Introduction
The contemporary leaders of the globe – either corporate leaders, political leaders, military leadership, or civil society leaders – need to perform within the perspective of a complex and dynamic system of global trends and pressures. Leadership is often comprehended as one of the most imperative and effective responses to the tasks, challenges, and opportunities offered by the global perspective. Leadership ethics emerged as a distinctive academic zone of applied ethics in the 1990s (Ciulla, Reference Ciulla1995; Rao, Reference Rao2018), but has been discussed for centuries. Commercial firms are engaged in corporate social responsibility (CSR) endeavors with a growing rate (Aguinis & Glavas, Reference Aguinis and Glavas2012). CSR has been defined as the ‘context-specific business activities, strategies and policies that consider stakeholders’ prospects and the triple bottom line of social, ecological, and economic performance’ (Morgeson, Aguinis, Waldman, & Siegel, Reference Morgeson, Aguinis, Waldman and Siegel2013), and as the accountability of organizations for their influence on the community and society. Organizations' CSR initiatives can comprise a huge range of activities, including community development programs, philanthropic giving, volunteerism initiatives, and ecological sustainability practices (Ong, Mayer, Tost, & Wellman, Reference Ong, Mayer, Tost and Wellman2018). Fortune 500 firms spent over 15 billion dollars a year on CSR practices (Times, Reference Times2014), and nearly all of the world's largest 250 firms report on their CSR practices (Stubbs, Higgins, & Milne, Reference Stubbs, Higgins and Milne2013).
In prior research, insufficient attention has been given to the association between CEO ethical leadership and CSR practices, generally conceived as context-specific corporate actions and strategies that deliberate stakeholders' expectations and the multiple outcomes of social, ecological, and financial accomplishment (Angus-Leppan, Metcalf, & Benn, Reference Angus-Leppan, Metcalf and Benn2010). Albeit, research of Waldman et al. (Reference Waldman, De Luque, Washburn, House, Adetoun, Barrasa and Debbarma2006) has examined the association between CEO transformational leadership and the CSR practices, the constraint temperaments of CEO transformational leadership rather than CEO ethical leadership to anticipate CSR practices is noticeable as CEO ethical leadership more explicitly estimates the moral resources of the leaders instead of transformational leadership (Brown & Mitchell, Reference Brown and Mitchell2010). Research of Yin and Zhang (Reference Yin and Zhang2012) postulates that moral leadership is an important antecedent to CSR practices. To study the impact of CEO ethical leadership on CSR practices empirically, the first purpose of contemporary research is to examine the effect of CEO ethical leadership temperaments on CSR practices.
Furthermore, previous studies have generally overlooked the role of mediating variables in the CEO ethical leadership–CSR association. Upper echelon theory posits that business outcomes expose top-level management's psychological aspects (Hambrick & Mason, Reference Hambrick and Mason1984). Research of Berson, Oreg, and Dvir (Reference Berson, Oreg and Dvir2008) concentrated on the mediating effect of business culture in illuminating the association between CEO values and business outcomes. To reveal the mediating mechanism between CEO ethical leadership and CSR practices, the second objective of the contemporary study is to witness the mediating role of ethical culture and CEO contemporary practice values pertaining to business outcomes, which exposes the outlooks about a corporate ethics that are shared by the personnel (Kuvaas, Buch, Dysvik, & Haerem, Reference Kuvaas, Buch, Dysvik and Haerem2012). In the contemporary age, the consideration of the global knowledge economy has been transformed from labor-intensive to knowledge-intensive companies. Knowledge is the principal worth and vital to persistent effectiveness of the contemporary businesses (Ahmed, Shahzad, Aslam, Bajwa, & Bahoo, Reference Ahmed, Shahzad, Aslam, Bajwa and Bahoo2016). Similarly, the capability to foster and to exploit propositions is rare, unique, and valued knowledge is essential to business efficiency (Huang, Hsieh, & He, Reference Huang, Hsieh and He2014). Consequently, intellectual capital, demanding the accumulation of all intangible knowledge resources, a business may use for sustainable advantage. Intellectual capital is associated with greater financial performance. The study demonstrates that ethical leadership and intellectual capital can have a positive impact on business performance (Donker, Poff, & Zahir, Reference Donker, Poff and Zahir2008). However, inadequate research has concentrated on CEO ethical leadership and intellectual capital and the relationship between CSR practices. Hence, to fill this knowledge gap, the third objective of current study is to answer the question: How do intellectual capital facets (social and human capital) play the mediating role in the association of CEO ethical leadership temperaments and CSR practices?
A way forward, the contemporary study has two main objectives. The first objective is to examine the relationship between CEO ethical leadership temperaments (the management art the most prominent in the manufacturing sector perspective) (De Hoogh & Den Hartog, Reference De Hoogh and Den Hartog2008) and CSR practices in the manufacturing firms; particularly, it addresses the moral leadership at the CEO level in correspondence to the literature, which recognizes top managers as the key personalities who may have impact on CSR efforts (Wu, Kwan, Yim, Chiu, & He, Reference Wu, Kwan, Yim, Chiu and He2015). Second, it goes on the contributing effort of ethical culture and the two facets of intellectual capital, the human capital and the social capital, in the relationship between CEO ethical leadership temperaments and CSR practices. These objectives are substantial because they discourse two important distresses in CSR study: first is a short-coming of statistical research, which observe the impact of leadership characteristics, for example, ethical style on CSR practices; and the second is a deficiency of apprehension of the implicit mechanisms connecting leadership with CSR practices (Christensen, Mackey, & Whetten, Reference Christensen, Mackey and Whetten2014). Therefore, to authenticate these objectives, Pakistan has been taken up substantial apropos perspectives, which comprehends the contemporary research, because the country's economy is mostly comprised of manufacturing sector (Ali, Reference Ali2015).
Literature Review and Study Framework
Corporate social responsibility
CSR has been considered a tool, but not the decisive factor in attaining key performances either toward employees or firms enhanced performances, however a consensus is lacking pertaining to its definition and its integral principles, dimensions, constructs, and concepts (Crane, McWilliams, Matten, Moon, & Siegel, Reference Crane, McWilliams, Matten, Moon, Siegel, Crane, McWilliams, Matten, Moon and Siegel2008). For instance, Friedman (Reference Friedman1970) claims that ‘the only social obligation of an organization is to increase its profits’ while remaining ‘within the rules of the game.’ Opposing to that, Davis (Reference Davis1973) says that CSR necessitates ‘deliberation of concerns beyond the defined legal, technical, and economic needs of the organization.’ Both of these definitions are contradictory to each other. The first proposes that an organization is accountable only for the shareholders, whereas the second claims that the benefits of other stakeholders, besides the shareholders, must also be deliberated and fostered. It is remarkable that the European Union (EU) Commission as the top statutory group in the EU has also suggested CSR definition, which is as ‘actions by organizations in addition to their lawful compulsions towards the environment and society’ (Reference Act IIAct II; Union, Reference Union2014). This definition is consistent with CSR definition presented by Davis (Reference Davis1973), as it obviously comprises the benefits of stakeholders other than the shareholders.
