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Linking ethical leadership and Linking ethical

leadership and
ethical climate to employees’ ethical climate

ethical behavior: the moderating

role of person–organization fit
Hussam Al Halbusi Received 27 September 2019
Revised 29 September 2019
Business Policy and Strategy, Universiti Malaya, Kuala Lumpur, Malaysia 22 November 2019
Kent A. Williams Accepted 29 March 2020

Faculty of Management, Dalhousie University, Halifax, Canada

Thurasamy Ramayah
Universiti Sains Malaysia, Penang, Malaysia;
Internet Innovation Research Center, Minjiang University, China and
Universiti Tunku Abdul Rahman (UTAR), Malaysia, and
Luigi Aldieri and Concetto Paolo Vinci
University of Salerno, Fisciano, Italy

Abstract
Purpose – With the growing demand for ethical standards in the prevailing business environment, ethical
leadership has been under increasingly more focus. Based on the social exchange theory and social learning
theory, this study scrutinized the impact of ethical leadership on the presentation of ethical conduct by
employees through the ethical climate. Notably, this study scrutinised the moderating function of the person-
organisation fit (P-O fit) in relation of ethical climate and the ethical conduct of employees.
Design/methodology/approach – To evaluate the research hypotheses, two-wave data were collected from
295 individuals who are currently employed in various Iraqi organizations (i.e. manufacturing, medical and
insurance industries).
Findings – In line with the hypotheses, the outcomes from a sample of 295 workers working in different Iraqi
entities exhibited a positive relation between the ethical behaviour of leaders and the ethical conduct of
employees in the ethical climate. Moreover, it was observed that the P-O fit of employees moderated the
relationship between ethical climate and the ethical conduct of employees such that the relationship was more
robust for those with a high P-O fit in comparison to those with a low P-O fit.
Research limitations/implications – The primary limitation of this study is in the data, which was obtained
from a single source. Although the study conducted two surveys and utilised a mediation and moderation variables
model that was less likely to be influenced by common method bias (CMB) (Podsakoff et al., 2012), one cannot
completely rule out CMB. Apart from the potential effects of the CMB, the consistency of the empirical findings
could have also been compromised since self-reported data were utilised in measuring ethical behaviour, which can
be a very complex and sensitive issue. For this reason, the social desirability response bias cannot be ruled out
completely. When possible, future studies must gather data from multiple sources. Furthermore, supervisors must
evaluate the ethical behaviour of employees. Another limitation was that the findings of this study were based on a
sample in a Middle Eastern cultural context such as in Iraq. Perhaps, the particular cultural features of this context,
which encompassed, among other things, a strong adherence to religious values (Moaddel, 2010), could have
influenced the findings of this study. It is true that the effects of differences (P–O fit) are highly likely to replicate
across cultural contexts (Triandis et al., 1988). However, it can be seen that further studies are needed to evaluate the
context-sensitivity of these findings (Whetten, 2009) by analysing other cultures, where the importance of
religiosity is on the decline (i.e. in Western countries, Ribberink et al., 2018) or where the cultural features are very
much different from those that apply to Iraq. Lastly, other external factors were not taken into account by this study
as it tried to explain ethical behaviour. Ethics is a highly complex subject and is influenced by numerous variables
at the organisational, individual and external environment levels. Thus, caution must be observed when making
inferences from the present study which, to a certain degree, offered a simplified version of ethical behaviour by
Personnel Review
© Emerald Publishing Limited
0048-3486
Funding: This work was not funded. DOI 10.1108/PR-09-2019-0522
PR concentrating on a few variables such as the Arab culture’s traditional ideology, which dominates even science
(Abu Khalil, 1992). In addition, there are the political conflicts in the Middle Eastern cultural context such as what is
happening in Iraq (Harff, 2018). Thus, it is important to include such aspects in future researches.
Practical implications – In terms of management, the findings send a clear signal to those in the upper
echelon that, without ignoring the issue of ethics in organizations, employees are a critical aspect to be taken
into account to encourage ethical behaviour at the workplace. This study has important practical implications.
First, this study determined that ethical leadership (here, of the supervisors) positively influences the behaviour
of subordinates (refers to the supervisors here); this in turn further improves the ethical behaviour of
employees. It is vital that managers or supervisors are motivated to practice ethical leadership because they
directly influence the employees. It has been suggested that top managers, especially chief executive officers,
have the ability to shape the ethical climate, which also influences the ethical behaviour of employees further.
This study offered several feasible ways that managers can apply to achieve that. In particular, top managers
may utilise the ethical climate as a way of communicating the ethical values that they have to their
subordinates, thereby serving as a motivation for the subordinates to adopt an ethical behaviour. It was also
suggested by this study that ethical climate and the P–O fit may, to some degree, substitute each other as they
influence the ethical behaviour of employees. Therefore, firms that were identified to have a low level of ethical
standards, practices, and policies, at least from the employees’ perspective, are better poised to conduct ethical
issues in order to construct the ethical behaviour of their subordinates. More importantly, it is highly essential
that the value congruence between an organization and its followers be considered.
Social implications – This study highlighted the notion of ethics and how it’s essential for society. Ethics
refer to the norms, standards, and values that direct the behavior of an individual. Ethical behaviour is vital in
society because we need to be treated with respect as human beings.
Originality/value – This study responds to recent calls for more research to identify factors which may
strengthen or mitigate the influence ethical behavior in the workplace such as ethical leadership, ethical climate
and Person–Organization.
Keywords Ethical leadership, Ethical climate, Person–organizationfit, Ethical behaviour, Social exchange
theory, Social learning theory
Paper type Research paper

