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Exploring the Impact of Ethical Leadership on Organizational SustainabilityAbstract
The current paper investigates the role of ethical leadership in organizational sustainability,
focusing on how the leaders’ values and vision influence sustainable behaviour. Ethical leaders
guided by integrity and responsibility promote trust, novelty, and flexibility in organizations,
which are critical factors for survival and contribution to society. The paper is based on peerreviewed sources retrieved from the most recent databases and discusses the impact of ethical
leadership on organizational culture and performance.
Introduction
Literature Review
Over the last few decades, we have seen more and more research shift toward ethical
leadership, in sight of organizational sustainability. Ethical leadership has more recently been
identified as the “cornerstone” of sustainable business, it is a style of leadership that is
characterised by integrity, fairness and a willingness to be transparent and this type of leadership
style is deemed to be an integral part of the long-term success and growth of the firm. El Melki
and Ben Salah Saidi (2023) also found that ethical leadership in an organization can be modelled
and nurtured to perpetuate a pro-ethical climate throughout the organization. Such culture is
critical for sustainable solutions, they are not after only short-term profits, but they try to propose
solutions which are beneficial to all and the future, and are win-win for the stakeholders as well
as for the environment in the longer term.
In the recent literature, the connection of ethical leadership with its impact on the way of
enhancing the sustainability of a firm for different dimensions of the organization is stressed. For
example, empirical evidence that ethical leadership has a strong effect on job engagement,
organizational citizen behaviour, or job performance and is significantly associated with
intentions to leave the organization. Similarly, Jia et al. (2022), ethical leadership is essentially
an expression of our expectation of fair play and justice – without which morale, and hence
productivity and long-term sustainable performance in the workplace would not be possible.”
It will also impact how the organization is innovative and adapt to be so. When ethical
leaders establish trust and psychological safety, employees are more willing to take risks and
engage in innovative behaviour. Scaliza et al. (2022) particularly note the need for a culture of
innovation is essential to keep up with the organizational competitiveness with the markets
changing rapidly. Ethical leadership also makes better stakeholder relations. To build the human
capacity required to sustain the business, ethical leaders focus on being transparent and
accountable in their communications to all stakeholders.
The enhancement of CSR is also manipulated by way of moral leadership. An enterprise
should be practicing its fundamental economic objectives which also comprise social and
environmental ambitions to align the entire business with the broader societal values. Good
ethical leaders act with the consequences of their actions on the future in mind for there is no
future in any organization unless that organization is an ethical and sustainable one. Finally, this
leadership style seems to relate to the ethical leadership values of stewardship of resources and
bindings with shareholders (Muff et al., 2022).
The review ended with literature declaring the necessity of the works ethical leaders
perform that are responsible for the present in the organization. In the rush that is the nature of
contemporary business, leaders who exhibit ethical behaviour-who operate with integrity and
follow through with accountability purposes and a culture that values future effects, innovation,
and stakeholders’ trust – are the building blocks to the long-term sustainability of an organization.
Approach to Discussion
This paper seeks to critically discuss the statement; “In exploring the impact of ethical
leadership on organisational sustainability, we are navigating a landscape of values and vision.
Ethical stewardship ensures that the cultural garden is well-tended and that people’s trust,
innovation, and flexibility grow. At its roots, ethical organisations flourish, nourishing leaves of
principles that guarantee profits and flowers of relevance to society bloom”. This paper will be
organised into various sections, beginning with how the ethical leadership of values and vision
plays a role in the overall theme, followed by how ethical stewardship grows people’s trust,
innovation, and flexibility. Finally, how ethical leadership impacts long-run organisational
sustainability.
Main Body
The Role of Values and Vision in Ethical Leadership
Ethical leadership is founded on values and vision. Values And Vision – the building
blocks of sustainable organizations. In addition, ethical leaders have a distinct vision that is
consistent with certain values such as honesty, integrity, and social responsibility. It is also a
lighthouse for decision-making and strategic planning so that all activities of the organization
can be aligned with its ethical value system. Freeman & Auster (2023) have observed, that a
clear ethical purpose helps to integrate the organization’s objectives with the wider societal
demands, generating a well-defined meaning and headline, avoiding possible transgressions.
