Does Ethical Leadership Matter in Indonesia’s Public Sector? The Mediating Role of Ethical Climate
Abstract
Amid the emergence of various problems of ethical violations at the global and local levels in Indonesia, especially in the public sector, many parties demand various efforts to improve ethical behavior both at the official and staff levels. This study aims to analyze the influence of ethical leadership and ethical climate on employee ethical behavior, moderated by person-organization fit in the context of state financial organization (Organisasi Keuangan Negara/OKN). Using quantitative research methods with Partial Least Square Structural Equation Modeling (PLS-SEM), this research examines the relationship between these variables through a survey of 898 respondents within the Indonesian state financial organization. The findings suggest that ethical leadership has a significant positive impact on ethical climate and employee ethical behavior. Moreover, ethical climate plays a partial mediating role between ethical leadership and employee ethical behavior. However, person-organization fit could not strengthen the relationship between ethical climate and employee ethical behavior. This study contributes to the literature by providing empirical evidence on the role of leadership and organizational climate in fostering ethical behavior among public sector employees. The findings offer practical implications for policymakers in enhancing ethical governance.
Downloads
References
Al Halbusi, H., Alhaidan, H., Ramayah, T., & AlAbri, S. (2023). Ethical Leadership and Employees’ Ethical Behavior: Modeling the Contingent Role of Moral Identity. Business and Professional Ethics Journal, 42(1), 1–31. https://doi.org/10.5840/bpej202344135
Al Halbusi, H., Tang, T. L.-P., Williams, K. A., & Ramayah, T. (2024). Do ethical leaders enhance employee ethical behaviors? Organizational justice and ethical climate as dual mediators and leader moral attentiveness as a moderator: Empirical support from Iraq’s emerging market. Monetary Wisdom, 317–337. https://doi.org/10.1016/B978-0-443-15453-9.00018-8
Al Halbusi, H., Tang, T. L. P., Williams, K. A., & Ramayah, T. (2022). Do ethical leaders enhance employee ethical behaviors?: Organizational justice and ethical climate as dual mediators and leader moral attentiveness as a moderator--Evidence from Iraq’s emerging market. In Asian Journal of Business Ethics (Vol. 11, Issue 1). Springer Netherlands. https://doi.org/10.1007/s13520-022-00143-4
Al Halbusi, H., Williams, K. A., Ramayah, T., Aldieri, L., & Vinci, C. P. (2021). Linking ethical leadership and ethical climate to employees’ ethical behavior: the moderating role of person–organization fit. Personnel Review, 50(1), 159–185. https://doi.org/10.1108/PR-09-2019-0522
Aryati, A. S., Sudiro, A., Hadiwidjaja, D., & Noermijati, N. (2018). The Influence of Ethical Leadership to Deviant Workplace Behavior Mediated by Ethical Climate and Organizational Commitment. International Journal of Law and Management, 60(2), 233–249. https://doi.org/10.1108/ijlma-03-2017-0053
Ayoko, O. B. (2022). Leadership, Ethics and Corporate Social Responsibility. Journal of Management and Organization, 28(1), 1–8. https://doi.org/10.1017/jmo.2022.13
Babalola, M. T., Stouten, J., Camps, J., & Euwema, M. (2019). When Do Ethical Leaders Become Less Effective? The Moderating Role of Perceived Leader Ethical Conviction on Employee Discretionary Reactions to Ethical Leadership. Journal of Business Ethics, 154(1), 85–102. https://doi.org/10.1007/s10551-017-3472-z
Bal, Y., Bozkurt, S., & Buyukbalci, P. (2014). Improving Social Responsibility through Ethical Leadership: A Perceptions Based View. 12th International Academic Conference, September, 123–135. http://proceedings.iises.net/index.php?action=proceedingsIndexConference&id=7
Bandura, A. (Stanford U. (1971). SOCIAL LEARNING THEORY Albert Bandura Englewood Cliffs, N.J.: Prentice-Hall, 1977. 247 pp., paperbound. Group & Organization Studies, 2(3), 384–385. https://doi.org/10.1177/105960117700200317