1. Introduction
Researchers, organizations, governments and practitioners have been under pressure due to
incidents of ethical scandals in recent years (Manz et al., 2008; Mehta, 2003; Brown and Trevi~ no,
2014; Trevi~ no et al., 2014; Al Halbusi, et al., 2017). Due to ethical issues and concerns in corporations
such as the National Irish Bank and Enron, researchers and analysts across the world have
observed that people with compromised ethical behaviour are likely to focus on and achieve their
personal goals and desires at the cost of organisations or corporations (Padilla et al., 2007;
Schaubroeck et al., 2007). As highlighted by Trevi~ no and Brown (2004), ethical and unethical
behaviour have existed been int have been in existence since the beginning of human civilisation.
Practitioners and academicians have increasingly raised an important query linked with
the role of ethical leadership (Brown and Trevino, 2006; Neubert et al., 2009; Mayer et al., 2009;
Trevi~ no et al., 2014). Leaders are bound to exhibit a high level of ethical behaviour and have
the highest moral standards when it comes to actions, behaviour and decision-making. This is
necessary so that they can set an ideal example for their followers or team members to emulate
(Ofori, 2009). In earlier studies on ethical leadership, the significance of considering the role of
ethical leadership was apparently specified to analyse the ethical behaviour of employees
(Brown et al., 2005; Ofori, 2009; Newman et al., 2015; Neves et al., 2018; Al Halbusi et al., 2019b).
It has been thoroughly highlighted in the literature that an organisation’s ethical atmosphere
or climate has a substantial impact on the ethical behaviour of its employees (Luria and Yagil,
2008; Deshpande and Joseph, 2009; Trevi~ no et al., 2014; Al Halbusi and Amir Hammad Hamid,
2018). There is considerable influence of the ethical climate of the organisation on the ethical
behaviour of employees (Elçi and Alpkan, 2009; Engelbrecht et al., 2017; Aryati et al., 2018).
Because subordinates perceive the existing ethical climate to impact organisational policies,
procedures for decision-making and the payment system, they are likely to offer services and act
well in the organisation when the ethical atmosphere in the organisation is strong (Weeks et al.,
2004; Lu and Lin, 2014; Demirtas and Akdogan, 2015; Al Halbusi and Tehseen, 2017).
 In recent years, literature has broadly deliberated on the impact of ethical leadership and Linking ethical
ethical climate in the workplace. In recent studies, Lu and Lin (2014), Demirtas and Akdogan leadership and
(2015) and Aryati et al. (2018) studied the mediating role of ethical climate in the relationship
between the ethical leadership and ethical behaviour of employees. However, despite studies
ethical climate
on how the relationship between ethical leadership and ethical climate affects the ethical
behaviour of employees, previous examinations have failed to take into account the condition
or the boundary variables on this relationship. However, this study proposes that the person-
organisation fit (P-O fit) has a vital moderating role on the relationship between the ethical
climate and ethical behaviour of employees. This research has both theoretical and practical
significance as it gives insights into what ethical leaders can actually do to affect the
behaviour of employees. It also provides indicator of how organisations can put an emphasis
on ethical climate. More importantly, it demonstrates the contingent role of P-O fit and how it
contributes to the decision of employees to engage in ethical behaviour.
Furthermore, according to Van Wyk (1989) human resource management is the creation of
an environment where people strive to do their best, where opportunities are equally
distributed, where initiatives are encouraged and the conditions for success are created.
However, management in the traditional paradigm is based on rules and regulations and the
control of input and output. The new paradigm is based on shared leadership and a shared
vision, honesty and transparency shaping (ethical climate) is very crucial for the employees
inside the organization and for stakeholders. A deep awareness of the necessity for shared
vision and transparency is the core of the new and future paradigm in education (Brown et al.,
2005; Woodrow and Guest (2014). Moreover, value congruence is significant, as an
implementation of the person-environment viewpoint in organisational settings (Terborg,
1981). P-O fit has usually been considered as the extent of congruence between employees and
organisational norms, beliefs, values (Chatman, 1989) and goals (Kristof-Brown et al., 2005).
In essence, this study aimed to investigate the mediating role of ethical climate on the
relationship between ethical leadership and the ethical behaviour of employees. Most
importantly, this study examined the moderating P-O fit on the relationship between ethical
climate and ethical behaviour of employees. Furthermore, no similar studies have been
conducted on Middle Eastern cultures, such as the culture of Iraq. Often Iraqi organizations
have a strong focus on profits, and it can be suggested they lack development in moral values,
principles, and code of ethics (Al Halbusi et al., 2019a). After April 2003, the Iraqi economy
collapsed due to the misconduct, mismanagement, corruption and misuse of power (Khalil,
2016). Organizations in bureaucratic state systems are perceived to be underdeveloped in
many administrations, damaging Iraq’s international trust in economic activities and
developments. This prevailing perspective suggests that Iraqi organizations must take
actions to enhance ethical standards, achieve high productivity, so as to be effective and
efficient, and to increase competitive advantages in the world market. We discuss the major
constructs of our theoretical model below, which may help to minimize these issues.

2. Theory
2.1 Theoretical framework
Two theories advocated by Brown and Trevi~ no have framed our study. With respect to the
understanding of ethical leadership and its consequences on the employees and the
environment, Brown and Trevi~ no (2006) have supported two theoretical frameworks, namely
social learning theory (SLT) (Bandura, 1986) and social exchange theory (SET) (Blau, 1964).
Social learning theory focuses on the antecedents and outcomes of ethical leadership and
suggests that individuals learn the norms of appropriate conduct in two ways: through their
own experience, and by observing others (Bandura, 1986). Generally, in learning such norms,
individuals pay attention and consider reliable and role models (Brown and Trevi~ no, 2006).
PR Ethical leaders are considered as role models or ethical leaders when they display integrity
and high standards of ethical behavior in the workplace for themselves, as well, as for others
(Brown et al., 2005). Thus, employees are more probable to emulate and adopt the value-
driven behaviors of their role model ethical leader (Brown and Trevi~ no, 2006). Role modeling
impacts ethical behavior through motivational and informational means (Bandura and
Walters, 1977). Leaders who are role models inspire ethical behavior by establishing the type
of activities they desire to encourage and reward. Leaders, also, assist as informational
leaders for appropriate behaviors.
Furthermore, researchers have suggested that followers’ behaviors can be formed
through the social exchange theory (Blau, 1964). Social exchange theory proposes that the
norms of reciprocity or perceived obligation prompt favors that undergird many social
relationships (Blau, 1964; Gouldner, 1960). Based on the social exchange theory, when
individuals perceived a leader and the organization’s practices (ethical climate) as caring and
concerned for their well-being, they felt more committed to reciprocity with positive behavior.
In line with these arguments, this study argued that ethical leaders and the organization
procedures cause feelings of trust and fairness in their followers, and at an established
workplace where the subordinates will probably reciprocate with positive behavior (Brown
and Trevi~ no, 2006; Brown et al., 2005). Hence, this study has used as a model for its research
the social learning theory and social exchange theory.

2.2 Ethical leadership and ethical behaviour

As per Brown et al. (2005), ethical leadership can be described as “the demonstration of
normatively appropriate conduct through personal actions and interpersonal relationships,
and the advancement of such conduct to the followers through two-way communication,
reinforcement, and decision making” (p. 120). Therefore, ethical leadership characterizes
integrity, which involves being fair and trustworthy, having concern for others, and acting in
an ethical manner (Trevi~ no et al., 2000; Mayer et al., 2009; Ofori, 2009). Trevi~
no et al. (2000) and
Brown et al. (2005) stated that ethical leadership has two dimensions: (1) a moral personal
factor, which includes integrity, fairness, concern for others and trustworthiness and (2) a
moral manager factor, which includes role modelling ethical conduct, punishing,
communicating and rewarding, and determining ethical standards. Mayer et al. (2009) and
Lin et al. (2019) have therefore stated that the focus of a moral manager is more on
transactional efforts that affect the ethical behaviour of employees.
Khuntia and Suar (2004) posit that motivating and empowering subordinates should be
vital features of ethical leadership. According to Brown et al. (2005), the dimensions of ethical
leadership include responding to communications, modelling behaviour, showing concern,
treating employees fairly, listening to employees, and fostering trust. Furthermore, ethical
leadership dimensions must also include power sharing, morality and role clarification (De
Hoogh and Den Hartog, 2008).
Ethical leadership is a crucial element for ethical behaviour inside an organisation (Stead
et al., 1990; Mayer et al., 2009). It has been previously indicated that leaders are a vital
organisational element that has a significant effect on the ethical behaviour of employees
(Stead et al., 1990; Brown et al., 2005; Trevi~ no et al., 2014; Meyer et al., 2019; Presbitero and
Teng-Calleja, 2019). Ethical managers possess positive personal attitudes and aim to
influence their employees through the active management of ethical conduct. An ethical
leadership displays regulated conduct in personal relationships within the organization that
is directed towards strengthening and improving the ethical behaviour of employees. Socio-
emotional exchange is a factor where ethical leaders can influence their subordinates (Mayer
et al., 2009; Lu and Lin, 2014; Dimitriou et al., 2018). A socio-emotional exchange refers to a
behaviour that builds fairness and trust between employees and leaders (Blau, 1964). When
employees feel that that they are being treated fairly by their leaders, they will believe that
behaviour of their leaders is advantageous to the whole organisation. As a result, they will be Linking ethical
less likely to act in an unethical manner (Mayer et al., 2009; Trevi~ no et al., 2014). leadership and
It has been indicated by previous empirical studies that ethical leadership significantly
influences the ethical behaviour of employees (Dickson et al., 2001; Mayer et al., 2009; Brown
ethical climate
et al., 2005; Ofori, 2009). It has been demonstrated by more recent empirical researches that
ethical leaders have a vital part in affecting the ethical behaviour of employees through their
day- to- day communication with their followers (Brown et al., 2005; Ruiz-Palomino et al., 2011;
Lu and Lin, 2014; Neves et al., 2018; Moore et al., 2019). The behaviour of employees may
change through the standards and guidance provided by their leaders. Thus, the research
hypothesis was developed based on this argument.
H1. Ethical leadership has a positive effect on the ethical behaviour of employees.

