WEEK 3

The Impact of Perceived Leader Integrity

on Subordinates in a Work Team

Environment Darin W. White

Emily Lean

ABSTRACT. Over the last decade, the increased use of

work teams within organizations has been one of the most

influential and far-reaching trends to shape the business

world. At the same time, corporations have continued to

struggle with increased unethical employee behavior.

Very little research has been conducted that specifically

examines the developmental aspects of employee ethical

decision-making in a team environment. This study

examines the impact of a team leader’s perceived integrity

on his or her subordinates’ behavior. The results, which

came from a survey of 245 MBA students functioning for

2 years in a work team environment, indicate an inter-

action between leader integrity and team member ethical

intentions.

KEY WORDS: work teams, leader integrity, ethical

decision-making, teammates

Abbreviations: PLIS: Perceived leader integrity scale;

MCSD: MC form C social desirability scale; SDRB:

Social desirability response bias

Introduction

Over the past decade, the ethical practices of cor-

porations have received increased attention.

Through mass media, the public has consistently

learned about the far-reaching effects of corporate

scandal in organizations like Enron, Adelphia Com-

munications, WorldCom, and Tyco International

(cf. Merritt, 2004). Increased public awareness of

corporate fraud has resulted in an outcry for stiffer

penalties and greater responsibility from business

leaders (Carter and Borrus, 2005). Due to consumers’

concerns related to these dishonorable practices, the

study of corrupt behavior in organizations remains an

area of great interest among academic researchers

(Loe et al., 2000). Associated with much of the dif-

ferences in the observed unethical behavior among

corporations is the integrity of the organization’s

leaders, both at the upper management level and at

the lower work team level (Sims and Brinkmann,

2002). It is our contention that, irrespective of the

level at which work is done, the ethical atmosphere

that a leader sets has a major impact on the ethical

behavior of his or her followers. Specifically, the

moral reputation of an organization may be influ-

enced at many levels by its work team leaders. As the

use of teams has grown and become one of the most

influential and far-reaching trends to shape the

business world, the ethical influence of team leaders

has increased respectively.

The term ‘‘team’’ refers to a working unit com-

posed of more than two members, with at least one

being a leader. Team members stress interdepen-

dence and cooperation with each other, pursue

common goals, and take responsibility for the success

or failure of the work (Jessup, 1990; Katzenbach and

Smith, 1993; Lewis, 1993). Teamwork has become

the basic working arrangement of most enterprises

(Drucker, 1998). Approximately 68% of the 1,000

largest U.S. companies have adopted the system of

teamwork design (Lawler et al., 1995). Teamwork

design offers numerous benefits, such as the

improvement of performance, productivity, cost

reduction, and employee satisfaction (Cohen et al.,

1996). One of the essential components of project-

related teamwork is the team’s leadership. The

leadership of a team impacts everything from the

successful accomplishment of team goals to various

behavioral determinants of team members (George

and Bettenhausen, 1990).

Journal of Business Ethics (2008) 81:765–778 � Springer 2007 DOI 10.1007/s10551-007-9546-6

To be most effective, leaders should be perceived

by followers as displaying a level of integrity consistent

with followers’ expectations and implicit leadership

theories (Craig and Gustafson, 1998). According to

Cheng (2000) and Shea (2000), a leader’s fairness in

giving rewards and punishments has a positive impact

on organizational commitment, team effectiveness,

and team and organizational performance. Research

has also shown that an individual’s ethical definitions

are learned through socialization and are acquired

from peers and managers (Zey-Ferrell et al., 1979).

Thus, any explanation of unethical behavior must take

into account that individuals do not learn values from

‘‘society’’ but rather from members of their immediate

social networks such as leaders of their work teams.

Few studies have looked at how members learn values

from their work teams.

Previous approaches to the study of ethical deci-

sion-making processes in organizations tend to address

either the individual role or the situational variables

resulting in unethical behavior. Further, there is little

empirical or theoretical research on developmental

aspects of employee ethical decision-making in a team

environment, and our knowledge of how employee

behavior is influenced by a team leader is limited. The

present study is unique in that it extends the business

ethics literature by examining the important interac-

tion between a team leader and the team members.

Specifically, we evaluate the degree to which a team

leader affects team members’ ethical intentions in an

organizational setting. By seeking to understand the

degree to which employees’ perceptions of their team

leader influence their individual ethical decision-

making, we seek to enrich our knowledge of how

employee ethical behavior is developed.

In the following sections, we discuss some of the

factors that may account for the impact of perceived

leader integrity in a team-management environment

and outline the hypotheses tested in this study.

Literature review and hypothesis

development

Over the last decade, virtually all organizations, from

production to commercial retailing to customer

service firms, have begun utilizing the work team

structure to some degree within their operations.

Due to this, the work team has emerged as a key

business concept, and unified team performance is

now regarded as crucial to corporate success (Wil-

liams, 2002). With this newfound influence on team

performance and unity, one might hope that ethical

behavior within corporations would improve since

increased accountability is inherent in team envi-

ronments. However, based on the constant stream of

corporate scandal stories saturating our media, this

obviously is not the case.