However, some consensus seems to be developing in CSR research. One public motive behind CSR literature is that business leaders must give due concentration on multi-stakeholders' benefits rather than focusing only on maximizing the shareholders' wealth (Becchetti & Trovato, Reference Becchetti and Trovato2011). Hence, the stakeholder cluster is broader than shareholder clusters that only comprise the suppliers of equity in the business. One more collective point is the strategic regions of CSR practices. These contain the societal, ecological, and economic pillar (Epstein & Buhovac, Reference Epstein and Buhovac2014).
CEO ethical leadership and CSR
Ethics are the standards, rules and norms, values and morals, and principles and policies that people must practice, digest, and observe while conducting their regular businesses in order to have a profound impact on the business and its stakeholders. Ethics are a set of principles and values that govern every individual in personal, professional, and social life, especially within the workplace where leadership is judged based on equitable decision-making and etiquettes (Treviño & Nelson, Reference Treviño and Nelson2016). Ethics means doing the right things without necessarily being publicly monitored (Ali Chughtai, Reference Ali Chughtai2016). Ethics means figuring out what is fair and just involves deciding what is right and wrong – not who is right and wrong. Ethics differ at diversity, i.e. culture to culture, but uniformly necessitate exploring one's own conscience.
Ethical leadership can be defined as the manifestation of intrinsically appropriate attitude and behavior through interpersonal relations and skills, and the encouragement of such type of behavior to the people through reinforcement, reciprocal communication, and decision-making (Brown, Treviño, & Harrison, Reference Brown, Treviño and Harrison2005). Corporate managers who adopt a moral leadership temperament are probable to build an environment that promotes the behaviors and attitudes of the employees. Two aspects of the ethical leadership are revealed from this description (Brown, Treviño, & Harrison, Reference Brown, Treviño and Harrison2005). First, the moral person complying a moral temperament has high-moral values considered as honesty, motivation, credibility, integrity, and justice (Lu & Guy, Reference Lu and Guy2014). Second, a moral leadership who influences the behaviors and attitudes of his employees through his behavior (Treviño & Nelson, Reference Treviño and Nelson2016).
Ethical leadership frequently executes through corporate activities, which are noticed as publicly responsible (Brown & Mitchell, Reference Brown and Mitchell2010). Moral leadership is linked to a number of positive social outcomes, for example organization citizenship behaviors, a predilection to take more risk, for instance, voicing transformation, which may hypothetically benefit the business (Metwally & Punnett, Reference Metwally and Punnett2017). That is how CSR effort comes into limelight and provides a level playing field in relation to CEO ethical leadership temperaments (Buckler, Reference Buckler2017).
Through determining a subjective example, supervisors transform the paradigm relating to business values and toward their ethical development, which concentrate them being profound to CSR strategies (Grabo, Spisak, & van Vugt, Reference Grabo, Spisak and van Vugt2017). This is how moral leadership forms perceptions regarding CSR. Empirical study substantiates this precedence of leadership on CSR practices (Mayer, Kuenzi, Greenbaum, Bardes, & Salvador, Reference Mayer, Kuenzi, Greenbaum, Bardes and Salvador2009). Muller and Kolk (Reference Muller and Kolk2010) elucidated that a spirit of responsibility, accountability, and justice among the managers, signs of moral leadership, consequences in CSR behaviors that sequentially reinforce employee–organization relationships, hence, entrenching value alignment. Consequently, followers recognize themselves as a part of social exchanges with their leaders and when they recognize the exchanges as unbiased they will respond by going beyond their formal job assignments to undertake and comprehend more substantially (Manning, Reference Manning2018).
The modern outlook of the CSR framework presents a content-based attitude toward CSR practices. It emphasizes on how CSR is substantiated in businesses. The signals about CSR monitoring are propelled by leaders, where CSR practices are carried out by those who can notice how managers behave and concern their stakeholders (Mitchell, Agle, & Wood, Reference Mitchell, Agle and Wood1997). The behavior and dialog of leaders shape the psychological settings of followers in evaluating CSR programs (Minbaeva, Reference Minbaeva2016). Furthermore, Ciulla (Reference Ciulla2005) recommended that the analogy between a manager's dialog and behavior determines the base for healthy relations described by faith, trust, and reciprocity. When followers have clear and consistent indications from a leader, they are probable in developing mutual psychological borders about CSR programs. This is more probable to occur when the leader has a reliable basis as revealed by one's inherent ethical personality (Ciulla, Reference Ciulla2005). It implies that we must assume dissimilarities in CSR perceptions through working units.
Upper echelon theory considers organizational policies and outcomes as a function of top management's psychosomatic features (Hambrick & Mason, Reference Hambrick and Mason1984). Combined by the reality that top managers are persistently challenging lots of vague stimuli during job, their beliefs and values are particularly distinct in building comprehension of the atmosphere and accordingly persuading their understanding of actions, decisions, and events (Hambrick & Mason, Reference Hambrick and Mason1984). A CEO is a strategic policy/decision-maker liable with the accountabilities to formulate and implement corporate policy, and strategy, and his beliefs and principles categorically play a critical role in sponsoring the organizational image through CSR (Morgeson et al., Reference Morgeson, Aguinis, Waldman and Siegel2013). Fostering CSR can be a significant option to reveal the scope to which a CEO is engaged in encouraging the organizational image. Ethical leadership proposition has stressed the leader personality, honesty, responsibility, and respect for others, and mutual alignment of the firm and the society (Resick, Martin, Keating, Dickson, Kwan, & Peng, Reference Resick, Martin, Keating, Dickson, Kwan and Peng2011). A moral CEO might therefore adopt the practices of CSR to display his ethical values. This statement establishes the substantiation of the optimistic influence of CEO ethical leadership temperaments on CSR. Consequently, it can be hypothesized as:
Hypothesis 1
CEO ethical leadership is positively related to corporate social responsibility.