2.3 Mediating effect of ethical climate

According to Victor and Cullen (1988), ethical climate can be defined as the “prevailing
perceptions of typical organisational practices and procedures that have ethical content” (p.
101). Also, the ethical climate of an organisation includes the normative beliefs and values
about the moral issues that the employees of that organization share (Trevi~ no et al., 1998
p. 453).
As previously stated, ethical leaders can have a strong influence on the ethical behaviour
of employees. Furthermore, ethical leaders are vital components in the development of the
ethical climate (Mayer et al., 2009; Brown and Trevi~ no, 2006). Empirical evidence has
indicated that ethical leaders can vitally affect and develop an ethical climate (Dickson et al.,
2001; Schminke et al., 2005; Mayer et al., 2009; Kang, et al., 2011). Leaders are able to set an
organisation’s ethical standards through procedures, processes, and policies that help enable
the employees’ perceptions of the ethical climate within the organisation (Mayer et al., 2009;
Demirtas et al., 2015). Schminke et al. (2005) showed consistently in their empirical research
that a leader’s morals combined with factors such as the regulations of the organization,
orientation towards caring, orientation of the regulations, and independent judgments, are
linked to the ethical climate in the organization. Therefore, it has been strongly suggested by
some other studies that an ethical leadership has a vital influence on the ethical climate
(Mayer et al., 2009; Engelbrecht et al., 2005; Lu and Lin, 2014). On the other hand, the ethical
climate has received great attention in the literature as a factor with high potential to
influence employees’ ethical behavior positively (Deshpande and Joseph, 2009; Lu and Lin,
2014). An ethical climate is associated with perceptions of trust, responsibility and high moral
standards regarding perceived rightness or wrongness (Luria and Yagil, 2008). Furthermore,
it enforces practices, policies and procedures with strong ethical content through which it
signals that “doing the right thing” is highly expected, encouraged, and valued (Trevi~ no et al.,
2014). Thus, the ethical leadership of immediate managers can shape ethical climate
perceptions of direct reports, which in turn should make these employees to perceive
procedures and practices that initiate and reinforce the development of ethical behavior in the
workplace (Mayer et al., 2009; Lu and Lin, 2014).
As asserted above, we suggested that the ethical climate is a key mechanism on the
relation of ethical leadership behaviour and the ethical behaviour of employees. Justifications
have been given for the utilisation of ethical climate as a mediator in the current study. Firstly,
an organisation sets its ethical standards by formulating policies, practices, and processes
that assist in the facilitation of employees’ perceptions of the ethical climate of the
organisation. The perceptions that employees have of the ethical climate are affected by the
practices and policies that the management emphasises, and the way in which the employees
receive them. An ethical climate also signifies that ethical decisions are taken in terms of
practices and procedures. Furthermore, it also gives consideration to “what is the right thing
PR to do” in terms of ethical norms, conducts regular communication with subordinates about
ethics, and rewards or punishes employees based on ethical principles. Thus, the ethical
climate standards explain to employees that maintaining ethics is a vital organizational
outcome (Brown et al., 2005; Mayer et al., 2009). Secondly, ethical climate is seen to be related
to perceptions of responsibility, trust, and high moral standards in terms of a perceived
wrongness or rightness within the organisation (Luria and Yagil, 2008; Bell et al., 2003). It has
been demonstrated by previous studies that an unethical environment may lead to significant
negative consequences in terms of employee behaviour within organizations (Jaramillo et al.,
2005). Specifically, it is expected for the ethical climate to enforce policies, practices, and
processes that aim to uphold the ethical behaviour of employees. Thirdly, it values,
encourages, and expects an ethical climate with processes, measures, and policies that tell
employees that they are doing the right thing. As a result, employees are more inclined to
perceive an ethical organisational environment (Mayer et al., 2009). Moreover, an ethical
climate that possesses clear practices, standards, and procedures shows followers how to be
skilful in acknowledging ethical issues and helps them manage ethical issues. Furthermore,
for subordinates receiving such signals, the ethical climate they perceive is clear and vital in
the maintenance of high ethical standards without the added pressure of sacrificing ethical
conduct just to achieve business objectives. In such circumstances, it is more likely for them to
act with better behaviour.
It has been stated by numerous empirical researches that the leaders of an organisation
influence an ethical work environment. For example, Schminke et al. (2005) investigated the
relationship between the morals of the leaders and ethical climate of an organisation. Their
findings reveal that the morals of a leader are related to the ethical climate of an
organisation. Besides, a consistent relationship exists between ethical leaders and an
ethical climate (Engelbrecht et al., 2005). Furthermore, more recent empirical studies have
revealed that ethical leadership positively influences the ethical climate (Neubert et al.,
2009; Lu and Lin, 2014; Demirtas et al., 2015; Choi et al., 2015). Essentially, when ethical
leader’s role-model appropriate behaviour, it helps them set standards for an ethical climate
that values doing the right thing. Consequently, it will help employees perceive the policies
and procedures of an organisation being of an ethical climate, which in turn is a motivation
for them to display and act with better behaviour (Brown et al., 2005; Mayer et al., 2009; Lu
and Lin, 2014). Thus, this study examined these relationships by recommending that an
ethical climate is the primary mechanism between the ethical behaviour of employees and
ethical leadership.
H2. An ethical climate is a mediator of the relationship between ethical leadership and the
ethical behaviour of employees.

