The Impact of Ethical Leadership on Readiness to Change: The Mediating Role
of Organizational Culture
Dina Metwally
Faculty of Commerce & Business Administration, Helwan University, Egypt.
E-mail: [email protected]
Mohamed Metwally
Unoversity of Deusto, Spain
Email: [email protected]
Corrosponding Author
10, Calle Artatzamina, 7 Dcha
Bilbao 48007
Spain
Unoversity of Deusto, Spain
1
Abstract
Today`s organizations are working in a highly competitive and changing environment. This
makes it essential for organizations to continuously change in order to survive in the market.
Change may exceed change in customers` needs and expectations to development of new
business strategies, which requires certain changes in organizational structure, systems,
processes, or technology. Without people, organizations can not implement change
successfully. The way employees respond to change is the key to organizational success.
Successful change requires the support of leaders and effective participation of employees.
Leaders are responsible for creating an organizational culture that fosters change and
implement it smoothly and effectively. This study aims to investigate the influence of ethical
leadership (EL) on employees` readiness to change through exploring the mediating effect of
organizational culture. The study is conducted in public foreign trade companies in Egypt.
Ethical leadership, organizational culture, and readiness to change are assessed using a five
point Likert scale questionnaire. Nevertheless, the impact of demographic factors on research
variables is also explored. Data were statistically analyzed using SPSS VR 22. Descriptive
statistics were used for the purpose of comparison. Structured Equational Modelling was
conducted using AMOS VR (22) to test the mediating effect of organizational culture on the
relationship between EL and employees` readiness to change. The study provides evidence that
ethical leaders have the ability to create an organizational culture that is strongly supportive to
change. This culture is reflected in increasing employees` readiness to accept change as well as
to support change implementation.
Keywords: Ethical leadership (EL), organizational culture, readiness to change, Egyptian
organizations.
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1. INTRODUCTION
Today`s organizations are working in a highly dynamic and competitive environment which
makes continuous change a necessity. Despite this, most change projects fail to meet expected
results. It is argued that 70% of business process reengineering projects fail (Bashein et al, 1994).
Further, Beer & Nohria (2000) show that seven out of ten change projects fails to achieve their
intended outcomes. Sirkin et al (2005) argue that two out of three transformation initiatives fail.
Researchers have agreed that the failure of most change programs is related to the human factor
(e.g. Pool, 2000; Abdul Rashid et al, 2004; Holbeche, 2006; Eby et al, 2016). According to
Holbeche (2006), change initiatives fail mainly because of people. People are usually resistant to
change because they are unable to adjust the behaviour, skills, and commitment to new
requirements. Employees` readiness to change has been regarded as an important factor for
understanding employees` resistance to change. Readiness to change can facilitate or undermine the
effectiveness of change implementation. Armenakis et al (1993) explain that the concept of
readiness to change is similar to the concept of unfreezing introduced by Lewin (1951). Unfreezing
refers to the process by which the beliefs and attitudes of organizational members about a pending
change are altered in a way that organizational members perceive change as a necessity and likely
to be successful. Eby et al (2016) argue that readiness to change evolves over time because of
employees` experience with the organization.
Thus, readiness to change may be considered as an important predictor of organizational ability
to implement change. Research about organizational culture suggests that organizational
characteristics must be consistent with the change the organization aims to create (Eby et al, 2016).
It is argued that readiness to change is influenced by employees` perception and interpretation of
organizational context. Thus, organizational climate and culture are expected to have a strong
influence on readiness to change (Eby et al, 2016).Research on change management suggests that
all approaches to change and leadership are supported by a set of ethical values that influence both
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leaders` actions and change outcomes (Burns & By, 2012). Despite this, Babalola et al (2016)
argues that most research concerned with change and leadership has been relatively one-sided,
focusing on the role of leaders in supporting change. This implies that most research connecting
change and leadership neglects the impact of leadership on change implementation and outcomes
(Battilana et al, 2010; Seo et al, 2012).
Researchers have been concerned with studying ethical leadership in the past few years. Ethical
leaders care about the interests of their followers (Kanungo, 2001; Babalola et al, 2016). Brown et
al (2005) believe that ethical leaders encourage employees` dedication to change because they
convey a message that they trust their employees. Accordingly, one may expect ethical leaders to
influence the success of change programs in their organizations. This can be done through raising
employees` awareness of change as well as desire to participate in the successful implementation of
change. This implies that ethical leadership is expected to influence employees` readiness to
change.
This study aims to investigate the influence of ethical leadership on employees' readiness to
change in Egyptian organizations. This relationship is investigated by studying the impact of
organizational culture. The study is applied in the Egyptian foreign trade companies, with a focus
on public sector organizations.
2. Literature Review
2.1 ETHICAL LEADERSHIP
The issue of ethics has received a tremendous concern in the past few years. Researchers have
been concerned with the ethical dimension of different leadership styles. For example,
transformational and authentic leadership have been described as containing an ethical component
(e.g. Avolio & Gardner, 2005; Barling et al, 2008). Other researchers have been concerned with
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ethical leadership as a set of behaviours rather than studying the ethical component of different
leadership styles (e.g. Kanungo, 2001; Brown et al, 2005; De Hoogh & Den Hartog, 2008).
Recently, Brown et al (2005) have considered ethical leadership as a separate style of
leadership. They defined ethical leadership as “the demonstration of normatively appropriate
conduct through personal actions and interpersonal relationships and the promotion of such
conduct to followers through two-way communication, reinforcement and decision-making”
(p.120). Such leaders act as role models to their followers. Further, ethical leaders protect their
followers, treat them fairly, and make them equally responsible for the achievement of common
goals (Gini, 1997; Babalola et al, 2016). Brown et al (2005) describe ethical leadership from a
social learning perspective. They argue that followers will behave similar to their ethical leaders
through imitation and observational learning. Meanwhile, other researchers view ethical leadership
from a social exchange approach and focus on mutual benefit and exchange between leaders and
followers (e.g. Turner et al, 2002; Cropanzano & Mitchell, 2005; Mayer et al, 2009). The social
exchange approach argues that followers are welling to reciprocate when being treated fairly by
their leaders.
In discussing the main components of ethical leadership, researchers have identified different
dimensions of ethical leadership. De Hoogh & Den Hartog (2008) identify three dimensions of
ethical leadership: fairness, power sharing, and role clarification. The three dimensions are also
related to the ethical leadership dimensions identified by Brown et al (2005). In addition to the
three dimensions identified by De Hoogh & Den Hartog (2008), Kalshoven et al (2011) add people
oriented behaviour, integrity, ethical guidance, and concern for sustainability.
Regarding fairness, ethical leaders are expected to be fair in their choices and decisions. Ethical
leaders are also expected to be trustworthy, responsible, honest, objective, and take responsibility
for their actions and decisions (Treviño et al, 2003; Brown et al, 2005; De Hoogh & Den Hartog,
2008). The second dimension of ethical leadership is power sharing. As explained by Yukl (2006),
power sharing allows subordinates more control and makes them less dependent on their leaders.
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Power sharing implies that ethical leaders allow their followers to participate in decision making
and listen to their ideas and opinions (Brown et al, 2005; Resick et al, 2006; De Hoogh & Den
Hartog, 2008). Role clarification is another dimension of ethical leadership. It indicates that ethical
leaders are transparent and engage in open communication (Brown et al, 2005). Ethical leaders
clarify performance goals, expectations, and responsibilities (De Hoogh & Den Hartog, 2008).
