The need for ethical leadership in combating corruption

Abstract

In this article, we empirically assess the role of ethical leadership in reducing corruption. We also examine whether the effectiveness of ethical leadership in curbing corruption depends on the quality of the reward system in public organizations. We focus on two related components of the reward system: the use of performance-based rewards and procedural fairness. Using data collected through a survey of 741 employees in 154 government and non-profit organizations in Pakistan, we find a negative association between ethical managerial leadership and reports of corruption. We also find that the use of performance-based rewards is associated with fewer incidences of corruption, and that the negative relationship between ethical leadership and corruption is stronger when employees report low levels of procedural fairness. We discuss the implications of these findings for research on and strategies for combating corruption in public organizations. Points for practitioners Ethical managerial leadership can reduce corruption in public organizations in developing countries. The need for ethical leadership is particularly high in organizations that are yet to establish a fair reward system. Moreover, to reduce incidences of unethical behavior and promote ethical behavior, managers in public organizations in developing countries should communicate ethical standards clearly, encourage subordinates to make decisions in an ethical manner, and hold subordinates accountable for unethical conduct.