Ethical Leadership on the Horizontal Scene: A Case Study on Middle Managers in the Tech Industry

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Ethical Leadership on the

Horizontal Scene

-

A Case Study on Middle Managers in

the Tech Industry

Master’s Thesis 30 credits

Department of Business Studies

Uppsala University

Spring Semester of 2019

Date of Submission: 2019-05-29

Josephine Bennegren

Amanda Tropp

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Acknowledgements

Writing this thesis has given us valuable knowledge and insights that never had been possible without the support provided. First of all, we would like to thank all of those who participated in our interviews for their time and contributions to our investigated topic. Secondly, we thank our seminar group for the thoughtful input. Finally, we give a special thanks to our supervisor, Jaan Grünberg, who has guided us with valuable insights and feedback during the process of research.

Uppsala, 2019-05-29

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Abstract

Due to an increased importance for organisations to act according to ethical leadership, we identified the need to extend the perspective of how ethical leadership practices are developed, enhanced and spread among leaders horizontally. Since previous literature has focused on ethical leadership from a top management perspective, it is of interest to examine how ethical leadership is discussed and practised among middle managers as they encounter ethical dilemmas to a greater extent. By conducting a qualitative content analysis of interviews and documents, we declare a case study on middle managers in a tech company. Suggesting social learning as a proper lens to investigate our issue, we found that middle managers learn ethical conduct prominently via identification and knowledge sharing including feedback and reflection. By identifying important elements of ethical leadership, we could further interpret what practices were spread and reinforced among mid-level managers. These were the abilit y to be transparent, authentic, available and to value diversity, inclusion, and risk-taking for the sake of employees. However, it was evident that the horizontal learning of ethical conduct occurs in a reactive manner, triggered by events in a complex web of social learning. Therefore, in order for ethical leadership to regularly be learnt between the middle managers, a formal structure and the ethical culture can reinforce the way in which ethical leadership practices are spread horizontally.

Keywords: Social Learning, Ethical Leadership, Ethical Leadership practices, Knowledge

Sharing, Middle Managers, Organisational Ethics

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1. Introduction

This chapter provides an introduction to the area of ethical leadership and ongoing discussions regarding its theoretical contributions and under-researched perspectives. A background is introduced, followed by a problem discussion which finally unfolds the purpose and research question of this thesis.

1.1. Background

The ethical aspect of leadership has received increased attention from both the public and scholars. The underlying motive partly stems from unethical behaviours of top manage me nt resulting in corporate scandals (Lawton & Páez, 2015). In pace with an expanding global market, organisations today are challenged to act in an increased ethical, moral and sustainab le manner in accordance with changing regulations (McCann & Sweet, 2014). While legisla t io n is one solution to this problem, ethical conduct also needs to be integrated into the leadership of organisations as it involves a decisive role in ethical actions (Marsh, 2012). This does not only involve leadership on top management levels but also middle management, as they are more prominent in facing ethical dilemmas (Bachmann, 2017).

A general definition of leadership is that it embraces a long-term and visionary inspiration and tends to be related to words such as risk-taking, creativity and change (Hughes et al., 2011; Douglas & Wykowski, 2017). The relationships between leadership and ethics which have emerged in management literature have created new definitions of what leadership actually constitutes. One dimension added to the role of leadership is the creation of the moral organisation (Lawton & Páez, 2014). In this sense, the task of leaders is to establish a strong set of ethics and set moral principles for others to follow. Thus, ethical leadership has a visionary view and is guided by what is perceived as the right thing to do (Hughes et al., 2011). By referring to Brown et al.’s (2005) common definition of ethical leadership as a social process, ethical leaders typically inspire their followers to act according to ethical conduct through interactions and interpersonal relationships encouraging two-way communication. By doing so the ethical leader acts as an ethical role model, inspiring followers to imitate the same behaviour via sanctions and rewards - a learning process within the field of social learning

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(ibid.). Overall, social learning describes a process in which individuals imitate the behaviour of others based on identification and motivation (Bandura, 1977; Harine, 2017). The concept of ethical leadership has partly emerged from the idea of transformational leadership where a leader is highlighted as someone who emphasizes integrity, the moral good and trustworthi ness (McCann & Sweet, 2014). Hence, ethical leadership is related to characteristics such as integrity, honesty, empathy, ethical guidance and trustworthiness (Bachmann, 2017). The concept is thereby associated to specific leadership behaviours that include taking actions that benefit their followers and the society as a whole (Brown & Treviño, 2006), which in turn indicates that ethical leadership possesses unique characteristics compared to other leadership types (Mayer et al., 2012).

Nowadays, ethical conduct is a common focus area in organisational HR policies and processes in terms of organisations corporate social responsibility (CSR). However, apart from processes and regulations, studies regarding CSR and business ethics have put less weight on considering leadership as one of the essentials in implementing enhanced ethical conduct within organisations (Bachmann, 2017). Although formal policies and procedures can be fundame nta l in establishing ethical conduct, “they cannot determine honesty character or integrity of the people involved” (Pollard, 2005, p. 14). Thus, the ethical character of a leader plays an important part in the implementation of ethical conduct.

1.2. Problem discussion

Due to its broadness and complexity as well as its rather young nature (Treviño et al., 2003; Bachmann, 2017), the concept of ethical leadership is in need of further examination. As previous research mainly has studied ethical leadership as part of a statistical relation, such as revealing positive relations to valuable organisational outcomes (Mo & Shi, 2018), it is of importance to reveal the issue through an interpretative approach to determine underlying aspects of the phenomena (Marsh, 2012).

