How Ethical Leadership Shapes Employees' Readiness to Change

The organizational change literature suggests that leadership may play an important role in influencing employees' attitudes and behavior toward change. Recent research has also revealed positive behavioral outcomes of ethical leaders in change conditions. However, until now no study had examined the direct effects of ethical leadership on employees' readiness to change, or had investigated the mediating mechanisms that could explain this relationship.

The aim of this investigation was to analyze whether ethical leadership positively influences employees' readiness to change and whether an organizational culture of effectiveness mediates this relationship. The findings support these hypotheses. The results indicate that ethical leadership has significant, direct positive effects on employees' readiness to change. The results also reveal that an organizational culture of effectiveness mediates this relationship, thus indicating that ethical leadership shapes cultural elements that prompt organizational effectiveness, and that by shaping such an organizational culture, ethical leadership helps to enhance employees' readiness to change. Overall, this study contributes novel theoretical implications to the literature on leadership, organizational culture, and organizational change management.

This research accordingly responds to recent calls to investigate the role of ethical leadership in organizational change situations, and extends previous findings indicating greater employee readiness to change in contexts where trust in management, management support, and good management–employee relationships abound. The investigation also advances previous literature suggesting the positive links of ethical leadership-related approaches to organizational effectiveness by indicating that ethical leaders shape cultural elements leading to organizational effectiveness (i.e., change management, goal achievement, coordinated teamwork, customer orientation, shared values and beliefs strength). However, although such cultural aspects may explain the positive relationship between ethical leadership and employees' readiness to change, the findings reveal that such mediation is marginal, and reveal the important role of ethical leadership in accounting for this valuable employee outcome itself.

Overall, this study brings ethical leadership, the organizational culture of effectiveness, and employees' readiness to change together for the first time in the literature, and does so in a non-Western context (i.e., Egypt). This is important in the context of the current ethical leadership literature, which over-focuses on Western contexts. This study is set in an Arab culture and reveals the influence of ethical leadership on one type of job response that is positive for the organization, namely, readiness to change, thus helping generalize existing theories across different contexts.