Kohlberg’s model suggests that individuals define

what is ethically appropriate based on the expecta-

tions of good behavior by others within their circle

of influence. Other scholars have suggested that the

intentions of individuals who do not believe in

universal moral rules are influenced by referent

others (Peterson, 2004), such as their organizational

team leaders. While researchers have questioned

exactly how much leaders influence the ethical

attitudes of their subordinates (Minkes et al., 1999),

most propose that the authority and power bestowed

on leaders in organizations provide them with the

means of setting the tone and ethical atmosphere of

the organization (Trevino, 1986). Results from

Peterson’s (2002) study clearly demonstrated that

deviant workplace behavior could be partially pre-

dicted from the ethical climate of an organization.

Similarly, Schminke et al. (2005) found results

indicating that the correlation between leader moral

development and ethical climate is moderated by the

degree to which the leader uses his or her moral

development as well as by the age of the organiza-

tion. They further found that the leader’s moral

development and the consistency between the lea-

der’s moral development and actions interacted to

affect ethical climate. Team leaders influence their

organizational environment through their manage-

ment techniques and their leadership abilities;

organizing assignments, tracking progress, and

rewarding performance are all under the control of

the work team leader (Thamhain, 2004). It is

through this control that team leaders define the

environment through their own actions and, thus,

build either a favorable, highly moral, team-friendly

environment, or one based on selfish, unethical

actions designed to achieve individual goals, even in

the face of conflicting team or organizational goals.

Numerous scholars have contributed to the

development of the ethical leadership literature. Vitell

and Davis (1990) found strong positive correlations

766 D. W. White and E. Lean

between employee perception of the manager’s

integrity and employee job satisfaction in a study that

linked perceptions of leader ethics with subordinate

outcomes. In their 2003 paper, VanSandt and Neck

examined the possible causes of ethical gaps between

the worker’s sense of right and wrong and the

organization’s ethical code. The findings of Weeks

et al. (2004) suggest that the ethical climate of an

organization has either a direct or indirect effect on

its sales force. Trevino and Brown (2004) recom-

mended that the ethical conduct be managed pro-

actively via explicit ethical leadership and conscious

management of the organization’s ethical culture.

One implication from Forte’s (2004) study on moral

reasoning was that managers or executive level

employees should keep in mind that gender and the

industry experience of a new employee might have

an impact on his or her moral reasoning. Sunder-

land’s theory of differential association states that

whether or not the learning process results in

unethical behavior is contingent upon the ratio of

contacts with unethical patterns to ethical patterns.

Ferrell and Gresham (1985) proposed referent others

as a determinant of whether an individual’s behavior

is ethical. Although both peers and managers fit the

role of referent others, managers have been deemed

more influential due to their greater authority

(Baumhart, 1961; Brenner and Molander, 1977;

Hunt et al., 1984). Similarly, Zey-Ferrell et al.

(1979) found that while an employee may hold a

fairly high standard of ethics individually, he or she

may still adapt his or her moral behavior to imitate

that of the primary group and/or that group’s leader.

In addition, association with co-workers who par-

ticipate in and condone unethical behavior, as well as

the opportunity to be involved in such behavior, are

thought to be major predictors of an individual’s

behavior.

A highly cited survey from Harvard Business

Review (Baumhart, 1961), updated by Brenner and

Molander (1977) and Vitell et al. (2000), found that

between the years 1960 and 2000, respondents

became significantly more skeptical regarding the

ethical conduct of their co-workers. Four-fifths of

those surveyed by Brenner and Molander (1977)

agreed that business managers should try to live up to

absolute ethical standards, and most felt that sound

ethics is good business. Approximately one-half of

the respondents, however, reported that supervisors

rarely if ever apply these ethical standards of good

business. Vitell et al. (2000) found that most

employees believe that the ethical behavior of cor-

porate leadership has the most impact on decisions in

ethical situations. Respondents offered explanations

for the decline in ethical standards as being man-

agement’s preoccupation with increased profit, lack

of reinforcement of ethical behavior, competition,

and a sense that only ‘‘results’’ are important.

Several authors have shown a positive relationship

between different dimensions of leadership and cit-

izenship-type behavior. Farh et al. (1990) reported

that, beyond the variance explained by satisfaction,

leader fairness accounted for 9% of variance in

altruism among individuals. Williams et al. (2002)

reported that leader fairness was associated with

subordinate intentions to engage in organizational

citizenship behavior. Different types of leadership

have also been found to be positively related to

citizenship-type behaviors (Pearce and Herbik,

2004). One method of categorizing ethical issues is

to classify them according to those directly affected

by the unethical behavior itself. Soutar et al. (1994)

reported that most unethical behavior in business

environments involve acts that adversely affect one

of three entities: the organization, co-workers, or

the customers. In addition, Vitell et al. (2000) found

that respondents held differing ethical responsibility

levels for these same three entities. Although man-

agers have begun increasing their ethical awareness

and, in turn, making more ethical decisions,

Premeaux (2004) reported that this is mainly due to

managers’ risk aversion.

In the current study, we theorize that three

internal entities would be impacted by potential

unethical behavior that occurs within a work team

environment: work team members, the team as a

cohesive unit, and the organization as a whole. Our

reasoning for choosing these three entities is outlined

below.

