applied project
deefer
ThaddeusCainfinalPresentation.pptxThe Role of Organizational Culture in Moderating Ethical Leadership and Employee Decision-Making
Thaddeus Cain
Arizona State University
Dr. Kevin Ellsworth
November 29, 2025
Introduction & Context
Persistent ethical scandals despite “ethics programs” (for example, Wells Fargo, Volkswagen) (Gamarra & Girotto, 2022)
Ethical leadership alone has not prevented systemic misconduct (Mostafa, 2018)
Organizational culture may be the missing moderator shaping employee decisions
In this project, I look at why major corporations continue to have serious ethical failures even after investing heavily in ethics programs and codes of conduct (Gamarra & Girotto, 2022). Cases like Wells Fargo’s fake accounts and Volkswagen’s emissions scandal show that ethical leadership rhetoric is not enough. I argue that organizational culture—shared norms, values, and expectations—moderates how ethical leadership actually affects employee decision-making (Mostafa, 2018)
2
Problem Statement & Guiding Question
Problem: Misalignment between formal ethical leadership and everyday decision-making
Evidence of recurring misconduct despite ethics initiatives (Kuenzi et al., 2020)
Guiding Question:
How does organizational culture moderate the relationship between ethical leadership and employee decision-making?
The core problem is the gap between what leaders say about ethics and what employees actually do when facing performance pressure or ambiguity. Even where ethical leadership is emphasized, unethical practices re-emerge, suggesting a weak ethical climate (Kuenzi et al., 2020). My guiding question is: How does organizational culture moderate the relationship between ethical leadership and employee decision-making? The project examines when ethical leadership ‘sticks’ and when it is undermined by culture.
3
Key Concept: Ethical Leadership
Ethical leadership: demonstrating normatively appropriate conduct and promoting it through communication and reinforcement (Ko et al., 2018)
Involves modeling fairness, integrity, and care in daily decisions (Kaptein, 2019)
Trickle-down effects: leaders shape employees’ ethical and unethical behavior (Ng et al., 2021; Wang et al., 2018)
Ethical leadership is not just about personal virtue; it is about consistently modeling integrity and making it clear that how results are achieved matters (Ko et al., 2018). Ethical leaders set expectations, reward ethical behavior, and sanction misconduct (Kaptein, 2019). Research shows a ‘trickle-down’ effect: employees use leaders as reference points for what is acceptable, which can either reduce or unintentionally legitimize unethical behavior (Ng et al., 2021; Wang et al., 2018).
4
Key Concept: Organizational Culture & Ethical Climate
Organizational culture: shared values, norms, and beliefs shaping behavior (Rukh & Qadeer, 2018)
Ethical climate: employees’ shared perceptions of what is “right” and how ethics are handled (Verma, 2020)
Culture can amplify or neutralize ethical leadership signals (Mostafa, 2018; Kuenzi et al., 2020)
Organizational culture is the informal ‘rules of the game’—the lived values that guide what people actually do, not what is written in policy (Rukh & Qadeer, 2018). Within that, the ethical climate reflects how employees perceive moral expectations, fairness, and accountability (Verma, 2020). Even strong ethical leaders can be overridden by a culture that rewards results at any cost. So culture can either amplify ethical leadership or completely drown it out (Mostafa, 2018; Kuenzi et al., 2020)
5
Theoretical Framework: CAELF & Supporting Theories
Cultural Alignment and Ethical Leadership Framework (CAELF): links leadership behaviors with cultural norms and ethics
Social Learning Theory: employees imitate leaders they see rewarded (Schunk & DiBenedetto, 2020)
Moral Management Theory: leaders actively manage ethics through communication and systems (Hoch et al., 2018)
Transformational Leadership: inspiring, value-based change and moral elevation (Deng et al., 2023)
The project uses the Cultural Alignment and Ethical Leadership Framework, which integrates leadership behavior with cultural norms and ethical outcomes. Social Learning Theory explains how employees learn by observing leaders and the rewards they receive (Schunk & DiBenedetto, 2020). Moral Management Theory emphasizes leaders’ responsibility to actively manage ethics through messaging and controls (Hoch et al., 2018). Transformational leadership contributes by inspiring employees through shared values and moral purpose (Deng et al., 2023). Together, these theories show why culture–leadership alignment is crucial.
