applied project

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The Role of Organizational Culture in Moderating Ethical Leadership and Employee Decision-Making

Thaddeus Cain

Arizona State University

Ogl 593

Dr. Kevin Ellsworth

November 8, 2025

The Role of Organizational Culture in Moderating Ethical Leadership and Employee Decision-Making

Abstract

Ethics in organizational leadership are essential for the success of a company on both a short-term and long-term basis. Although ethical leadership is the basis of gauging misbehaviors in an organization, the frequent wrangles in international companies show that leadership is not adequate in promoting ethical conduct. The Cultural Alignment and Ethical Leadership Framework (CAELF) in transformational leadership, moral management theory, and social learning theory shows the influence of culture on leadership. The paper uses a qualitative research study with Wells Fargo, Volkswagen, and Patagonia as alternative scenarios. The write-up also anticipates that leadership and ethical culture depend on each other in providing effective ethical aspects. Culture and ethical alignment in the field help ensure morals in corporations across the world.

Introduction

There are a lot of ethical issues in various companies globally that affect the output of goods and services. A lot of companies are trying hard to implement and reinforce ethical leadership, but these efforts are still insufficient and inconsistent (Gamarra & Girotto, 2022). Harmful gas release by Volkswagen and unscrupulous activities of Wells Fargo are examples of unethical practices that show a recurrence of unjustified behaviors in organizations. Corporate culture is the norms, values, and beliefs of the company that shape the code of conduct of the employees. The culture of the organization determines the adherence to ethics and morals by the employees, particularly in the recurrence, pattern, and wave of misconduct (Mostafa, 2018). When business ventures embrace cooperation, respect, transparency, and justice, the influence of ethical leadership takes shape, leading to the success of companies. The essay examines how ethical leadership and employee decision-making depend entirely on the organizational culture in the long run.

Literature Review

Ethics in Leadership and Organizational Culture

Ethical leadership is the ability of leaders to promote transparency and accountability and to provide moral support to employees continuously. It also entails incorporating the cultural system to facilitate continuous behavioral change for the benefit of the institution (Zheng et al., 2022). When an organization embraces open communication and individual understanding as a culture, it fosters justice and moral standards, unlike organizations that disregard integrity and justice (Zhu et al., 2025). Leaders need to ensure there is complete interdependence between leadership and culture to achieve general and specific objectives

Cultural Alignment and Ethical Leadership Framework (CAELF)

· Social Learning Theory

The code of conduct of the employees and the culture of the organization are a mirror of the behaviors of the leaders (Schunk & DiBenedetto, 2020). It also highlights that a behavior is learned when the observer perceives the action to be beneficial and has a direct impact on the immediate environment. The conduct of supervisors and managers influences the production levels of the employees and the overall functionality of the institution.

· Moral Management Theory

Leaders influence the moral standards of the employees through frequent communication and outlining of the cultural expectations (Hoch et al., 2018). It is essential for managers to frequently keep the employees on their toes and remind them of the moral expectations and the organizational values to prevent deviation from the norms. This step ensures the company functions within the expected cultural and ethical dimensions without harming any party.

· Transformational Leadership

It is the role of leaders to motivate and guide the employees on cultural and ethical aspects that ensure adherence to organizational goals (Deng et al., 2023). Good and effective leaders bring to the table tangible results for the employees and other immediate stakeholders to emulate. When leading by example, the leader has to be motivational by setting realistic goals and giving people room for growth and improvement. An ethical and transformational leader also understands individual differences, like variations in physical, emotional, and social needs, and thus puts in place equal and equitable measures to fit diverse groups within the working environment.

Ethics and Decision Making

When there is favorable room for communication, there are always high chances of moral adherence. Ethical climate is the existence of awareness and the ability to distinguish what is wrong and right in an organization as a result of strong and positive leadership (Verma, 2020). The awareness is possible when there is open and consistent communication between the employees and the leadership (Verma, 2020). Lack of supportive culture leads to a weak and poor ethical perspective, thus leading to the malfunctioning of a corporation. Employees are also motivated when they are aware that their morals, values, beliefs, and social practices are of the essence in the organization. Ethical climate promotes inclusivity and a sense of belonging, thus leading to an increase in commitment to the organizational goals and objectives, and thus more production and success.

Cross-Cultural Aspects

Multinational companies usually experience extensive cultural aspects, but the specific norms depend on the views and judgment of the employees on the local cultures. These interpretations may shape morality, leading to either collective morality or diverse behaviors (Maheshwari et al., 2024). It is therefore crucial for leaders to adjust to the common cultural dimensions to facilitate the effectiveness and efficiency of the organization. The CAELF concepts are crucial in choosing and evaluating the necessary ethical leadership dimensions.

Study Methodology

Design

Qualitative research design on multiple case studies of companies will be used to elaborate on the influence of culture on ethical leadership and moral decision-making. The following companies were selected:

· Wells Fargo- demonstrated performance orientation aspect with little regard to ethical leadership.

· Volkswagen- focused on technical leadership and high performance, but neglected ethical culture, leading to involvement in environmental pollution.

· Patagonia- it emphasizes strong ethical leadership and adheres to cultural, individual, and social norms.

Data Analysis

Data analysis uses the thematic six-steps of the Braun and Clarke method, consisting of familiarization, coding, theme creation, evaluation, elaboration, and dissemination (Braun & Clarke, 2019). A comparison will be made on the three cases of the companies and how they utilize or incorporate the leadership and cultural ethics, where Wells Fargo and Volkswagen are on one side, and Patagonia is the comparison.

Ethical Consideration

Since the project uses secondary data, there will be no direct involvement with people, thus no issues like privacy and confidentiality. The study will also maintain ethical integrity through the acknowledgement of scholars in citations and the use of references. It will also ensure accuracy through scientific search, analysis, and presentation of results, which prevents bias in information.

Expected Outcomes

The study is projected to show that ethical leadership and effective decision-making among workers depend entirely on organizational culture. Ethical leadership promotes an ethical climate due to strong moral awareness in supportive cultures among all the stakeholders in the company. On the other hand, unsupportive and disjointed cultures suppress effective leadership, leading to misconduct, poor organizational culture, and negatively varying norms (O’Keefe et al., 2020). The Cultural Alignment and Ethical Leadership Framework (CAELF) will be the main framework for incorporating cultural values with leadership due to its direct application in assessment, evaluation, and strengthening ethical and cultural aspects. The model also facilitates adherence to organizational culture, societal norms, and individual consideration regardless of origin and background. Additionally, utmost organizational functionality will be achieved through the effective integration of communication, trust, and openness between the leadership and the employees.

References

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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. https://www.ceeol.com/search/article-detail?id=1225445

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. https://journals.sagepub.com/doi/abs/10.1177/0149206316665461

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. https://www.tandfonline.com/doi/abs/10.1080/10508422.2017.1318069

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Kussatz, S. B. (2023). The Dynamics of Ethical Leadership: Unraveling Influences on Individual Behavior within Organizations. https://osuva.uwasa.fi/handle/10024/16651

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.

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. https://www.tandfonline.com/doi/abs/10.1080/1359432X.2018.1470088

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.

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. https://onlinelibrary.wiley.com/doi/abs/10.1002/job.2427

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 (PJCSS),  12(1), 398-418.

Schunk, D. H., & DiBenedetto, M. K. (2020). Motivation and social cognitive theory.  Contemporary educational psychology,  60, 101832. https://www.sciencedirect.com/science/article/pii/S0361476X19304370

Verma, G. (2020). Organizational Ethical Work Climate: A Systematic Review of the Literature. In  the e-journal, First Pan IIT International Management Conference–2018. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3753187

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