Why "Ethical" Leaders Still Create Unethical Cultures

Why It Matters

Because leadership style directly influences employees’ moral judgments, adopting prestige‑based influence protects organizational ethics and reduces costly misconduct, especially in turbulent periods.

Key Takeaways

• Dominance‑style leaders unintentionally signal lower moral character to teams.
• Employees infer unethical traits from intimidation and control tactics.
• Prestige‑based influence preserves ethical standards despite rule compliance.
• Trait inference drives norm‑violating behavior across entire organizations.
• Crisis‑driven dominance risks eroding corporate ethical foundations over time.

Summary

The video examines why leaders who follow rules can still foster unethical workplaces, arguing that the way they exert influence—through dominance or prestige—shapes their team's moral compass.

Across seven studies, including field surveys, time‑lag analyses, and lab experiments, researchers found that dominance‑oriented leaders, even with spotless ethical records, trigger perceptions of low moral character. In contrast, prestige‑based leaders, who lead by expertise and respect, do not generate the same ethical erosion.

The authors explain the mechanism as trait inference: employees observe intimidation or control and automatically extrapolate broader unethical traits, creating a narrative that “if the boss can act that way, cutting corners is permissible.” This cascade leads to norm‑violating behavior such as cheating for monetary gain.

The implication for businesses is clear: during rapid change or crises, the temptation to adopt a dominant, command‑and‑control style can silently undermine ethical foundations. Leaders should prioritize prestige‑based influence to preserve integrity and sustain long‑term performance.

Original Description

Why do some rule-abiding leaders still preside over unethical cultures?

In this video, Niro Sivanathan, Professor of Organisational Behaviour at London Business School, explores how different leadership styles shape the ethical behaviour of teams.

Research published in Organization Science shows that even when leaders have a clean ethical record, dominance-oriented leadership can signal lower moral character to employees, increasing the likelihood of norm-violating behaviour within organisations.

The findings highlight how the way leaders exert influence can quietly shape the ethical foundation of a workplace.

Learn more about Niro:

https://www.london.edu/faculty-and-research/faculty-profiles/s/sivanathan-n

Read the research:

https://pubsonline.informs.org/doi/10.1287/orsc.2021.15640

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