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The moderated mediating effect of business ethics towards firm performance

Author

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  • Areerat Leelhaphunt
  • Sid Suntrayuth

Abstract

The objective of this study is to investigate the relationship among manager ethical leadership, organisation ethical culture, corporate ethics program and both firm performances: ROA and corporate governance reputation. By exploring the: 1) direct effect; 2) mediating effect; 3) moderated mediating effect or conditional indirect effect, that have influences on firm performances of 84 listed firms on the stock exchange of Thailand, which is represented by 785 participants. For analysis and comparison of the two-level factor structure of the conceptual model, each stage of effect is tested by PROCESS (model 1, 4, and 14), whereas an overall moderated mediating model is tested by structural equation model (SEM). It was found that the relationship between manager ethical leadership and both firm performances through organisation ethical culture is positive when an organisation implements a strong ethics program. Furthermore, based on estimation, SEM uses maximum likelihood while PROCESS uses ordinary least square regression. It was also found that both estimators provide exactly regression weight, but the statistical inferential tests are slightly different. Thus, this study offers the alternative best-fit estimator for another moderated mediating model testing.

Suggested Citation

  • Areerat Leelhaphunt & Sid Suntrayuth, 2020. "The moderated mediating effect of business ethics towards firm performance," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 14(1), pages 54-77.
    • Handle: RePEc:ids:ijbget:v:14:y:2020:i:1:p:54-77
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