Researchers suggest other dimensions of ethical leadership. Brown et al (2005) argue that
ethical leaders assist their followers in the ethical dilemma they face. This is referred to as ethical
guidance (Kalshoven et al, 2011). Ethical guidance implies communication about ethics,
explanation of ethical issues, and promotion and reward of ethical conduct (Kalshoven et al, 2011).
Another dimension is people oriented behaviour. People orientation reflects the ethical leader`s
concern for people, i.e. caring about, respecting, and supporting subordinates (Treviño et al, 2003).
People orientation was highly focused by Treviño et al (2003) as an important ethical leadership
dimension.
Research on sustainability draws attention to ethical leadership. Hargreaves & Fink (2004,
2006) studied sustainability of leadership in the educational sector. They suggest that sustainability
focuses on the development of others, distribution of responsibilities, and endurance over time.
Further, Ferdig (2007) argues that sustainable leaders act beyond their self-interest. Accordingly,
Kalshoven et al (2011) included environment orientation or sustainability as one of the dimensions
of ethical leadership. This dimension is concerned with the impact of leaders` actions beyond the
scope of their own workgroup and caring about the impact of their actions on the society
(Kalshoven et al, 2011).
The last dimension of ethical leadership as identified by Kalshoven et al (2011) is integrity.
Kalshoven et al conclude that ethical leaders keep their promises, trustworthy, and act consistently
in a predictable way. This was referred to as “integrity” (Kalshoven et al, 2011).
Brown & Treviño (2006) focused on studying the outcomes of ethical leadership using the
social learning theory. According to Brown & Treviño (2006), ethical leaders are considered as an
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important source of employee`s guidance. This is because the attractiveness and credibility of
ethical leaders as role models draw attention to their modelled behaviour. Bandura (1986) argue that
power and status are two characteristics of models that make them more attractive. Accordingly,
because of their power and status, followers are more likely to pay attention to the behaviour of
ethical leaders. However, not only power and status influence followers in modelling the behaviour
of ethical leaders, but also their honesty and credibility. As argued by Brown & Treviño (2006),
ethical leaders are credible because they are trustworthy and do what they say.
Considering the influence of ethical leaders on the behaviour of followers, it is possible to
predict their influence on employees` acceptance to change. It is arguable that ethical leaders have
the ability to prepare their followers to understand the importance of change and participate in its
implementation. This makes it important to discuss employees` readiness to change and predict the
relationship between ethical leadership and readiness to change.
2. 2 EMPLOYEES` READINESS TO CHANGE
Organizational change has become a necessity in a highly competitive environment. It is
arguable that change is the only way for today`s organizations to survive in a highly competitive
environment. Change can be regarded as breaking down existing structures and building new ones
(Chonko, 2004). It is “the organizational transformation between two points in time” (Faghihi &
Allameh, 2012, p.217). Change might take different forms. It may be small or large (Shah & Shah,
2010). Regardless of change type, it affects employees` behaviours and attitudes.
Research has been concerned with discussing the role of people in the success of change
initiatives. In fact, researchers believe that employees` attitudinal and behavioural reactions to
change play a major role in the success of any change initiative (Kim & Mauborgne, 2003; Shin et
al, 2012). Accordingly, different researchers have focused on the person-focused approach to the
study of organizational change (e.g. Judge et al, 1999; Wanberg & Banas, 2000; Vakola &
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Nikolaou, 2005). As Soumyaja et al (2015) state, “the key challenge of change lies in gaining
employees` willingness to commit to the change effort” (p. 12)
Organizational change is accompanied by anxiety, uncertainty, and ambiguity. To overcome
this, researchers have focused on studying factors influencing employee`s readiness to change
(Cinite et al, 2009). Lewin (1954) has proposed three stages to bring about change in any system:
unfreezing, changing, and refreezing. Schein (1989) studied Lewin`s model in more depth and
provided an example of a contemporary approach to organizational change. Holt et al (2007) further
studied Lewin`s model and demonstrated that successful change consists of three stages: 1)
readiness to change,, 2) adoption, and 3) institutionalization. Thus studying readiness to change is
crucial to the success of change initiatives.
Armenakis et al (1993) explain that readiness refer to employees` beliefs, thoughts, and
behaviors of organizational needs and capabilities. Madsen (2005) demonstrates that employees`
readiness affect their mental and physical preparation for accepting and dealing with change. As
Madsen (2003) explain, readiness to change means that employees are prepared mentally and/or
physically for immediate actions that will improve, alter, vary, or modify something.
Employees` reactions to change are influenced by different factors. Because change is a
transformation from the known to the unknown, employees might react differently to change
(Wittigg, 2012). Researchers have differed in the way of studying the construct of readiness to
change. Some researchers consider readiness to change as a multidimensional construct measured
through three main dimensions: cognitive, affective, and behavioural (Abdulrashid et al, 2003;
Bouckenooghe & Devos, 2007). Others consider readiness to change as a uni-dimensional construct
(Madsen et al, 2005; Holt et al, 2007). Holt et al (2007) studied antecedents of readiness to change
in terms of context, content, process, and individual factors.
Researchers have focused on studying factors related to readiness to change. Miller et al (2006)
examined different workplace factors and their impact on readiness to change. They concluded that
management/leadership relationship, job knowledge and skills, and job demands significantly
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influence employees` readiness to change. Erturk (2008) studied factors influencing readiness in a
public sector organization in Turkey. Erturk concluded that trust in supervisors mediates the
relationship between managerial communication and openness to change. Shah & Shah (2010)
found that readiness to change is influenced by employees` beliefs of self-efficacy, appropriateness,
management support, and personal valence.
Based on the discussion of ethical leadership (EL), readiness to change, and the influence of
leadership on employees` readiness to change, the first research hypothesis can be formulated as
follows:
H1: Ethical leadership has a positive impact on employees` readiness to change
2.3 ORGANIZATIONAL CULTURE
Researchers have introduced different definitions of organizational culture. Deshpande &
Webster (1989) define organizational culture as the pattern of shared values and beliefs that wide
members of an organization understand and have the appropriate behavioural norms in the
organization. Organizational culture reflects organizational norms and values that identify the
acceptable and unacceptable patterns of behaviours. As Khuong & Nhu (2015) explain,
organizational culture is the core of organizational activities that affect its overall performance,
effectiveness, and quality of products and/or services.
Organizational culture has been found to be significantly related to employees` job satisfaction,
commitment, performance, and citizenship behaviour (e.g. House et al, 2004; Moynihan & Pandey,
2007; Ahmad, 2012; Khan & Abdul Rashid, 2012; Messner, 2013; VUKONJANSKI & NIKOLIĆ,
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2013). Further, it has been argued that organizational culture helps employees adapt to different
types of organizational and environmental change (Pool, 2000; Abdul Rashid et al, 2004). Holt et al
(2007) believe that employee`s participation is one of the factors that influence the success of
organizational change. Reichers et al (1997) demonstrate that when employees participate in the
design and development of change, they come to be less resistant to change. According to Reichers
et al (1997), employees must believe they are considered as a part of the change program. By doing
this they tend to be more ready to implement change successfully.
Nevertheless, if employees are encouraged to participate and their inputs are consistently and
genuinely considered, commitment and performance will increase and resistance to change will be
reduced (Wanberg & Banas, 2000; Bouckenooghe & Devos, 2007). Furthermore, the degree of
employees’ participation in decision making, of employee’ empowerment, of trust given to them,
and their involvement in change initiatives is a reflection of the organizational culture. Moreover,
the way employees are treated within the organization, their participation in decision making, and
the level of employees` empowerment reflect the leadership style within the organization. Thus, it is
arguable that organizational culture reflects the leadership style. An ethical leadership is expected to
create an organizational culture that respects employees, believes in employees` empowerment and
participation, and encourages change initiatives.