6
Methodology: Qualitative Multi-Case Design
Qualitative multiple case study design using secondary data (Braun & Clarke, 2019)
Cases selected for contrasting cultural–ethical profiles:
Wells Fargo
Volkswagen
Patagonia
Thematic analysis with six-step Braun & Clarke approach (Braun & Clarke, 2019)
I use a qualitative multi-case design based on secondary data—public reports, prior research, and documented scandals or practices. The three cases were chosen for contrast: Wells Fargo and Volkswagen as examples of high performance orientation with severe ethical failures, and Patagonia as a counterexample with a strong ethical culture. I apply Braun and Clarke’s six-step thematic analysis—familiarization, coding, theme generation, review, definition, and reporting—to examine how culture moderates ethical leadership and decision-making (Braun & Clarke, 2019)
7
Case 1: Wells Fargo
Strong performance culture focusing on aggressive sales targets
Ethics programs existed, but culture rewarded rule-bending and misconduct (Kuenzi et al., 2020)
Ethical leadership signals undermined by fear, pressure, and normalized deviance
In Wells Fargo, official statements emphasized integrity, but the operating culture aggressively rewarded sales metrics. Employees faced intense pressure to hit unrealistic quotas, leading to practices like opening unauthorized accounts. Even if leaders spoke about ethics, the real message was ‘hit the numbers or else’ (Kuenzi et al., 2020). This shows how a misaligned culture can neutralize ethical leadership and push employees toward unethical decisions.
8
Case 2: Volkswagen
Technical excellence and performance prioritized over compliance and transparency (Maheshwari et al., 2024)
“Dieselgate” emissions scandal: cheating software to pass tests
Culture tolerated cutting corners to protect brand and market share
Volkswagen projected an image of engineering excellence and environmental responsibility, yet installed defeat devices to cheat emissions tests. The organizational narrative prized technical ingenuity and market dominance, and this seems to have outweighed ethical and legal considerations (Maheshwari et al., 2024). Again, formal ethics structures were present, but the culture made it acceptable—even expected—to bend rules to protect the brand and sales numbers.
9
Case 3: Patagonia
Explicitly values environmental and social responsibility in its culture (Maheshwari et al., 2024)
Ethical leadership and culture strongly aligned—“doing good” integrated into strategy
Employees encouraged to raise concerns and act on values
Patagonia, by contrast, embeds environmental and social responsibility into its core identity and daily practices. Leaders model and reward ethical, pro-social decisions, even when this reduces short-term profit—for example, encouraging customers to buy less or repair their clothes (Maheshwari et al., 2024). Here, ethical leadership and culture are aligned, so employees are supported when they make decisions consistent with those values.
10
Cross-Case Themes & Expected Outcomes
When culture rewards only performance, ethical leadership messages lose credibility (O’Keefe et al., 2020)
Supportive culture + ethical leadership → stronger ethical climate & prosocial decision-making (Peng & Kim, 2020)
Expected outcome: culture moderates the impact of ethical leadership on employee behavior
Across the cases, a consistent pattern emerges. Where culture heavily rewards performance and tolerates corner-cutting, employees quickly see ethical messaging as symbolic or hypocritical, and misconduct spreads (O’Keefe et al., 2020). Where culture and ethical leadership are aligned, employees internalize values and feel safe acting on them, which strengthens the ethical climate (Peng & Kim, 2020). The central expectation is that organizational culture moderates the effect of ethical leadership on employee decision-making—for better or worse.
11
Practical Implications for Leaders
Leaders must align systems (rewards, metrics) with ethical standards, not just communicate values (Kaptein, 2019)
Build ethical climate through open communication, psychological safety, and fair enforcement (Verma, 2020; Kuenzi et al., 2020)
Use CAELF to regularly audit cultural–ethical alignment and adjust practices
The implication is harsh but simple: leaders cannot ‘manage ethics’ with posters and training alone. Incentives, performance metrics, and informal norms must reinforce ethical conduct, or employees will follow what is truly rewarded (Kaptein, 2019). Building an ethical climate means encouraging speaking up, ensuring consistent consequences, and signaling that dignity and fairness matter (Verma, 2020; Kuenzi et al., 2020). CAELF can be used as a practical lens to audit where leadership claims and culture diverge and to guide corrective actions.
