London Business School

Why "Ethical" Leaders Still Create Unethical Cultures

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.