Emerging out of the notion that ethical leadership is linked to various valuable organisatio na l outcomes, research has emphasized the process of ethical leadership within organisations and how it tends to be spread in different stages. As already mentioned, by assigning meaning to specific situations, or regulating employee action by sanctions, ethical leaders are able to acknowledge employees, via social learning, with norms that “legitimize a specific behaviour” (Shin et al., 2015, p.44). Ethical leadership is thus suggested to be spread trickle-down, through

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top management down to middle management, and from middle management down to employees. Mentioned by Mayer et al. (2009, p. 9), there is a positive relation “between top management and supervisory [mid-level management] ethical leadership”, where both middle management and top management are determinants of employee action as middle managers act as mediators between employees and top leadership.

Although ethical leadership is a broad concept that can be applied to all levels of hierarchies of the organisation, yet previous research has mainly focused on studying top managers and CEOs in relation to ethical leadership. Managers who operate on a mid-level have, on the other hand, been neglected (Brown et al., 2005). Their role further represents an important function in defining organisational objectives and policies since their position is in between front-line and top management (McGurk, 2009; Bachmann, 2017). Sull et al., (2015) criticize top leaders of being unrealistic when it comes to corporate strategies. It is further argued that middle managers, in contrast to top managers, are the ones who encounter ethical dilemmas in practice and thus have better possibilities to implement ethical practices (Martin et al., 2009). Furthermore, middle managers hold a strong influence on followers since if followers do not trust middle managers, the probability that followers trust top management is low. Thus, middle managers are often the ones that naturally become ethical role models, as top manage me nt often is perceived as a rather diffuse figure among other organisational members (Weaver et al., 2005).

Mentioned by Kim and Brymer (2011) it would be of value to provide a deeper understanding of how ethical leadership is developed and enhanced among leaders themselves. Since there is a pressure on organisations today to act in accordance with the norms and values associated with ethical leadership, it becomes of importance to investigate its key insights (McCann & Sweet, 2014). Thus, if not acting according to what is considered as an ethical leadership, leaders “may be unable to achieve the strategic goals and may place their organisations in challenging situations that result in compliance issues, poor decision making, morale problems, and communication issues” (McCann & Sweet, 2014, p. 381). Since middle management is suggested to be prominent in facing ethical dilemmas in organisations, providing a deeper understanding of how ethical leadership is spread and reinforced among mid-level managers will result in valuable insights. Further, as ethical leadership is explained to be spread in a rather social setting, via role modelling, rewards and sanctions (Brown et al., 2005), it is suggested that social learning function as a proper lens for investigating the issue at hand.

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1.3. Purpose and research question

The purpose of this study is to investigate how practices of ethical leadership within organisations are enhanced, developed, trained and fostered between leaders operating at a mid-level. The research aims to extend the social learning perspective in ethical leadership by examining a horizontal learning process that occurs between leaders. By doing this, we ultimately identify ethical leadership practices that are of particular importance for middle managers. As a result, the research will result in valuable insights into the world of academia as it studies the social learning of ethical leadership practices in a new light. The study further aims to provide practical implications in how organisations can embrace and develop how ethical practices are learnt among middle managers who are exposed to similar ethical leadership issues.

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2. Literature review

The forthcoming section presents existing literature capturing the main elements of social learning theory, which are further drawn in connection to ethical leadership. This is followed by literature covering knowledge sharing, explanations of what characterizes the ethical leader and insights regarding the organisational ethical culture and structures. The section is finalized in a conceptual framework.

2.1. Social learning in leadership

Learning from others is suggested to be an important element in the process of learning behaviours, especially in order to understand how leaders learn to become successful. Leaders learn by imitating behaviours, asking questions and paying attention to different everyday situations, consequently obtaining experience and knowledge (Hughes et al., 2011).

2.1.1. Social learning theory

Discussions of how ethical leadership as a practice influences organisational actors suggest social learning to reveal underlying reasons. Social learning theory explains the process of behavioural learning based on the assumption that individuals learn through both direct and indirect experiences by observing others’ behaviours. Through modelling, i.e. imitating, observing and identifying with the behaviours of others, social learning theory suggests that individuals mirror the same behaviours and apply them to their own actions by being motivated to do so (Harinie et al., 2017). The foundation of social learning theory is proposed to be an extension to behaviourism theory which outlines a learning process that involves environmental, individual and behavioural factors. Harinie et al., (2017) suggest, by emphasizing Bandura’s (1977) social learning theory, the process of learning from experience starts by individuals reflection of the how the outer environment tends to behave which leads to the observation of others, often so-called models. During this occasion, the individual does not solely objectively observe the behaviour of the model. Instead, the individual feels and identifies with the behaviour based on own preferences. The identification process occurring between the one observing and the model determines what behaviour the individual observing will decide to pay attention to. The human interaction involves both the individual’s and the model’s characteristics and activities chosen to be executed by the model and observed by the individual. In the following steps, the individual in learning firstly remembers the behaviour of the model. Later on, the same behaviour is reproduced based on memory and finally, it is

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decided whether the individual in learning is motivated or not to continue acting in accordance. The motivational factors that can affect if the individual decides to carry on the behaviour or not, are e.g. if the modelled behaviour rewards the model in any case, such as when a follower models a manager’s desired behaviours (Harinie et al., 2017). An ethical leader would for instance reward ethical conduct, while at the same time provide information about the consequences of an unethical one (Brown et al., 2005). Even if the individual in learning is succeeding in imitating behaviours, or remembers the specific behaviour really well, the individual in question will not continue acting on the same behaviour if motivational factors are lacking. It is thus suggested that motivation is the final determining factor in the social learning process (Bandura, 1977).