2.4 Moderating role of person–organization fit

Mixed findings have been obtained regarding the influences of an ethical climate on the
employees’ behaviour. For example, it was stated by Demirtas and Akdogan (2015) and Lu
and Lin (2014) that an ethical climate positively affects the ethical behaviour of employees.
Alternatively, it was demonstrated by several studies that there are inconsistent outcomes for
the relationship between ethical climate and ethical behaviour among employees (Deshpande
and Joseph, 2009; Duh et al., 2010; Jahantigh et al., 2016). These mixed findings indicate that
ethical climate may have varying effects on the ethical behaviour of employees, based on the
situation or context, such as the followers’ characteristics (Yukl, 2010; Yun et al., 2006).
Therefore, this study suggested that the ethical climate can have varying effects based on the
followers’ characteristics, particularly the person-organisation fit (P-O fit) of the followers.
Person-organization (P-O) fit has been defined in various ways as value congruence, goal
congruence, the match between employees’ needs and reinforcers available in the work
environment, as well as the match between the personality of the individual and the Linking ethical
characteristics of the organization (Chatman, 1991; McCulloch and Turban, 2007; Chatman, leadership and
1989) defined P-O fit as the congruence between the norms and values of organizations and
the values of persons. This definition refers to a value-based congruence between employee
ethical climate
and the organization. P-O fit can be defined as to how an individual’s matches an
organization’s values, goals, and mission (Lauver and Kristof-Brown, 2001, p. 455). According
to the literature, high P-O fit leads to more successful and competitive organizations and
employees (Boxx et al., 1991; Chatman, 1989, 1991; Meglino et al., 1989; O’Reilly et al., 1991).
There are many positive effects of high congruence between person and organization both for
employees and organizations. A greater degree of P-O fit has been shown to be related to
multiple organizational outcomes including enhanced organizational commitment, increased
productivity, and employees’ ethical behaviour (Van Vianen, 2001; Ruiz-Palomino et al., 2013).
Since it is likely that the relationship between the ethical climate and ethical behaviour of
employees will be generalizable across settings and non-zero (Kish-Gephart et al., 2010), the
strength of the association is projected to significantly shift as a function of the way in which
one measures and conceptualises the ethical climate. Apart from this, in this study the
aforementioned literature about the role of different types of value congruences was raised in
this study (e.g. Liedtka, 1989; Valentine et al., 2002; Elango et al., 2010; Kristof-Brown et al.,
2005) to posit that the overall P-O fit significantly influences organisational outcomes.
As an implementation of the person-environment viewpoint in organisational settings
(Terborg, 1981), P-O fit has usually been considered as the extent of congruence between
employees and organisational norms, beliefs, values (Chatman, 1989), and goals (Kristof-
Brown et al., 2005). The importance associated with the extent of P-O fit is consistent with
various theoretical frameworks, which include the theory of cognitive dissonance (Festinger,
1957). When implemented in the work environment, this theory states that the resulting
dissonance would produce negative work and organisational results when employees
perceive a meaningful inconsistency between their values and norms, and those of the
organisation. On the other hand, a high degree of overall P-O fit can potentially satisfy human
desires, needs, and preferences (Chatman, 1989; Kristof, 1996). It can therefore produce
positive subjective experiences (Vilela et al., 2008), which include positive behaviour (Verquer
et al., 2003; Kristof-Brown et al., 2005; Ruiz-Palomino et al., 2013).
More importantly, the P-O fit construct can also be applied to contexts where the fit has a
narrower definition to refer to perceived ethicality differences between employees and the
organisations they belong to. It has been previously noted that there is no proof that different
kinds of value incongruences can influence the ethical behaviour of employees (Liedtka, 1989;
Elango et al., 2010). For instance, Liedtka (1989) reported that moral incongruence, which can be
found either among the individual’s values or among the values that are experienced within the
organisation, negatively impact ethical decision- making. This agrees with the belief that
perceived value differences between employees and the organisation can be seen on as a poor
overall P-O fit, which translates into lower ethical behaviour. Analogously, it was discovered by
Elango et al. (2010) that in the context of international business, ethical behaviour was observed
to be highest in the subset of a sample both the individuals and their organizations have high
scores on evaluations of ethics. Lastly, when seen from the perspective of a social learning
theory (Bandura and Walters 1977), it is reasonable for one to assume that ethical climate
practices and values (for example) have a good impact to the degree that the behaviours being
shown coincide with the values of the employees. In general, ethical climate can have varying
effects on the ethical behaviour of employees as a function of the apparent overall P-O fit. Thus,
the following hypothesis was formulated with this as the basis (see Figure 1).
H3. There will be a stronger relationship between an ethical climate and the ethical
behaviour of employees for employees who possess a higher perceived P-O fit.
PR Employee Rating
(Time Point 2)

Person-Organization
fit

H2 H3

Employee Ethical
Ethical Leadership Ethical Climate
Behavior

H1

Employee Rating Employee Rating Employee Rating

(Time Point 1) (Time Point 1) (Time Point 2)

Figure 1. First-Order Construct

Proposed research
framework Second-Order Construct

3. Research method
3.1 Sample and procedures
To evaluate the research hypotheses, two-waves data were collected from 295 individuals
who are currently employed in various Iraqi organizations (i.e., manufacturing, medical, and
insurance industries). Researchers chose this approach to collect data from various
organizations for several reasons. First, this approach gives an advantage due to the large
number of respondents compared to one or two organizations. Second, one clear advantage is
that data collected from distinct sector is more reflective of the broader population than data
collected in more restricted settings (one organization) (Zehir and Erdogan, 2011). Third, this
allows the researcher examining topics of a sensitive nature (e.g., ethical behavior) to receive
responses less inhibited by social desirability, which may influence the results (Al Halbusi
et al., 2019b).
Prior to conducting the survey, senior human resources were approached in each
organization to ask permission for the study: once permission was granted, the survey was
distributed. Survey packets containing the questionnaire, a prestamped envelope, and a
cover letter were sent to 295 employees. The covering letter explained the purpose of the
survey, assured the confidentiality of their responses, and requested that respondents
return the completed survey directly using the prestamped envelope. The refusal rate was
very low.

3.2 Measurement
All the item scales were adapted from previous studies. Since the respondents spoke
Arabic, the questionnaire had to be precisely translated from English to Arabic. A back-
translation was therefore conducted. This procedure has been extensively used to test a
translation’s precision within a cross-cultural survey (Brislin, 1980). First, the items were
translated into Arabic and then two bilingual speakers compared the translation with its
original English version to assess if any discrepancies in semantic equivalence occurred. If
a difference were detected, a cycle of retranslation and evaluation was repeated until no
further problems were detected by the two bilingual speakers. Finally, the agreement rate
of this process was high. Subsequently, in this study a pre-test and pilot test were Linking ethical
performed to ensure the validity of the survey before the primary data collection stage leadership and
(Memon et al., 2017).
3.2.1 Ethical leadership. Brown et al. (2005) developed the ethical leadership scale (ELS)
ethical climate
used in this study. The scale was made up of 10 items. The following is an example of an item:
“My supervisor listens to what employees have to say”. Respondents will respond through a
5-point Likert scale ranging from “1 5 Strongly Disagree” to “5 5 Strongly Agree”.
3.2.2 Ethical climate. Victor and Cullen (1988) developed the ethical climate scale used in
this survey. It is made up of 14 items that were all, also, utilised in this study. The following is
an example of an item: “In my organization, it is expected that you will always do what is right
for the customers and public”. The response is given in the form of a 5-point Likert scale that
ranges from “1 5 Strongly Disagree” to “5 5 Strongly Agree”.
3.2.3 Person-organisation fit (P-O fit). Measurement of the P-O fit was done with a four-
item scale. These items were taken from Cable and Judge 1996; Ruiz-Palomino et al., 2013).
The following is an example of an item: “I feel my values match or fit this organization’s
values”. The response given is through a 5-point Likert scale that ranges from “1 5 Strongly
Disagree” to “5 5 Strongly Agree”.
3.2.4 Employees’ ethical behaviour. Ethical behaviour pertains to the employees’ perceived
ethical behaviour within their organisations. Measurement of this variable was done
using sixteen items adapted from previous studies (Ferrell et al., 2000; Lu and Lin, 2014).
Ethical behaviour has two dimensions, namely, normative ethical and juridical ethical
behaviour. Since there was a relationship between the items under normative ethical
behaviour and the activities, the factor was thus classified to be a normative ethical
behaviour dimension. On the other hand, the juridical ethical behaviour dimension was
made up of six items. Because these items can be considered professional ethical-related
activities, the factor was thus classified as a juridical ethical behaviour dimension. Examples
of an item include “I use company services appropriately and not for personal use”. The
response is in the form of a 5-point Likert scale ranging from “1 5 Strongly Disagree” to
“5 5 Strongly Agree”.

