

theory in explaining the trickle-down effect of justice

perceptions, as examined in Wo et al.’s study; yet when it

comes to the cascading effect of ethical leadership

behaviors, social learning theory might be a more

suitable perspective.

Finally, from the results of our data analyses, we found

some effects relating to the control variables of our study

interesting and we believe these small yet interesting

findings could indicate potential research questions to be

examined in the future. As was shown in Table 3, super-

visor gender was positively (B = .27, p \ .05) associated with their ethical efficacy expectation, such that females

tend to have higher ethical efficacy scores than males.

Given that existing research suggested that women should

be more likely to conduct ethical behaviors and avoid

unethical behaviors than men (see Franke et al. 1997; Kish-

Gephart et al. 2010; Pan and Sparks 2012 for meta-ana-

lytical reviews) and men are more than two times as likely

as women to engage in actions regarded as unethical (Betz

et al. 1989), the finding that women have higher belief in

their ability to execute ethical behaviors is not surprising.

Besides, supervisor’s level of education was negatively

(B = -.36, p \ .05) related to supervisors’ ethical behavior–reward expectation yet positively (B = .22,

p \ .05) associated with supervisors’ unethical behavior– punishment expectation. A possible explanation could be

that those highly educated people, due to their higher levels

of morality or their higher levels of conscience, may view

conducting ethical behaviors as something normal in their

life. Under this circumstance, they may not expect any

rewards for their good deeds and sometimes, they might

even dislike the rewards given for good deeds. However, in

terms of unethical behaviors, highly educated individuals

might be more likely to have a strong belief in norms or

principles, which essentially requires a punishment for

unethical behaviors.

Practical Implications

This research also has practical implications for organiza-

tion management, especially for the ethics management in

the banking industry where ethical scandals have happened

so frequently and have caused severe consequences. First,

consistent with other explorations of trickle-down effects

How Does Ethical Leadership Trickle Down?… 701

123

of leadership, the present study highlighted the importance

of the role modeling of leadership and indicated that high-

level leaders should set examples for middle-level super-

visors in the practice of ethical leadership. Moreover,

supervisors can act either as transmitters of ethical

behaviors or as inhibitors of unethical behaviors due to

their role as linking-pins in the organization. Therefore, the

role of middle-level supervisors in promoting the trickle-

down effect of ethical behaviors should deserve greater

attention in organizational ethics management. Second, our

findings of the intermediate mechanisms underlying the

trickle-down effect offered deeper insights into how the

trickle-down effect occurs, providing practical recom-

mendations for facilitating the trickle-down effect. For

instance, high-level managers should serve as ethical role

models for middle-level supervisors to bolster their per-

ceived abilities to execute ethical behaviors and to shape

their ethical outcome expectations, which would in turn

transform those supervisors into ethical leaders.

Limitations and Future Directions

Our research is not without limitations. First, although we

have theoretically delineated the causal relationships

among variables, the cross-sectional data used in the cur-

rent study still limited us in making causal inferences. The

use of multi-source ratings in the current study could help

alleviate the common method variance to some extent, yet

future research could use more advanced design to provide

more conservative and robust support for the proposed

relationships among variables. For example, a multi-wave

longitudinal design with the ratings for ethical leadership

and the mediators separate in time would help establish

more robust findings. Second, in this study, we only col-

lected our sample from the banking industry, the general-

izability of our findings to other contexts remains to be

further investigated. Although ethical leadership research

does not primarily focus on any specific sector or generate

conclusions that were only applicable to any given sector,

future research should still consider the generalizability of

the trickle-down effect to other research settings. Third, in

theorizing on the proposed mechanisms linking manager’s

ethical leadership and followers’ ethical efficacy expecta-

tion, we relied heavily on social learning theory and sug-

gested that the four sources of efficacy, as suggested

originally by Bandura (1977), to be the focal determinants

of ethical efficacy. However, due to the lack of a valid

scale, we did not measure the four sources of efficacy

directly in the current study, which is an obvious limitation

of our study. This said, future research should develop a

reliable and valid scale to measure the four sources of

efficacy.