2.1.2. Social learning theory in ethical leadership

Social learning theory is suggested to be a strong learning tool in the learning of ethical conduct since leaders, through acting in accordance with ethical behaviour, influence followers by acting upon a normative desired behaviour which is seen as legit and attractive. If ethical behaviour is the ultimate goal of a leader’s behaviour, by acting on legitimate and credible behaviours, the leader becomes attractive to followers by expressing a normative desired behaviour. When acting accordingly, followers end up being motivated to imitate the same conduct by altruistic, rather than selfish, reasons. These behaviours, characterizing an ethical leadership, can e.g. include elements of showing respect to others and treat people fairly. Ethical leaders thus model ethical behaviour, which later becomes the target of followe rs’ identification processes which ultimately encourages ethical conduct in the organisation as a whole (Brown et al., 2005). Despite previous research’ interest in the leader-follower relation, it can be argued that the same altruistic motivational factors can be implied among middle managers learning ethical conduct since social learning is a general notion (Bandura, 1977). Recurring in ethical leadership literature is the concept of imitating others, emerging from social learning theory, in terms of role modelling (Brown & Treviño, 2006; Weaver et al., 2005; Mayer et al., 2012; Hassan et al., 2013; Bachmann, 2017). Role models are often used by individuals to guide actions and to steer identification (Weaver et al., 2005). Ethical leaders influence followers by representing an ethical role model, and through implementing sanctions and rewards they guide ethical conduct (Brown et al., 2005). Just as in social learning theory, through identifying with a role model an individual embodies the same attributes, values and behaviour which the role model communicates. The person observing the role model creates a

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mental image of how the role model would act in different situations and later on acts accordingly. Thus the role model functions as a guide to the behaviour of others. Role modelling is suggested to be a strong learning tool in organisations due to the fact that it affects behaviour. In some cases, mentors are formally appointed to newcomers in order to show and guide how the business supposes to operate and how organisational members tend to behave. However, whether the mentor applies or exhibits effective ethical conduct in the learning process is not a necessity. Instead, ethical role models are often not aware of other people modelling them, thus the process of role modelling is mostly informa l and not communicated openly (Weaver et al., 2005).

The behaviour of the ethical role model

Ethical leaders are considered to have a clear-cut communication concerning ethical issues that they complement with their own ethical conduct as well as enhancement of others’ ethical actions (Mayer et al., 2012). From a social learning perspective, ethical leaders are role models of ethical behaviour and influence their employees via their legitimacy through actions that capture ethical conduct. Based on interviews with managers that represent differe nt organisational backgrounds, an ethical role model holds characteristics divided into four categories, namely; interpersonal behaviours, ethical action and expectations for themselves, fairness with others and articulating ethical standards (Weaver et al., 2005).

A person with interpersonal behaviours is viewed as someone who cares, feels concern and compassion, values relationships and takes responsibility. Central for the ethical role model who possesses interpersonal behaviours is thus someone who stands up for his/her employees and prioritizes their relation. The ethical role model acts through interpersonal characterist ics with a high ethical expectation of themselves, where the ethical role model’s actions and expectations can be described as acting in accordance with honesty, trust and integrity. These three characteristics are indicated as explicit among ethical role models. Moreover, by fairness with others, the ethical role model is someone who treats others with respect, listens to and encourages input from others. By articulating ethical standards, the ethical role model holds on to an established ethical vision, free from conflict, that communicates a high level of ethics that goes far and beyond the individual and organisational interests, through a long- term stakeholder perspective (Weaver et al., 2005).

What appears to distinguish the ethical role model, except the already discussed, is the tendency to frequently interact with people as the ethical role model is not defined as someone who is

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encountered with distance. Furthermore, the ethical role model is someone that is respected by others. However, despite the rather admirable aspects associated with the ethical role model, business success is not shown to be a determining factor for an ethical role model, i.e. the ethical role model does not per se show tendencies of having a successful business career (Weaver et al., 2005).

2.2. Sharing of leadership knowledge

Since previous research has defined leadership as a social procedure, learning can be implemented through relational and social processes to align members’ commitment. A relational leadership approach has particularly been highlighted in ethical leadership studies where the leader has taken on several roles such as being a moral person and a coach. Leaders do not only observe behaviour, but they also exchange knowledge in order to learn or to become more effective. This can take place both internally and externally and exists mainly to improve cooperation, social capital and resource exchange (Iles & Macaulay, 2007). Lin (2007, p. 315) defines knowledge sharing as “social interactions involving the exchange of employee knowledge, experience, and expertise to all departments within the organisation”. Therefore, in order to determine the spread of ethical leadership practices, knowledge sharing complements social learning theory by defining how best practices become exchanged through mutual interactions between leaders.

Knowledge sharing is the process in which members of the organisation, both within or across teams, have the possibility to collectively contribute with valuable knowledge applicatio n, innovation and evolvement for the organisation to become more effective. Through knowledge sharing, organisational knowledge is reinforced as it develops based on shared expertise contributing to an organisation's competitive advantage (Wang & Noe, 2010). As a result, it can be suggested that such knowledge concerns the learning and exchange of leadership practices, styles and conduct. It is proposed that leaders play an extraordinary role in the process of knowledge sharing since leaders are the ones responsible for the organisatio na l strategy to become effective (Le & Lei, 2018).

Knowledge sharing is suggested to occur in a greater span if specific attributes of manage me nt practices are considered. These involve activities such as establishing discipline by follow ing clear standards of performance through feedback and sanctions, helping others out, enhancing trust in the commitment to each other and sharing a common vision. Thus, an existence or a

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lack of these elements is suggested to either allow or limit how far learning among leaders can take place within an organisation (Belkhamza & Azizi Wafa, 2014). To be able to develop and become a better leader, an openness to others’ feedback, occurring both during formal and informal circumstances, are suggested to result in an ability to change leadership style and advance the ability to learn as a person through the reflection of one’s actions and learning from others. Feedback from others can, in addition, help to identify unknown strengths and weaknesses. A similar view is supported by Marsh (2012), who suggests that time for reflectio n and mindfulness are essential when it regards the development of, especially, ethical leadership. However, in order to spare time for reflection and feedback, other components and activities in leadership such as spending time with employees may be excluded since reflectio n and feedback require time to be set aside. Thus, as these elements may seem to be of equal importance, they need to be prioritized and match with, for some leaders, a quite tight schedule since leaders today often act in a stressful environment (Lovelace et al., 2007).