4. Minimization of common method variance

Common method variance (CMV) is a vital concern of any research, particularly if data is
obtained from a common source or self-reported as in this study. Podsakoff et al. (2003,
2012) suggested some remedies that were used in this study for the minimisation of
common method bias. For example, the collection of the independent and dependent
variables was conducted at various times. To lessen the influence of common method
variance (CMV) two surveys were administered 3 weeks apart. This survey also introduced
a time lag to lessen consistency motifs. In the first wave, subordinates provided their
demographic information, assessed their immediate supervisors’ ethical leadership
behaviours and rated their perception of the ethical climate as well. Subsequently, three
weeks later in the second wave, the employees rated their PO fit and ethical behaviour. The
respondents were also provided with descriptions for every construct, with precise
directions on completing the assessment of the items in order to prevent any confusion. The
respondents were given assurance of the study’s academic nature as well as of the
confidentiality of their identities. They were also reminded that there were no incorrect or
correct answers in order to reduce evaluation apprehension. Both sets of surveys were
coded to confirm that the responses could be matched later. 350 questionnaires were
distributed in both waves. Out of these 350 surveys, only 295 were valid as a final set a total
of 84% representing the response rate. Finally, only 295 matched subordinate responses
were obtained across two-waves.
PR 5. Data analysis and results
This study utilised structural equation modelling via the partial least squares (PLS) method.
The research model was then analysed using the SmartPLS 3.2.6 software (Ringle et al., 2015).
This study utilised the two-stage analytical technique that Anderson and Gerbing (1988) and
Hair et al. (2017) recommended. It begins with the measurement model assessment (constructs
reliability and validity) and is followed by the structural model assessment (tests the
hypothesised relationships).

5.1 Demographic profile of respondents

This section includes the respondents’ demographic information, which was gathered using
SPSS version 23. As revealed, 75.9% of the respondents were males, and 24.1% were females.
In terms of age, the majority of the employees (43.4%) ranged from 31 to 40 years. With
regard to their educational background, the highest percentage of 56.6% represented people
who were bachelor’s degree holders. In terms of job experience, 38.0% of the employees had
been working for between 6-10 years. In terms of the type of organization, the highest score of
17.6% went to the insurance industry. The details are presented in Table 1.

5.2 Measurement model assessment

The measurement model was evaluated through construct validity (including discriminant
and convergent validities) and construct reliability. In terms of construct reliability, the
individual Cronbach’s alpha values were tested to evaluate the reliability of core variables in
the measurement model. Results indicated that all the individual Cronbach’s alpha values,
which ranged from (0.709–0.920), were more than the suggested 0.7 value (Nunnally and
Bernstein, 1994; Hair et al., 2017). Additionally, the composite reliability (CR) was used by this
study to test the construct reliability, which also gave the suggested value. Therefore, the
values obtained, which ranged from (0.869–0.930), were seen to be more than 0.7 (Hair et al.,
2017). This is an adequate signifier that the construct reliability was achieved, as
demonstrated in Table 2. Therefore, the CR and Cronbach’s alpha obtained for all the

Demographic item Categories Frequency Percentage

Gender Male 224 75.9

Female 71 24.1
Age Less than 25 Years 17 5.8
25–30 Years 66 22.4
31–40 Years 128 43.4
41–50 Years 60 20.3
More than 51 Years 24 8.1
Level of education High School 46 14.9
Diploma 47 15.9
Bachelor’s Degree 167 56.6
Master’s Degree 19 6.1
Doctorate Degree 16 4.4
Job experience 2 Years or Less 17 5.8
3–5 Years 60 20.3
6–10 Years 112 38.0
11–15 Years 31 10.5
16 Years or More 75 25.4
Organization type Manufacturing 99 25.4
Table 1. Medical organizations 103 38.0
Profile of respondents Insurance 93 23.6
 Second-
Linking ethical
First-order order Loading CA CR AVE leadership and
constructs constructs Items Items descriptions (>0.5) (>0.7) (>0.7) (>0.5) ethical climate
Ethical EL1 My supervisor listens to 0.636 0.911 0.926 0.558
Leadership what employees have to say
EL2 My supervisor disciplines 0.640
employees who violate
ethical standards
EL3 My supervisor conducts his/ 0.754
her work in an ethical
manner
EL4 My supervisor has the best 0.810
interests of employees in
mind
EL5 My supervisor makes fair 0.735
decisions
EL6 My supervisor can be 0.734
trusted
EL7 My supervisor discusses 0.752
business ethics or values
with employees
EL8 My supervisor sets an 0.811
example of how to do things
the right way in terms of
ethics
EL9 My supervisor defines 0.782
success not just by results
but also the way that they
are obtained
EL10 When making decisions, my 0.795
supervisor asks, “what is the
right thing to do?”
Caring EC1 What is best for everyone in 0.861 0.809 0.887 0.724
my organization is the major
consideration here
EC2 In my organization, it is 0.851
expected that you will
always do what is right for
the customers and public
EC3 In my organization, each 0.840
person is expected above all
to work efficiency
Independence EC4 In my organization, 0.910 0.709 0.871 0.772
employees are expected to
follow their own personal
and moral beliefs
EC5 In my organization, 0.846
employees are guided by
their own personal ethics
EC6 In my organization, Dropped Table 2.
employees are expected to Measurement model,
follow their own personal item loadings,
and moral beliefs construct reliability
and convergent
(continued ) validity
PR Second-
First-order order Loading CA CR AVE
constructs constructs Items Items descriptions (>0.5) (>0.7) (>0.7) (>0.5)

Law and Code EC7 In my organization, the law 0.822 0.774 0.869 0.689
or ethical code of their
profession is the major
consideration
EC8 Employees are expected to 0.863
comply with the law and
professional standards over
and above other
considerations
EC9 In my organization, 0.804
employees are expected to
strictly follow legal or
professional standards
EC10 It is very important to follow 0.828 0.771 0.857 0.749
Rules the organization’s rules and
procedures
EC11 Everyone is expected to 0.902
stick by organization’s rules
and procedures
Instrumental EC12 Employees are expected to 0.856 0.805 0.885 0.719
do anything to further the
organization’s interests,
regardless of the
consequences
EC13 In my organization, people 0.852
protect their own interests
above all else
EC14 Employees are expected to 0.835
do anything to further the
organization’s interests,
regardless of the
consequences
Ethical Caring 0.881 0.872 0.897 0.881
Climate
Independence 0.711
Law and Code 0.870
Rules 0.757
Instrumental 0.633
Person P-O Fit1 I feel my values match or fit 0.883 0.826 0.883 0.749
organization this organization’s values
fit P-O Fit2 My organization’s objective 0.749
reflects your own objectives
P-O Fit1 3 The personality of this 0.558
organization reflects your
own personality
P-O Fit1 4 My organization’s values Dropped
and culture provide a good
fit with the things that you
value in life