Accordingly, it is possible to formulate the following research hypotheses:
H2: ethical leadership has a positive impact on organizational culture
H3: organizational culture influences employees` readiness to change
According to Sashkin & Rosenbach (2013) the nature of organizational culture can be
described using five dimensions: managing change, achieving goals, coordinating teamwork,
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building a strong culture, and customer orientation. These dimensions describe the nature of culture
in any organization. They are affected by and reflect the nature of organizational culture. Sashkin &
Rosenbach (2013) explain that these dimensions reflect the organizational effectiveness – or
organizational failure. As they explain:
“When organization members share a strong belief that they can have
some effect on their environment they are likely to invest their energies in
efforts that just might have some positive payoff. If they believe
instead that they can't have any impact, then it isn't relevant whether or
not that's really true; they won't try. And, the result can be disastrous for
the organization.” (Sashkin & Rosenbach, 2013, p. 3)
2.3.1 Managing change reflects the ability of the organization to adapt to change and manage it
effectively (Sashkin & Rosenbach, 2013). It is expected that ethical leaders are more influential in
raising employees` readiness to change when the organization is of a culture that accepts change
and has the ability to adopt effectively to different change types.
Achieving goals is concerned with measuring the ability of the organization to effectively achieve
goals, as well as the degree to which there is a coherent and shared (aligned) goals , and the degree
to which shared values support improvement and achievement (change) (Sashkin & Rosenbach,
2013).
2.3.2 Coordinated teamwork evaluates the effectiveness of the organization to coordinate teams and
groups efforts (Sashkin & Rosenbach, 2013). This dimension is important because long term
organizational survival depends on how well efforts of individuals and groups are tied together and
directed towards achievement of organizational goals.
2.3.3 Cultural strength is mainly concerned with the ability of organizational culture to support
long-term organizational survival. As explained by Sashkin & Rosenbach (2013), a strong
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organizational culture, in which everyone strongly follows a set of commonly shared values and
beliefs, is not necessarily an organizational culture that helps the organization to survive and be
effective. Thus, this dimension is not only concerned with the strength of the culture, but also with
the sort of values and beliefs that form the culture. According to Sashkin & Rosenbach:
”Whether a strong culture is also a good culture, helping the organization to
function and survive in the long run, depends on the sort of values and beliefs
that form the cultural fabric. When the culture is based on values that do not
support the functions of managing change, organizational achievement,
customer orientation, and coordinated teamwork--or when the values
actually work against the effective performance of these functions—then a
"strong" culture might actually hamper organizational survival.” (2013, p.6)
2.3.4 Customer orientation reflects the extent to which the organization is customer oriented. I.e.
pays attention to customers` needs and expectations. Such organizations are supportive to change
simply because customers` desires are highly changeable (Sashkin & Rosenbach, 2013).
Organizations that are customers oriented are well prepared to adopt to continuous change.
Based on the detailed discussion of organizational culture and its components, it is possible
to argue that an organization that believe in the importance of change, works according to specific
goals and targets, believes in and encourages teamwork, has a strong culture, and are customers`
oriented are supportive to change. However, as discussed earlier, organizational culture is argued to
reflect leadership style. Thus, organizational culture is expected to facilitate or burden leaders from
achieving their goals and influencing followers. Accordingly, ethical leaders are expected to
influence employees` readiness to change through creating an organizational culture that is
supportive to change. The previous discussion leads to the fourth hypothesis.
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H4: Ethical leadership have a positive impact on employees` readiness to change through the
mediating effect of organizational culture
3. IMPACT OF DEMOGRAPHIC FACTORS
Review of the literature indicates that there is unclear impact of demographic factors of leaders
on ethical leadership. However, researchers have been concerned with studying the impact of
gender on ethical leadership (e.g. Ambrose & Schminke, 1999; Eagly & Carli, 2003). Some, argue
that there is a moral difference between males and females which is usually in favor of females (e.g.
Gilligan, 1982; Ameen et al, 1996; Dawson, 1997; Roxas & Stoneback, 2004; Marta et al., 2008).
Others, find no difference between males and females with regard to moral development and
reasoning (e.g. Walker, 1985; Rest, 1986; Davis & Welton, 1991; Mason & Mudrack; 1996, Brown
& Treviño, 2006). Considering differences in research findings, Ambrose & Schminke (1999)
concluded that there was no definite finding related to the impact of gender differences on ethics.
Ambrose & Schminke suggest that only perceived gender differences in ethics exist.
Other demographic factors were included in studying ethical behaviour. Deshpande (1997)
found a significant difference between males and females based on gender and work experience.
Veit & Murphy (1996) studied differences in ethical behaviour based on gender, education level,
and work experience. Also, Borkowski & Ugras (1992) found that gender had a statistically
significant impact on ethical behaviour however; this was not true for work experience. There is a
lack of agreement about the impact of age on ethical behaviour. Some researchers believe that there
is a positive relationship between age and ethical behaviour (e.g. Peterson et al., 2001; Chiu, 2003;
Vitell et al, 2007). Others provide statistical evidence that younger people tend to be more ethical in
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their behaviors than older people (e.g. Ede et al., 2000; Vitell et al., 2007). Educational level and
years of experience are other demographic factors that were studied in relation to ethical behaviors,
but not specifically ethical leadership.
Regarding organizational culture, researchers have been concerned with studying the impact of
demographic factors on the perception of organizational culture. For example, Hofstede et al (1990)
argue that the values of employees differ according to nationality, age, and level of education.
Helms & Stern (2001) indicate that there is a significant relationship between the perception of
organizational culture and age, gender, and ethnic background. However, Helms & Stern (2001)
argue that there is no significant impact of the length of work experience on cultural perception. In a
more recent study, Bellou (2010) provides evidence that age and gender influence employees`
perception of organizational cultural values. Similarly, SAYLI et al (2010) observed a significant
difference in the perception of organizational culture according to age, gender, and education level.
However, SAYLI et al (2010) indicate no significant difference in the cultural perception according
to the length of experience.
Nevertheless, the relationship between demographic factors and readiness to change was
discussed and investigated by many researchers (e.g. Kirchmeyer, 1995; Hanpachern, 1997; Weber
& Weber, 2001). Hanpachern (1997) found that readiness to change was significantly related to
work experience and position. However, Hanpachern argues that there is no significant relationship
between readiness to change, gender, and marital status. Similarly, Weber & Weber (2001) found
no significant relationship between readiness to change and age and education. In contrast to
Hanpacher (1997), Weber & Weber (2001) found no significant relationship between work
experience and readiness to change.
Madsen et al (2005) studied the relationship between number of children and readiness to
change. Surprisingly, Madsen et al found a positive significant relationship between number of
children and individual`s willingness to change. Also, Madson et al (2005) along with Kirchmeyer
(1995) found a positive significant relationship between age and commitment to change. This
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contradicts other researchers who found a negative relationship between age and readiness to
change (Hanpachern, 1997; Weber & Weber, 2001; Yoon & Thye, 2002).
Despite differences in research findings, previous discussion demonstrate the impact of
demographic factors on ethical leadership, organizational culture, and readiness to change.