Strong executive leaders have the ability to create an inspiring vision that appeals to
internal and external stakeholders. The vision here is profit not just that but to work towards the
greater good of society and the environment. Under the leadership of Yvon Chouinard, as an
example, Patagonia has built a brand on a message of environmental sustainability. This guiding
vision of a nature-respecting business model determined every strategic decision of the company
from the fabric it employs to its supply chains. This case exemplifies how a strong and explicit
ethical vision can guide an organization to implement sustainable policies.
Ethical leaders mobilize employees toward sustainability; the vision acts as a
transformational goal that inspires and motivates employees, nurturing an emotional bond and
collective commitment to sustainability efforts. According to Riswanti Rini (2022), leaders who
profess a transparent ethical vision are more likely to be perceived as trusted by their employees.
But, this trust is essential to create an open and collaborative space where innovation and agility
can thrive. Employees are more likely to take action on the ethical vision of a leader they trust,
and as a result, organizations benefit from this extra mile of contribution on the part of their
employees.
Robinson (2023) concluded from their study that competent and caring visionary leaders
are capable of significantly increasing organizational commitment among followers. This
commitment leads to greater job satisfaction, lower turnover, and overall increased performance.
When leaders authentically stand for their values and are genuinely committed to principles of
integrity, their employees will feel it, and a sense of loyalty and dedication that leads to an
engaged culture of respect and appreciation will follow.
Crucial for sustainability is that these wise leaders are ethical in so far as they make sure
that their vision aligns with societal expectations. Society is more and more expressing the need
to demand that global companies address problems such as climate change, social justice, and
corporate responsibility in their operations. Understanding that organizations that deliver on
these societal expectations are better positioned to outperform; it is clear that ethical leaders have
a lot to gain. One such example is the Unilever Sustainable Living Plan launched under Paul
Polman´s helmed leadership, which embeds sustainability across the company’s core strategy,
with an aim to decouple growth from environmental impact and increase social value. Not only
does this appertain to Unilever forging a strong reputation consumers can trust but also Unilever
gains brand loyalty.
Ethical vision – This gives a basis for making decisions and guides the planning and
execution of activities. A vision allows an ethical leader to make practical decisions that are
equally profitable and socially responsible or environmentally sustainable. This type of longterm lens is necessary for the organization to exist in the future. A clear ethical vision serves as a
moral compass for businesses by ensuring the complexity of the business system with a sense of
clear direction and purpose (Ezvan & Langohr, 2024).
Trust and Credibility Matter Companies wise enough to understand the full extent of trust
and credibility will be among the winners in the long run (Radomski, 2023). Trust is created by
showing that they act with integrity and are transparent in consistent ways time after time. If the
leaders continually live up to their vision, then they set up a trust culture throughout the
organization. An ethical leader helps forge a team where innovation and adaptation flourish
through a shared moral compass. Ethical leaders like to invite an open way of communication
and participation of all other members of the organization. Moreover, this inclusive form of
decision-making not only boosts creativity and problem-solving but helps to keep the
organization agile and able to react promptly to changes in the external environment. Ethical
leadership has been related to increased performance for teams and is therefore vital to
organizational sustainability (Dey et al., 2022).