Table 2. (continued )
 Second-
Linking ethical
First-order order Loading CA CR AVE leadership and
constructs constructs Items Items descriptions (>0.5) (>0.7) (>0.7) (>0.5) ethical climate
Normative EEB1 I take responsibility for my 0.700 0.880 0.904 0.513
ethical own errors
behavior EEB2 I give credit to those who 0.596
deserve it
EEB3 I use company services 0.738
appropriately and not for
personal use
EEB4 I am open about my errors 0.773
EEB5 I conduct only company 0.705
business on company time
EEB6 I do not give gifts/favors in 0.740
exchange for preferential
treatment
EEB7 I keep confidential 0.771
information confidential
EEB8 I take the appropriate 0.664
amount of time to do a job
EEB9 I report others’ violation of Dropped
company policies and rules
EEB10 I lead my subordinates to 0.740
behave ethically
Juridical EEB11 I am careful with company 0.776 0.849 0.889 0.576
ethical materials and supplies
behavior EEB12 I request reimbursement 0.770
only for allowed expenses
EEB13 I come to work unless I am 0.570
sick
EEB14 I refuse gifts that are offered 0.748
for preferential treatment
EEB15 I take only the allotted/ 0.853
assigned personal time
(lunch hour, breaks)
EEB16 I complete time/quality/ 0.806
quantity reports honestly
Employees’ Normative 0.955
0.920 0.930 0.872
ethical Ethical
behavior Behavior
Juridical 0.912
Ethical
Behavior
Note(s): CA5 Cronbach’s Alpha, CR5 Composite Reliability, AVE 5 Average Variance Extracted; EEB9,
EC6, and P-O Fit4 were dropped due to the low loading Table 2.

constructs can be classified as sufficiently error-free. To test the reliability indicator, factor
loading was utilised. High loadings on a construct are indicators that the associated
indicators would seem to have a lot in common, in such a way that the construct was able to
capture them (Hair et al., 2017). For factor loadings, values higher than 0.50 were classified as
very significant (Hair et al., 2010, 2017). As seen in Table 2, the loadings for all the items were
more than the suggested value of 0.5, except for items EEB9, EC6 and P-O Fit4. These items
were removed from the scale because of low loadings. For the remaining items in the model,
the loading met all the requirements (see Table 2).
PR For testing the convergent validity (the degree to which a measure is positively correlated
to alternative measures of the same construct), the average variance extracted (AVE) was
used in this study. This is an indication that all the values of AVE ranging from (0.558–0.881)
were higher compared to the recommended value of 0.50 (Hair et al., 2017). For all constructs,
the convergent validity was met successfully, and an adequate convergent validity was
achieved, as presented in Table 2.
This study assessed the discriminant validity (the extent of differentiation of items among
constructs or the measure of individual concepts) using the heterotrait-monotrait (HTMT)
ratio criteria. This criterion was selected instead of the Fornell-Larcker criterion because there
have been some criticisms with regard to the latter. According to Henseler et al. (2015), the
Fornell-Larcker criterion fails to accurately reveal the absence of discriminant validity during
common research situations. The heterotrait-monotrait (HTMT) ratio of correlations was
proposed as an alternative technique based on the multitrait-multimethod matrix. Thus, the
discriminant validity was evaluated by this study through the HTMT ratio of correlations.
However, the discriminant validity encounters an issue when the HTMT value is more than
the HTMT0.85 value of 0.85 (Kline, 2010). As shown in Table 3, all the values were less than the
recommended value. This signifies that the validity of the discriminant had been determined.

Constructs EB EC EL POF

EB
EC 0.768
EL 0.632 0.647
Table 3. POF 0.454 0.592 0.433
Discriminant validity Note(s): Key: EB 5 Ethical Behaviour, EC 5 Ethical Climate, EL 5 Ethical Leadership, POF 5 Person-
via (HTMT criterion) Organization Fit

5.3 Structural model assessment

Hair et al. (2017) have recommended a particular criterion while evaluating the structural
model. This criterion involves examining the initial stage to the collinearity issue. The R2,
beta (β), and the corresponding t-values then follow through a bootstrapping procedure,
including a re-sample of 5,000. It was also recommended to report the predictive relevance
ðQ2 Þ and the effect sizes ðf 2 Þ as well. Sullivan and Feinn (2012) have posited that while the p-
value determines the existence of the effect, it does not reveal how big the effect is.

5.4 Hypothesis testing

The hypothesis testing provided the first indication of the direct effect, namely, that ethical
leadership significantly predicts ethical behaviour. Hence, H1 was accepted with (β 5 0.229,
t 5 4.083, and p < 0.000). The results are shown in Table 4.
For the mediation hypothesis (indirect effect), it was suggested by Hair et al. (2017) that
researchers should follow the technique of Preacher and Hayes (2004) and Preacher and
Hayes (2008) during the testing of the mediating effects. In this study, the test of the indirect
effect (mediation effect) of ethical climate had its basis in the method developed by Preacher
and Hayes (2004) and Preacher and Hayes (2008), which involves bootstrapping the indirect
effect. Table 5 presents the results obtained from the bootstrapping analysis.
The findings revealed that there was a significant indirect effect, with (β 5 0.275,
t 5 8.898, and p < 0.000). However, it was mentioned by Preacher and Hayes (2008) that when
the 0.275, 95% Boot CI: [LL 5 0.224, UL 5 0.352] and a 0 is not straddled in between,
mediation exists. Thus, one can conclude in this study that the mediation effect of the ethical
Hypothesis Relationship Std beta Std error t-value p-value LL UL Decision R2 f2 Q2 VIF

H1 EL ≥ EB 0.229 0.056 4.083 0.000 0.135 0.317 Supported 0.559 0.080 0.258 1.626
Note(s): VIF 5 Variance Inflation Factor
Source(s): EL ≥ EB 5 Ethical Leadership ≥ Ethical Behaviour
ethical climate
leadership and
Linking ethical

