Importance of Ethical Leadership in Business

This assignment analyzes the importance of ethical leadership in business, changing dynamics of global business from developed to developing nations and its impact on ethical standards, procedure of establishing ethical standards to avoid corruption and support CSR, standards prevailing when moral business conducting standards creates conflict across borders, and leaders creating and maintaining company’s standards of business practice that is ethical and moral.

Running head: LEADERSHIP IN BUSINESS
LEADERSHIP IN BUSINESS
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Changing dynamics of global business from developed to developing nations and its impact on
ethical standards...............................................................................................................................2
Assessing the procedure of establishing ethical standards to avoid corruption and support CSR. .3
Standards prevailing when moral business conducting standards creates conflict across borders..4
Leaders creating and maintaining company’s standards of business practice that is ethical and
moral................................................................................................................................................4
Conclusion.......................................................................................................................................5
References........................................................................................................................................6

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Introduction
The present assignment analyzes about the importance of ethical leadership in business.
Ethical leadership has huge significance in business as its leads to strategic as well as financial
success of the organizations (Avey, Wernsing and Palanski 2012). This study also evaluates on
the changing dynamics of the global business from developed to developing countries. The
impact of these dynamics on the ethical standards is also analyzed in this assignment. The
process of establishing ethical standards for avoiding corruption and supporting corporate social
responsibility (CSR) in emerging market is also assessed in this assignment. The standards that
should prevail when moral business conducts standards create conflict across borders. The study
also analyses about how the leaders in the organization create and maintain organizational
standards of business practice that are ethical as well as moral.
Changing dynamics of global business from developed to developing nations and its impact
on ethical standards
For the last few decades, there has been huge change in dynamics of the global business
environment owing to advancement of new technology, ethical practices, cultural as well as
political ideologies, emerging markets etc. This in turn have huge impact on the various aspects
of ethical standards in the business. Recent evidences reflects that some of the business
organizations integrates unethical business practices as they faces huge difficulties in meeting
with the changing global environment. The unethical practices adopted by the global business
organizations includes – exploitation of workers, loopholes in tax, corruptions etc. The violation
of ethical standards by the global business adversely impacts on their efficiency, profitability and
reputation (Hartman, DesJardins, and MacDonald 2014). Furthermore, social media along with

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smart technologies works together to counteract these unethical practices. However, the business
operating in both developed and developing countries adjust their management styles as well as
strategies in order to achieve success in competitive business environment. In fact, the investors
as well as consumers take into account the organizational practices while making the decision
regarding investment of funds and purchase of goods. For example, some of the multinational
companies such as Walmart have been alleged with scandals relating to bribery and corruption
due to change in global environment, which in turn adversely impacts on their financial
performance.
Assessing the procedure of establishing ethical standards to avoid corruption and support
CSR
The procedures of establishing ethical standards to avoid corruption are illustrated below:
 The organizations should set up proper rationale in order to corruption.
 Setting up corporate governance framework will help to mitigate the risk of corruption.
Certain risk areas of corruption including public procurement should be properly
examined and adoption of transparent model will aid to prevent corruption at each levels
of business.
 The companies should step up enforcement or integrity framework through effectual
international cooperation. They should properly utilize data analytics as it helps in
extracting, analyzing and interpreting data and also detect corruption.
CSR refers to the responsibility of companies for the effect of their activities as well as
decisions on society and environment. Integration of ethical standards also helps the
organizations to support CSR while doing business in the emerging markets (Hartman,

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DesJardins and MacDonald 2014). However, the business integrating processes like
corporate strategy, governance and business procedure redesign aids to reconcile with
ethicality while doing business in the emerging markets. Additionally, CSR with proper
ethical standard also facilitates to reduce adverse impact that is caused through business
operations (Yukl 2013). It also facilitates to increase positive contributions through anti-
bribery as well as anti- corruption measures, transparency in reporting, accountability,
employees volunteering etc.
Standards prevailing when moral business conducting standards creates conflict across
borders
Several organizations around the globe divide their employees into different levels in
order to conduct ethical standards in business. As the employees operating in different layers
have varied culture of compliance, the company needs to concentrate on administering
compliance in several sections. In addition, the employees at different layers should have
proper communication among themselves for making compliance culture exist within
business. In fact, leaders also plays vital role in maintaining standards when moral business
conducting these standards creates conflicts across borders. They motivate the employees
working at lower levels to conduct ethical practice before adhering to higher rankings
(Yidong and Xinxin 2013). Western practices apt to portray domestic nation standards as
more restrictive than lower standards of the emerging markets.

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Leaders creating and maintaining company’s standards of business practice that is ethical
and moral
The ethics applied by leaders in the company to manage employee’s impacts on their moral
as well as loyalty. The code of ethics used by the leaders mainly determines disciplinary
procedures as well as acceptable behavior for the employees in organizations. The leaders having
high ethical standards motivate employees in the company to meet the same level. In addition,
the actions of ethical leadership are mainly concerned with creation of ethical institutions and
resolving specific ethical dilemmas in leadership (Eisenbeiß and Giessner 2012). The leaders
also negotiate various ethical concerns for remaining competitive in the global business
environment. If I were the leader in the organization that operates in both developed as well as
emerging markets, personal and organizational standards of business practices that are ethical as
well as morale can be created through-
 Ethical Quality- Several tools will be used for ensuring quality of product and customer
service. These tools includes- adoption of six sigma, lean supply chain management etc.
 Ethical communication- Proper communication will be developed for helping the
employees convey truthful information regarding business operations(Yukl et al. 2013).
 Ethical succession planning- Strong operational procedures and company’s standards
will be established for the succession planning.
 Ethical collaboration-All the leaders including myself will collaborate with advisors for
incorporating best practices and address issues facing the company.

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Conclusion
Ethical leadership in business helps to improve credibility as well as reputation of the
organization by accentuating ethical decisions, ideas, behaviors and boundaries. They also helps
to reduce liability in business, assure high quality service to customers, prevents corruption and
administrative errors and helps their workers in making good decisions. Moreover, development
of principles relating to ethical leadership should also address care of environment and
sustainability principles for attaining good reputation in competitive marketplace.
References
Avey, J.B., Wernsing, T.S. and Palanski, M.E., 2012. Exploring the process of ethical leadership:
The mediating role of employee voice and psychological ownership. Journal of Business
Ethics, 107(1), pp.21-34.
Eisenbeiß, S.A. and Giessner, S.R., 2012. The emergence and maintenance of ethical leadership
in organizations. Journal of Personnel Psychology.
Hartman, L.P., DesJardins, J.R. and MacDonald, C., 2014. Business ethics: Decision making for
personal integrity and social responsibility. New York: McGraw-Hill.
Monahan, K., 2012. A review of the literature concerning ethical leadership in
organizations. Emerging leadership journeys, 5(1), pp.56-66

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Voegtlin, C., Patzer, M. and Scherer, A.G., 2012. Responsible leadership in global business: A
new approach to leadership and its multi-level outcomes. Journal of Business Ethics, 105(1),
pp.1-16.
Yidong, T. and Xinxin, L., 2013. How ethical leadership influence employees’ innovative work
behavior: A perspective of intrinsic motivation. Journal of Business Ethics, 116(2), pp.441-455.
Yukl, G., Mahsud, R., Hassan, S. and Prussia, G.E., 2013. An improved measure of ethical
leadership. Journal of leadership & organizational studies, 20(1), pp.38-48.
Yukl, G.A., 2013. Leadership in organizations. Pearson Education India.