Teammates

Why unethical activity is common in some com-

panies but not in others has been a highly debated

topic among researchers (Sims and Brinkmann,

2002). The unethical behaviors found in these

organizations could be from many sources: poor

The Impact of Perceived Leader Integrity on Subordinates 767

hiring practices, societal ethical shifts, unclear goals,

etc. Numerous studies (Deluga, 1995; Schnake et al.,

1993; Wayne and Green, 1993) have shown cor-

porate leadership to be strongly associated with

employee behavior at the individual level.

Researchers have speculated that the integrity of

leaders may be the primary driving influence on

subordinates’ behaviors with regard to ethical issues

involving other individuals. Based on this theory,

managers develop into role models and, thus, are

responsible for establishing the norms for how other

individuals, such as teammates, are to be treated

(Paine, 1997; Sims and Brinkmann, 2002).

When team members perceive that their leader

has low integrity the atmosphere within the team

will become one of independent gain as opposed to

unity and progress. In this environment, we propose

that team members will be more willing to engage in

unethical behaviors regardless of the negative out-

comes to their teammates. Similarly, if a team leader

is perceived as having high integrity, his or her

subordinate team members will be less willing to

behave in a manner that would hurt individual team

members. Following this reasoning, we posit:

Hypothesis 1 As perceptions of team leader

integrity increase, team members’ intentions to

engage in unethical activity adversely affecting

other team members will decrease.

The team as a cohesive unit

A work team’s success on a project depends to a

large degree on effective interactions among the

team members responsible for the project. If team

members have positive emotional attachments to the

team and its leaders, it seems likely that they would

engage in behaviors that would be beneficial to the

team (Pearce and Herbik, 2004). Conversely, if the

situational environment is such that the emotional

attachments to the team are negative or very weak

due to poor or unethical leadership practices, it is

more likely that individuals would engage in

behaviors harmful to the team.

As previously mentioned, Williams et al. (2002)

found that leader fairness was associated with subordi-

nate intentions to engage in organizational citizenship

behavior. Team citizenship behavior is defined as

encompassing the following behaviors: altruism, civic

virtue, conscientiousness, courtesy, teamwork, and

team mindedness (Pearce and Herbik, 2004). If the

team leader exhibits unfair and unethical behaviors,

subordinates will, we theorize, be less likely to engage

in team citizenship behaviors such as civic virtue,

courtesy, teamwork, and team mindedness.

Based upon this line of reasoning, we propose that

the leader, through his or her own unethical

behavior and the resulting harmful environment,

will reduce the level of personal attachment between

the individual and the team as a cohesive unit. This

will result in individual team members being more

likely to engage in activities having adverse out-

comes to their team. If however, the manager

engages in behaviors that create positive subordinate

perceptions of his or her integrity, these subordinates

will be less likely to engage in behaviors that would

have a negative impact on the team. Accordingly,

we propose:

Hypothesis 2 As perceptions of team leader

integrity increase, team members’ intentions to

engage in unethical behavior adversely affecting

the team as a whole will decrease.

The organization

Many key functions within organizations exist in

teams of individuals. Both Hunt and Vitell (1986)

and Trevino (1986) speculated that organizational

norms are a determinant of ethical or unethical

behavior. Stated differently, organizational norms

identify what is and what is not appropriate behav-

ior, thus determining the ethical environment of the

organization itself. Theorists assert that leaders have

the ability to establish and communicate these

organizational norms as well as to offer rewards and

impose sanctions in order to ensure compliance with

these norms (Paine, 1997; Sims, 2000; Sims and

Brinkmann, 2002).

The social exchange theory (Settoon et al., 1996;

Wayne et al., 1997) suggests that when team

members perceive that they are being treated ethi-

cally, they will feel an obligation to reciprocate this

positive behavior to the organization. Therefore, if

768 D. W. White and E. Lean

the leader, who is perceived as an agent of the

organization, creates an atmosphere of trust and

loyalty through positive, personal integrity, the team

member will replicate the leader’s behavior by not

acting in ways that would cause harm to or create

negative attention for the organization. Conversely, a

team leader that is perceived as having poor integrity

implicitly communicates that the organization

approves of an unethical environment. In this situa-

tion, it is likely that team members will take no heed

of whether their actions cause adverse affects to the

organization. Therefore, we posit the following:

Hypothesis 3 As perceptions of team leader integrity

increase, team members’ intentions to engage in

unethical behavior adversely affecting the organi-

zation that the team is a part of will decrease.

Research design and methodology

Pretest

A self-report survey was used for the current study.

A pretest was conducted with 41 undergraduate

college students to assure that respondents would

properly interpret the wording in the various sce-

narios and items. Based on their feedback a few slight

revisions were made to the instrument. At this point,

the survey instrument was deemed ready to be

administered to the chosen sample frame.

Sample frame

The questionnaires were administered to MBA

students from two southeastern universities over

several months. The students completed the survey

instrument in class when they were within 2 months

of finishing the MBA program or via e-mail some-

time after they had completed the program. Each

student had been part of a work team that consisted

of the same five to seven individuals for two con-

secutive years. The teams had met twice per week

during the entire program to work together on

projects, cases, and papers. Each team had a leader

who was responsible for scheduling meetings,

developing agendas, and keeping the team on track.

These teams were designed by the MBA director to

closely reflect work teams in real organizations.