CEO ethical leadership and organizational ethical culture
Organizational ethical culture is one of the factors that make up an institution, a business, an organization, penetrating all the other factors of the business or institutional infrastructure. According to Cambra-Fierro, Hart, and Polo-Redondo (Reference Cambra-Fierro, Hart and Polo-Redondo2008), business cultures are shared values that constitute the approach, attitude, philosophy, and ideology to comprehend corporate activities. Hence, business values effect what a business considers as remedial activities to do (Nygaard & Biong, Reference Nygaard and Biong2010). Accordingly, ethical principles and values are reflected as a collection of basic principles and values, concerning moral differences that establish the values, attitude, philosophy, and way of comprehending organizational activities. It is the organization's responsibility to establish and promote an ethical environment in a firm (Robertson, Reference Robertson2008). In order to stimulate ethical principles within the firms, business managers often openly publicize the importance of ethics and moral values, and reward employees for their ethical behaviors. Ethical leadership cultivates values, strategy, philosophy, and code of ethical conduct, urges his followers to follow ethical rules, hold ethical training programs, and develop ethical commissions (Yaoming, Reference Yaoming2012).
Current research postulates that moral leaders may inspire ethical culture in the firm in their exertion to nurture CSR efforts. Previous study exhibits that ‘leaders with strong moral obligations who frequently demonstrate morally normative behaviour’ (Piccolo, Greenbaum, Hartog, & Folger, Reference Piccolo, Greenbaum, Hartog and Folger2010) have a tendency to shape work atmosphere, which offer organizational followers high levels of independence, thus inspiring followers to display productive behaviors at work (Kalshoven, Den Hartog, & De Hoogh, Reference Kalshoven, Den Hartog and De Hoogh2013). Described by features of responsibility, and a mutual alignment for the company and the humanity (Resick et al., Reference Resick, Martin, Keating, Dickson, Kwan and Peng2011), moral leadership is expected to encourage employees to behave dutifully to the constantly changing requirements of the firm and the humanity (Wu et al., Reference Wu, Kwan, Yim, Chiu and He2015), and so construct values with an external alignment. Due to high-ethical values, and orientations for openness in information sharing (Brown & Mitchell, Reference Brown and Mitchell2010), moral leaders endeavor to stimulate high levels of emotional safety and risk taking within the firm (Khuntia & Suar, Reference Khuntia and Suar2004). Moreover, ethical leadership has been absolutely linked with the followers' readiness to describe complications to management, employee voice, and creativity (Kalshoven, Den Hartog, & De Hoogh, Reference Kalshoven, Den Hartog and De Hoogh2013). Being principally people-focused (Treviño & Nelson, Reference Treviño and Nelson2016), ethical leadership demonstrates itself in the search of enabling policies that comprehend developing followers and inspire them for modernization and encouraging business vision (Brown & Mitchell, Reference Brown and Mitchell2010). More specifically in terms of business culture, Toor and Ofori (Reference Toor and Ofori2009) observed that ethical leadership is significantly associated with transformational culture (Kumar & Uzkurt, Reference Kumar and Uzkurt2011), that offers a positive perspective for innovation. A way forward, it appears that ethical leadership promotes ethical culture in the business. Therefore, it can be hypothesized:
Hypothesis 2
CEO ethical leadership is positively related to organizational ethical culture.
Organizational ethical culture and CSR
Even though the significance of business culture in expediting and encouraging of different management practices has been richly established, for example, accomplishment of goals such as competitive advantage, innovation, and organizational effectiveness, the consideration rendered to the business culture of CSR is insufficient. Prior studies exhibit that ethical firms inspire the foundation of solution-focused ad-hoc task teams to treat difficult tasks; this methodology warrants that social, environmental, and economic concerns are taken into account in management and decision-making, and accordingly encourages the employment of social obligation (Treviño & Nelson, Reference Treviño and Nelson2016). Furthermore, such firms are mostly engaged in presenting new and value-added products, services, and processes. The study of Padgett and Galan (Reference Padgett and Galan2010) has displayed that the high intensity of these actions definitely influences the company's aptitude to display CSR practices. Therefore, it seems that an ethical culture absolutely influences the firms' CSR efforts. Hence, it may be detailed as:
Hypothesis 3
Organizational ethical culture is positively related to corporate social responsibility.
Mediating role of ethical culture
Current research hypothesizes that ethical leadership can encourage an ethical culture in the firm in exertion to nurture CSR endeavors. Previous study reveals that ethical leaders regularly exhibit morally normative behavior (Piccolo et al., Reference Piccolo, Greenbaum, Hartog and Folger2010), and have a tendency to build an atmosphere, which offers high levels of autonomy, thus inspiring followers to display creative behaviors at work (De Hoogh & Den Hartog, Reference De Hoogh and Den Hartog2008). Described by virtues of responsibility, and a mutual alignment for the business and the society, ethical leadership is probable to stimulate employees to behave appropriately to the emerging needs of the firm and the society (Wu et al., Reference Wu, Kwan, Yim, Chiu and He2015).
The culture of a firm impacts its CSR practices and policies (Chaudary & Ali, Reference Chaudary and Ali2016). In organizations having ethical culture, stress is given on the maintenance of pleasant relations; employees are anticipated to be cooperative (Grojean, Resick, Dickson, & Smith, Reference Grojean, Resick, Dickson and Smith2004). Employees' other orientation with classic culture is probable to go beyond the interests and needs of employees to those of the external stakeholders of the organization (Ong et al., Reference Ong, Mayer, Tost and Wellman2018), therefore, they are probable to struggle to behave in reaction to their anxieties for CSR; hereafter, such types of cultures are anticipated to have a constructive impact on the firm's capability to exhibit CSR. Moreover, moral businesses as such value decentralized decision-making, transparency, and explicit communication with their consumers (Torugsa, O'Donohue, & Hecker, Reference Torugsa, O'Donohue and Hecker2012), and have a tendency to embrace an organizational stance on concerns of firm ethics (Babalola, Stouten, & Euwema, Reference Babalola, Stouten and Euwema2016). These aspects encourage effective organization-wide information sharing and processing that in turn permits such firms for prompt response to the emerging needs of their consumers (Ahmed et al., Reference Ahmed, Shahzad, Aslam, Bajwa and Bahoo2016). Consequently, it seems that organizational ethical culture certainly influences CSR practices of the organization.
