Home⇛Business Research Journal⇛vol. 5 no. 1 (2019)

Ethical Leadership of Supervisor on the Firm’s Social Capital

Myra V. De Leon

 

Abstract:

Social capital as a valuable asset facilitates knowledge sharing and competitive advantage of the firm for its survival. Growing number of studies show the positive effect of social capital but there is a dearth of literature on empirical studies on how organizations may build social capital. The goal of this paper is to test empirically if supervisor’s ethical leadership contributes to the creation of internal social capital. According to social learning theory, employees learn to transcend their self-interest and become aware of the outcome of their actions by displaying and enforcing ethical leadership. A survey questionnaire was administered to 158 rank and file employees from 31 Manila branches of a financial institution. This paper is an exploratory attempt at generating supervisor’s ethical leadership constructs. Based on factor analysis, reputation of ethical leadership characterized as a moral person and a moral manager emerged as new constructs. Anchored on the study of Pastoriza and Arino (2013), this research extended their model of supervisor’s ethical leadership by examining characteristics of being a moral person and a moral manager as antecedents of the firm’s social capital. Using partial least squares structural equation modelling (PLS-SEM), findings show that supervisor characterized as being a moral person results to higher willingness of employees to share information and resources in their personal dyadic relationships with supervisor and among employees (structural dimension); increase in employee trust in the long-run fairness of their relationship with the organization and co-employees (relational dimension); and intensification of employees’ identification with the firm (cognitive dimension). A supervisor characterized as a moral manager significantly influence the cognitive and structural dimensions of internal social capital. This study is relevant in proposing strategies that can help management in the creation of social capital as well as contribute on social capital literature and field of business ethics.



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