During the 8 weeks leading up to the time when

the students completed the survey instrument, the

teams were engaged in an intensive business simu-

lation game. Teams were required to function in an

environment very similar to that of the real business

world with extreme workloads, pressures, and

responsibilities. Course participants were expected

to allocate at least 8 h per week to outside-of-class

activities during which time they would meet with

their MBA work teams to make informed, strategic

business decisions for their companies. The com-

petitive nature of the simulation game, the feedback

that it provided, and the wide open challenge it

presented the students were the primary driving

forces that determined the extent of their efforts.

Thus, extreme pressure existed within each team for

each member to pull his or her own weight. Due to

the required workload, it was virtually impossible for

a team to be successful unless everyone in the group

significantly participated. Team leaders were given

complete control of their groups with both reward

power and the authority to fire poor performing

members. At the end of the 8 weeks, team leaders

were responsible for determining grade assignments

for each member of the team based on individual

and team performance measures. Team members

who received a ‘‘C’’ or lower or were fired had to

repeat the class. Insights into the culture of the class

are perhaps best provided by the following quota-

tions, which have been taken from course evalua-

tions of previous course participants:

This is the real world, fraught with real world work-

loads, satisfactions, and frustrations. A course offering a

lot of fun but little sleep... the most challenging course

I’ve taken.

I found the job interviewers were fascinated, by the

way, with the kinds of problems we were asked to

solve – especially the organizational problems. What

do you do with the free loader? How do you handle

the good friend who tries hard but really doesn’t

perform? The study group is the most real world thing

you will do here.

The scenarios

A total of 12 scenarios were written to be directly

relevant to the MBA work team groups. The ethical

dilemmas involved realistic situations that a MBA

The Impact of Perceived Leader Integrity on Subordinates 769

work team might potentially face while in the pro-

gram. In two of the scenarios, the respondents were

required to project their MBA work team group

into a different environment.

There were four scenarios that involved acts

impacting other team members. These scenarios

described a hypothetical teammate who either

engaged in financial misconduct; went into the team

leader’s office when they were not there, opened a

file marked ‘‘private’’ and read damaging informa-

tion about teammates (Conger et al., 1995); violated

the team charter in a way that impacted other team

members; or pretended to be sick resulting in more

work for other team members (Zey-Ferrell and

Ferrell, 1982).

Four scenarios involved actions negatively

impacting the team as a whole. These four scenarios

described a team member who abruptly resigned

without advance notice (Abratt and Penman, 2002);

a team member who used group equipment without

obtaining approval from the team leader (Zey-Fer-

rell and Ferrell, 1982); a team member who took a

trip and then lied on the reimbursement documen-

tation, thus leaving the team less budget money for

the year (Zey-Ferrell and Ferrell, 1982); and a team

member who decided to lie to an external party, thus

negatively impacting the team.

The remaining four scenarios involved acts

affecting an organization of which the team is a part.

These scenarios described a team member who fre-

quently made derogatory comments about the

organization to friends and acquaintances (Peterson,

2004); a team member who drove away potential

customers from the organization through unsavory

conduct; a team member who falsely reported

information to a regulatory agency, resulting in

potential negative consequences for the organiza-

tion; and a team member who hired an employee

with a reputation of poor integrity, resulting in

negative media coverage for the organization.

The ordering of the 12 scenarios on the survey

instrument was random. Following Peterson’s

(2004) example, three questions followed each sce-

nario to access (1) the extent to which society in

general is perceived to agree that the act in question

was morally repugnant; (2) the degree of damage

caused by the act; and (3) the behavioral intentions

of the respondent (‘‘I might take the same action’’ as

the individual in the scenario). As a result of the

pretest, a few of the scenarios were slightly changed

to ensure respondents would view the acts as

‘‘causing damage’’ and ‘‘morally wrong.’’ Each of

the questions was answered using a Likert scale

(1 = strongly agree and 7 = strongly disagree). For

each participant, three average behavioral intention

scores were calculated relating to intended ethical

behavior in teammate situations, team situations, and

organizational situations. Higher values indicated

lower intentions to engage in unethical behavior.

Additional measures

In addition to the scenarios and various demographic

questions, the survey instrument included two well-

established, highly reliable and valid measurement

scales: Craig and Gustafson’s (1998) 31-item per-

ceived leader integrity scale (PLIS) and Andrews and

Meyer’s (2003) MC Form C social desirability scale

(MCSD) originally developed by Crowne and Mar-

lowe (1960). According to Reynolds (1982), the

shortened version of the MCSD is comparable to the

full version with only a slight reduction in internal

consistency. For both scales, a seven point, strongly

agree/strongly disagree, Likert scale was used, and

responses were averaged across all items to create a

mean value for each participant. Higher values indi-

cate higher perceived leader integrity and a higher

social desirability response bias (SDRB). To mini-

mize the effect of common rater bias, we undertook

numerous precautions.

On the survey instrument, we strongly assured

participants of the anonymity of their responses,

promised them that no identifying marks were on

the survey, assured them that there was no right or

wrong answer, and encouraged them to be honest

with their responses. According to Podsakoff et al.