Overall, it has been proposed in this study that ethical leadership permits the evolution of ethical culture, and ethical culture influences the firm's CSR programs, it is anticipated that ethical leadership temperaments have an indirect influence on CSR perceptions via the ethical culture. Statistical study has confirmed the mediating mechanism of business culture on the ethical leadership–CSR association (Wu et al., Reference Wu, Kwan, Yim, Chiu and He2015). Hence, it can be hypothesized that:
Hypothesis 4
Organizational ethical culture mediates the relationship between CEO ethical leadership and corporate social responsibility.
CEO ethical leadership and intellectual capital
Many researchers have proposed that intellectual capital comprises three key elements: the relational capital, structural capital, and human capital (Mention & Bontis, Reference Mention and Bontis2013). Tovstiga and Tulugurova (Reference Tovstiga and Tulugurova2009) indicated that intellectual capital includes two components: human and structural capital. Stewart and Capital (Reference Stewart and Capital1997) classified intellectual capital into customer capital, structural capital, and human capital. Yi-Ching Chen, Shui Wang, and Sun (Reference Yi-Ching Chen, Shui Wang and Sun2012) specified that the notion of relational capital is similar to the social capital and can therefore be used interchangeably with each other. Consequently, Subramaniam and Youndt (Reference Subramaniam and Youndt2005) proposed that intellectual capital comprises social capital and human capital.
Human capital can be defined as the skills, knowledge, and experiences, which leave the firm once the working day is over, for example, creativity, innovation capacity, learning capacity, motivation, employee flexibility, and loyalty (Wei Kiong Ting & Hooi Lean, Reference Wei Kiong Ting and Hooi Lean2009). Human capital is not completely retained by the organization and is inseparable from its bearer and therefore should be efficiently managed and deliver a viable competitive differential advantage (Mention & Bontis, Reference Mention and Bontis2013). According to Yi-Ching Chen, Shui Wang, and Sun (Reference Yi-Ching Chen, Shui Wang and Sun2012) organizations should constantly invest in human capital in order to benefit from the knowledge and skills of their employees. However, in order to exploit human capital and establish organizational capabilities, organizations require to have relational and structural capital also (Kong, Reference Kong2010).
Literature offers a number of definitions of social capital. Social capital can be defined as an intangible asset, which relies on creating and maintaining relations with personalities, groups, and organizations that distress organizations (Obeidat, Al-Suradi, Masa'deh, & Tarhini, Reference Obeidat, Al-Suradi, Masa'deh and Tarhini2016). Building and maintaining social capital lead to consequences having customer satisfaction, brand loyalty, market image, goodwill, coalitions, and strategic alliances (Joshi, Cahill, Sidhu, & Kansal, Reference Joshi, Cahill, Sidhu and Kansal2013). Organizations can generate social capital through building quality relations with other stakeholders, for example, suppliers, customers, and investors (Komnenic & Pokrajčić, Reference Komnenic and Pokrajčić2012). Kianto, Hurmelinna-Laukkanen, and Ritala (Reference Kianto, Hurmelinna-Laukkanen and Ritala2010) detailed and denoted to relational as the capability of organizations to interact with outside stakeholders in order to actualize their human and structural capital. Namvar, Fathian, Akhavan, and Reza Gholamian (Reference Namvar, Fathian, Akhavan and Reza Gholamian2010) recognized social capital as the movement of knowledge between diverse stakeholders through group interaction, organizational learning, knowledge transfer, and information flows through networks. In this study, human capital and social capital have been taken as the dimensions of intellectual capital.
An organization navigated by CEO moral values supports moral conduct and generates trust in it by interested parties e.g. clients, employees, and suppliers. Effects of trust and ethical values shape an organizational culture of honesty, ethics, and create a helpful atmosphere, which boosts open communication with employees, teamwork, knowledge sharing, creativeness, and better organizational problem solving, guiding to better organizational capital (Maletič, Maletič, & Gomišček, Reference Maletič, Maletič and Gomišček2018). In the guideline of ethical values, employees exhibit ethical manners to the stakeholders, for example, suppliers and customers. These ethical behaviors generate trust in them by these stakeholders, which enable interfaces and superior relations with them leading to higher social capital. Likewise, employees tend to be important as part of an ethical organization. Moreover, in the effects of CEO moral and ethical values, good-will and employees' behavior would tend in attracting and retaining the talent, which will lead to better human capital (De Hoogh & Den Hartog, Reference De Hoogh and Den Hartog2008). Keeping in view of the above, we can hypothesize that:
Hypothesis 5
The higher the CEO ethical leadership, the higher the social capital.
Hypothesis 6
The higher the CEO ethical leadership, the higher the human capital.
Intellectual capital and CSR
Given that the present knowledge economy has been shifted from labor-intensive to industrial-based and to knowledge-based, intangible dynamics have obtained substantial significance serving as products, resources, and as facilitating elements for smart companies (Tovstiga & Tulugurova, Reference Tovstiga and Tulugurova2009). In the modern knowledge economy, organizations should value intellectual capital as the most imperative asset over their physical capital (Lönnqvist, Kianto, & Sillanpää, Reference Lönnqvist, Kianto and Sillanpää2009). Flint, Maher, and Wielemaker (Reference Flint, Maher and Wielemaker2012) advocate that an important driver of an organization's competitive advantage subsists in the intellectual capital that is personified in the business employees. Thus, Brunold and Durst (Reference Brunold and Durst2012) recommended that organizations should incorporate intellectual capital management into their strategic determinations. Though organizations understand the significance of intellectual capital, Brunold and Durst (Reference Brunold and Durst2012) point out that some of them lack an understanding of the requirements required for it and the complications linked with it. Accordingly, intellectual capital management is difficult as it is generated and exploited by employees, and hence highly influenced by the people and organizational beliefs and values.
Intellectual capital played an ever-emerging role not only in the economic growth of organizations, but also in subsidizing to economic accomplishments, for example, market evaluation (Huang, Hsieh, & He, Reference Huang, Hsieh and He2014). If the relationship between intellectual capital and economic growth is true, then observing from previous research that has presented an encouraging association between economic growth and CSR practices, we can anticipate that intellectual capital will also have a positive relationship with CSR practices. Scholars have recognized that the main competitive advantages presently include managers, knowledge workers, loyal customers, effective systems, and robust brands as opposed to what used to be capital, land, or labor (Koonmee, Singhapakdi, Virakul, & Lee, Reference Koonmee, Singhapakdi, Virakul and Lee2010). There is substantial proof that displays firms, which have focused on developing intellectual capital have delivered great profits to their shareholders and are overperforming their rivals on each economic extent (Torugsa, O'Donohue, & Hecker, Reference Torugsa, O'Donohue and Hecker2012). We can conclude that intellectual capital will also have an association with CSR (González-Rodríguez, Díaz-Fernández, & Simonetti, Reference González-Rodríguez, Díaz-Fernández and Simonetti2015). Hence, it is anticipated that there would be an association between intellectual capital and the CSR practices. Hence, it can be hypothesized as:
Hypothesis 7
The higher the social capital, the higher the corporate social responsibility.
