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Ethical Leadership of Supervisors and Internal Social Capital in a Financial Institution

Author

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  • Myra V. De Leon
  • Jerwin B. Tubay

Abstract

Purpose: The aim of this paper is to test empirically if the supervisor’s ethical leadership contributes to the creation of internal social capital. Design/Methodology/Approach: A survey was administered with 158 rank and file employees from 31 Manila branches of a financial institution. Based on factor analysis, reputation of ethical leadership characterized as a moral person and a moral manager emerged as new constructs. Partial least squares structural equation modelling (PLS-SEM) was used. Findings: Findings show that supervisor characterized as being a moral person results to higher willingness of employees to share information and resources in their personal dyadic relationships with supervisor and among employees (structural dimension); increase in employee trust in the long-run fairness of their relationship with the organization and co-employees (relational dimension); and intensification of employees’ identification with the firm (cognitive dimension). An ethical supervisor characterized as a moral manager significantly influences the cognitive and structural dimensions of internal social capital. Practical Implications: The results can give practitioners an idea of the ethical leadership traits observed by rank and file employees. This can have implications for human resource management, particularly superior-subordinate matching and for the process of socialization. In a company and economy that is constantly seeking change-makers and role models, empirical contributions are significant. This study is relevant in proposing strategies that can help management in the creation of social capital as well as contribute to social capital literature and field of business ethics. Originality/Value: The paper contributes to the existing literature by using financial institutions’ employees and in Philippine setting. Previous studies had tested ethical leadership as a whole but this time, the researchers deductively used characteristics of an ethical leader as a moral person and a moral leader.

Suggested Citation

  • Myra V. De Leon & Jerwin B. Tubay, 2020. "Ethical Leadership of Supervisors and Internal Social Capital in a Financial Institution," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 291-301.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:2:p:291-301
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    References listed on IDEAS

    as
    1. David Pastoriza & Miguel Ariño, 2013. "Does the Ethical Leadership of Supervisors Generate Internal Social Capital?," Journal of Business Ethics, Springer, vol. 118(1), pages 1-12, November.
    2. Peter Moran, 2005. "Structural vs. relational embeddedness: social capital and managerial performance," Strategic Management Journal, Wiley Blackwell, vol. 26(12), pages 1129-1151, December.
    3. Brown, Michael E. & Trevino, Linda K. & Harrison, David A., 2005. "Ethical leadership: A social learning perspective for construct development and testing," Organizational Behavior and Human Decision Processes, Elsevier, vol. 97(2), pages 117-134, July.
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    5. David Pastoriza & Miguel Ariño & Joan Ricart, 2009. "Creating an Ethical Work Context: A Pathway to Generate Social Capital in the Firm," Journal of Business Ethics, Springer, vol. 88(3), pages 477-489, September.
    6. repec:ers:ijebaa:v:v:y:2017:i:1:p:83-99 is not listed on IDEAS
    7. Carrie R. Leana & Frits K. Pil, 2006. "Social Capital and Organizational Performance: Evidence from Urban Public Schools," Organization Science, INFORMS, vol. 17(3), pages 353-366, June.
    8. Anne Davis & Hannah Rothstein, 2006. "The Effects of the Perceived Behavioral Integrity of Managers on Employee Attitudes: A Meta-analysis," Journal of Business Ethics, Springer, vol. 67(4), pages 407-419, September.
    9. David Pastoriza & Miguel Ariño & Joan Ricart, 2008. "Ethical Managerial Behaviour as an Antecedent of Organizational Social Capital," Journal of Business Ethics, Springer, vol. 78(3), pages 329-341, March.
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    More about this item

    Keywords

    Ethical leadership; capital; moral person and manager.;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

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