The dual paths that ethical leadership drives employees sustainability behaviors

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

--------------------------------

MAI TRUONG AN

THE DUAL PATHS THAT ETHICAL LEADERSHIP

DRIVES EMPLOYEES’ SUSTAINABILITY BEHAVIORS

DISSERTATION

Ho Chi Minh City – 2022

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

--------------------------------

MAI TRUONG AN

THE DUAL PATHS THAT ETHICAL LEADERSHIP

DRIVES EMPLOYEES’ SUSTAINABILITY BEHAVIORS

Major: Business administration

Code: 9340101

DISSERTATION

Academic advisors:

1. ASSOC. PROF. TRAN MAI DONG

2. ASSOC. PROF. LE NHAT HANH

Ho Chi Minh City – 2022

STATEMENT OF AUTHENTICITY

I hereby certify that this thesis was written independently without any aid from

unnamed sources. In addition, I also declare that all secondary materials used in this

thesis are fully referenced.

Mai Truong An

ACKNOWLEDGEMENTS

I am incredibly thankful to my supervisors, Associate Professor Tran Mai

Dong and Associate Professor Le Nhat Hanh, School of Management, University of

Economics Ho Chi Minh City (UEH), for their tremendous support and help during

my doctoral study. This thesis could not be possible without their guidance and

assistance.

Further, I want to express my gratitude to my friends, who work in

manufacturing companies in Vietnam, for helping me collect the data.

I would also like to thank my colleagues, the Faculty of Business

Administration, Ho Chi Minh City College of Economics, for assisting me with

teaching duties.

Lastly, I am grateful to my family for their endless support, both in financial

and spiritual aspects.

TABLE OF CONTENT

STATEMENT OF AUTHENTICITY.......................................................................i

ACKNOWLEDGEMENTS.....................................................................................ii

TABLE OF CONTENT..........................................................................................iii

LIST OF ABBREVIATIONS.................................................................................ix

LIST OF TABLES ..................................................................................................x

LIST OF FIGURES AND DIAGRAMS................................................................xii

ABSTRACT.........................................................................................................xiii

CHAPTER 1: INTRODUCTION ............................................................................1

1.1. Research background ....................................................................................1

1.1.1. Ethical leadership and employees’ sustainability behaviors....................1

1.1.2. Research gaps ........................................................................................6

1.1.3. The context of Vietnam........................................................................13

1.2. Research purposes and questions ................................................................15

1.3. Research object and scope ..........................................................................16

1.4. Research methodology................................................................................16

1.5. Research contributions................................................................................17

1.5.1. Theoretical contributions......................................................................17

1.5.2. Practical contributions..........................................................................18

1.6. Chapter outline ...........................................................................................18

CHAPTER 2: LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT

...................................................................................................................................20

2.1. The study constructs.......................................................................................20

2.1.1. Ethical leadership.................................................................................20

TABLE OF CONTENT

2.1.2. Organizational citizenship behavior toward the environment (OCB-E) 25

2.1.3. A review of the literature on the relationship between ethical leadership

and OCB-E....................................................................................................26

2.1.3.1. Moral identity................................................................................37

2.1.3.2. Corporate environmental strategy..................................................38

2.1.3.3. Green psychological climate..........................................................39

2.1.3.4. Agreeableness ...............................................................................39

2.2. Background theory......................................................................................41

2.2.1. Social learning theory ..........................................................................42

2.2.2. Social identity theory ...........................................................................44

2.2.3. Self-consistency theory ........................................................................44

2.2.4. Upper echelons theory..........................................................................45

2.2.5. Substitutes for leadership theory ..........................................................46

2.3. Hypotheses developments and proposed model...........................................47

2.3.1. The role of ethical leadership in driving OCB-E...................................47

2.3.2. The mediating role of moral identity ....................................................49

2.3.3. The mediating role of corporate environmental strategy and green

psychological climate ....................................................................................54