Hypothesis 8
The higher the human capital in the organization, the higher the corporate social responsibility.
Mediating role of intellectual capital
In order to develop the CSR, the organizational leadership can choose to develop intellectual capital (Huang, Hsieh, & He, Reference Huang, Hsieh and He2014). Intellectual capital development is a deliberation of higher-level management. The management comprehends the datum that the firm's advantage is fundamentally an emphasis on what the business identifies, how knowledge is utilized, and how organizational learning acquires something different (Rego, Sousa, Marques, & e Cunha, Reference Rego, Sousa, Marques and e Cunha2014). Besides, the leaders identify that the key source of upcoming cash flows would limit the energetic supervision of intellectual capital. To cope up with the customer needs does matter and strengthen the usage of knowledge to resolve problems, provide better services and suitable products instead of funding in an innovative vibrant capability. For instance, the implementation of CSR practices needs management commitment, workers' commitment and the endowment of knowledge, and skill. Employees' contribution in the delivery of CSR spirits is essential for this accomplishment. Practices leading to human resource management can assist in integrating CSR practices into the firm and intensify the bottom line (Huang, Hsieh, & He, Reference Huang, Hsieh and He2014). Businesses acknowledged for having comprehensive CSR practices are taking benefit of stakeholders' perspective that a firm behavior and its employees follow to the principles of CSR. Forgoing in view of the above, following hypotheses can be developed:
Hypothesis 9
Human capital mediates the relationship between CEO ethical leadership and corporate social responsibility.
Hypothesis 10
Social capital mediates the relationship between CEO ethical leadership and corporate social responsibility.
Methodology
Population, sampling, and procedure
Manufacturing firms are fighting to strive through the challenges of technological advancements, competitiveness, and need of productive and efficient workforce in achieving organizational excellence. They are involved in a variety of factors, whereas, human factor stands as substantial one, on the part of its capabilities to develop harmony among all other factors. Hence, firms need to construct and apply those strategies that may significantly develop optimistic outlooks of employees associated with dynamic managerial outcomes. Pakistan has a very large consumer market with a population of over 200 million. To meet customers' need, many segments have been acknowledged as prospective denotes to every day need. As the population grows, the demand also increases. The corporate sector of Pakistan is involved in several CSR practices. This study selected a sample of 120 organizations from the seven manufacturing sectors of the Pakistani economy, which are, fertilizer, chemical, cement, oil and gas exploration, refinery, pharmaceutical, and textile. Those firms were excluded during sample selection, which did not mention CSR practices in their annual reports, and organizations for which data were not available with the Pakistan Stock Exchange (PSX).
Pakistan was selected for the current research for the reason that the manufacturing sector in Pakistan is facing several challenges and the support from government is marginal rather yet to exist. It would be pertinent to mention here, as why the population of this sector has been taken as a sample. Since, the Pakistan manufacturing sector had contributed substantially toward the GDP (13%) of Pakistan (Zafar, Reference Zafar2017). Moreover, there are some other reasons to target this sector. First, manufacturing organizations have greater CSR practices as compared with firms in other sectors (Scott, Reference Scott2007). Second, manufacturing organizations have higher disclosure about environmental, production, and welfare activities as compared with other sectors (Haniffa & Cooke, Reference Haniffa and Cooke2005). Third, manufacturing sector has huge CSR exposure as they grasp higher market capitalization in the PSX and have more assets with which to contribute to CSR activities (Ehsan, Nazir, Nurunnabi, Raza Khan, Tahir, & Ahmed, Reference Ehsan, Nazir, Nurunnabi, Raza Khan, Tahir and Ahmed2018). Fourth, the manufacturing firms of Pakistan do more export relatively high as compared with service sector. Fifth, it is important for exporting organizations to implement CSR practices to grow and compete in the global market and fulfill global standards. Manufacturing sector of Pakistan has well formalized and developed CSR activities. These firms publish sustainability reports by following the instructions of Security Exchange Commission of Pakistan (SECP) and global reporting initiative (GRI). In Pakistan, manufacturing sector is contributing considerably to social welfare initiatives, for example, health and education, poverty reduction, human resource development, development of infrastructure for natives, professional and technical teaching, residential care, and emergency support in natural disasters (Prieto-Carrón, Lund-Thomsen, Chan, Muro, & Bhushan, Reference Prieto-Carrón, Lund-Thomsen, Chan, Muro and Bhushan2006).
Data for current research were collected through in person administered questionnaire-based survey from the respondents. At the start of the questionnaire, the scholar needs to describe obviously and briefly, why researcher wishes the respondent to complete the feedback. Dillman (Reference Dillman2011) says that, to accomplish a high rate of replies as possible, this should be prepared on the first page of the survey form. At the end of the survey form, we need to enlighten obviously, what we want the respondents to do with their completed form. It is common to start this segment by thanking the respondent for completing the survey, and by providing a contact name and telephone number for any queries they may have. CEOs, HR managers, and middle managers were surveyed discretely, and they were unaware about the queries of each other. Moreover, due consideration was given while selecting the respondents from R&D departments of these manufacturing units, who were typically involved in knowledge intensive tasks and where application of intellectual capital is essential. Convenience sampling technique was adopted to carry out the survey. This sampling method allows the researcher to attain the sample size he wants in a comparatively fast and economical way (Cooke, Reference Cooke2017). Sample is small in contrast to probability sampling techniques. This sampling method allows the researcher to attain the sample size he wants in a comparatively fast and economical way. Four hundred questionnaires were distributed for the survey among the respondents and 250 respondents answered the entire questionnaire items and therefore, considered for final data analysis (Roscoe, Reference Roscoe1975).
Measurement
All the survey measures developed by the researchers were taken from previous research. CEO ethical leadership was assessed by the measure of Brown, Treviño, and Harrison (Reference Brown, Treviño and Harrison2005). Response options had ranges from 5, ‘strongly agree’ to 1, ‘strongly disagree.’ Example items are ‘Our company's leader sets an example of how to do things the right way in terms of ethics,’ and ‘Listens to what employees have to say.’