12
Limitations, Future Directions & Personal Takeaways
Reliance on secondary data; no direct access to employees (Braun & Clarke, 2019)
Focus on three high-profile cases limits generalizability
Future research: cross-cultural studies, longitudinal designs, and employee-level data (Zheng et al., 2022)
Personal takeaway: ethics work must start with culture, not just leadership messaging
This study is limited by its use of secondary sources; I did not interview employees or observe behavior directly, which constrains causal claims (Braun & Clarke, 2019). Focusing on three well-known corporations also raises questions about generalizability. Future work could use longitudinal and cross-cultural designs, with survey or interview data, to test CAELF more rigorously and examine mechanisms like value internalization and identity (Zheng et al., 2022). My main personal takeaway is that ethical leadership without cultural alignment is almost guaranteed to fail. Real ethics work is messy, systemic, and inseparable from how organizations define and reward success.
13
References
Braun, V., & Clarke, V. (2019). Reflecting on reflexive thematic analysis. Qualitative Research in Sport, Exercise, and Health, 11(4), 589–597.
Deng, C., Gulseren, D., Isola, C., Grocutt, K., & Turner, N. (2023). Transformational leadership effectiveness: An evidence-based primer. Human Resource Development International, 26(5), 627–641.
Falode, A. (2021). Found: A definition of intelligence. Journal of Social Sciences, 4(1), 70–73.
Gamarra, M. P., & Girotto, M. (2022). Ethical behavior in leadership: A bibliometric review of the last three decades. Ethics & Behavior, 32(2), 124–146.
Hoch, J. E., Bommer, W. H., Dulebohn, J. H., & Wu, D. (2018). Do ethical, authentic, and servant leadership explain variance above and beyond transformational leadership? A meta-analysis. Journal of Management, 44(2), 501–529.
Kaptein, M. (2019). The moral entrepreneur: A new component of ethical leadership. Journal of Business Ethics, 156(4), 1135–1150.
Ko, C., Ma, J., Bartnik, R., Haney, M. H., & Kang, M. (2018). Ethical leadership: An integrative review and future research agenda. Ethics & Behavior, 28(2), 104–132.
Kuenzi, M., Mayer, D. M., & Greenbaum, R. L. (2020). Creating an ethical organizational environment: The relationship between ethical leadership, ethical organizational climate, and unethical behavior. Personnel Psychology, 73(1), 43–71.
Kussatz, S. B. (2023). The dynamics of ethical leadership: Unraveling influences on individual behavior within organizations.
Maheshwari, M., Gupta, A. K., Gaur, P., Tiwari, N., & Goyal, S. (2024). Corporate social responsibility in the global business world: A conceptual, regulatory, and illustrative framework. Apple Academic Press.
References
Mostafa, A. M. S. (2018). Ethical leadership and organizational citizenship behaviours: The moderating role of organizational identification. European Journal of Work and Organizational Psychology, 27(4), 441–449.
Ng, T. W., Wang, M., Hsu, D. Y., & Su, C. (2021). Changes in perceptions of ethical leadership: Effects on associative and dissociative outcomes. Journal of Applied Psychology, 106(1), 92–108.
O’Keefe, D. F., Howell, G. T., & Squires, E. C. (2020). Ethical leadership begets ethical leadership: Exploring situational moderators of the trickle-down effect. Ethics & Behavior, 30(8), 581–600.
Peng, A. C., & Kim, D. (2020). A meta-analytic test of the differential pathways linking ethical leadership to normative conduct. Journal of Organizational Behavior, 41(4), 348–368.
Rukh, H., & Qadeer, F. (2018). Diagnosing culture of public organization utilizing competing values framework: A mixed methods approach. Pakistan Journal of Commerce and Social Sciences, 12(1), 398–418.
Schunk, D. H., & DiBenedetto, M. K. (2020). Motivation and social cognitive theory. Contemporary Educational Psychology, 60, 101832.
Verma, G. (2020). Organizational ethical work climate: A systematic review of the literature. In First Pan IIT International Management Conference–2018 e-journal.
Wang, Z., Xu, H., & Liu, Y. (2018). How does ethical leadership trickle down? Test of an integrative dual-process model. Journal of Business Ethics, 153(3), 691–705.
Zheng, Y., Epitropaki, O., Graham, L., & Caveney, N. (2022). Ethical leadership and ethical voice: The mediating mechanisms of value internalization and integrity identity. Journal of Management, 48(4), 973–1002.
Zhu, L., Jin, X., & Kwak, W. J. (2025). The relationship between exploitative leadership and counterproductive work behavior: The moderated mediation effect of power distance. SAGE Open, 15(3).