effect)
Path coefficients (direct
Table 4.
PR climate had statistical significance between ethical behaviour and ethical leadership. Hence,
the mentioned results also supported H2, as observed in Table 5.
In accordance with the goals of this study, the moderation test was the key contribution
for determining if the P-O fit moderates the relationship between ethical climate and
employees’ ethical behaviour. According to Hair et al. (2017, p. 271), “Moderation occurs when
the strength or even the direction of a relationship between two constructs depends on a third
variable”. Hence, the nature of the relationship varies as per the third variable’s value.
Furthermore, the moderator is considered an independent latent variable that affects the
direction or strength of the relationship between the dependent variable and predictor
variable (Baron and Kenny, 1986, p. 1174). Therefore, given the objective of this study, testing
was done on the moderation effect of the “P-O fit” and the relationship between the ethical
climate and ethical behaviour of employees. As stated earlier, the PLS bootstrapping method
with 5,000 re-samples was performed on the structural model to generate the t-values. Thus,
the results of the moderation analysis (β 5 0.160, t 5 2.490, p < 0.007), as presented in Table 6,
showed that H3 was supported.
Generally, it is not quite clear as to how a moderation analysis differs between a high and
low interaction. In other words, the size of the precise nature of this effect is not easy to define
from the analysis of the coefficient itself (Dawson, 2014). Thus, Dawson (2014) suggested that
this be followed up by an interaction plot. Hence, this study employed an interaction plot.
Based on the results and the interpretation of the plot, Figure 2 demonstrates the relationship
among the ethical climate, employees’ ethical behaviour, and the P-O fit. For the interaction
effect, the resultant graph illustrates that ethical climate and employees’ ethical behaviour
had a stronger positive relationship (the slope was more pronounced) when employees had a
higher P-O fit, which supports H3 (Figure 2). Therefore, ethical climate and employees’ ethical
behaviour had a stronger relationship when the employees possess a higher P-O fit more
than lower.
As stated earlier in the analysis section, the issue of collinearity is crucial with regard to a
structural model. Hair et al. (2017) state that there is a multi-collinearity issue when the largest
VIF has a value greater than 5. However, multicollinearity diagnostic is noted in Table 4 and
Table 6 through the VIF, which is an indication that no evidence of significant
multicollinearity exists among the exogenous constructs in the study since all the VIF
values were less than 5 ranged from 1.403 to 1.626). This signifies that the variations
observed in the exogenous constructs, and expounded on in the endogenous construct, did
not overlap.
In general, the values of R2 obtained an acceptable degree of explanatory power, as
suggested by Cohen (1988) and Chin (1998a, b). This accounts for the 0.617% variance in the
given research model which can be classified as a moderate-to substantial effect (Hair et al.,
2017). Also, the Stone-Geisser blindfolding sample reuse technique reveals Q2 is another
criterion that has to be assessed during a structural model analysis. This study investigated
the power of the proposed research model in terms of predictive relevance and through the
utilisation of the blindfolding procedure. Hair et al. (2017) recommended using the
blindfolding procedure only on endogenous constructs. If Q2 has a value greater than 0,
then there is a predictive relevance of the proposed model for a particular endogenous
construct (Fornell and Cha, 1994; Hair et al., 2017). Table 4 shows that the Q2 value was 0.258

Hypothesis Relationship Std beta Std error t-value p-value LL UL Decision

Table 5.
Mediating test (Indirect H2 EL ≥ EC ≥ EB 0.275 0.031 8.898 0.000 0.224 0.352 Supported
effect) Source(s): EL ≥ EC ≥ EB 5 Ethical Leadership ≥ Ethical Climate ≥ Ethical Behaviour
Hypothesis Relationship Std beta Std error t-value p-value LL UL Decision R2 f2 VIF

H3 EC 3 POF ≥ EB 0.160 0.064 2.490 0.007 0.114 0.276 Supported 0.617 0.047 1.403
Note(s): VIF 5 Variance Inflation Factor
Source(s): EC*POF ≥ EB 5 Ethical Climate*Person Organization Fit ≥ Ethical Behaviour
ethical climate
leadership and
Linking ethical

Interacting effects of

with ethical climate on

person-organization fit
Table 6.

behaviour
employees’ ethical
PR 5

4.5

Ethical Behavior
3.5

3 Low P–O fit

2.5 High P–O fit

Figure 2. 2
Interacting effects of P-
O fit with ethical 1.5
climate on the ethical
behaviour of employees 1
Low Ethical Climate High Ethical Climate

(greater than 0), which signified that the proposed model had an adequate predictive
relevance. Hair et al. (2017) suggested Q2 values of 0.35 (large), 0.15 (medium) and 0.02 (small)
to be used as relative measures of predictive relevance. Hence, this study revealed that the
endogenous construct exhibited a large predictive relevance.
In term of the effect size ðf 2 Þ, which can be used in determining whether an exogenous
latent construct has a weak, moderate, or substantial effect on an endogenous latent construct
(Gefen and Rigdon, 2011), it was recommended by Hair et al. (2017) that a test should be
conducted on the change in the R2 value. Cohen (1988) suggested a magnitude of f 2 at 0.02
(small effects), 0.15 (medium effects), and 0.35 (large effects), as guideline measures. Thus, as
indicated in Table 4 and Table 6, the f2 presented large effect sizes.

6. Discussion and implications

Ethics refer to the norms, standards, and values that direct the behaviour of an individual
(Trevi~
no et al., 2014; Bright et al., 2014). Ethical behaviour is vital in society because human
beings need to be treated with respect. As previously stated, the focus of earlier studies were
focused on the antecedents of the employees’ ethical behaviour to determine the factors that
would enhance ethical behaviour within an organisation and improve the relationship
between leaders and their subordinates (Brown et al., 2005; Mayer et al., 2009). Thus, this
study examined how the ethical behaviour of leaders is related to the ethical behaviour of
employees by using an ethical climate as the mediator. Most importantly, the current study
determined that the person-organization fit is an important moderator of the relationship
between ethical climate and employees’ ethical behaviour.

6.1 Theoretical implications

This study Contributes to the literature on ethical leadership and ethical behaviour of
employees in terms of the following aspects. Firstly, earlier studies in general, have observed
that perceived ethical leadership has a positive effect on the employees’ ethical behaviours
(e.g. Mayer et al., 2009; Lu and Lin, 2014). However, these studies were not able to identify the
underlying mechanism that connected perceived ethical leadership to the employees’ ethical
behaviours (Trevi~ no et al., 2014). Hence, this study was able to determine the relationship
between ethical leadership and employees’ ethical behaviours via the ethical climate as one of
the significant underlying mechanisms. Consequently, this study contributes to this limited
stream of research with findings that support and help generalize this relationship in another
country and context, which encompasses different ethnicities. Iraq is considered a
multicultural country which encompasses Arab (Suni and Shina), Kurds, Yazidis and other Linking ethical
ethnicities with important differences in terms of beliefs, religion, ideology, and identity (Al leadership and
Halbusi et al., 2019a), thus this study is a an asset for the generalization of this relationship
across different culture.
ethical climate
Secondly, this study was able to determine that the P-O fit is a vital boundary condition
for identifying the effect of ethical climate on the employees’ ethical behaviours. Even
though past researches have determined the link between the ethical climate and ethical
behaviour of employees, there are still several important questions that need to be addressed
(Ruiz-Palomino et al., 2013; Decoster et al., 2019). Thus, this study includes the P-O fit being a
vital moderator that reinforces ethical behaviour of employees. Therefore, this study
determined that ethical climate has a stronger effect on the ethical behaviour of employees
when the P-O fit is high. In other words, a high P-O fit better strengthens the relationship
between the ethical climate and ethical behaviour of employees. As expected, there was a
substantial change in the strength of the association as a function of the way in which the
organisation and the P-O fit congruence were linked. Moreover, the study utilised the logic of
the role that different types of value congruences play in order to posit that the overall
Person-Organization fit significantly influences organisational outcomes. Therefore, this
study also helps to confirm previous suggestions of P-O fit as a concept that influences the
relationship of contextual influences on the ethical behaviour of individuals (Ruiz-Palomino
et al., 2013).