Cultivating Cultures of Trust, Innovation, and Adaptability
Ethical leadership is central to creating a culture of trust, innovation, and adaptive
practices which are integral to the survival of any organization. Ethical leadership such as this
builds trust, and without trust, it is hard to imagine a sustainable organization emerging from the
chaos. Ethical leaders are individuals who behave with authenticity, consistency, transparency,
and accountability; in other words, they practice what they preach. By aligning with their words,
the leaders build confidence with employees or stakeholders that they do what they say, and
believe in being ethical. Trust in leadership was even found to reduce the likelihood of employee
trust in leadership was even found to reduce the likelihood of organization. This is positive for
the organizationally deviant employees’ organizationally deviant motivated employees and bad
for unjust motivated employees and moral organization because when trust in leadership morally
motivated employees are dated and engaged in fraud and turnover in the organization. Trust
leads to greater active engagement, collaboration and a positive company culture of contributions
because employees feel that their well-being is taken into account and can focus their energy and
enthusiasm on their performance.
Organizations must also innovate and adapt to stay sustainable and remain adaptable to
changing market conditions and societal expectations. Ethical leaders promote innovation by
promoting open communication and creative thinking and giving people the resources to try new
things. Ethical leadership fosters a safe environment with rewards for individuals and teams to
take risks or present new ideas necessary for continuous improvement, and long-term success
(Liu et al., 2023). The approach towards innovation is key in today’s hi-tech, fast-moving
business world, and can either make or break your business if you fail to adapt and grow.
Ethical leaders also cultivate adaptability in part by staying open to feedback and by
using that feedback to change strategies as necessary in the face of new information and
changing situations. And due to the versatility, this is advantageous, that a few businesses have
flourished, although only a few stays, pivot and modify. Ethical leaders can model adaptability in
another way, by purposefully learning and thereby creating a similar context for all. This is what
ethical leaders need to do – they need to understand change and inculcate a growth mindset, and
in the process ensure that their organizations can navigate through the chaos and still make
profits out of uncertainties. Ethical leaders not only promote creativity and agility but also
establish a reward and development system which is based on a shared effort to acknowledge the
part of everyone.
Enabling, in turn, all employees to feel involved is an approach that results in more
morale and productivity as employees simply feel wiser for contributing. Moreover, an inclusive
and supportive culture helps to recruit and retain great people, who make the organization even
more innovative and nimble.
Ethical Stewardship and Long-term Organizational Sustainability
Ethical stewardship is about caring for an organization, managing the resources
responsibly and for the long term, and ensuring its survival and relevance over time. Ethical
leaders emphasize sustainable, responsible practices which are not only good for the
organization, but the broader community, and environment as well. This holistic approach is
essential to ensure the long-term sustainability of the organization and also its relevance in
society.
Ethical stewardship is a philosophy that guides financial planning to serve the best
interests of stakeholders. Concerned leaders understand the need to ensure all stakeholders are
considered in balance – employees, customers, suppliers, and community (Jasir et al., 2023). This
promotes the organization’s image and gains both the loyalty and support of even the different
parties. Ethical leaders focus on solving what matters most to stakeholders and in turn,
implement their values in the decision-making process – ultimately strengthening trust and
mutual respect. Organizations must have this kind of trust since it is a foundation for long-term
support and cooperation from major stakeholders.
Furthermore, socially responsible sustainability programs that seek to create positive
impacts around social and parochial dilemmas define ethical stewardship. Organizations with
ethical leaders are expected to give back more to society through CSR activities leading to
improvement of their legitimacy and competitive advantage. CSR activities reflect the values of
business ethics, and an organization, irrespective of its size, can build its credibility in the public
eye and improve its brand value. Most notably, companies like Ben & Jerry’s and Patagonia have
excelled by making corporate social responsibility a primary aspect of their business model,
tackling topics from environmental sustainability to social justice. They do well in business, as
well as for society and the planet.
Similarly, ethical stewardship also relates to strategy and resource management. This
view ethic leaders have: viewing things in the long-term when considering broader impacts on
the environment, the community, and the effects on generations into the future. This forward
look ensures that the organisational strategies are sustainable and socially responsible. This
includes steps such as renewable energy sources and sustainable supply chains among many
other initiatives to cut down the environmental impact and make resources available in the long
run for any company to come. Strategic planning sustainability over time allows for business to
evolve in relation to the changing environments and social standards, thus ensuring the future
viability of the organization.