Differences in Western research findings raise the issue of similarity between Western and Arab
(Eastern) research findings. It is interesting to investigate the impact of demographic factors (such
as gender, age, working experience, education, position) on ethical leadership, organizational
culture, and readiness to change in an Arab culture like Egypt. This is useful in illustrating
differences and/or similarities between Western and Arab countries. Further, this comparison may
explore cultural issues that might affect research variables and included relationships.
Accordingly it is possible to formulate the fifth research hypothesis as follows:
H5: demographic factors have an impact on ethical leadership, organizational culture, and
employees` readiness to change.
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4. METHODOLOGY
4.1 Research Model and Hypotheses
Ethical Leadership





Fairness
Power sharing
People orientation
Role clarification
Sustainability
Readiness to Change
H1
H4
Organizational Culture
 Managing change
 Achieving goals
 Coordinating team
work
 Strong organizational
culture
Figure
Research
Model and Hypothese
 1.
Customer
orientation
5. Measurement
Research variables include ethical leadership, organizational culture, and readiness to change. These
were measure as follows:
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5.1 Ethical leadership
Five main dimensions were used to measure ethical leadership (De Hoogh & Den Hartog, 2008;
Kalshoven et al, 2011): fairness, power sharing, people orientation, role clarification, and care for
sustainability. Likert scale was used with five levels of agreements (strongly agree, agree, neutral,
disagree, and strongly disagree). A number of statements were used to measure each dimension. For
each statement, participants were asked to evaluate the ethical dimension of their managers by
choosing the level of agreement that expresses their opinion the most.
5.2 Organizational culture
Culture was measured using the organizational culture assessment questionnaire (OCAQ)
adopted from Sashkin & Rosenbach (2013). The OCAQ measures the organizational culture using
five main dimensions: managing change, achieving goals, coordinating team work, building a
strong culture, and customer orientation. Each dimension was measured using a number of
statements. Likert scale with five levels of agreements was used. Participants were asked to choose
the level of agreement that better expresses their opinions about each statement.
5.3 Readiness to change
Readiness to change was measured using 13 statements. Participants were asked to think about
how their organization typically plans for and implements workplace changes. With this “change
history” in mind, they were asked to respond to each statement by selecting the level of agreement
that better expresses their opinions. The statements were adopted from three main sources: change
readiness survey (WorkLife Design, 2008), McNabb & Sepic (1995), Rollnick et al (1992).
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6. Sample
This study was conducted in the public foreign trade companies in Egypt. Public foreign trade
companies in Egypt include: Misr for Foreign Trade Co., Misr for Exports & Imports Co., and El
Nasr Exports & Imports Co. A simple random sample was used for the purpose of data collection.
Table 1 shows the sample size and its distribution across the three public companies of foreign trade
in Egypt.
Table 1. Sample Size and Distribution
Total number of
Sample size
employees
Misr for Foreign Trade Co.
3132
224
Misr for Export & Import Co.
1450
103
El Nasr Export &Import Co.
418
30
Total
5000
357
Sample size was calculated using the following equation (Cochran, 1963):
𝑁 = ((𝑍 𝛼/2)^2 . 𝑝. 𝑞 )/𝐸^2
Where:
 N is the sample size
 〖(𝑍 𝛼/2)〗^2 is the abscissa of the normal curve that cuts off an area α at the tails. The value
for Z is found in statistical tables which contains the area under the normal curve e.g. Z=1.96 at a
confidence level 95%.
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 P is the estimated response rate, i.e. the estimated proportion of an attribute that is present in the
population (e.g. 50% or 0.5) and q equals (1-p).
 E is the desired level of preciseness (usually calculated at 5%).
For small population size (less than 20,000) sample size equals:
(𝑁. 𝑛 )/(N + n − 1)
Where:
 n is the population size.
Accordingly, sample size in this study is calculated as follows:
𝑁 = (〖(𝑍 𝛼/2)〗^2 . 𝑝. 𝑞 )/𝐸^2
𝑁 = (〖(1.96)〗^2 𝑥 0.5 𝑥 0.5)/((0〖. 05〗^()2) ) = 384
As the population size is less than 20,000, then:
Sample size = (384 𝑥 5000)/(384 + 5000 − 1) = 1,920,000/5383= 357
7. Data analysis
Data were statistically analysed using SPSS VR 22. Descriptive statistics were used to
for the purpose of comparison. Structural Equation Modelling (SEM) was conducted using
AMOS VR (22) to test research hypotheses and to show the mediating effect of
organizational culture on the relationship between ethical leadership (EL) and employees`
readiness to change. SEM is a general statistical modelling technique that is widely used in
19
behavioural sciences. It is a combination of factor analysis and regression or path analysis
(Hox & Bechger, 1999),
T-test (for two independent groups) and one way ANOVA (for more than two independent
groups) were used to study the impact of demographic factors on research variables.
8. FINDINGS
8.1 Reliability and validity
Reliability reflects consistency and stability of test results determined through statistical
methods after repeated trials (i.e. the degree to which an assessment tool produces stable
and consistent results). In this study, reliability was measured using Cronbach's Alpha
Coefficient and Composite Reliability Coefficient. Cronbach`s alpha coefficient ranges from
zero to 1. The closer the coefficient to 1 the higher is reliability. An acceptable reliability
level is usually of a coefficient that ranges from 0.6 ≥ α ≤ 1. Whilst Cronbach`s Alpha
measures connection between items, composite reliability takes into consideration errors in
statement formulation. The minimum acceptable value of composite reliability coefficient
should not be less than 0.7 (Peterson & Kim, 2013; Colwell, 2016).On the other hand,
validity is the extent to which a concept, conclusion or measurement is well-founded and
corresponds accurately to the real world. The validity of a measurement reflects the degree
to which the tool measures what it claims to measure (Brains et al, 2011).
8.1.1 Overall reliability
The overall Cronbach`s alpha coefficient is .967 (0.6≥ 0.967 ≤1) which indicates a high
level of reliability (stability over time). Consequently, the overall validity is 0.983 (≥ 0.9)
which implies a high validity level – Table 2. Further, the overall composite reliability
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coefficient is 0.986. This value is greater than 0.70 which indicates a high level of
reliability, i.e. reveals a high level of confidence with the results of data analysis.
Table 2. Overall Reliability and Validity
No. of
Composite
Cronbach's
Items
reliability
Alpha
Average
variance
Validity
extracted
Ethical leadership
29
0.959
0.902
0.950
0.526
Organizational culture
28
0.964
0.895
0.946
0.585
Readiness to change
14
0.955
0.958
0.979
0.618
71
0.986
0.967
0.983
total
Regarding the three research variables, Table 2 shows that values of Cronbach's alpha
coefficient range between 0.895 and 0.958. Also, the values of composite reliability
coefficient range between 0.955 and 0.964. Thus, the values of Cronbach's alpha and
composite reliability (greater than 0.70) indicate a high level of reliability of data collected
about each of the three research variables (ethical leadership, organizational culture,
readiness to change).
Average Variance Extracted (AVE) is used to assess convergent validity. Convergent
validity means that a test designed to measure a particular construct is actually measuring
that construct (Akkucuk, 2015). The values of AVE for the three research
dimensions/variables range between 0.526 and 0.618. These values are greater than 0.50
which indicates a high level of validity.
