The Negative Side Effects of Ethical Leadership and how LMX mitigates Psychological Reactance

Ethical leadership has long been considered a precursor to ethical behavior in organizations. Although such leadership has, indeed, been shown to encourage ethical behavior, the negative implications of ethical leadership have largely been ignored by previous research. In this paper, we explore a negative “side effect” of ethical promotion-an important aspect of ethical leadership. Specifically, we show that a leader’s deliberate promotion of ethics may cause followers to experience psychological reactance-a negative psychological state in response to a perceived restriction of freedom. Although ethical leadership has been shown to decrease deviant behavior and even increase citizenship behaviors and job performance, we argue-and empirically demonstrate-that psychological reactance can reduce the net positive effect of ethical promotion on these desired outcomes. Furthermore, we show that effective leader-member exchange can minimize this unintended consequence. We also discuss the implications of our fin...