The Impact of Ethical Leadership on Employees’ In‐Role Performance: The Mediating Effect of Employees’ Psychological Ownership

• Author: Woocheol Kim,Ji Hoon Song,Cho Hyun Park
• Published date: 01 December 2015
• DOI: http://doi.org/10.1002/hrdq.21217
• Date: 01 December 2015

HUMAN RESOURCE DEVELOPMENT QUARTERLY, vol. 26, no. 4, Winter 2015 © 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com) • DOI: 10.1002/hrdq.21217 385

The Impact of Ethical

Leadership on Employees’

In-Role Performance: The

Mediating Effect of Employees’

Psychological Ownership

Cho Hyun Park, Woocheol Kim, Ji Hoon Song

The aim of the current research was to identify the infl uences of ethical

leadership on employees’ in-role performance in the Korean public

nonprofi t agency setting. The mediating effect of employees’ psychological

ownership was also examined. A total of 202 responses were analyzed

using the structural equation modeling (SEM) approach to test study

hypotheses. Results showed that while the level of ethical leadership

signifi cantly impacts employees’ psychological ownership, ethical leadership

has a signifi cant indirect impact on in-role performance only through

employees’ psychological ownership. These results support the mediating

role of the level of employees’ psychological ownership in explaining the

relationship between ethical leadership and in-role performance levels of

employees. Research limitations and implications are discussed and future

research directions are suggested.

Key Words: ethical leadership, in-role performance, psychological ownership

Introduction

Human resource development (HRD) emerged with the purposes of increasing

organizational performance and promoting employee learning and develop-

ment (Garavan & McGuire, 2010). In spite of the original purposes of HRD,

in the past HRD emphasized training employees, as they were viewed as assets

or resources to achieve organizational performance (Lee, 2010). However,

there was criticism of the performance-driven HRD practices that mainly

focused on short-term performance rather than the well-being of individuals

386 Park, Kim, Song

HUMAN RESOURCE DEVELOPMENT QUARTERLY • DOI: 10.1002/hrdq

in organizations and the holistic development of human potential from the

perspective of humanistic social science (Ardichvili, 2013). Due to the criti-

cism, HRD’s view on employees has changed: Employees are not regarded as

just a cost to be minimized or an asset to be exploited (Becker, Carboli, &

Langella, 2010). In addition, the role of HRD has become broader: The main

role of HRD is expanded into developing employees’ value and competencies

to help them contribute to corporate responsibility, which embraces corpo-

rate social responsibility, long-term sustainability, and ethical actions, as orga-

nizational members (Ardichvili, 2013; Blakeley & Higgs, 2014; Garavan &

McGuire, 2010). Sustainable and responsible HRD focuses on both employee

development and organizational effectiveness (Ardichvili, 2013). The role of

HRD involves not only ensuring organizational profi t but also developing ethi-

cal and responsible leaders who are able to support corporate responsibility

(Blakeley & Higgs, 2014; Garavan & McGuire, 2010). Therefore, developing

ethically and socially conscious leadership is a critical role of HRD in that

leaders’ values and behaviors infl uence responsible and ethical organizational

cultures (Baek & Kim, 2014; Blakeley & Higgs, 2014).

Refl ecting on the trend of the growing attention to corporate responsibil-

ity as a role of HRD, ethical leadership has also become an area of increasing

interest given that a leader’s ethical or unethical behavior can defi ne the orga-

nizational culture (Mendonca & Kanungo, 2007) and consequently determine

the way that organization members perceive, think, feel, and behave (Schein,

1984). Employees’ perception of their leaders’ ethics and integrity may affect

their attitudes toward their work and organization as well as their behav-

iors (Church, 1995; Tansky, Gallagher, & Wetzel, 1997). Much research has

examined the effects of ethical leadership on subordinates’ outcomes, such

as employees’ organizational commitment (Fu, Deshpande, & Zhao, 2011;

Hansen, Alge, Brown, Jackson, & Dunford, 2013; Khuntia & Suar, 2004;

Zhu, May, & Avolio, 2004); job performance and job involvement (Khuntia&

Suar, 2004); psychological ownership and job satisfaction (Avey, Wernsing,

& Palanski, 2012); prosocial behaviors (Mayer, Kuenzi, Greenbaum, Bardes,

& Salvador, 2009; Piccolo, Greenbaum, Hartog, & Folger, 2010); unethical

pro-organizational behavior (Miao, Newman, Yu, & Xu, 2013); innova-

tive work behavior (Yidong & Xinxin, 2013); in-role behavior performance

(Piccolo etal., 2010); and so forth.

Employees’ psychological condition also has an impact on their behavior

and performance. Lazarus, Deese, and Osler (1952) argued that psychological

stress that infl uences emotion and motivation is related to skilled work per-

formance. Turnley, Bolino, Lester, and Bloodgood (2003) asserted that there is

a positive relationship between employees’ psychological contract fulfi llment

and their in-role performance. In contrast, employees’ psychological contract

breach results in their poor in-role performance (Restubog, Bordia, & Tang,

2006). Employees’ psychological capital including hope, resilience, optimism,

and efficacy has a positive relationship with their performance (Luthans,