8.1.2 Validity of research variables: confirmatory factor analysis (CFA)
21
CFA can be used to examine construct validity and whether a measure is invariant or
unchanging across groups, population, or time (Harrington, 2009). In this study, CFA was
used to test the method effect, i.e. the relationship between items or variables that result
from the measurement approach (the questionnaire) (Podsakoff et al, 2003)
a) Ethical leadership (EL)
Standard estimate value of ethical leadership variable ranges between 0.502 and
1.000, which represent the loading coefficients for each latent variable. Moreover, all
variables were greater than 0.50. Also, there is a significant correlation between the
statements expressing the exogenous variables and the latent variable at a confidence
level 99% (this is known as uni-dimensionality). Therefore, these statements strongly
express and measure the latent variables for ethical leadership dimension and none of
them can be excluded.
b) Organizational culture
Standard estimate value of organizational culture variable ranges between 0.500 and
0.987, which represent the loading coefficients for each latent variable. Moreover, all
variables were shown to be greater than 0.50. Also, there is a significant correlation
between the statements expressing the exogenous variables and the latent variable at a
confidence level 99% (this is known as uni-dimensionality). Therefore, these statements
strongly express and measure the latent variables for Organizational culture dimension.
Thus, none of the statements used to measure organizational culture can be excluded.
c) Readiness to Change
22
Standard estimate value of readiness to change variable ranges between 0.648 and
0.913, which represent the loading coefficients for each latent variable. Moreover, all
variables were found to be greater than 0.50. Also, there is a significant correlation
between the statements expressing the exogenous variables and the latent variable at a
confidence level 99% (this is known as uni-dimensionality). Therefore, these statements
strongly express and measure the latent variables for readiness to change dimensions.
Hence, all statements used to measure readiness to change are important and none of
them can be excluded.
9. Testing Research Hypotheses
H1: ethical leadership has a significant positive impact on employees` readiness to change
Model variables include:
 Observed Endogenous Variables : the dependent variable - Readiness to change.
 Observed Exogenous Variables: include dimensions of the independent variable
(Ethical Leadership): people orientation, power sharing, fairness, role clarification,
concern for sustainability, ethical guidance, and integrity.
 Unobserved Exogenous Variables: include errors of the dependent variable
(Readiness to change).
Structural Equation Modelling (SEM) statistically analysed the different paths between
the observed exogenous variables (people orientation, power sharing, fairness, role
clarification, concern for sustainability, ethical guidance, and integrity) and the observed
endogenous variable (readiness to change). The direct paths between ethical leadership and
readiness to change are summarized in Figure Two. Other paths that are not included in the
framework are indirect.
23
Figure Two: Adjusted Framework for SEM
The direct paths for readiness to change are shown in Table 3.
Table 3: Direct paths for Readiness to Change
Dependent
Path
Readiness to change
<-------
Readiness to change
Independent
Standardized
T-test
P_value
Ethical guidance
0.484
11.662
***
<-------
Role clarification
0.389
8.984
***
Readiness to change
<-------
Power sharing
0.211
5.624
***
Readiness to change
<-------
People Orientation
-0.103
-2.75
0.006**
** Significant at (α =1%) level
*** Significant at (α =0.1%) level
Table 3 shows the following:
1) There is a significant positive direct impact from ethical guidance on readiness to
change at confidence level .99 with path coefficient 0.484.
2) There is a significant direct impact from role clarification on readiness to change at
confidence level .99 with path coefficient 0.389
3) There is a significant direct impact from power sharing on readiness to change at
confidence level .99 with path coefficient 0.211
24
4) There is a significant direct impact of people orientation on readiness to change at a
confidence level 0.99 and a path coefficient -0.103
The coefficient of determination (R square) equals to 0.788, which indicates that the
independent variable (Ethical leadership) explains 78.8% of any change in the dependent
variable (Readiness to change). Goodness of fit indexes show that the model fit is high. The
Chi Square (χ2) test yields a statistic of 39.956 (DF=20), which has a corresponding
standardized χ2 of 0.835. This value is too small to reject the null hypothesis of a good fit.
The values of Root Mean Square Error of Approximation (RMSEA), Root Mean Residual
(RMR), Comparative fit Index (CFI), Goodness of Fit Index (GFI), Normed Fit Index, and
Incremental Fit Index (IFI) are 0.007, 0.002, 1.000, 0.976, 0.999 and 1.000 respectively.
This suggests that the model fits the data well. In this case all of the unconstrained estimates
are statistically significant.
So H1 is accepted as; there is there is a significant positive impact of ethical leadership on
readiness to change.
H2: ethical leadership has a significant positive impact on organizational culture
Model variables include:
 Observed Endogenous Variables : include the dependent variable (organizational
culture) and its main dimensions: managing change, goal achievement, coordinated
teamwork, customer orientation, and cultural change.
 Observed Exogenous Variables: include the independent variable (ethical
leadership) and its main dimensions: people orientation, power sharing, fairness, role
clarification, concern for sustainability, ethical guidance, integrity.
25
 Unobserved Exogenous Variables: include errors of the main dimensions of the
dependent variable (organizational culture) including: managing change, goal
achievement, coordinated teamwork, customer orientation and cultural change.
Using Structural Equation Modelling (SEM) paths between the observed exogenous
variables (people orientation, power sharing, fairness, role clarification, concern for
sustainability, ethical guidance, and integrity) and the observed endogenous variables
(managing change, goal achievement, coordinated teamwork, customer orientation, and
cultural change) were statistically analysed. Figure 3 shows the adjusted framework for
SEM including the direct paths between ethical leadership and organizational culture.
Figure 3: Adjusted Framework for SEM
The direct paths for organizational culture are shown in Table 4.
26
Table 4: Direct and Indirect Paths for Organizational Culture
Dependent
Path
Independent
Standardized
T-Test
Cultural change
<---
Integrity
-.133
-3.513***
Coordinated teamwork
<---
Integrity
.138
3.394***
Cultural change
<---
Ethical guidance
.917
19.808***
Customer orientation
<---
Ethical guidance
.431
10.095***
Coordinated teamwork
<---
Ethical guidance
-.239
-4.527***
Goal achievement
<---
Ethical guidance
.409
9.352***
Managing change
<---
Ethical guidance
.304
7.61***
Customer orientation
<---
Concern for sustainability
.274
8.424***
Goal achievement
<---
Concern for sustainability
.121
3.568***
Customer orientation
<---
Role clarification
.306
7.617***
Coordinated teamwork
<---
Role clarification
.427
8.334***
Coordinated teamwork
<---
Fairness
.526
13.552***
Cultural change
<---
Power sharing
.113
2.823**
Customer orientation
<---
Power sharing
.164
4.563***
Coordinated teamwork
<---
Power sharing
.201
4.607***
Goal achievement
<---
Power sharing
.491
14.213***
Managing change
<---
People Orientation
.613
17.452***
Customer orientation
<---
People Orientation
-.124
-3.435***
Cultural change
<---
People Orientation
-.110
-2.695**
** Significant at (α =1%) level
*** Significant at (α =0.1%) level
27
Table 4 shows the following:
1) There is a significant direct impact from Integrity, Ethical guidance, Role
clarification, Fairness and Power sharing on coordinated teamwork at confidence
level .99 and a path coefficient 0.138, -0.239, 0.427, 0.526 and 0.201 respectively.
2) There is a significant direct impact from Ethical guidance, Concern for sustainability,
Role clarification, Power sharing and People Orientation on Customer orientation at
confidence level .99 with path coefficient 0.431, 0.274, 0.306, 0.164 and -0.124
respectively.
3) There is a significant direct impact from Ethical guidance, Concern for sustainability,
Power sharing on Goal achievement at confidence level .99 with path coefficient
0.409, 0.121 and 0.491 respectively.