Leadership learning in training programs

Leadership development and knowledge sharing often take shape in terms of training programs. Training programs contribute with several techniques, expertise and relevant content for leadership development (Hughes et al., 2011). What is often highlighted in leadership development is the importance of reflection and the confrontation of one’s views. In order for leadership training programs to be effective, they need to stimulate “personal growth, skill building, feedback, and conceptual awareness” (Mawson, 2001, p. 44). While personal growth includes self-assessments by letting others evaluate one’s leadership style, skill building includes more tangible elements such as behaviours that can be taught by others. Feedback highlights how others perceive one’s leadership abilities and can contribute with distinctive positive results if done right. Finally, conceptual awareness is the key to knowing how to use different, rather easy skills in relation to different situations and people (Mawson, 2001). Due to heavy media publications concerning ethical issues, training programs in ethical leadership have become a central focus in several organisations, suggesting the importance of ethical leadership practices to increase. The training programs often demonstrate competencies such as communication of values and ethical guidelines and exemplify ethical behaviours and practices that are opposite to unethical behaviour. However, training programs have received critiques indicating that competency frameworks tend to create false promises in the sense that they disclaim the relational and contextual aspects of leadership and rather focus on leadership

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as a rational process (Liu, 2017). Furthermore, to train and coach values are not simple actions, as personal values tend to be deeply established in the mind of the participant (de Haan, 2008).

2.2.1. Leadership learning among middle managers

Narrowing the focus to research on learning among mid-level managers, a study executed by Lalleman et al. (2017) focusing on nurse middle managers suggested the action of shadowing each other to influence leadership learning and development. While shadowing others, the middle managers started to compare their work with their observations and developed their own characteristics by comparing these with others. Thus, this social comparing process draws strong connections to social learning theory and role modelling. Social comparison origina tes from the desire to act like someone who succeeds in their work, which results in is a willingness to act according to those who are most successful. Moreover, during the process of shadowing others on the same level, the middle managers seemed to learn more from the experience by giving feedback during the process (Lalleman et al., 2017). Although this was applied to nurse middle managers, it is not neglected that a similar social construct is applicable to another organisational sector perspective.

Regarding formal learning development, Chaimongkonrojna and Steane (2015) address training workshops, or programs, to hold a positive influence over leadership development among middle managers. The training workshops or programs usually include peer coaching, group reflection and 360-degree feedback, which supports the general notion of how leadership practices in the greater picture develop. For middle managers, the focus of these programs often includes improvements of oral and written communication skills, but they also give advice in time management, goal setting and planning (Hughes et al., 2011). Further, the middle manager is likely to develop his/her leadership through supervisors’ and peer feedback and time for reflection of one's own leadership actions (Chaimongkonrojna & Steane, 2015).

2.3. Characteristics of ethical leadership

To be described as an ethical leader it is suggested that one needs to act both as a moral person and a moral manager. The moral person possesses traits such as honesty and trustworthiness, is someone who cares of other people and society, and makes principled decisions. Since the moral manager uses ethics as guidance in leadership by acting as an ethical role model for followers (Brown & Treviño, 2006), the characteristics of the moral manager occupy strong parallels to traits of social learning theory, where role modelling constitutes a major function.

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Emerging out of the context of organisational scandals, such as the Enron scandal and the economic meltdown in 2007, ethical leadership has been outlined as an example on how a preferable leadership should be acknowledged learnt by wrongdoings (Bachmann, 2017). Several researchers (Mayer et al., 2009; Kim & Brymer, 2011; Hassan et al., 2013; McCann & Sweet, 2014; Shin et al., 2015; Wang et al., 2017; Mo & Shi, 2018) have followed the path of Brown and Treviño’s (2006, p. 595) by referring ethical leadership 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, reinforceme nt, and decision-making”. Ethical leadership leans on underlying norms, cultural influence and moralism. Where law stops, business ethics comes in, which indicates the complexity of ethical decision making and its underlying constitutions (Bachmann, 2017). Highlighted is the moral perspective, where the ethical leader forms the moral climate among followers through discipline and rewards. Morality is essential for the ethical leader, as it makes sure that the leader communicates values and ethics and acts as a role model on how a preferable leader should act in a moral manner (Brown & Treviño, 2006). As argued by Brown and Treviño (2006, p. 597) “such explicit behaviour helps the ethical leader to make ethics a leadership message that gets followers' attention by standing out as socially salient against an organisational backdrop that is often ethically neutral at best”. Thus, the ethical leader uses ethics and morals as guidance in their leadership.

2.3.1. Ethical leadership practices

What seems to be of importance in ethical leadership regards what values the ethical leaders connect to their practices. Marsh (2012) stresses that mindfulness, engagement, authentic it y and sustainment seem to be the primary underlying reasons. Mindfulness includes activit ies and processes such as “observation, time for reflection, systems thinking, rational process, and dialogue and questioning” (ibid., p. 569), and is thus one’s awareness and process of absorbing and reflect on information. Engagement in terms of ethical leadership includes visible activit ies that are expressed by leaders when expressing power. Examples of these activities are the abilities to deal with both creation and termination of relationships, embracement of diversit y in organisations and risk-taking. By risk-taking, ethical leaders encourage risk-taking for the sake of what seems to be the most ethically right. Furthermore, the ethical leader is self-knowing and is likely to show authenticity by expressing moral braveness by holding on to strong integrity. What brings together both mindfulness, engagement and authenticity is sustainment by being “the glue that melds disciplined mindfulness, empathetic engageme nt,

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and courageous authenticity into a substantial force for ethical action; it reconciles the paradoxical forces of autonomy and community” (ibid., p. 572). The ethical leader acts on sustainment by believing in hope and holds on to a holistic view towards life and work. Thus, ethical leadership allows for ethical values to grow and flourish.

