Financially insecure and less ethical: Understanding why and when financial insecurity inhibits ethical leadership

Yuanmei Qu, Mayowa T. Babalola, Chidiebere Ogbonnaya, Shuang Ren, Lu Chen, Mengxi Yang

Research output: Contribution to journalArticlepeer-review

2 Citations (Web of Science)

Abstract

With the recent COVID-19 pandemic, among other crises (e.g., Russia–Ukraine conflicts and recession projections) threatening organizations’ financial conditions across the globe, supervisors may not only encounter challenges such as job cuts that test their ethical leadership, but also experience financial insecurity themselves. However, our knowledge of why and when supervisors’ ethical leadership behaviors may be affected in such a situation remains quite limited. In this research, we draw on uncertainty management theory (UMT) to examine the potential influence of financial insecurity on ethical leadership. Specifically, we suggest that financial insecurity triggers anxiety in supervisors, which inhibits their demonstration of ethical leadership. We also propose organizational pay fairness as a boundary condition for this process, such that supervisors who perceive their pay as fair are less susceptible to the anxiety resulting from financial insecurity than those who perceive their pay as unfair. Results from two multi-source, multi-wave studies supported our hypothesized model. We conclude by discussing the theoretical and practical implications of our findings.

Original languageEnglish
Pages (from-to)329-359
Number of pages31
JournalHuman Relations
Volume77
Issue number3
Early online date7 Jan 2023
DOIs
Publication statusPublished - Mar 2024
Externally publishedYes

Cite this