A 9-item scale originated from Key (Reference Key1999) was used for measuring organizational ethical culture. Reply preferences had ranges from 5, ‘strongly agree’ to 1, ‘strongly disagree.’ The example statement contains ‘Employees in our company accept organizational rules and procedures regarding ethical behaviour.’ The questionnaire has been authenticated a number of times in the previous study (Gibson & Frakes, Reference Gibson and Frakes1997; Key, Reference Key1999). Key (Reference Key1999) contended that the Ethical Culture Questionnaire measures individual perception of a firm's ethical culture.
In order to measure CSR practices, a 17-item scale developed by Turker (Reference Turker2009) was utilized. This scale differentiates five types of CSR dimensions, according to the type of stakeholder targeted: CSR to customers, employees, environment, government and society, and philanthropy. We selected to use all five facets of Turker's scale as we would like to evaluate workers' overall CSR perceptions. This is principally required in the perspective of this research, where those manufacturing firms all have some levels of pollution to the atmosphere and accountabilities for the society. Hence, business employees are not only fellows of an organization, but they are also accountable for CSR programs and contribute to the value of the organization and various stakeholders (Rupp, Shao, Thornton, & Skarlicki, Reference Rupp, Shao, Thornton and Skarlicki2013). Response options had ranges from 5, ‘strongly agree’ to 1, ‘strongly disagree.’ Example statements are: ‘Our company provides full and accurate information about its products or services to its customers’ and ‘Customer satisfaction is highly important for our company.’
To measure intellectual capital facets (social and human capital), the current study used the intellectual capital scale developed by Youndt, Subramaniam, and Snell (Reference Youndt, Subramaniam and Snell2004). This scale has 10 items. Human capital reveals the overall knowledge, skill, and expertise of a firm's employees. The five statements were used to measure human capital. The five statements were used to measure a firm's overall capability in sharing and leveraging knowledge among and between nets of government, employees, alliance partners, suppliers, customers, and technical fellows. A 5-point scale was adopted to assess the range of the survey items, with one demonstrating ‘strongly disagree’ and five representing ‘strongly agree.’ One item, for example, is given as: ‘The employees of our firm share information and learn from one another.’
Common method bias check
To control for the common method variance issue, which may arise because of data collection using same-source self-reports, the one-factor test was applied (Podsakoff, MacKenzie, Lee, & Podsakoff, Reference Podsakoff, MacKenzie, Lee and Podsakoff2003). Using structural equation modeling (SEM), all of the items were loaded on a single factor to evaluate whether common method bias is an issue in this study. The common method bias is anticipated to exist if one factor accounts for the majority of variance in the variables or if one factor surfaces from unrotated factor solutions (Craighead, Ketchen, Dunn, & Hult, Reference Craighead, Ketchen, Dunn and Hult2011). The first factor demonstrated 43.341% variance, which is less than 50%. Hence, the common method bias was exposed as not a problem in the contemporary research.
Data Analysis and Results
Assessment of scale reliability and validity
Reliability is associated with the estimation of the degree of consistency between multiple measurements of a facet, and can be assessed by Cronbach alpha coefficient (α). A number of researchers recommended that the values of all indicators must be greater than the suggested value of .70 (Jolibert & Jourdan, Reference Jolibert and Jourdan2006).
Table 1 shows that all values of Cronbach α for the study variables were above the suggested value of .70 indicating that the scale is reliable. Therefore, all the study dimensions in the current research are deliberated as reliable.
Values of α, AVE, CR, and correlation matrix
Note: Bold diagonal values are the square root of AVE.
The intensity of shared variance between the observed variables is generally checked through the method of Fornell and Larcker (Reference Fornell and Larcker1981). Furthermore, Fornell and Larcker (Reference Fornell and Larcker1981) suggested Average Variance Extracted (AVE), and Composite Reliability (CR) for testing the convergent validity of study constructs. Where, AVE is applied to evaluate the level of variance calculated by constructing versus the level of measurement error. The .50 value is considered as the acceptable value for AVE, while .70 is acknowledged as a good value. Moreover, CR is employed to access the reliability and this method is conceived less biased than α. The .70 value is considered as the acceptable value for CR as well as for α. The results of Table 1 show that all the values of CR and α are above .70.
As long as the discriminant validity concerns, Fornell and Larcker (Reference Fornell and Larcker1981) exclaim that if the correlation values between two constructs are less than the square root of their corresponding AVE values, then there is a substantial likelihood for the discriminant validity. As shown in Table 1, the square roots of all AVE values are greater than the correlation values between the respective constructs. The result shows adequate discriminant validity. For further authentication, the method suggested by Ngo and O'Cass (Reference Ngo and O'Cass2012) was implemented. Discriminant validity is witnessed when the correlation estimates between two constructs are not greater than their corresponding reliability estimates. As shown in Table 1, the reliability value of any two constructs is greater than their respective correlation value. Consequently, these findings offer confirmation of sufficient discriminant validity.
The results of confirmatory factor analysis (CFA) factor loading are presented in Table 2. The χ2, the comparative fit index (CFI), the Tucker–Lewis index (TLI), and the root mean square error of approximation (RMSEA) were applied to estimate the model fit (Hair, Black, Babin, Anderson, & Tatham, Reference Hair, Black, Babin, Anderson and Tatham1998). Moreover, a cutoff value of ≥.90 for CFI, TLI, and an cutoff value less than .08 for RMSEA (Hair et al., Reference Hair, Black, Babin, Anderson and Tatham1998) postulate that there is a relatively acceptable fit between the proposed model. The results of CFA values demonstrate that all the models of this research were observed as to fitting the data well.
Results of factor loadings for the study variables
Analysis of demographics
A sample of 250 (participants considered, who answered the items correctly) valid participants participated in the current research. Female included about 26% of the target sample and male 74%. The ages of the respondents ranged from 18 to 45. The job experience ranged from 1 year to over 11 years. In total, 41% of the respondents had intermediate education, 6% were university graduates, 49% had master degrees, and 4% were PhDs. The distribution of the respondents' job level was middle level management (86%), top-level management (28%), and lower level management (37%).
Hypothesis testing
To investigate the research model, SEM through AMOS 18 was used. SEM may be divided into two sub-models: a measurement model and a structural model. The measurement model describes associations between the observed and unobserved variables, whereas the structural model ascertains relations among the unobserved variables by postulating which unobserved variables indirectly or directly affect variation in other unobserved variables in the model (Hair et al., Reference Hair, Black, Babin, Anderson and Tatham1998). Moreover, SEM comprises two modules: validating the measurement model and fitting the structural model. However, the first one is done through confirmatory factor analysis, while the second one is done by path analysis with unobserved variables (Kline, Reference Kline2005).
