How Does Ethical Leadership Trickle

Down? Test of an Integrative Dual-

Process Model
Zhen Wang . Haoying Xu . Yukun Liu

Key Words: Ethical Leadership, Ethical Efficacy Expectation

Ethical outcome expectation,
 Abstract
Although the trickle-down effect of ethical leadership has been
documented in the literature, its underlying mechanism still remains largely
unclear.
To address this gap, they develop a cross-level dual-process model to
explain how the effect occurs. Drawing on social learning theory, we hypothesize
that the ethical leadership of high-level managers could cascade to middle-level
supervisors via its impact on middle-level supervisors’ two ethical expectations.
Using a sample of 69 middle-level supervisors and 381 subordinates across
69 sub-branches from a large banking firm in China, they found that middle level
supervisors’ ethical efficacy expectation and unethical behavior–punishment
expectation accounted for the trickle-down effect. The theoretical and practical
implications are discussed.
Theoretical Framework
 Hypotheses
H1 High-level managers’ ethical leadership relates positively to
middle-level supervisors’ ethical leadership.

H2 The relationship between high-level managers’ ethical leadership

and middle-level supervisors’ ethical leadership is mediated by
middle-level supervisors’ ethical efficacy expectation.
 Hypotheses
H3 The relationship between high-level managers’ ethical leadership
and middle-level supervisors’ ethical leadership is mediated by
middle-level supervisors’ ethical behavior–reward expectation.

H4 The relationship between high-level managers’ ethical leadership

and middle-level supervisors’ ethical leadership is mediated by
middle-level supervisors’ unethical behavior–punishment
expectation.
 Sample and Procedure
We collected multi-level and multi-source data from a large banking
company in China. This banking company has 120 sub-branches and
976 employees in total. Through personal social network and alumni
contacts, we approached 79 sub-branches. Three sub-branches refused
to participate, resulting in 76 sub-branches that participated.
 Sample & Procedure
After excluding responses from seven sub-branches with only
one or two subordinates, we finally collected a sample of 69 sub-
branch supervisors (57.5 % of all sub-branch supervisors) and 381
subordinates (39.0 % of all employees). In this matched sample, the
average number of participating subordinates per sub-branch
supervisors was 5.52. Of the 69 supervisors, 47.8 % were women, 81.2
% had a college degree, the average age was 39.61 years (SD = 5.97),
and the average tenure as a sub-branch supervisor was 2.33 years (SD =
1.22). Among the subordinates, 61.9 % were women, 79.0 % had a
college degree, the average age was 31.49 years (SD = 6.37), and the
average dyadic tenure with the supervisor was
2.32 years (SD = 1.14).
 Measures
Manager Ethical Leadership and Supervisor Ethical Leadership

• The Cronbach’s αs were .89 for manager ethical leadership and .93 for
supervisor ethical leadership.

(Cronbach’s α is a measure of internal consistency, if α ≥ 0.9 then it is

excellent)
Measures
 Ethical Outcome Expectation
The Cronbach’s αs were .90 and .73, respectively. To check the
construct validity, we performed exploratory factor analysis using the
principal component method with the number of factors not specified.
 Results
• Discriminant Validity Tests
AVE = Average Variance Extracted is a measure of the amount of
variance that is captured by a construct in relation to the amount
of variance due to measurement error
df = Degree of freedom (the number of independent values or
quantities which can be assigned to a statistical distribution)
X2 = Chi-squared (The chi-squared test is used to determine whether
there is a significant difference between the expected
frequencies and the observed frequencies in one or more
categories.)
CFI = Comparative Fit Index (≥ 0.9 Good)
SRMR = Standardized Root Mean Square Residual (≤0.08 Good)
TLI = Tucker Lewis Index (≥ 0.95 Good)
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