2.3.4. The moderating role of agreeableness ..................................................57

2.3.5. Proposed model....................................................................................60

CHAPTER 3: RESEARCH METHODOLOGY ....................................................62

3.1. Research design ..........................................................................................62

3.2. Scale and questionnaire...............................................................................63

3.2.1. Variable measurements........................................................................63

3.2.1.1. Ethical leadership ..........................................................................63

TABLE OF CONTENT

3.2.1.2. Organizational citizenship behavior toward the environment (OCB￾E) 65

3.2.1.3. Moral identity................................................................................67

3.2.1.4. Corporate environmental strategy..................................................69

3.2.1.5. Green psychological climate..........................................................70

3.2.1.6. Agreeableness ...............................................................................71

3.2.1.7. Control variables...........................................................................72

3.2.2. Questionnaire development ..................................................................72

3.3. Pilot test......................................................................................................73

3.3.1. Pilot test’s process................................................................................73

3.3.2. Pilot test’s results.................................................................................75

3.4. Main study..................................................................................................86

3.4.1. Data collection .....................................................................................86

3.4.2. Data analysis........................................................................................88

3.4.2.1. Common method bias....................................................................89

3.4.2.2. Measurement model ......................................................................89

3.4.2.3. Structural model............................................................................90

3.4.2.4. Robustness checks.........................................................................91

CHAPTER 4: RESEARCH RESULTS AND DISCUSSIONS ..............................92

4.1. Testing for common method bias................................................................92

4.2. Assessment of the measurement model .......................................................93

4.2.1. Factor loadings.....................................................................................93

4.2.2. The scale reliability..............................................................................99

4.2.3. The convergence validity ...................................................................100

TABLE OF CONTENT

4.2.4. The discriminant validity ...................................................................101

4.3. Assessment of the structural model ...........................................................103

4.3.1. The variance inflation factor (VIF).....................................................103

4.3.2. Hypotheses testing .............................................................................103

4.3.2.1. The direct effect ..........................................................................104

4.3.2.2. The indirect effects......................................................................105

4.3.2.3. The moderating effects................................................................108

4.3.3. The coefficient of determination adjusted (R2

) ...................................110

4.3.4. The Stone-Geisser Indicator values (Q2

).............................................111

4.3.5. The effect size (f2

)..............................................................................112

4.3.6. PLSpredict .........................................................................................113

4.3.7. Model comparisons............................................................................116

4.4. Robustness checks ....................................................................................121

4.4.1. CTA-PLS application for the measurement model’s robustness check121

4.4.2. Robustness check for the structural model..........................................127

4.4.2.1. Nonlinear effects........................................................................127

4.4.2.2. Assessment of the endogeneity....................................................128

4.4.2.3. Assessment of the unobserved heterogeneity...............................128

4.5. Discussions...............................................................................................130

4.5.1. Hypotheses testing summary..............................................................130

4.5.2. Main effects.......................................................................................132

4.5.3. Moderating effects .............................................................................135

CHAPTER 5: CONCLUSIONS AND IMPLICATIONS.................................138

5.1. Conclusions ..............................................................................................138

TABLE OF CONTENT

5.2. Theoretical contributions and practical implications .................................139

5.2.1. Theoretical contributions....................................................................139

5.2.2. Practical implications.........................................................................141

5.3. Limitations and directions for future research ...........................................143

REFERENCES

APPENDICES

Appendix 1: Vietnamese research questionnaire

Appendix 2: Pilot test

Appendix 3: Focus group participants

Appendix 4: Eight manufacturing companies in Vietnam

Appendix 5: Sample profile of respondents

Appendix 6: Common method bias testing

Appendix 7: Measurement models

Appendix 7.1: Factor loadings

Appendix 7.2: The scale’s Cronbach’s Alpha, CR and AVE

Appendix 7.3: Discriminant validity

Appendix 8: Structural models

Appendix 8.1: The variance inflation factor (VIF)

Appendix 8.2: Hypotheses testing

Appendix 8.2.1. The direct effect

Appendix 8.2.2. The indirect effect

Appendix 8.2.3. The moderating effect

Appendix 8.3. The coefficient of determination adjusted (R2

)

Appendix 8.4. The Stone-Geisser Indicator values (Q2

)

Appendix 8.5. The effect size (f2

)

Appendix 8.6. PLSpredict

Appendix 8.7. Model comparisons

Appendix 9: Robustness checks

Appendix 9.1: CTA-PLS

Appendix 9.2: Nonlinear effects

Appendix 9.3: Unobserved heterogeneity

LIST OF ABBREVIATIONS

AG Agreeableness

CEO Chief executive officer

CS Corporate environmental strategy

EFA Exploratory factor analysis

EL Ethical leadership

ELS Ethical leadership single scale

ELW Ethical leadership at work questionnaire

GC Green psychological climate

IM Internalization

KMO Kaiser-Meyer-Olkin Measure of Sampling Adequacy

OCB Organizational citizenship behavior

OCB-E Organizational citizenship behavior toward the environment

OE OCB-E

PLS-SEM Partial least square structural equation modeling

SM Symbolization

VIF Variance inflation factor

LIST OF TABLES

Table 1.1: The study main constructs.....................................................................11