4) There is a significant direct impact from Integrity, Ethical guidance, Power sharing
and People Orientation on Cultural change at confidence level 0.99 with path
coefficient -0.133, - 0.917, 0.113 and - 0.119 respectively.
5) There is a significant direct impact from Ethical guidance and People Orientation on
Managing change at a confidence level 0.99 and a path coefficient -0.304 and 0.613
respectively.
The coefficient of determination (R Square) is 0.865 which implies that ethical
leadership explains 86.5% of any change in organizational culture. The overall model fit
appears quite high. The χ2 test yields a statistic of 39.956 (DF=20), which has a
corresponding standardized χ2 of 1.998. This value is too small to reject the null hypothesis
of a good fit. The RMSEA of 0.079 , RMR of 0.007, CFI of 00.993, GFI of 0.976, NFI of
28
0.986 and IFI of 00.993 also suggest that the model fits the data well. In this case all of the
unconstrained estimates are statistically significant.
So H2 is accepted as; there is a significant positive effect of ethical leadership on
organizational culture.
H3: there is a significant positive relationship between organizational culture and
employees` readiness to change
Model variables include:
 Observed Endogenous Variables : include the dependent variable (readiness to
change).
 Observed Exogenous Variables: include the main dimensions of the independent
variable (organizational culture): managing change, goal achievement, coordinated
teamwork, customer orientation, and cultural change.
 Unobserved Exogenous Variables: include the error of the dependent variable
(readiness to change).
Using Structural Equation Modelling (SEM) paths between the observed exogenous
variables (managing change, goal achievement, coordinated teamwork, customer orientation
and cultural change) and the observed endogenous variable (readiness to change) were
statistically analysed. Figure 4 shows adjusted framework for SEM including the direct
paths between organizational culture and readiness to change.
29
Figure 4: Adjusted Framework for SEM
Direct paths for readiness to change are shown in Table 5.
Table 5: Direct and Indirect Paths for Readiness to Change
Dependent
Path
Independent
Standardized
T-test
Readiness to change
<------
Customer orientation
0.357
7.741***
Readiness to change
<------
Coordinated teamwork
0.172
4.958***
Readiness to change
<------
Goal achievement
0.148
3.081**
Readiness to change
<------
Cultural change
0.358
8.365***
** Significant at (α =1%) level
*** Significant at (α =0.1%) level
Table 5 shows the following:
1) There is a significant direct impact from Customer orientation on Readiness to
change at a confidence level 0.99 and a path coefficient 0.357
2) There is a significant direct impact from Coordinated teamwork on Readiness to
change at a confidence level 0.99 and a path coefficient 0.172
3) There is a significant direct impact from Goal achievement on Readiness to change at
a confidence level 0.99 and a path coefficient 0.148
30
4) There is a significant direct impact from Cultural change on Readiness to change at a
confidence level 0.99 and a path coefficient 0.358
The coefficient of determination (R square) equals to 0.780. This indicates that the
independent variable (Organizational culture) explains 78.0% of any change in the
dependent variable (Readiness to change). The overall model fit appears quite high. The χ2
test yields a statistic of 1.925 (DF=1), which has a corresponding standardized χ2 of 1.925.
This value is too small to reject the null hypothesis of a good fit. The value of RMSEA of
.059 , RMR of .003, CFI of 0.999, GFI of .998, NFI of .998 and IFI of 0.999 suggest that
the model fits the data well. In this case all of the unconstrained estimates are statistically
significant. Eventually, H3 is accepted as there is a significant positive effect of
organizational culture on readiness to change.
H4: Organizational culture significantly mediates the positive relationship between ethical
leadership and employees` readiness to change
Model variables include:
 Observed Endogenous Variables : include the dependent variable (readiness to
change) and the mediator (organizational culture)
 Observed Exogenous Variables: include the independent variable (ethical
leadership) and its main dimensions: people orientation, power sharing, fairness, role
clarification, concern for sustainability, ethical guidance, and integrity
 Unobserved Exogenous Variables: include the errors of the dependent variable
(readiness to change) and the mediator (organizational culture).
Using Structural Equation Modelling (SEM) paths between the observed exogenous
variables (people orientation, power sharing, fairness, role clarification, concern for
31
sustainability, ethical guidance, and integrity) and the observed endogenous variables
(organizational culture and readiness to change) were statistical analysed. Figure 5 shows
the adjusted framework for SEM including the direct paths between ethical leadership,
organizational culture, as well as the indirect paths through the mediating effect of readiness
to change.
Figure 5: Adjusted Framework of SEM
The direct and indirect paths of readiness to change are summarized in Table 6.
32
Table 6: The direct and indirect paths of readiness to change
Dependent
Moderate
Organizational culture
<---
Organizational culture
<---
Independent
Ethical guidance
Standardized
T-Test
0.445
12.826***
0.085
2.554*
Concern for
sustainability
Organizational culture
<---
Role clarification
0.179
4.99***
Organizational culture
<---
Fairness
0.125
4.479***
Organizational culture
<---
Power sharing
0.254
8.025***
Organizational culture
<---
People Orientation
0.074
2.455*
Readiness to change
<---
Organizational culture
0.693
12.078***
Readiness to change
<---
Fairness
-0.030
-2.745**
Readiness to change
<---
People Orientation
-0.139
-4.613***
Readiness to change
<---
Role clarification
0.356
3.677***
Readiness to change
Organizational culture
People Orientation
0.074
***
Readiness to change
Organizational culture
Power sharing
0.254
***
Readiness to change
Organizational culture
Fairness
0.125
***
Readiness to change
Organizational culture
Role clarification
0.179
***
Readiness to change
Organizational culture
0.085
***
0.445
***
Concern for
sustainability
Readiness to change
Organizational culture
* Significant at (α = 5%) level.
Ethical guidance
** Significant at (α =1%) level.
*** Significant at (α =0.1%) level.
Table 6 shows the following:
 There is a significant positive impact of integrity, ethical guidance, and power sharing
on managing change at a confidence level 99%. Also, there is a significant positive
impact of people orientation and fairness on managing change at a confidence level 95%.
33
 There is a positive significant impact of ethical guidance, concern for sustainability,
role clarification, power sharing, and people orientation on customer orientation at a
confidence level 99%.
 There is a positive impact of ethical guidance, integrity, power sharing, fairness, and
role clarification on coordinated teamwork at a confidence level 99%
 There is a positive significant impact of ethical guidance, power sharing, and concern
for sustainability on goal achievement at a confidence level 99%. However, there is a
significant positive impact of integrity on goal achievement at a confidence level 90%.
 There is a significant positive impact of people orientation and ethical guidance on
managing change at a confidence level 99%. Also, there is a significant positive impact
of role clarification and integrity on managing change at a confidence level 90%.
 There is a significant positive impact of coordinated teamwork, customer orientation,
goal achievement, and managing change on readiness to change at a confidence level
99%
Goodness of fit indexes indicate that the model is highly acceptable as all indexes are
within the acceptable level (not less than .90) – Table 7. For example, the value of Root
Mean Square Residual (RMR) and Root Mean Square Error of Approximation (RMSEA) is
0.010 and 0.079 respectively which indicates a very low error percentage of the model.
Also, the value of Incremental Fit Index (IFI) is 0.988.
34
Table 7: Goodness of Fit Indexes
1
Normed Chi-Square
2.684
2
Goodness of Fit Index (GFI)
0.966
3
Normed Fit Index (NFI)
0.981
4
Comparative Fit Index (CFI)
0.988
5
Tucker Lewis Index (TLI)
0.959
6
Incremental Fit Index (IFI)
0.988
7
Root Mean Square Residual (RMR)
0.010
8
Root Mean Square Error of Approximation (RMSEA)
0.079
Thus, H4 is accepted as organizational culture mediates the significant positive relationship
between ethical leadership (independent variable) and employees` readiness to change
(dependent variable).