The fourth limitation concerned with the use of self-

developed measure of ethical outcome expectations. As

suggested by Bandura (1977), outcome expectation is very

specific to the research context. Bearing this in mind, we

indeed tried to find an existing measure for ethical outcome

expectations. Although there have been a few studies that

operationalized ethical outcome expectations (Ashkanasy

et al. 2006; Treviño and Youngblood 1990), the measure-

ment approach used in these studies, either designed for an

experimental setting or based on a general assessment (i.e.,

not differentiating two types of expectations), did not fit

well with the context and the purpose of our research.

Given the lack of an appropriate scale to measure ethical

outcome expectations, we considered the alternative of

using a self-developed measure instead. We realized that,

however, many researchers have developed measures

according to their research purposes. For instance, Yuan

and Woodman (2010) developed three items to assess

employees’ expected positive performance outcomes from

innovative behaviors; Lian et al. (2011) developed a five-

item scale to assess employees’ perceptions of the likeli-

hood that abusive behaviors would be rewarded; Schau-

broeck et al. (2016) recently used a self-developed three-

item scale to evaluate employees’ beliefs about the benefits

of engaging in desired customer service behaviors. In light

of these studies, we built upon our theorizing of ethical

outcome expectations and developed a six-item measure

for the current study. Although the self-developed measure

has demonstrated good reliability and validity, we still

encourage future research to further develop and validate a

rigorous measure for ethical outcome expectations.

Finally, we examined the trickle-down effect of ethical

leadership and its ‘‘black box’’ solely from the social

learning perspective, leaving other potential perspectives

uncharted. The theories of ethical leadership and the earlier

work on the trickle-down effect of leadership in combi-

nation suggested that there may be more than one reason

explaining why ethical leadership cascades in organiza-

tions. For instance, according to social exchange theory

and the observation that ‘‘imitation is the sincerest form of

flattery’’ (Liden et al. 2014, p. 1436), middle-level super-

visors are expected to feel a sense of indebtedness to high-

level ethical managers because of their trustworthy,

humane, and fair nature (Mayer et al. 2012), and such a

sense of indebtedness might drive middle-level supervisors

to reciprocate ethical managers by emulating their ethical

leadership behaviors. Besides social exchange theory,

social identity theory may also be an alternative explana-

tion. This theory holds that followers who identify with

their leaders are more sensitive to and active in meeting

leaders’ expectations (Aron 2003; Li and Sun 2015; Pratt

1998). In this sense, it could be possible that high-level

managers’ ethical leadership could elicit middle-level

702 Z. Wang et al.

123

supervisors’ personal identification with managers (e.g.,

Walumbwa et al. 2011), which would in turn influence

them to display behaviors that are consistent with high-

level managers’ ethical expectations. This said, future

research should continue investigating alternative expla-

nations for the trickle-down effect of ethical leadership,

which could help provide a more comprehensive under-

standing of this phenomenon.

Acknowledgments This study was funded by the National Natural Science Foundation of China (Grant Number 71302129).

Compliance with Ethical Standards

Conflict of Interest The authors declare that they have no conflict of interest.

Ethical approval All procedures performed in this study were in accordance with the ethical standards of the Institutional Research

Committee and with the 1964 Helsinki Declaration and its later

amendments or comparable ethical standards.

Informed consent Informed consent was obtained from all individ- ual participants included in this study.

Appendix

Items from the six-item ELS

(1) Disciplines employees who violate ethical standards;

(2) Conducts his/her personal life in an ethical manner;

(3) Discusses business ethics or values with employees;

(4) Sets an example of how to do things the right way in

terms of ethics;

(5) Defines success not just by results but also the way

that they are obtained;

(6) When making decisions, asks ‘‘what is the right

thing to do.’’

Note The above six-item ELS was from Detert et al. (2007)

and was adapted based on the original 10-item ELS

developed by Brown et al. (2005).

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