6.2 Practical implications

In terms of management, the findings send a clear signal to those in the upper level that,
without ignoring the issue of ethics in organizations, employees are a critical aspect to be
taken into account to encourage ethical behaviour at the workplace. This study has
important practical implications. First, managers are considered as vital sources of ethical
behaviour which contributes to organisational success. This study revealed that ethical
leadership has a meaningful effect on the ethical behaviour of employees. This study
argued that as role models in their organizations who can engender relational attachments
and model ethical leadership behaviour, managers possess a moral authority that
virtuously affects the behaviour of the organisation’s members. Furthermore, several
important aspects Can be drawn from the results of this study. First, ethical leadership is a
key factor that affects the employees’ ethical behaviour. Thus, this should be taken into
consideration by Iraqi organisations. Iraqi businesses should therefore try to choose or
train ethical leaders, given how ethical leadership can improve the ethical behaviour of
employees. Options that organisations may consider can include hiring more ethical
leaders and offering existing leaders with more training. Examples of training topics
include supporting and rewarding employees who behave ethically, communicating the
importance of ethics, and leaders acting as role models of ethical behaviour (Demirtas, 2015;
Lu and Lin, 2014).
Secondly, as noted earlier, the statistical results signified that ethical climate plays an
important mediating role in the relationship between ethical leadership and employees’
ethical behaviour. According to Victor and Cullen (1988), an ethical work climate can be
defined as the “predominant perceptions about the procedures and practices of the
organization that have ethical content or the prevailing perceptions of typical organizational
practices and procedures that have ethical content” (p. 101). The generation of ethical
behaviour depends on multifactorial entities. Manager behaviour is one of the most
influential and important factors in fostering the ethical behaviour of employees. Therefore, it
has been also demonstrated by the results that creating an ethical climate within the
workplace is vital since an ethical climate has a positive relationship with the employees’
PR ethical behaviour. To enhance ethical conduct, organisations must have leaders who inspire
and exemplify ethical behaviour. Organizations should also implement systems that
discipline unethical conduct and reward ethical behaviour. It is suggested by this study that
Iraqi organizations must focus on the development of an ethical climate that puts emphasis
on the employees’ ethical behaviour by focusing on observing the law and professional
standards, and also emphasising public interest instead of self-interest (Trevi~ no et al., 1998).
Therefore, the vital indication given by the results of this study is that managers who possess
and exhibit ethical leadership qualities such as fairness and integrity; emphasise ethical
standards; support and reward employees who behave ethically; and become role models of
ethical behaviour are more capable of creating an ethical climate that values doing the right
thing. When employees operate in an ethical climate, they are more likely to engage in ethical
behaviour (Mayer et al., 2009; Trevi~no et al., 2014). Thus, this study revealed that within the
Iraqi context, leaders are able to improve ethical behaviour among employees by enhancing
the ethical climate. This can be done by enacting ethical rules and standards, demonstrating
the highest ethical behaviour inside the organisation, and establishing very clear ethical
standards. Fundamentally, an ethical climate is an important key facilitator of the
relationship between the ethical behaviour of employees and ethical leadership which needs
to be highly considered by the organizations.
Third, as previously mentioned, this study determined that ethical climate has a
stronger effect on the ethical behaviour of employees when the P-O fit is high rather than
low. The effect that ethical climate has on the employees’ ethical behaviour is dependent on
the P-O fit. In other words, a high P-O fit better strengthens the relationship between the
ethical climate and ethical behaviour of employees. Therefore, there was a significant
change in the strength of the association as a function of the way in which the organisation
and the P-O fit congruence are linked. Furthermore, the study utilised the reasoning of the
role that different types of value congruences play in order to posit that the overall Person-
Organization fit significantly influences organisational outcomes. Consequently, as an
exemplification of the person-environment standpoint within organisational situations, the
P-O fit has normally been described as the extent of congruence between employees and
organisational norms, beliefs, values (Chatman, 1989), and goals (Kristof-Brown et al.,
2005). A high degree of overall P-O fit can potentially meet human needs, preferences, and
desires (Chatman, 1989; Kristof, 1996). As a result, these produce positive subjective
experiences (Vilela et al., 2008), such as positive behaviour (Verquer et al., 2003; Kristof-
Brown et al., 2005). Therefore, there is a need for Iraqi organisations to highly consider the
congruence of value between employees and organisational values, norms, and goals in
order to obtain a strategic, sustainable and positive behaviour on their employees’ parts.
Thus, it was also suggested by this study that the ethical climate and the P-O fit may, to
some degree, substitute for each other as they influence the ethical behaviour of employees.
Therefore, firms that were identified to have a low level of ethical standards, practices, and
policies, at least from the employees’ perspective, are better poised to conduct ethical issues
in order to construct the ethical behaviour of their subordinates. More importantly, it is
highly essential that the value congruence between an organization and its followers be
considered.

7. Limitations and future studies

The primary limitation of this study is in the data, which was obtained from a single source.
Although the study conducted two surveys and utilised a mediation and moderation
variables model that was less likely to be influenced by common method bias (CMB)
(Podsakoff et al., 2012), one cannot completely rule out CMB. Apart from the potential effects
of the CMB, the consistency of the empirical findings could have also been compromised since
self-reported data were utilised in measuring ethical behaviour, which can be a very complex Linking ethical
and sensitive issue. For this reason, the social desirability response bias cannot be ruled out leadership and
completely. When possible, future studies must gather data from multiple sources.
Furthermore, supervisors must evaluate the ethical behaviour of employees.
ethical climate
Another limitation was that the findings of this study were based on a sample in a Middle
Eastern cultural context such as in Iraq. Perhaps, the particular cultural features of this
context, which encompassed, among other things, a strong adherence to religious values
(Moaddel, 2010), could have influenced the findings of this study. It is true that the effects of
differences (P-O fit) are highly likely to replicate across cultural contexts (Triandis et al., 1988).
However, it can be seen that further studies are needed to evaluate the context-sensitivity of
these findings (Whetten, 2009) by analysing other cultures, where the importance of
religiosity is on the decline (i.e., in Western countries, Ribberink et al., 2018) or where the
cultural features are very much different from those that apply to Iraq.
Lastly, other external factors were not taken into account by this study as it tried to explain
ethical behaviour. Ethics is a highly complex subject and is influenced by numerous variables
at the organisational, individual and external environment levels. Thus, caution must be
observed when making inferences from the present study which, to a certain degree, offered a
simplified version of ethical behaviour by concentrating on a few variables such as the Arab
culture’s traditional ideology, which dominates even science (Abu Khalil, 1992). In addition,
there are the political conflicts in the Middle Eastern cultural context such as what is happening
in Iraq (Harff, 2018). Thus, it is important to include such aspects in future researches.

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Further reading
Salin, D. (2009), “Organisational responses to workplace harassment: an exploratory study”, Personnel
Review, Vol. 38 No. 1, pp. 26-44.
Sims, R.L. and Keon, T.L. (2000), “The influence of organizational expectations on ethical decision- Linking ethical
making conflict”, Journal of Business Ethics, Vol. 23 No. 2, pp. 219-228.
leadership and
Vlachos, P.A., Panagopoulos, N.G. and Rapp, A.A. (2014), “Employee judgments of and behaviors
toward corporate social responsibility: a multi-study investigation of direct, cascading, and
ethical climate
moderating effects”, Journal of Organizational Behavior, Vol. 35 No. 7, pp. 990-1017.

Corresponding author
Hussam Al Halbusi can be contacted at: hussam.mba@gmail.com

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