Table 1.2: Definitions of the key constructs...........................................................12

Table 2.1: Comparison of ethical leadership and other types of leadership.............21

Table 2.2: Literature on empirical research between ethical leadership and

employees’ favorable behaviors in the ..................................................................29

Table 2.3: Literature on the empirical research between ethical leadership and

OCB/OCB-E .........................................................................................................33

Table 3.1: Ethical leadership scale.........................................................................65

Table 3.2: OCB-E scale .........................................................................................66

Table 3.3: Moral identity scale ..............................................................................68

Table 3.4: Corporate environmental strategy scale.................................................70

Table 3.5: Green psychological climate scale ........................................................71

Table 3.6: Agreeableness scale ..............................................................................72

Table 3.7: The results of Cronbach’s Alpha testing................................................76

Table 3.8: The ethical leadership scale when removing EL2..................................82

Table 3.9: The organizational citizenship behavior toward the environment – OCB-E

scale when removing OE8 .....................................................................................83

Table 3.10: The summarization of the scale items after the pilot test......................85

Table 3.11: Sample profile of respondents.............................................................88

Table 4.1: Factor loadings .....................................................................................94

Table 4.2: The constructs’ Cronbach’s Alpha, CR, and AVE...............................100

Table 4.3: Fornell-Larcker criteria .......................................................................102

Table 4.4: Heterotrait-Monotrait ratio..................................................................102

Table 4.5: The VIF values ...................................................................................103

Table 4.6: The direct effect testing results ...........................................................104

Table 4.7: The indirect effect testing results ........................................................107

Table 4.8: The moderating effects testing results.................................................109

Table 4.9: The R

2 values......................................................................................111

Table 4.10: The Q2 values....................................................................................112

Table 4.11: The effect size...................................................................................113

Table 4.12: PLSpredict assessment......................................................................115

Table 4.13: Model comparisons...........................................................................120

Table 4.14: Confirmatory tetrad testing ...............................................................122

Table 4.15: Testing results for the potential nonlinearity .....................................128

Table 4.16: FIMIX-PLS results ...........................................................................130

Table 4.17: Segment size.....................................................................................130

Table 4.18: The summarization of hypotheses testing results...............................131

LIST OF FIGURES AND DIAGRAMS

Figure 2.1: Proposed model ...................................................................................60

Diagram 3.1. Research process..............................................................................63

Figure 4.1: The direct effect analysis results........................................................105

Figure 4.2: The indirect effects analysis results....................................................108

Figure 4.3: The moderating effects analysis results..............................................109

Figure 4.4: The relationship between ethical leadership and internalization moderated

by agreeableness..................................................................................................110

Figure 4.5: The original model ............................................................................117

Figure 4.6: The first alternative mode ..................................................................118

Figure 4.7: The second alternative mode..............................................................119

ABSTRACT

Ethical leadership has attracted enormous interest in recent years.

Nevertheless, in spite of all this extensive writing, the nexus between ethical

leadership and subordinate outcomes is still an interesting topic. Based on social

learning theory, social identity theory, upper echelons theory, and substitutes for

leadership theory, this study investigates the direct, indirect effects of ethical

leadership on employees’ sustainability behaviors such as organizational citizenship

behavior toward the environment (OCB-E) and the moderating role of agreeableness

on the ethical leadership – moral identity relationship. The current study utilized

partial least square structural equation modeling to test the proposed hypotheses using a

data set of 406 full-time employees working in manufacturing companies in

Vietnam. The testing results reveal that ethical leadership is positively related to

OCB-E. This relationship could be mediated by two mechanisms suggesting the dual

pathways that ethical leaders could motivate followers’ OCB-E: (1) by enhancing

employees’ moral identity internalization and symbolization, and (2) by issuing and

publishing corporate environmental strategy, which forms the organization’s green

psychological climate. Regarding the moderating roles of agreeableness, the research

findings highlight that this kind of personality lessens the motivational efforts of

ethical leaders by impairing their direct effects on followers’ moral identity

internalization. However, unexpectedly, agreeableness does not play a significant

role in moderating the link between ethical leadership and moral identity

symbolization. The results, which in large part validate the theoretical framework,

make contributions and implications to research as well as practice.

Keywords: Ethical leadership, employees’ sustainability behavior, OCB-E,

moral identity, corporate environmental strategy, and green psychological climate.