(2003) these procedures can greatly reduce or even

eliminate common rater effects. Second, we in-

cluded the MCSD scale on our survey instrument

and utilized it to control for SDRB. Social desir-

ability response bias is the tendency of respondents

to answer questions in the perceived socially

acceptable way rather than with their true feelings. It

is one of the most prevalent common rater effects

impacting ethics research. To determine if SDRB

was a problem, we utilized a Harman’s one-factor

test as well as a partial correlation procedure

770 D. W. White and E. Lean

described below. Finally, we physically distanced the

MBA work team leaders from the respondents by

asking them to leave the room while the survey was

being completed. According to Scott (1982), this

procedure has been shown to reduce social desir-

ability bias in some situations. Respondents who

completed the survey instrument via e-mail were

assumed to be in a similar condition. Indeed, Booth-

Kewley et al. (1992) found no SDRB difference

between computer-administered and paper and

pencil modes when precautions were taken with the

face-to-face group.

Analysis and results

Demographics and response rate

About 249 MBA students completed the survey over

the course of several months. A final sample of 245

was established after rejecting four unusable, partially

completed responses. Of the respondents, 58.8%

were male and 41.2% were female. The average age

was 24 with a standard deviation of 2.41. Ages

ranged from 21 years to 34 years old. The majority

of the respondents (96%) was from the United States

and was currently employed on a full-time basis

(93%). The primary industries of employment in-

cluded healthcare, manufacturing, services, sales,

transportation, and consumer products.

The total sample frame for the in-class condition

was 174, of which 169 provided us with completed

usable surveys (one was incomplete and four de-

clined to participate). This resulted in a response rate

of 97.1%. Team leaders were asked to leave the class

(before we announced what was going to happen)

and were not included in the sample. This was done

to ensure honest responses and to guard against

potential unwanted leader influence regarding the

leader integrity scale.

The total sample frame for the e-mail condition

was 138, of which 76 provided us with completed

usable surveys (three were incomplete). A total of

three e-mails were sent out to each respondent over

the course of 10 days. This resulted in a response rate

of 55.1%. The excellent response rate was due in

part to a strong relationship with the professor, high

levels of involvement in the simulation course, and a

general interest in the topic.

To test for possible difference between the two

conditions, the 169 questionnaires received from the

in-class respondents were compared to the 76 ques-

tionnaires received from the e-mail respondents. A

total of 11 separate t-tests were conducted to com-

pare the mean values of every scale for the two

conditions. The 11 scales included three average

behavioral intention scores for teammate, team, and

organizational situations, three agreement with

society scores, three degree of damage caused scores,

perceived leader integrity scores, and the social

desirability scores. None of the constructs were dif-

ferent between the two groups at the p < 0.05 level.

Scale reliabilities

The general psychometric characteristics of the

constructs used to evaluate the hypothesized rela-

tionships are described in this section. For the 12

ethical scenario scales, we followed a traditional scale

development procedure. The first step was to

investigate the internal consistency of the construct

items by calculating a Cronbach’s alpha. The next

step involved an analysis of the correlation matrix

and the item-to-total correlations. This was done to

identify potential scale contaminants. Items with low

item-to-total correlations (below 0.3) were deleted

from the scales as the low correlations suggested that

the items might not fit the construct or might tap

into another dimension of the construct (Churchill,

1979). The third step involved an analysis of the

factor structure of each scale by carrying out a

principal component analysis. An eigenvalue of one

was used as a criterion for creating the dimensions

(cf. Green, 1978; Hair et al., 1992). Emergence of a

single factor indicates the unidimensionality of a

scale (Churchill, 1979). Items that loaded on more

than one factor were deleted. After all split loading

items were deleted, a final principal components

factor analysis was conducted to assure scale unidi-

mensionality. Items with communality of 0.4 or

greater remained in the factor solution (cf. Green,

1978). The final step was to calculate a concluding

Cronbach’s alpha. Ideally, the coefficient alpha for a

purified scale should exceed 0.7 (Nunnally, 1978).

For the ethical scenarios, we utilized the behav-

ioral intention of the respondent question for scaling

purposes. In the literature review section, it was

The Impact of Perceived Leader Integrity on Subordinates 771

predicted that a three-factor solution would result.

We theorized that respondents would view situa-

tions involving teammates, the team, and the orga-

nization differently. Three scenarios, one from each

group, had to be deleted because of cross loadings.

The deleted teammate scenario dealt with a violation

of the team charter in a way that impacted other

team members. The deleted team scenario con-

cerned a team member who decided to lie to an

external party thus negatively impacting the team.

The deleted organization scenario dealt with a team

member who frequently made derogatory comments

about the organization to friends and acquaintances.

The remaining nine scenarios loaded on their pre-

dicted factor. As Table I demonstrates, the coeffi-

cient alpha of two of the scales was above the 0.70

threshold recommended by Nunnally (1978). The

organization ethical scenario scale fell just shy with a

coefficient alpha of 0.65.

Following Parry and Proctor-Thomson (2002), a

principal component analysis was conducted on the

PLIS to verify dimensionality. It found that a four-

factor solution best fit the data. These four factors

accounted for 55.89% of the variance. Similar to

Craig and Gustafson (1998) and Parry and Proctor-

Thomson (2002), the first factor produced an

eigenvalue five times larger than the second eigen-

value, indicating a latent one-factor construct. In

addition, the high Cronbach’s alpha (0.97) for the

complete scale supports the finding of a latent one-

factor construct.