The results exhibit regression estimates, regression path, significance values, critical ratio, standard error, and label of proposed associations (Table 3 and Figure 1). The results describe a substantial and positive impact of CEO ethical leadership on ethical culture of the organization (β = .31, p < .05). It reveals that CEO ethical leadership boosts ethical culture of the organization approximately 31%. The critical ratio (7.279) reveals that CEO ethical leadership is considered as an important factor of organizational ethical culture. Hence, the study hypothesis 2 is accepted. In addition to that, the results exhibit that CEO ethical leadership is witnessed as having a significant and positive relation to the social capital (β = .29, p < .05) and human capital (β = .40, p < .05). Accordingly, hypotheses 5 and 6 are accepted. Moreover, ethical leadership is related to CSR (β = .43, p < .05), hence, hypothesis 3 is substantiated. The results indicate that organizational ethical culture is positively and significantly related to CSR perceptions (β = .30, p < .05), thus supporting hypothesis 1. In addition to that, social capital was observed to be significantly and positively related to CSR practices as the β value is .30 at p < .05, and human capital was witnessed as having a significant and positive relationship with CSR as the β value is .34 at p < .05 that provide support to hypothesis 7 and hypothesis 8 correspondingly.
Structural model depicting path estimates. CEL, CEO ethical leadership; OEC, organizational ethical culture; scoop, social capital; HCap, human capital, CSR, corporate social responsibility.
Regression results of direct effects
***p < .05.
Values of model fit indices considered as an outcome of SEM are presented in Table 4 demonstrating that the indices of the model fulfill the criteria for adequate model fit (Hu & Bentler, Reference Hu and Bentler1999).
Structural equation model fit measures
NFI, normed fit index; CFI, comparative fit index; GFI, goodness for fit index; AGFI, adjusted goodness fit for index; RMSEA, root mean square error of approximation; IFI, incremental fit index.
For mediation investigation, the study model was divided into four sub-models. In the first model, direct relationship between CEO ethical leadership and CSR practices was investigated. In the second model, ethical culture of the organization (mediator) was examined in order to observe the indirect and direct association. In the third model, human capital (mediator) was investigated to study the indirect and direct association between dependent and independent variables. In the fourth model, social capital (mediator) was examined to study the indirect and direct association between dependent and independent variables (Table 5).
Results of mediation analysis
To investigate the mediation role of ethical culture, the direct association between CEO ethical leadership and CSR practices was analyzed first. The results instigated significant and positive association as the β value was .43 at p < .05. By introducing organizational ethical culture, the value of β was reduced to .14, which showed a partial mediation. Hence, hypothesis 4 was accepted. Similarly, by inserting human capital, the β value was reduced to .15. Subsequently, hypothesis 9 was also substantiated that human capital had mediating role in CEO ethical leadership–CSR relationship. Last, adding social capital as mediation, the β value was also reduced (.16), thus supporting hypothesis 10.
Discussion
Current study discovers developing a paradigm focusing on CEO ethical leadership, organizational ethical culture, and intellectual capital facets (human capital and social capital), which explain the effects on CSR. It also examines the mediating effect of ethical culture, human capital, and social capital between the relationship of CEO ethical leadership and CSR perceptions. Within the context of the current study, CEO ethical leadership temperaments stimulate ethical culture of the organization. Consequently, business employees have a propensity to share similar ethical principles and values. A concern of this association is that employees behave rationally while behaving with the stakeholders, comprising clients, government, people, and the environment, exhibiting a remarkable business social demonstration (Kerse, Reference Kerse2019; Metwally & Punnett, Reference Metwally and Punnett2017; Rao, Reference Rao2018).
The current study has significantly contributed to the body of knowledge. Current research not only delivers robust substantiation for the declaration that CEO ethical leadership temperaments could affect CSR practices of the firm, but also incorporates the understanding of how this type of association is developed. While the research of Waldman et al. (Reference Waldman, De Luque, Washburn, House, Adetoun, Barrasa and Debbarma2006) focused on the CEO transformational leadership influence on CSR, the first to adhere CEO leadership to CSR, current research directly appraises CEO ethical leadership temperaments beyond and above CEO transformation leadership and extended the framework of Waldman et al. (Reference Waldman, De Luque, Washburn, House, Adetoun, Barrasa and Debbarma2006) to recognize the mediating variables between CEO ethical leadership and CSR. Current research addresses the call of Waldman et al. (Reference Waldman, De Luque, Washburn, House, Adetoun, Barrasa and Debbarma2006) for assessing the influence of ethical leadership relating to CSR practices. In addition, it addresses the voice of Mayer et al. (Reference Mayer, Kuenzi, Greenbaum, Bardes and Salvador2009) to examine the association of ethical leadership and business ethical culture along with the broader condition for the influence of CEO moral leadership. The current work proposes that the exertion is strong, in line with the declaration that organizational ethical culture and consequences exhibit higher leaders' principles and values. Moreover, CEO ethical leadership has witnessed an encouraging paradigm to the growth and promoting an ethical culture and CSR practices within the organization.
Moreover, two prominent theories, i.e. upper echelon theory and social learning theory were used to relate CEO ethical leadership temperaments to its consequences. The results of the study exhibit that firms with higher ethical values have improved intellectual capital facets (human and social). Accordingly, in response to the plea to address CEO ethical leadership and intellectual capital facets (human and social) together and the link among them (Huang, Hsieh, & He, Reference Huang, Hsieh and He2014; Polo & Vázquez, Reference Polo and Vázquez2008), current study incorporates the existent intellectual capital research by connecting research of CEO ethical leadership temperaments with intellectual capital and analyzing the association of CEO ethical leadership with human capital and social capital.
Moral leadership stimulates businesses to accept social obligation, producing a conducing public environment to develop corporate culture. Market demand urges the firms to revise the strategies, decrease investment and having lessor employment. Even when facing the massive market stresses, businesspersons must take ethics seriously. Corporate leaders can only achieve their objectives by integrating ethical needs into corporate plans (Moore, Mayer, Chiang, Crossley, Karlesky, & Birtch, Reference Moore, Mayer, Chiang, Crossley, Karlesky and Birtch2019). Ethical capital desires entrepreneurs to be liable for humankind overall, not just for the organizations. Entrepreneurs have acknowledged the importance of social accountability pertinent that it has today come to be a dynamic value for the success of the business (Wang, Reference Wang2015). Entrepreneurs having a modest obligation of social responsibility and the spectrum of moral values roaming within them will guide their companies to be more accountable for the humanity (Buckler, Reference Buckler2017; Ehsan et al., Reference Ehsan, Nazir, Nurunnabi, Raza Khan, Tahir and Ahmed2018; Muchiri, Shahid, & Ayoko, Reference Muchiri, Shahid and Ayoko2019). It would absolutely cultivate the level of morality, and create a public environment that will be beneficial for the development of corporate culture (Crane, Matten, & Spence, Reference Crane, Matten and Spence2019).