H5: demographic factors have a significant impact on ethical leadership, organizational
culture, and employees` readiness to change.
T-test was used to test the impact of gender and nature of job on research variables, while
one-way ANOVA was used with age and experience.
1. Gender
Statistical analysis shows that gender differences have a significant impact on ethical
leadership at a confidence level 95% (p-value=0.025). Also, gender differences have an
impact on organizational culture and readiness to change at a confidence level 99% (pvalue= 0.006 and 0.009 respectively). This difference is in favour of females as female
35
leaders tend to be more ethical compared to male leaders (mean value for females 3.7142) >
(3.5623 mean value for males). This is also true for organizational culture and readiness to
change as females have a higher mean value than males (3.6399 > 3.4637) which implies
that females tend to be more supportive to an organizational culture that supports change in
comparison to their male counterparts. Further, females tend to be more supportive to
change than males (mean value for females is 3.5876 compared to 3.3138 for males).
2. Nature of the job
Data analysis shows that there is no statistically significant difference between managers
and non-managers towards ethical leadership, organizational culture, and readiness to
change (p-value > 0.05).
3. Age
Age differences have a statistically significant impact on ethical leadership (EL),
organizational culture, and readiness to change (p-value < 0.05). Regarding EL, age
differences have a statistically significant impact on EL at a confidence level 95% (pvalue=0.012). This difference is in favour of 35 to less than 45 age group (with the highest
mean value 3.7218). This implies that employees with the age of 35 to less than 45 tend to
support EL style than other employees.
Furthermore, there is a statistically significant difference among different age groups
towards organizational culture at a confidence level 99% (p-value=0.001). This difference is
in favour of employees with the age of 45 to less than 55 (with the highest mean value
among other age groups 3.6023). Also, there is a significant difference among age groups
towards readiness to change at a confidence level 99% (p-value=0.000), this difference is in
favor of employees with the age of 45 to less than 55.
36
4. Years of experience in the present job
Experience has a statistically significant impact on EL, organizational culture, and
readiness to change at a confidence level 99% (p-value=0.000). Employees with an
experience of 5 to less than 10 years tend to support EL, accept and support an
organizational culture that is encouraging change, and have a higher readiness to change
compared to employees with an experience less than 5 years as well as employees with an
experience of 10 years or more.
10. DISCUSSION
10.1 Relationship among EL, organizational culture, and employees` readiness to
change
This study provides evidence of the significant impact of EL on organizational culture.
However, certain elements of EL seem to be more important in shaping an organizational
culture that is supportive to change. This is explained below.
 Ethical guidance tend to be the most important element of EL in shaping an
organizational culture that is supportive to change (β = 0.446). Thus, leaders can create
an organizational culture that supports change through creating a culture of ethical
practices in which ethical leaders are expected to be fair in their choices, actions, and
decisions. As described in the literature, ethical leaders are expected to be trustworthy,
responsible, honest, objective, and take responsibility for their actions and decisions
(Treviño et al, 2003; Brown et al, 2005; De Hoogh & Den Hartog, 2008).
37
 Power sharing (β=0.253) tends to be the second important element of EL in shaping
organizational culture. The importance of power sharing as one of the elements of EL
has been widely discussed in the literature (e.g. Brown et al, 2005; Resick et al, 2006;
Yukl, 2006; De Hoogh & Den Hartog, 2008). Ethical leaders can create an
organizational culture that is regarded as "fertile to create change" by allowing
employees to participate in decision making and listen to their ideas and opinions. By
doing so, change initiatives might be introduced by employees themselves. This ensures
employees` support to change implementation.
 Ethical guidance (β=0.484) and role clarification (β=0.389) are the most important
elements of EL in shaping employees` readiness to change. Where ethical guidance is
useful in generating trust between leaders and their followers, role clarification
facilitates understanding the role of each employee in implementing change. This
facilitates change implementation and supports the success of change initiatives.
Regarding the impact of organizational culture on employees` readiness to change, a
strong organizational culture that supports change (β=0.358) and customer orientation
(β=0.357) are the most important factors that affect employees` readiness to change. An
organizational culture that encourages and supports change is a culture of employees who
believe in the importance of change, prepared to accept change, and believe in their role in
implementing a successful change. Further, it is arguable that customer orientation is closely
related to cultural change. In a highly competitive environment, customers` needs and
expectations have no limits. For an organization to survive in this market, there must be an
organizational cultural that accepts, encourages, and supports change. Thus, continuous
organizational development and change initiatives are crucial to the satisfaction of
38
customers` needs and expectations as well as to organizational survival in a highly
competitive market.
10.2 The impact of demographic factors
Regarding the impact of gender on ethical leadership, this study suggests that female
leaders tend to be more ethical compared to their male counterparts. For many years
researchers have been concerned with studying issues related to gender and whether gender
makes a difference. Many researchers have studied the moral and ethical dimension of
leadership and whether this dimension is affected by gender. The findings of this study
support other researchers who believe that females tend to be more ethical leaders and
support ethical business practices compared to their male counterparts. (e.g. Bernardi, 1997;
Morris, 1997; Beaman et al, 2009; Kish-Gephart, Harrison, & Treviño, 2010; Boulouta,
2012).
In contrast to the findings of this study, researchers suggest that there is insignificant
difference between males and females with regard to the ethical dimension (e.g. Murray,
1996; Hunter, 1997; Kanny, 1997; Balasubramanian & Krishnan, 2012). Balasubramanian
& Krishnan (2012) suggest that feminine traits are more supportive to ethical behaviour.
According to Balasubramanian & Krishnan (2012), females tend to be more ethical leaders
than males. Nevertheless, in a more recent study, Brown & Treviño (2006) have argued that
finding an impact of gender differences on ethical leadership behaviour is unlikely.
An interesting research finding is related to the relationship between length of
experience in the current job and EL, organizational culture, and readiness to change. This
39
study shows that employees with a longer experience are more supportive to EL and
organizational change compared to other employees with a shorter length of experience.
Further, the study provides evidence that middle age employees (45-55) are more supportive
to EL and organizational change compared to other employees.
This research finding could be explained using career stages model. Hall (1984) used
career lifecycle to describe the different career stages within the organization. Employees
with an experience of 5 to 10 years in their current job are expected to be at the end of their
middle career stage/the beginning of late career stage. Considering the three possible types
of employees` performance at these stages (growth, plateau, decline), employees aiming at
continuously improving their performance are expected to support ethical leadership
practices at their mid-career stage as they have gained sufficient experience to value the
importance of these practices. Meanwhile, employees with plateaued performance levels
may be expected to support change to find new interesting ways of doing work and to
overcome the routine working life they have. On the other hand, employees with an
experience less than 5 years tend to be at the establishment stage as they need stability to
actualize themselves and make a difference at the job. Meanwhile, employees with an
experience more than 10 years tend to be very close to retirement. Those employees prefer
the "status quo" as they have no time to experience change and enjoy its outcomes.