As noted by Parry and Proctor-Thomson (2002),

the potential negative effect of heteroscedasticity

caused by highly skewed means is a weakness of the

PLIS scale. However, they recognized that the scale

is useful for measuring ‘‘a level of global perceived

integrity’’ but that a ceiling effect on the positive end

of the scale limits its usefulness to other types of

analyses. In line with Parry and Proctor-Thomson’s

suggestion, we utilized the PLIS in the current study

as a global measure of perceived integrity. By con-

verting the data from Likert scale data into nominal

categorical data, we minimized the impact of the

ceiling effect. Individuals who rated their leader

above the PLIS mean of 6.09 were placed into the

high-perceived leader integrity group. Individuals

who rated their leader below the mean but still

within one standard deviation of the mean were

placed into the medium perceived leader integrity

group. Those who rated their leader more than one

standard deviation below the mean were placed into

the low perceived leader integrity group. This

approach is logical given the characteristics of PLIS.

Since the PLIS utilizes items that describe clear,

unambiguous unethical acts, the presence of uneth-

ical behavior is detected when respondents rate their

leader lower than the highest end of the scale.

However, if all unethical behavior is completely

absent, then the leader is said to act ethically and

posses integrity (Parry and Proctor-Thomson, 2002).

Factor analysis was not conducted on the ten-item

social desirability response scale (MCSD) because its

factor structure has been confirmed many times in

the literature. Similar to Andrews and Meyer’s

(2003), the scale produced a final Cronbach’s alpha

of 0.88.

TABLE I

Summary Statistics, Correlation Coefficients, & Scale Reliabilities

Variable Mean S 1 2 3 4 5

1. MCSD 4.821 1.432 (0.880)

2. PLIS 6.091 1.114 0.146 (0.970)

Dependent Measures

3. Teammates 5.090 1.192 0.389** 0.201* (0.764)

4. Team 5.559 1.279 )0.122* 0.318** 0.073 (0.757)

5. Organization 5.137 1.419 )0.134* 0.194* 0.278** 0.207* (0.653)

Note: Cronbach’s alpha coefficients are in parentheses

*p < 0.10; **p < 0.05

772 D. W. White and E. Lean

Preliminary analyses

Before hypothesis testing could begin, two series of

tests were conducted to assure that respondents be-

lieved the situations described in the scenarios would

be viewed as (1) unethical by society in general and

(2) harmful to the affected individual or group.

Three means were calculated for the social consensus

items relating to teammates (2.22), the team (2.41),

and the organization (2.40). All three were below

the neutral value of four, which indicates that

respondents believe the situations would be viewed

as unethical by society in general. In addition, three

means were calculated for the magnitude of conse-

quence items – teammates (5.39), the team (4.92),

and the organization (5.16). The mean values were

all above 4 indicating that respondents viewed the

situations as harmful to the affected individual or

group.

Hypotheses testing

The three hypotheses predicted a positive relation-

ship would exist between a team members’ percep-

tion of his leader’s integrity and his own ethical

intentions. To test these hypotheses, it was first nec-

essary to identify those team members who were

characterized as having very high perceptions of the

team leader’s integrity and those team members who

were characterized as having low perceptions of the

team leader’s integrity. As was described above, a

frequency distribution of all respondents was con-

ducted on the mean scores of the PLIS. We then

divided the respondents into one of three groups

based on the PLIS mean and standard deviation: low

perceived team leader integrity (PLIS-LG) – more

than one standard deviation below the mean; mod-

erate perceived team leader integrity (PLIS-MG) –

less than one standard deviation below the mean yet

not above the mean; and high perceived team leader

integrity (PLIS-HG) – above the mean. The 128

respondents in the high group had a mean PLIS of

6.98. The 77 respondents in the middle group (PLIS-

MG) had a mean PLIS of 6.41, and the 40 respondents

in the low group (PLIS–LG) had a mean PLIS of 5.10.

To test the hypotheses we needed to determine

whether or not each population (PLIS-HG, PLIS-

MG, and PLIS-LG) had a statistically different ethical

intention mean in the three different situations. To

achieve this, we conducted an ANOVA test for each

of the three situational scenarios. An ANOVA test

was used to find out if there was a significant dif-

ference between the three group means. The

ANOVA analysis, however, simply indicated there

was a difference between two or more group means;

it did not indicate which means were significantly

different. Thus, we performed a post hoc pairwise

multiple comparison Scheffe’s test to determine

which means differed. Scheffe’s test was selected

since we had unequal group sizes.

For H1 (ethical situations impacting specific

teammates), the overall relationship was significant

(F = 14.12, p < .001). The PLIS-HG exhibited a

stronger tendency toward ethical behavior with a

mean of 4.94 than did the PLIS-LG with a mean of

3.71. The PLIS-MG also had a statistically lower

ethical intention score of 4.49 from that of PLIS-

HG. The PLIS-LG and PLIS-MG ethical intention

means were not statistically different. Overall these

findings lend support for H1.

For H2 (ethical situations impacting the overall

team), the overall relationship was again significant

(F = 21.44, p < .001). The PLIS-HG exhibited a

stronger tendency toward ethical behavior with a

mean of 6.38 than did the PLIS-LG with a mean of

4.94. The PLIS-MG had a statistically lower ethical

intention score of 5.11 from that of PLIS-HG. The

PLIS-LG and PLIS-MG ethical intention means

were not statistically different. Overall these findings

lend support for H2.