2.3.2. Ethical leadership during organisational change

Ethical leadership has been further explained as what is perceived to be the most effic ie nt approach in terms of organisational change as context (Liu, 2017). As a result, studying an organisational change in relation to ethical leadership is not completely ignored in this study as it affects how leadership is depicted and considers what practices are most effective depending on the organisational context. Why ethical leadership do play an important part during organisational change is explained to be dependent on the need for ethical clarity in the sense that leaders are unable to achieve a sustainable and beneficial change without behaving ethically and applying ethical approaches to it. As a result, ethical values should be promoted on a regular basis during times of change as this will enhance their meaning within the organisation (Burnes & By, 2012). Moreover, leadership efforts in change may be aligned with moral principles which enhances followers’ perceptions of the leader’s actions. Leaders who are ethical in the context of organisational change are often viewed as more trustworthy by subordinates which in turn result in positive attitudes and behaviour among subordinates (Sharif & Scandura, 2014).

2.4. Ethical culture and formal structures

As mentioned earlier, the foundation of ethical leadership is built on norms, cultural influe nce and moralism. The ethical culture and structure of an organisation play an important part in whether a moral person can act as a moral manager and thus whether ethical leadership can be spread and reinforced. Reversely, an ethical leader, i.e. a moral person and manager, is suggested to be able to boost the ethical climate in the workplace (Bachmann, 2017). A complete ethical organisation is suggested to contain ethical practices that are modelled by the leader, instilled through organisational structures supporting ethical conduct and reinforced by the ethical culture where the members of the organisation share similar ethical awareness and values (Verbos et al., 2007). As a result, leaders, ethical structures and ethical culture are relevant elements in the process of how ethical leadership practices are spread and reinforced within organisations.

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2.4.1. The ethical culture of the organisation

The organisational culture reflects the history of the organisation and exists in terms of beliefs and values that are visible in the organisation’s strategies and goals. As the leader is the one who models and expresses the ethical values within the organisation, these values are further reinforced by the ethical culture (Verbos et al., 2007). As previous research has stated, “actions speak louder than words”, and due to the complexity of ethics, formal structures alone do not ensure ethical conduct (Brown and Treviño, 2004, p. 73). It is suggested that the integrity of the organisation is to a large extent determined by the ethical leadership and the underlying norms integrated within the organisational culture. It is further demonstrated that the leader oneself is able to determine ethical standards within the organisation (Mayer et al., 2010). The vision of ethical leadership is to establish ethics within the organisation which in turn will guide the organisation to pursue its goals. This is implemented through practices and policies that are likely to reduce the emergence of undesired behaviour which makes ethical behaviour more visible. As a result, ethical leadership can eventually be the driver of an organisational culture if ethics are widely discussed and modelled (Seidman, 2004). According to Schaubroeck et al. (2012), ethical leaders on senior levels are also able to integrate their ethical assumptio ns among the members of the organisation through their ethical leadership engagement and through encouraging a strong ethical culture within the organisational units. One way of doing this involves telling appealing stories concerning ethics that can ultimately be spread further by others (Schraubroech et al., 2012). Thus, although managers in higher positions often are perceived as a distant model for followers to identify with (Weaver et al., 2005), they could still have a potential effect on creating a uniform culture across different organisational units.

2.4.2. Formal ethical structures’ influence on ethical culture

The formal ethical structure is referred to different types of policies such as enforced ethical codes or ethical training programs (Schaubroeck et al., 2012). There are ongoing discussio ns on how organisations best pursue ethical conduct. Svensson and Wood (2011) suggest that organisational ethics are dependent on formal ethical structures, ethical processes and measurements of ethical performance. They suggest that the ethical structures function as a foundation and support ethical business practices, in which they tend to monitor, develop and manage these practices throughout the organisation. This further creates support for organisational processes that require organisations to adopt current and future ethical practices. Lastly, performance indicates the need to maintain and evaluate ethical business practices among organisations to make sure they operate in an ethical manner (ibid.).

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Svensson and Wood (2011) highlight ethical codes as something that may contribute to an ethical culture. Yet, additional efforts need to be put in place in order for an ethical structure to be maintained. An additional effort would, for example, be to implement the conduct of ethical audits, have an ethical committee or have a committee with the mission of developing ethical education and training. However, as mentioned by Brown and Trevino (2014) the establishment and development of organisational ethical codes do not necessarily imply that the employees act in accordance with these. Rather, the organisation has to take serious action to fulfil the ethical codes, which can be done through leaders modelling the ethical standards (Brown and Trevino, 2014).

2.5. Theoretical summary and conceptual framework

In the following section, a conceptual framework is suggested in order to establish theoretical guidelines in the collection of data. Thus, the framework, illustrated in Figure 1, further aided the process of drawing connections between theory and empirical findings. The forthcoming paragraphs present and constitute each element within the framework.

Social learning in leadership

Built on previous literature, we argue for the relevance of using social learning theory as a lens to examine how ethical leadership practices are spread among leaders operating on a mid-leve l. Thus, building on the theory of social learning theory, which suggests that individuals learn behaviours through observing and imitating others (Bandura, 1977; Harinie et al., 2017), the process of how ethical leadership practices are spread is investigated given that ethical leaders learn from ethical role models (Brown et al., 2005). Ethical leaders are often identified as ethical role models in the sense that they care and respect others and have high expectations on ethical conduct (Weaver et al., 2005). As a result, a person who acts on these traits is further considered to model ethical practices among other members of the organisation.