This study supports other researchers who provide evidence that there is a positive
relationship between age and employees` support to change (e.g. Steiner, 1979; Judson,
1991; Ming-Chu Yu; 2009). Judson (1991) explains that younger people do not usually
support change because it is difficult for them to make present sacrifices for future
gratifications for others. Also, Ming-Chu Yu (2009) concluded that 80.5% of the young
employees in his study were leaving the organization due to lack of developing
40
opportunities. In contrast, other researchers argue that there is a positive relationship
between age and employees` resistance to change (e.g. Dunks, 2000; Galangar, 2004;
Maaja, 2004; Felix et al, 2013). Dunks (2000) states that older employees may be
psychologically incapable of accepting radical change. Maaja (2004) argues that older
employees find it difficult to support change because of their previous experience. Maaja
(2004) provided evidence that young employees with a short working experience tend to be
more supportive to change. Similarly, Felix et al (2013) found that older members of the
organization do not support organizational change compared to younger organizational
members.
11. PRACTICAL IMPLICATIONS
This study provides evidence that female leaders tend to be more ethical than their male
counterparts. This must be used to enhance the ethical environment of the organization. To
achieve this, there must be opportunities for males and females to work together. This
working environment encourages exchange of knowledge and sharing experience which
influences the moral environment of organization. Meanwhile, it is important to give
females the opportunity to promote and grow in their organizations. Gilligan (1982) has
mentioned that if females are more ethical than males, then engaging and encouraging
females in their careers would certainly promote an ethical environment. According to
Shakeshaft (1993, p. 105):
“The point of examining these differences is not to say one approach is
right and one is wrong, but rather to help us understand that males and
females may be coming from very different perspectives, and that unless
41
we understand these differences, we are not likely to work well
together”.
Nevertheless, this study provides evidence that organizational culture has a direct impact
on employees` readiness to change. Thus, organizations need to adjust organizational
culture appropriately to enhance employees` readiness to change. Based on the current
study, EL is one way to build an organizational culture that is supportive to change which is
reflected in improving employees` readiness to change. Ethical leaders play a significant
role in creating a strong organizational culture that supports change. Ethical leaders should
not only focus on their ethical practices, rather they should focus on building a strong
ethical value system of the organization as a whole. Ethical leaders are responsible for
identifying the gap between current organizational practices and targeted value system.
Filling in the gap is also the responsibility of ethical leaders.
Further, building a culture of trust between leaders and employees is crucial to building
an ethical organizational value system. Trust encourages employees to express their
thoughts and ideas about ethical practices all over the organization. This discussion results
in creating a value system to which everyone in the organization is committed.
To ensure employees` commitment to the ethical value system of the organization,
ethical leaders are responsible to create a "code of conduct". Ethical leaders should
communicate this code of conduct to organizational members and ensure that the aim of this
code is clearly understood by everyone within the organization. Creating a code of conduct
to ensure building a strong organizational culture that is supportive to change has been
emphasized by other researchers (e.g. Khuong & Nhu, 2015).
42
12. FUTURE RESEARCH
The main contribution of this study is bringing ethical leadership, organizational culture,
and readiness to change together. Although many researchers have examined the impact of
EL on employees` readiness to change, the impact of organizational culture on this
relationship was rarely investigated. Further, investigating the relationship between EL,
organizational culture, and readiness to change in an Arab culture is another research
contribution as most research has been placed in Western countries. Despite differences in
research findings regarding the impact of gender on EL, this study provides evidence that
gender differences influences EL. This draws attention to the explanation of this moral
development between men and women. Future research is needed to justify moral and
ethical differences between male and female leaders. Future research is also needed to better
understand the relationship between gender, moral development, and ethical behavior in the
public sector. Whilst this study focuses on foreign trade companies, including other
industries is useful for purposes of comparison. Also, other types of public organizations as
well as private organizations need to be studied in detail.
Acknowledgements
This research did not receive any specific grant from funding agencies in the public,
commercial, or not-for-profit sectors.
43
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55
Appendix 1:
Confirmatory factor analysis
 Ethical leadership
Observed
Standardized
Latent Variable
T test
Variable
Coefficient
X1.1.4
<---
X1.1.3
<---
X1.1.2
<---
X1.1.1
<---
X1.2.9
<---
X1.2.8
<---
X1.2.7
<---
X1.2.6
<---
X1.3.15
0.578
People Orientation
<---
0.585
8.143***
1.041
6.299***
0.502
7.421***
0.590
8.256***
0.637
Power sharing
X1.1.5
10.298***
0.862
12.171***
0.856
11.827***
<---
0.637
1.996*
X1.3.14
<---
0.603
X1.3.13
<---
0.612
8.243***
X1.3.12
<---
0.629
2.199*
X1.3.11
<---
0.537
1.96*
X1.3.10
<---
0.631
1.996*
X1.4.19
<---
0.828
X1.4.18
<---
X1.4.17
<---
X1.4.16
<---
X1.5.21
<---
X1.5.20
<---
0.766
14.525***
0.725
13.629***
0.733
14.022***
0.618
ty
sustainabili
for
Concern
Role clarification
Fairness
0.706
0.586
56
2.484*
<---
X1.6.25
<---
X1.6.24
<---
X1.6.23
<---
X1.6.22
0.585
Ethical guidance
X1.6.26
3.23***
0.711
3.219***
0.712
3.218***
<---
0.718
3.228***
X1.7.29
<---
0.739
X1.7.28
<---
X1.7.27
<---
Integrity
0.743
0.800
15.031***
0.932
17.48***
*** Significant at .1%
 Organizational culture
observed
latent
standardized
variable
variable
coefficient
T test
<---
X2.1.33
<---
X2.1.32
<---
X2.1.31
<---
X2.1.30
0.629
Managing change
X2.1.34
10.998***
0.855
11.357***
0.529
7.835***
<---
0.545
7.962***
X2.2.39
<---
0.591
13.575***
X2.2.40
<---
0.815
4.826***
X2.2.38
<---
X2.2.37
<---
X2.2.36
<---
Goal achievement
0.817
0.728
0.750
12.673***
0.749
12.664***
57
<---
0.744
12.58***
X2.3.46
<---
0.897
15.232***
X2.3.45
<---
X2.3.44
<---
X2.3.43
<---
X2.3.42
<---
X2.3.41
Coordinated teamwork
X2.2.35
0.749
11.4***
0.533
3.916***
0.524
3.816***
<---
0.584
2.728***
X2.4.51
<---
0.746
15.355***
X2.4.52
<---
0.759
14.787***
X2.4.50
<---
X2.4.49
<---
X2.4.48
<---
X2.4.47
Customer orientation
0.687
0.867
7.066***
0.796
16.447***
<---
0.812
16.929***
X2.5.57
<---
0.823
X2.5.56
<---
0.555
2.495*
X2.5.55
<---
0.529
4.717***
X2.5.54
<---
0.789
15.06***
X2.5.53
<---
0.770
14.547***
*** Significant at .1%
Cultural change
0.499
** Significant at 1%
* Significant at 5%
58
 Readiness to change
observed
latent
standardized
T test
variable
variable
coefficient
<---
0.877
X3.1.70
<---
0.759
15.849***
X3.1.69
<---
0.913
22.618***
X3.1.68
<---
0.818
18.085***
X3.1.67
<---
0.648
12.429***
X3.1.66
<---
0.881
20.976***
X3.1.65
<---
0.688
13.574***
X3.1.64
<---
0.664
6.172***
X3.1.63
<---
0.725
14.702***
X3.1.62
<---
0.849
19.268***
X3.1.61
<---
0.834
18.703***
X3.1.60
<---
0.856
19.767***
X3.1.59
<---
0.803
17.452***
X3.1.58
<---
0.820
18.157***
Readiness to change
X3.1.71
59