For H3 (ethical situations impacting the organi-

zation of which the team is a part), the overall

relationship was significant (F = 12.94, p < .001).

The PLIS-HG exhibited a stronger tendency toward

ethical behavior with a mean of 5.69 than did the

PLIS-LG with a mean of 4.46. The PLIS-MG also

had a statistically lower ethical intention score of

5.23 from that of PLIS-HG. The PLIS-LG and

PLIS-MG ethical intention means were also statis-

tically different. Overall these findings lend support

for H3.

Social desirability response bias

Previous research that has sought to study the rela-

tionship between the ethical attitudes of leaders and

The Impact of Perceived Leader Integrity on Subordinates 773

subordinates has produced confusing results (Akaah

and Riordan, 1989; Murphy et al. 1992; Trevino

et al., 1999; Zey-Ferrell et al., 1979). Peterson

(2004) suggests that SDRB could be partially to

blame. To test for SDRB in the present study, we

first performed a Harman’s single-factor test. We

loaded all of the variables in the study into an

exploratory factor analysis and examined the unro-

tated factor solution. The first factor explained

45.34% of the variance which seemed to indicate the

presence of one general factor that accounted for the

majority of the covariance among the measures

(Iverson and Maguire, 2000). Next we calculated

partial correlations between the PLIS and respondent

ethical intentions while controlling for MCSD.

These scores were 0.186, 0.289, and 0.186 for

teammates, team, and the organization scenarios

respectively. We then compared these scores to the

Pearson correlations of the same variables found in

Table I. MCSD was not controlled for when cal-

culating the Pearson correlations in Table I. These

scores were 0.201, 0.318, and 0.194 for teammates,

team, and the organization scenarios respectively.

When not controlling for MCSD, the correlations

were larger for all three scenario conditions. From

this comparison, it appeared that SDRB might have

inflated the simple correlations, which is indicative

of the potential spurious impact of the SDRB

(Peterson, 2004).

Discussion and conclusions

As Trevino (1986) noted in her manuscript,

understanding the ethical decision-making process in

organizations is significant to the development of

organizational science. With the structure of tradi-

tional organizations shifting in reaction to changes in

the local and global economy, it is becoming

increasingly important to understand the determi-

nants of ethics within corporations and, more

importantly, in the work team environment. The

contingent thesis that is proposed by this study is

perceived leader integrity will influence subordinate

ethical intentions in a work team environment.

More specifically, it was theorized that team mem-

bers who serve under a leader who is perceived as

having strong integrity would be less likely to engage

in unethical conduct than would team members

who serve under a leader who is perceived as having

weak integrity. It was also thought that ethical

intentions of team members might vary depending

on who was being impacted by the unethical

behavior. Three salient, internal entities were iden-

tified in the literature as: (1) team members, (2) the

team as a cohesive unit, and (3) the organization as a

whole.

The findings confirm that perceived leader

integrity does indeed have an impact on the ethical

intentions of team members in all three situations.

The relationship was strongest in ethical situations

impacting the team itself and the organization as a

whole. This is significant in light of current events in

the business world. As corporations are searching for

ways to decrease unethical employee activity, it is

important to note that team members who perceived

their team leader to have high integrity were less

likely to commit unethical acts that impact the team

itself and the organization.

Most of the previous work researching the effects

of leadership on subordinate behavior looked at the

effects of CEO or top management ethical behavior

rather than at the team level, as in the present study.

By increasing the use of work teams, corporations

can create a stronger sense of identity within their

employees and foster an environment where

employees feel they are part of something larger than

themselves. In addition, work teams tend to produce

accountability between team members which may

help to improve ethical conduct. It was found that

respondents who perceived their team leader to have

high integrity reported lower intentions of com-

mitting unethical acts directed at other team mem-

bers. Interestingly, however, the relationship was not

as strong as it was in situations impacting the team

and the organization. Only leaders who were per-

ceived as having extremely high integrity were

found to positively impact the ethical intentions of

team members toward each other. This seems to

lend support to Robinson and Bennett’s (1995)

argument that unethical acts that affect co-workers

may be more explicable in terms of individual,

personal factors rather than in terms of situational

factors such as leader influence.

As with all empirical research, there were several

limitations associated with this study. First and fore-

most was that a team leader’s integrity was assessed

strictly through a single participant’s perceptions. In

774 D. W. White and E. Lean

order to obtain the most accurate moral reading of a

team leader, it would be preferable to survey an

entire team. However, in such a case, the anonymity

perceived by participants may begin to diminish.

Further, the actual integrity of a team leader may not

be properly assessed by surveys of his or her imme-

diate subordinates. A related issue would be that

leaders are not likely to allow their integrity to be

directly observed or measured. The purpose in our

study, however, was to assess the relationship

between the team member’s ethical intentions and

that member’s perception of his leader’s integrity

as opposed to his leader’s actual integrity. Thus, it is

the team member’s perception of his leader that is

expected to influence his behavioral intentions

(Vidaver-Cohen, 1998). Since all research designs

contain limitations, we must caution against potential

implications of this study until further inquiries can

confirm our results.