Knowledge sharing will further work as a complement to determine social interactions of best practices that occur within the organisation. In addition, an understanding of knowledge sharing contributes with a foundation of how best practices are later reinforced and spread most effectively across organisations (Iles & Macaulay, 2007; Lin, 2007; Wang & Noe, 2010; Belkhamza & Azizi Wafa, 2014; Le & Lei, 2018). Further, examples of how leadership learning can occur formally are included. This regard, for instance, training programs and

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formally structured feedback occasions (also as a part of training programs) (Mawson, 2001; Hughes et al., 2011; Chaimongkonrojna & Steane, 2015).

Identifying the ethical leader

In order to identify what practices of ethical leadership that are spread, the study takes into account the middle managers’ perceptions of what a preferable leadership constitutes. An ethical leader possesses characteristics such as honesty, caring, transparency, sense of justice, reflectiveness, sustainability, and distinguishes a person who is guided by morality and an ethical compass (Brown & Treviño, 2006; Marsh, 2012; Bachmann, 2017). Ethical leaders act on clear-cut communication regarding ethical issues and value ethical conduct in both their own and others’ actions (Mayer, 2012). Lastly, ethical leadership is suggested to work explicitly well during organisational change, since an ethical behaviour of leaders enhance trust among employees, which become essential during change (Burners & By, 2012).

Ethical culture and formal structures

What is considered to have an effect on how ethical leadership practices are spread are the ethical culture and the formal ethical structure. Previous research suggests that the organisational culture determines how far the ethical leader can go in implementing ethical principles (Bachmann, 2017). The formal structure includes ethical procedures and policies such as organisational ethical codes and is suggested to hold an influence on the organisatio na l culture (Svensson & Wood, 2011). As a result, these factors are considered to either constrain or reinforce ethical leadership practices among the members of the organisation (Schaubroeck et al. 2012). In turn, leaders themselves are able to contribute to an ethical culture. Thro ugh modelling and discussing ethics in an appealing way, leaders are likely to reinforce ethical assumptions and conduct across different organisational units (Seidman, 2004; Schaubroeck et al., 2012). Thus, we argue that an ethical culture and formal structure can potentially reinforce how ethical practices become spread between middle managers.

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Figure 1. A theoretical framework of the spread and reinforcement of ethical leadership practices.

Overall, the framework describes an ongoing social process where the learning of ethical leadership practices among middle managers occurs through identification, role modelling and knowledge sharing. The social process is infused in the ethical organisational culture and ethical formal structures, that can either restrain or reinforce this particular spread.

Social learning in leadership • Social learning theory

• Sharing of leadership knowledge

Organizational ethical culture and structure

• The ethical culture reinforces the ethical conduct

• The leader can determine ethical conduct through modelling • The ethical formal, including policies and procedures, set ethical

standards

Ethical leadership practices

• Expressed characteristics of ethical leaders • Ethical leadership as essential during

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3. Methodology

This section provides a bridge to how we answer our research question. The chapter is introduced with the selection of research strategy followed by how the study is designed. This is further followed by the implementation of content analysis, including a description of the coding scheme. Lastly, ethical considerations related to how the research was executed are discussed.

3.1. A qualitative research strategy

As the aim of this research was to investigate how ethical leadership practices are spread and reinforced among leaders, the purpose was to understand a rather complex social situatio n. Previous studies have mainly focused on the effect ethical leadership has on its employees or stakeholders (Frisch & Huppenbauer, 2014). Thus, little is known regarding the antecedents of ethical leadership. How does it actually emerge? What practices frame the concept of ethical leadership among middle managers? A subjective view, by highlighting social actors, was of value when studying how middle managers learn, reinforce and spread certain practices (Bryman & Bell, 2011).

As the topic of interest presents a rather complex phenomenon supported by little empirica l research, we found explorative research to be a suitable choice. The exploratory research aims to answer questions in a new light, allowing the researcher to be flexible and adjust the path of research to new findings if needed. In combination with exploratory research, we embraced an abductive approach, which allowed us to extend theory through the collection of new findings, yet made it possible to guide the research by previous literature of relevance. An abductive approach thus allows a researcher to find more surprising details, that perhaps would be missed if not explicitly leaning on theoretical suggestions (Saunders et al., 2016).

3.2. Case study design

The research of this study was implemented through an in-depth case study. This particular research design was considered as an appropriate approach mainly because it allowed a phenomenon to be studied in practice and aimed to create an understanding of dynamic features within a single case (Eisenhardt, 1989; Klenke, 2016), such as ethical leadership. As the concept of ethical leadership is a fairly modern concept, a case study was likely to contribute with new learnings within the science of leadership. Furthermore, the abductive approach in

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combination with the case study contributed with a deeper understanding of both theory and the empirical phenomena, as we frequently went back and forth from the empirical data to previous relevant theory. In addition, another advantage using a case study was that it allowed an approach where the researcher is able to combine several qualitative methods, and hence not be reliant on one method only (Knights & McCabe, 1997). As a result, through the combination of semi-structured interviews and documents, the study achieves a triangula t io n approach, which ultimately strengthens the theory building of the study (Eisenhardt, 1989). Further, the use of triangulation does strengthen the reliability of research (Bryman & Bell, 2011).

3.2.1. Selection of case

The case selected for this study is an organisation operating globally within the technology industry offering IT-solutions to businesses in various sectors (Alpha, n.d.). In the forthcoming sections, the organisation is referred to as Alpha. The selection of case was purposely made according to two specific criteria; (1) ethical leadership constitutes a part of the communicated organisational values and (2) the organisation operates with at least a two-level manage me nt structure, i.e. representing both top-management and middle management. Besides the criteria, the organisation was further taken into consideration since it offered us easy access.