We need to develop a culture of innovation that is fueled, in part, by ethical stewardship.
Ethical leaders set the stage for innovative and improvement-minded behaviour that contributes
to long-term organizational sustainability. Leaders cultivate an ethics-rich environment that
sparks employees to innovate, to solve problems in ways that are consistent with the
organization’s values and the future it wishes to create. This culture of innovation is more
important than ever due to the need for organizations to evolve quickly to meet the uncertain and
constantly changing nature of business today. Companies that factor such stewardship into their
innovation strategies are positioned to create socially and environmentally responsive solutions
that better meet evolving customer desires.
Open communication and accountability are essential components of ethical stewardship.
Leaders who exhibit ethical behaviour keep their stakeholders in the loop and regularly provide
them with updates on the organization’s performance and sustainability efforts. This level of
transparency builds trust and accountability as anyone who may have an interest in what your
organization does can clearly see that your organization is willing to be ethical and is willing to
train itself to better react with any given situation, competitive viewer, or even observer. Ethical
leaders also are responsible and accountable for their and their organization’s actions upholding
their commitment to the stakeholders. This accountability is important as it determines
credibility and trustworthiness, two main factors for long-term survival.
Additionally, ethical stewardship may improve financial performance. This and a host of
other aspects point toward the ultimate fact that organizations that invest in ethical practices &
sustainability drive up their customer loyalty and employee satisfaction while reducing
regulatory risks which cumulatively add up to financial performance. Some good news has been
reported in that a study by Atz et al. (2023) suggests that companies with robust sustainability
programs will more likely outperform their peers financially in the long run. The bottom line is
that this financial success not only serves shareholders well but, more importantly, enables the
organization to reinvest in sustainability initiatives that serve to increase its ability to positively
benefit society and the environment.
Stewardship also plays a big role in organizational culture. Ethical leaders lead by
example and inspire integrity and responsibility throughout the organization. It influences
interactions with peers, customers, and all stakeholders, regardless of the level in the
organization. Engagement is a Factor in Ethical Culture High engagement is associated with a
lower rate of unethical behaviour in instances where employees demonstrate more passion and
engagement in their everyday work performance. High engagement levels and ethical business
conduct can be linked to increased levels of performance within the organization. When we
believe that our organization belongs to an ethic continuum, it generally is to be more motivated
and productive, and more loyal and happy as well.
Finally, ethical stewardship is key to sustainability. Sustainable: Being environmentally
responsible. Balanced: Making stakeholders happy. CSR-based: Engaging in society. Long-term:
Making strategic decisions with the aim of the long term (balanced scorecard). Ethical leaders
create cultures of innovation, transparency and accountability and drive their organizations to
stick around for the long term in a business world that is always shifting. In addition, ethical
stewardship can also help foster increased financial performance, a more resilient corporate
culture and improved trust and loyalty with stakeholders. Thus sustainable growth that has a
positive consequence for the society and the environment is likely to be achieved by
organizations that see themselves as ethical stewards.
Conclusion
This paper has critically analyzed the effect of ethical leadership on organizational
sustainability. The review has explored the role values and vision play in guiding ethical leaders;
the importance of trust, innovation, and adaptability in inculcating sustainable organizational
culture; and the relevance of ethical stewardship to organizational survival into the future or to
societal contribution. Ethical leaders thus create an enabling environment for organizations to
sustainably flourish due to their commitment to integrity and responsibility. It is evidently clear
from the discussions presented above that ethical leadership plays a critical role in ensuring
sustainability. Ethical leaders not only enable and inspire their team members, but they also
provide a platform for trust and innovation. This aspect is crucial for the long-term success of
organizations. These leaders also ensure relevance and competitiveness in the market and society
by ensuring they put the welfare of other stakeholders ahead of their interests. It is, therefore, the
responsibility of leaders to ensure that they develop and support ethical leadership to facilitate
growth and contribute to society’s development.
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