No attempt was made to determine the impact

that leaders external to the work team have on group

members. It is likely that other leaders (spiritual,

work, athletic, etc.) have significant impact as well.

In the future, it would be valuable to determine the

degree of influence external leaders have as com-

pared to the internal group leader.

Another potential limitation of our study relates

to the fact that the respondents provided the measure

for both the PLIS and their own ethical intentions.

According to Podsakoff et al. (2003), a common

rater effect bias can be produced when the predictor

and criterion variable measures are provided by the

same individual. This type of self-report bias or

‘‘artificial covariance between the predictor and

criterion variable’’ is a potential weakness of the

current study. In an effort to reduce the possibility of

these types of method biases, we followed proce-

dures recommended by Podsakoff et al. (2003).

They state that by following two procedural reme-

dies, researchers can greatly minimize, if not totally

eliminate, the potential effects of common rater

variance on the findings of their studies. First, we

promised the respondents that their answers would

be completely anonymous multiple times through-

out the survey instrument. Second, we assured

respondents that there were no wrong or right an-

swers and encouraged them to answer the items as

honestly as possible. Finally, we pointed out that no

markings were used to identify the respondents on

the survey instrument. According to Podsakoff et al.

(2003), these procedures ‘‘should reduce people’s

evaluation apprehension and make them less likely

to edit their responses.’’ In addition, we physically

distanced the respondents from the work team

leaders (Scott, 1982).

The findings that emerged from this study, though

consistent with previous studies regarding the rela-

tionship between the ethical attitudes of leaders and

their subordinates, raise several questions worthy of

additional research. Future research should investigate

how a belief in universal moral rules by team members

impacts the perceived leader integrity/ethical inten-

tions relationship. Individuals join organizations with

an individual level of cognitive moral development as

well as other personal characteristics. A personal

characteristic likely to moderate the influence of sit-

uational variables, such as perceived leader integrity, is

the degree to which an individual believes in universal

moral rules. For example, one team member may

believe that certain behaviors are always unethical

regardless of the situation while another team member

may reject the idea of universal moral rules and believe

that morality depends on situational variables or the

outcome. Assessing a subordinate’s level of universal

moral rules may help researchers to understand exactly

how much of an impact the team leader has on the

subordinate’s ethical intentions.

As was stated earlier, the PLIS has a tendency to

produce extremely high means due to the fact that it

only uses negative items. This limits the potential

usefulness and the analyses it can provide. In the

future, researchers should seek to deal with the po-

tential effects of heteroscedasticity caused by the

highly skewed means (Parry and Proctor-Thomson,

2002).

An implication of these results, as Craig and

Gustafson (1998) studied, is that researchers do not

yet fully understand how a follower’s impressions of

leader integrity develop, how those impressions

change over time, or even which leader behaviors

are most influential in the perception formation

process. Studying each of these issues would greatly

expand the literature with regard to team members’

ethical intentions as a result of their perceived leader

integrity.

In summary, the present study provides needed

research on the relationship between perceived lea-

der integrity and its effect on employee behavior.

The Impact of Perceived Leader Integrity on Subordinates 775

Rather than focusing on the impact of the ethical

influences of top management and CEOs, as much

of the previous literature has done, the present study

examined how leaders of work teams affect the

ethical intentions of their subordinates. It is hoped

that the findings from this study can add to the

conceptual base needed to develop a research agenda

for future investigations of the integrity of team

leaders and its effect on work team groups.

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Darin W. White

McAfee School of Business Administration,

Union University,

1050 Union University Dr, Jackson, TN, 38305,

U.S.A.

E-mail: [email protected]

Emily Lean

Walton College of Business,

University of Arkansas,

Business Building 402, Fayetteville, AR, 72701,

U.S.A.

778 D. W. White and E. Lean

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/GrayImageAutoFilterStrategy /JPEG /GrayACSImageDict << /QFactor 0.76 /HSamples [2 1 1 2] /VSamples [2 1 1 2] >> /GrayImageDict << /QFactor 0.15 /HSamples [1 1 1 1] /VSamples [1 1 1 1] >> /JPEG2000GrayACSImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /JPEG2000GrayImageDict << /TileWidth 256 /TileHeight 256 /Quality 30 >> /AntiAliasMonoImages false /DownsampleMonoImages true /MonoImageDownsampleType /Bicubic /MonoImageResolution 600 /MonoImageDepth -1 /MonoImageDownsampleThreshold 1.50000 /EncodeMonoImages true /MonoImageFilter /CCITTFaxEncode /MonoImageDict << /K -1 >> /AllowPSXObjects false /PDFX1aCheck false /PDFX3Check false /PDFXCompliantPDFOnly false /PDFXNoTrimBoxError true /PDFXTrimBoxToMediaBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXSetBleedBoxToMediaBox true /PDFXBleedBoxToTrimBoxOffset [ 0.00000 0.00000 0.00000 0.00000 ] /PDFXOutputIntentProfile (None) /PDFXOutputCondition () /PDFXRegistryName (http://www.color.org?) /PDFXTrapped /False /Description << 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>> >> setdistillerparams << /HWResolution [2400 2400] /PageSize [5952.756 8418.897] >> setpagedevice