Due to the organisation’s seemingly interest in being an ethical role model of their field as well of their clear statement of having zero tolerance towards an unethical behaviour this aligned well with our stated criteria (Sustainability Report, 2018). By conducting open interviews with two employees from the departments dealing with formalities regarding ethical business and conduct, the understanding of how the organisation works formally to promote their position as an ethical role model was enhanced. These interviews were conducted prior to our main interviews with the middle managers. Hence, this provided supportive information on how ethical leadership is viewed and elaborated on according to the organisation’s formal ethical principles. Since the culture of an organisation does either allow or limit the presence of ethical leadership (Bachmann, 2017), choosing an organisation where ethical conduct is encouraged was a part of selecting the representative case. The organisation is further a rather large organisation that has a large set of several different middle managers, which ultimately fulfil led all criteria.

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3.2.2. Semi-structured interviews

Interview sample

Ethics as a concept is commonly experienced as complex and blurry (Brown et al. 2005). Thus, to be able to gather primary data in a rather informal and open approach, semi-struct ured interviews was considered as an appropriate alternative. Similar to the selection of case, the respondents were chosen through purposive sampling with the help from a key informant at the organisation. The interview sample represented middle managers of the organisation that have employee responsibility and are in the forthcoming sections in relation to their field of profession, referred to as ‘tech managers’. Nine tech managers (four women and five men) from different departments working at the same office were addressed by telephone or e-mail. All the respondents, i.e. tech managers, are presented in Table 1.

Table 1: Interview Respondents

Tech Manager

Years of Employment at the Organisation Short-term (0-2) Medium-term (2-10) Long-term (>10) Number of Subordinates Interview Time 1 Long-term >40 54:34 2 Long-term 20-40 59:10 3 Medium-term <20 1:01:30 4 Medium-term >40 1:11:55 5 Medium-term 20-40 59:24 6 Short-term <20 36:41 7 Long-term 20-40 1:01:53 8 Short-term 20-40 45:55 9 Medium-term 20-40 46:09 Interview design

The interviews were conducted face-to-face following an interview protocol (see Appendix 1) based on the conceptual framework (see Figure 1). The tech managers were asked to inform about their personal perception and reflections of leadership, their social connection with

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colleagues and their personal perception and experiences of how they tend to reflect upon learning by others. Further, in order to gain a deeper insight in their ethical behaviour, we inquired how they reflect upon what challenges they encounter in their leadership and how they as leaders deal with situations or actions they consider as ethically wrong. The tech managers were further asked to share their general reflections of what is considered to be the most important characteristics in leadership, in connection to ethical leadership, as well as their view on the organisation’s culture and ethical structures and its effect on their ethical leadership character. Moreover, as the interviews proceeded, we got the understanding that Alpha underwent an organisational change and that the tech managers drew strong parallels to the organisational change in their answers. As ethical leadership is suggested to be of high importance during these kinds of circumstances (Burnes & By, 2012), we encouraged the tech managers to elaborate on the potential effect by the ongoing change. Thus, we updated the interview protocol accordingly and added questions covering the role of the organisatio na l change in the tech managers leadership. In order to avoid any biased answers that may result from potentially leading questions, the questions were formulated openly yet in line with the interview guide in order to cover our areas of interest (Bryman & Bell, 2011). The intervie ws were recorded and lasted between 45 min and 1 h 15 min. All interviews were conducted at the organisation's office over a three-week period.

3.2.3. Documents

To complement the primary data collection of interviews, secondary data was collected to include data on what is formally communicated within the organisation regarding ethical issues. Secondary data provides the possibility to contribute with valuable information to research and is often of high quality (Bryman & Bell, 2011). Furthermore, secondary data is useful in studies covering sensitive issues, such as ethics, in the sense that it diminishes biased results that could emerge in social settings (Harris, 2001). Therefore, we found it useful to examine both annual and sustainability reports of the organisation in order to provide an understanding of how the core ethical values communicated by the organisation could potentially play a part in the spread and reinforcement of ethical leadership.

The annual and sustainability reports were studied within the annual range between 2014-2018 and presented in Table 2. The choice of studying a variety of annual and sustainability reports was due to the integration of the sustainability reports into the annual reports of the years 2016-2018. As a result, studying reports five years behind allowed us to more explicitly compare and

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contrast the formal communication regarding relevant issues and draw relevant conclusio ns regarding the formal structures of Alpha, pinpointing recurring relevant concepts. Thus, this process contributed with a thorough understanding of the enduring ethical values of the organisation and how these values, in turn, potentially influence the spread and reinforce me nt of ethical leadership. To simplify, all documents were referred to as ‘Sustainability Report’, and the year of publication.

Table 2: Sustainability Reports

Document Title Year of Publication Pages

Corporate Responsibility Report 2014 65

Corporate Responsibility Report 2015 64

Annual Report 2016 239

3.3. Content analysis

In order to build and maintain a structure to the analysis, a qualitative content analysis was conducted since it provides a systematic and objective approach of analysing the data (Frisch & Huppenbauer, 2013). The qualitative content approach did also fit well with the exploratory strategy of research since displaying summarized data into visual aid allowed the use of comparisons and further opened up to explore new contributions to the generation of theory during the process of analysis. The summaries of data did lean on both previous research and allowed new findings to be highlighted and conceptualized, further allowing the abductive stance to guide the process of analysis.

As this study aimed to investigate how practices of ethical leadership are spread and reinfo rced between middle managers, a qualitative content analysis allowed us to display the data and make relevant conclusions and comparisons. This, in turn, made it possible to capture how different elements work and answers to the research question examined in a specific setting.