Blau, P. M. (1967). Exchange and power in social life. Exchange and Power in Social Life, 1–352. https://doi.org/10.4324/9780203792643
Brown, M. E., & Trevino, L. . (2014). Do role models matter? An investigation of role modeling as an antecedent of perceived ethical leadership. Journal of Business Ethics, 122(4), 587–598. https://doi.org/http://dx.doi.org/10.1007/s10551-013-1769-0
Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97(2), 117–134. https://doi.org/10.1016/j.obhdp.2005.03.002
Cable, D. M., & Judge, T. A. (1996). Person - Organization fit, job choice decisions, and organizational entry. Organizational Behavior and Human Decision Processes, 67(3), 294–311. https://doi.org/10.1006/obhd.1996.0081
Chatman, J. A. (1989). Improving Interactional Organizational Research: A Model of Person-Organization Fit. Academy of Management Review, 14(3), 333–349. https://doi.org/10.5465/amr.1989.4279063
Cheng, P. Y., Yang, J. Te, Wan, C. S., & Chu, M. C. (2013). Ethical contexts and employee job responses in the hotel industry: The roles of work values and perceived organizational support. International Journal of Hospitality Management, 34(1), 108–115. https://doi.org/10.1016/j.ijhm.2013.03.007
Cresswell, J. W. ., & Cresswell, J. D. (2021). Qualitative, quantitative and mixed methods research (Dörnyei). In Introducing English Language. https://doi.org/10.4324/9781315707181-60
Cropanzano, R., Anthony, E. L., Daniels, S. R., & Hall, A. V. (2017). Social exchange theory: A critical review with theoretical remedies. Academy of Management Annals, 11(1), 479–516. https://doi.org/10.5465/annals.2015.0099
Demirtas, O., & Akdogan, A. A. (2015). The Effect of Ethical Leadership Behavior on Ethical Climate, Turnover Intention, and Affective Commitment. Journal of Business Ethics, 130(1), 59–67. https://doi.org/10.1007/s10551-014-2196-6
Downe, J. D., Cowell, R., & Morgan, K. (2016). What Determines Ethical Behavior in Public Organizations: Is It Rules or Leadership? Public Administration Review, 76(6), 898–909. https://doi.org/10.1111/puar.12562
Engelbrecht, A. S., Wolmarans, J., & Mahembe, B. (2017). Effect of ethical leadership and climate on effectiveness. SA Journal of Human Resource Management, 15(0), 0–9. https://doi.org/10.4102/sajhrm.v15i0.781
Ferrell, A. O. C., Weaver, K. M., Taylor, J. W., Jones, R. M., & Weaver, K. A. A. R. K. (1978). Ethical beliefs of marketing managers: What they say they believe and do, compared with their perceptions of peers and top management. Journal of Marketing, 42(3), 69–73. https://doi.org/https://doi.org/ 10.1177/002224297804200313
Gamasiwi, R. J. (2023). How to Reduce Workplace Deviant Behavior : Through Ethical Leadership and Workplace Spirituality With Organizational Commitment as Mediation. International Journal of Scientific Research and Management, 11(12), 5596–5613. https://doi.org/10.18535/ijsrm/v11i12.em10
Gan, C., Cheng, C. Y., Chai, Y., & Yang, L. (2023). Ethical leadership and employee unethical behavior: a dual-processing model. Management Decision, 1501–1516. https://doi.org/10.1108/MD-05-2022-0694
Grusec, J. E. (1992). Social learning theory and developmental psychology: The legacies of Robert Sears and Albert Bandura. In Developmental Psychology (Vol. 28, Issue 5, pp. 776–786). https://doi.org/10.1037//0012-1649.28.5.776
Guo, F., Xue, Z., He, J., & Yasmin, F. (2023). Ethical leadership and workplace behavior in the education sector: The implications of employees’ ethical work behavior. Frontiers in Psychology, 13. https://doi.org/10.3389/fpsyg.2022.1040000
Hair, Jr., J. F., M. Hult, G. T., M. Ringle, C., Sarstedt, & Marko. (2022). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) [3 ed]. In Sage Publishing (Vol. 3, Issue 1).
Hair Jr., J. F., Anderson, R. E., Babin, B. J., & Black, W. C. (2019). Multivariate Data Analysis, Multivariate Data Analysis. In Book (Vol. 87, Issue 4). www.cengage.com/highered
Jahantigh, M., Zare, S., & Shahrakipour, M. (2016). The survey of the relationship between ethical climate and ethical behavior in nurses. Der Pharma Chemica, 8(3), 189–193.
