eThesis - School of Business electronic theses

Globalising world, bigger competitive pressures, and the requirement for companies to adapt to ever changing environments put businesses under greater pressure nowadays. At the same time the need to address various stakeholders and engage in socially responsible operations has grown in emphasis. Sometimes companies deal with these pressures with unquestionable means and leaders or individual employees engage in unethical conduct. In recent years there have been big scandals over companies operating in an extremely unethical way - these incidents have often resulted in big turmoil and lost company reputation at the very least. This study addresses the issue by looking at things from the other end - by observing how ethical leadership could be seen as an effective and functional leadership style to be adopted in organisations of today. The aim is to gain an understanding on the phenomenon of ethical leadership and the implications it has on individual employees and on organisations as a whole by scrutinising the perception of Finnish MNC employees.

The study was executed as a qualitative single case study in a Finnish listed MNC. Semi-structured interviews were conducted in person with ten employees working in various positions within the organisation. The interviews were executed in summer 2014 in Finnish, and they were analysed by engaging in thematic content analysis.

The findings of the study reveal that ethical leadership should be seen as a potent leadership style that can yield positive implications in organisations. First of all, according to the Finnish employees, ethical leadership is to be mastered by all of us as everyone can train in it. The main characteristics of an ethical leader revolve around fairness, honesty, and consideration. Ethical leaders are seen as managers who lead with those values in mind and who always demonstrate congruence in words and actions. They also need to be able to build trust and functioning relations by utilising good personal skills and by providing and taking in feedback. Secondly, and most significantly, ethical leadership was seen to have wide ranging implications on employees and on organisational climate as well. Employees in the Finnish MNC emphasised that job-satisfaction and well-being, motivation, and even work performance are improved when they are being led by an ethical leader. Also, engaging in OCB behaviours tends to increase. Additionally, work climate is affected by ethical leadership; solidarity, transparency, trust, and flexibility of the work environment is positively affected when ethical leadership is practiced at all levels of an organisation.