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3.3.1. Coding strategy

Interviews

Following the structuring technique by Frisch & Huppenbauer (2013), the first step in the coding strategy was to identify the main categories in the transcripts based on our research question. After reading through the transcripts, four main categories were identified; social learning among middle managers, middle managers’ perceptions of ethical leadership, organisational culture’s effect on ethical leadership and the role of formal ethical structures. The next step was to code the transcripts according to these main categories. This process was primarily done in order to allow time to independently reflect on how the categories were interpreted. When the main categories were identified and agreed upon the categories were divided into subcategories that finally was narrowed down to codes (such as e.g. ‘demonstrates the importance of transparency’). Each code was counted in order to create a greater meaning to our empirical findings. Although the wording of the code was not always present, the meaning of a certain code was counted (for example the expression ‘to speak up' was translated into having transparent communication). After each code, two digits are presented within brackets, visualized as ‘(x/x)’. The first digit within the bracket represents the number of times the code is mentioned by the tech managers. The following digit within the bracket represents the number of interviews the code is present. The results are summarized into tables (see Appendix 2) where each table visualizes each main category.

Documents

The coding scheme for all documents did follow the same strategy as for the interviews. The codes and main categories were partly selected based on the empirical findings from the interviews, where the main categories were based on the ones of the interviews, and further prominent theory suggested to provide a deeper understanding in order to answer the research question. This foundation mainly included already existing literature of what ethical leadership include (Brown & Treviño, 2006; Marsh, 2012; Mayer, 2012; Bachmann, 2017). Having similar main categories, gave us the possibility to later map our findings and analyze them by being able to draw connections and make comparisons. The findings were, as well as for the interviews, visualized into tables (see Appendix 2), representing main categories, subcategories and codes.

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Further, by counting all codes mentioned in the documents separately, the findings provided us with the possibility to get an overview of how many times the codes were mentioned representing each document and year. This provided with the opportunity to be able to compare focus areas of the organisation's formal communication over a five-year period, providing with yet another dimension to the analysis.

3.4. Ethical considerations

When conducting this sensitive kind of qualitative research, it is of high importance to acknowledge ethical considerations. In our case, this did foremost regard the participants of the selected case study. Firstly, to make sure no participant was exposed to harm, such as harm to their careers or self-esteem, their personal details as well as any records related to the study were kept confidential. Further, all the participants were informed about the purpose of research and promised that all records were only to be used for this specific purpose and nothing else. To cover any potential risks that may have caused any participant, we ensured that all had the opportunity to read any individual record if they desired to do so. This concern was connected to the issue of potential lack of consent, which we answered to by providing all participants with the necessary information needed for them to make an informed decision to participate in the study or not (Bryman & Bell, 2011).

Moreover, as part of giving the participants all necessary information for consent, the participants were ensured the right to privacy. Thus, before the participants answered any questions they were all well informed about what the study was to entail, giving them the right to elaborate on what to express. Yet, an important notion regarding allowing the participants information regarding the purpose of the research was the potential effect of participants changing behaviour (Bryman & Bell, 2011). Thus, as a result, this was considered as a potential limitation to the choice of methodology.

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4. Empirical findings

In this section, we present our empirical findings concerning how middle managers practices are learnt among them horizontally, followed by their perception of ethical leadership. We further include the middle managers' perception of the organisational culture and its formal ethical structure. To begin with, a short introduction to Alpha and its formal structure is provided, followed by Table 3 presents a summary of our main empirical findings.

4.1. Introducing Alpha and its formal structure

Alpha operates globally within the tech industry and is a leading IT company in Sweden listed on the stock exchange. Alpha has an established ethical agenda to be an ‘ethical forerunner’, which they also communicate externally in its Sustainability Report 2018. By being an ethical forerunner the company intends to be an employer that creates sustainable value and possibilities for their employees to contribute to the ethical good of the society. When studying the Sustainability Report of Alpha we identified that the company’s interest in ethical issues has remained a highlighted topic for at least five years behind. However, the number of times concepts such as ‘ethical culture’, ‘employee engagement’ and ‘employee experience’ are used show a considerable increase in the more recent Sustainability Report compared to the Sustainability Report in 2014. A similar increase of mentionings was identified among concepts such as ‘diversity’, ‘equality’, ‘equal opportunities’ and ‘inclusion’ during the five -year period, which indicates an enhanced focus on how the company works with ethics from an external perspective (Sustainability Report, 2014; 2018).

Our empirical findings identify that the company works according to formal ethical structures that proactively and reactively deal with ethical issues related to employee, customer and supplier conduct. The ethical structure constitutes of, for instance, a code of conduct, leadership training and other formal procedures and policies concerning organisational ethics. These are externally communicated in the organisation’s sustainability and annual reports. The main ethical values of Alpha circulate around inclusion, where equality and diversity are essential components for the company to succeed in their industry. Alpha further states that their ethical work regarding these queries is a continuous process to become more distinct and better in these areas (Sustainability Report, 2018). One example is that the organisation conducts materiality analyses in order to evaluate which area within sustainability to push for, which further lay a foundation behind the choice of their formal communication of being an ‘ethical

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forerunner’. Internal and external audits are done additionally to ensure that any policies, laws and regulations are followed (Sustainability Report 2014;2018).

In the following sections, we capture the middle managers’ perspective of how practices related to ethical issues are discussed and dealt with between other middle managers. We further take into account their opinions of how the formal structure and culture of the organisation affects their ability to be an ethical leader operating on a mid-level. All main findings of the empirica l data are summarized in the table below (see Table 3).

Table 3: Main empirical findings

Main category Subcategory Main findings

Ethical Leadership on the Horizontal Scene: A Case Study on Middle Managers in the Tech Industry