Jin, Y. (2022). Development and Application of Social Learning Theory. Learning & Education, 10(7), 183. https://doi.org/10.18282/l-e.v10i7.3002
Kaptein, M. (2020). Ethical Climate and Ethical Culture. Encyclopedia of Business and Professional Ethics, 1–4. https://doi.org/10.1007/978-3-319-23514-1_70-1
KPK. (2023a). KPK Tahan Tersangka Gratifikasi di DJP Kementerian Keuangan. https://www.kpk.go.id/id/ruang-informasi/berita/kpk-tahan-tersangka-gratifikasi-di-djp-kementerian-keuangan
KPK. (2023b). KPK Tetapkan Tersangka Gratifikasi dan TPPU Pengurusan Ekspor Impor di Bea Cukai. https://www.kpk.go.id/id/ruang-informasi/berita/kpk-tetapkan-tersangka-gratifikasi-dan-tppu-pengurusan-ekspor-impor-di-bea-cukai
Kristof-Brown, A., Schneider, B., & Su, R. (2023). Person-organization fit theory and research: Conundrums, conclusions, and calls to action. In Personnel Psychology (Vol. 76, Issue 2, pp. 375–412). https://doi.org/10.1111/peps.12581
Kuenzi, M., Mayer, D. M., & Greenbaum, R. L. (2020). Creating an ethical organizational environment: The relationship between ethical leadership, ethical organizational climate, and unethical behavior. Personnel Psychology, 73(1), 43–71. https://doi.org/10.1111/peps.12356
Lauver, K. J., & Kristof-Brown, A. (2001). Distinguishing between employees’ perceptions of person-job and person-organization fit. Journal of Vocational Behavior, 59(3), 454–470. https://doi.org/10.1006/jvbe.2001.1807
Lu, C. S., & Lin, C. C. (2014). The Effects of Ethical Leadership and Ethical Climate on Employee Ethical Behavior in the International Port Context. Journal of Business Ethics, 124(2), 209–223. https://doi.org/10.1007/s10551-013-1868-y
Manz, C. C., Anand, V., Joshi, M., & Manz, K. P. (2008). Emerging paradoxes in executive leadership : A theoretical interpretation of the tensions between corruption and virtuous values. 19, 385–392. https://doi.org/10.1016/j.leaqua.2008.03.009
Mayer, D. M., Kuenzi, M., & Greenbaum, R. L. (2010). Examining the Link Between Ethical Leadership and Employee Misconduct: The Mediating Role of Ethical Climate. Journal of Business Ethics, 95(SUPPL. 1), 7–16. https://doi.org/10.1007/s10551-011-0794-0
Oladimeji, K. A., & Abdulkareem, A. K. (2023). Ethical Leadership and Employee Performance in the Public Sector: The Mediating Effects of Motivation and Satisfaction. Jurnal Studi Pemerintahan, 133–148. https://doi.org/10.18196/jgp.v13i2.14903
Padilla, A., Hogan, R., & Kaiser, R. B. (2017). The toxic triangle : Destructive leaders , susceptible followers , and conducive The toxic triangle : Destructive leaders , susceptible followers , and conducive environments. June 2007. https://doi.org/10.1016/j.leaqua.2007.03.001
Parboteeah, K. P., Weiss, M., & Hoegl, M. (2024). Ethical Climates Across National Contexts: A Meta-Analytical Investigation. Journal of Business Ethics, 189(3), 573–590. https://doi.org/10.1007/s10551-023-05387-z
Paterson, T. A., & Huang, L. (2019). Am I Expected to Be Ethical? A Role-Definition Perspective of Ethical Leadership and Unethical Behavior. Journal of Management, 45(7), 2837–2860. https://doi.org/10.1177/0149206318771166
Podsakoff, P. M., Mackenzie, S. B., & Podsakoff, N. P. (2012). Sources of Method Bias in Social Science Research and Recommendations on How to Control It. https://doi.org/10.1146/annurev-psych-120710-100452
Ruiz-Palomino, P., Martínez-Cañas, R., & Fontrodona, J. (2013). Ethical Culture and Employee Outcomes: The Mediating Role of Person-Organization Fit. Journal of Business Ethics, 116(1), 173–188. https://doi.org/10.1007/s10551-012-1453-9
Sarstedt, M., Hair, J. F., J., C., J.-H., B., J.-M., &, & Ringle, C. M. (2019). How to specify, estimate, and validate higher-order constructs in PLS-SEM. Australasian Marketing JournalJournal, 27(3), 197–211. https://doi.org/https://doi.org/10.1016/j.ausmj.2019.05.003
Shin, Y. (2012). CEO Ethical Leadership, Ethical Climate, Climate Strength, and Collective Organizational Citizenship Behavior. Journal of Business Ethics, 108(3), 299–312. https://doi.org/10.1007/s10551-011-1091-7
Tabiu, A. (2023). Impact of ethical leadership, HRM practices and ethical climate on organizational citizenship behaviors in Nigerian local governments. International Journal of Public Leadership, 19(3), 229–245. https://doi.org/10.1108/IJPL-06-2022-0038
Transparency International. (2025). Corruption Perceptions Index 2024. In Transparency International. https://doi.org/10.4135/9781412952613.n110
Verma, G. G., & Biswas, S. N. (2023). Ethical workplace climate in nonprofit organizations: Conceptualization and measurement. Business Ethics, the Environment and Responsibility. https://doi.org/https://doi.org/10.1111/beer.12568
Victor, B., & Cullen, J. B. (1988). The Organizational Bases of Ethical Work Climates. Administrative Science Quarterly, 33(1), 101. https://doi.org/10.2307/2392857
Walumbwa, F. O., Mayer, D. M., Wang, P., Wang, H., Workman, K., & Christensen, A. L. (2011). Linking ethical leadership to employee performance: The roles of leader-member exchange, self-efficacy, and organizational identification. Organizational Behavior and Human Decision Processes, 115(2), 204–213. https://doi.org/10.1016/j.obhdp.2010.11.002
Wang, Z., Xing, L., Xu, H., & Hannah, S. T. (2019). Not All Followers Socially Learn from Ethical Leaders: The Roles of Followers’ Moral Identity and Leader Identification in the Ethical Leadership Process. Journal of Business Ethics, 170(3), 449–469. https://doi.org/10.1007/s10551-019-04353-y
Copyright (c) 2025 Dekri Firmansyah, Riani Rachmawati
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