Contemporary research reveals that the ethical leaders' model is a useful behavior for employees and inspires them to participate in learning. While this is a significant contribution of the current study, social learning occurs only when the role of model leaders is positive behaviors. We come to an agreement with the recommendation of Brown and Mitchell (Reference Brown and Mitchell2010) that much can be learnt by also observing the black side of the leadership. This can contain such areas as rude leadership or negative management (Tepper, Duffy, Henle, & Lambert, Reference Tepper, Duffy, Henle and Lambert2006), ultimately stimulating unethical environment in the organization and restricting employees' not to gain intellectual capital. From a social learning viewpoint, it is respectively imperative to recognize what the people learn from the black side of leaders. There can even be a destructive downward influence so that those who are abused are running abusive management model or destructive behavior, thus harming others further down the chain of command (Farooq, Rupp, & Farooq, Reference Farooq, Rupp and Farooq2017; Zoghbi-Manrique-de-Lara & Viera-Armas, Reference Zoghbi-Manrique-de-Lara and Viera-Armas2019).
The results of the contemporary research provide statistical evidence supporting the latest business propensity in boosting ethical values to attract talent, improve corporate image, and developing an ethical culture and environment for shared learning, open communication, product development, and teamwork. The current study provides a platform toward the empirical inquiry on the association between CEO ethical leadership temperaments and intellectual capital facets, which can originate new horizon for further research in this domain.
Practical implication
The research has practical implications for practitioners, researchers and business persons by attracting them to the promising associations between ethical leadership, organizational ethical culture, and evolution of the intellectual capital and CSR practices. Accordingly, organizations can initiate by highlighting the importance of ethical principles and moral values. To demonstrate the tone from the top, the top-level management must do this. The target organizations stress the values of justice, compliance, honesty, open communication, long-term alignment, transparency, and corporate citizenships. Consideration should also be given to increase the awareness of the importance of intellectual capital, which can have an impact on the long-term sustainability of the organization, rather than only emphasis on physical resources and interim financial growth. Transparency of intellectual capital may be improved through choosing appropriate indicators. For example, a number of ethical concerns described by all stakeholders, the amount of arbitrators nominated and what corrective arrangements to address these concerns can be used to show the intellectual capital factor display honesty, and integrity. Supplier and customer satisfaction portfolios may be used to indicate social capital by presenting what kind of suppliers and clients they have. Moreover, it also shows the working relations with them.
Based upon ethical culture, the firm is able to emphasize that managing global challenges of limited resources with economic goods and services that can improve quality, and reduce organic and public cost, also generates commendable corporate sophistication. It is positive to infer that the profile of the association between CEO ethical leadership temperaments and intellectual capital facets will gradually increase as per firms initiate to monitor the development of their intellectual capital facets (human and social capital), and link their corporate principles with their developments as suggested by the results of the current study. Corporate leaders can exhibit through their entire stakeholders by encouraging corporate ethics, and also to develop intellectual capital facets (social capital and human capital) for better differential advantage, competitiveness, and business performance.
To develop CSR practices in the organization is to discover leaders who keep an unusual platform of managing preferences. The current research describes that the encouraging impact of CEO ethical leadership and business moral culture, are very useful for business managers and leaders who have freedom. Therefore, companies should pay complementary attention to such managers and encourage them to exercise moral leadership intended for inspiring the ethical culture and CSR practices in the organization.
The result of this study proposes that firms should prioritize selecting and developing leaders who consider ethics as a vital ingredient of their vision. This can be accomplished through selecting or executing training programs, which offer motivations for wisdom, serving members become prepared to learn, and offering resources and support to assist the learning process. The results also recommend that firms should invest in systems, which encourage leaders and followers justice to develop CSR in firms. Designing programs to develop moral values can be principally good gesture because this study's results recommend that followers of moral behavior play a key role in fostering CSR. It means that as followers learn and recognize the benefits of moral behavior, that behavior can be worthy to firms by improving performance, obligation, and discretionary learning behavior. Hence, firms should invest more resources in intellectual capital development programs, which develop the moral behavior as a way to expedite justice and fairness within firms. Taken together, the results of this study propose that business firms should invest supplementary funds into promoting moral leaders and discovering innovative techniques to teach intellectual capital and ethical culture in order to enable workplace justice and fairness. Such investments are more likely to result in positive organizational outcomes, for example development of CSR.
Limitations and direction for future research
Despite the constructive contribution, the current research has a number of limitations, which should be noted. First, the target sample of this research are the organizations located in Pakistan. Further study with samples from different areas in which companies' development of ethical leadership, CSR, and intellectual capital is also critical to their growth, and effectiveness would encompass awareness and enhance pertinence to other perspectives. Second, little research attention has been given to discover the associations between ethical leadership and the evolution of the dimensions of intellectual capital. Therefore, further investigation taking case study may offer an in-depth and complete exploration into their associations and changing aspects. Third, contemporary study used cross-sectional design for data collection; hence, causality cannot be studied. Future study might use longitudinal survey to have a gaze at the impact of ethical leadership and the chronological development of the dimensions of intellectual capital, organizational culture, and CSR over time in order to study their relationships more carefully.
Fourth limitation is that although the current study used social learning theory and upper echelon theory to tie CEO moral leadership temperaments and to its consequences, however, it did not in reality evaluate any role-modeling factors. Even though, considering such factors might have made our framework awkward, we realize the significance in observing the principal developments, which are accountable for the impacts of ethical leadership. Moreover, this study concentered only on restricted outcomes. However, study of Piccolo et al. (Reference Piccolo, Greenbaum, Hartog and Folger2010) has suggested that CEO ethical leadership may be linked to a positive conduct, for example employee voice. In upcoming research, it would be vital to surge the nomological net of likely dependent predictors by studying constructive consequences of CEO ethical leadership, for instance employee voice, cooperation, intellectual capital, and organizational financial performance.
Fifth, the target sector of the current study was the manufacturing firms. As the sample selection depicts to deliberate the importance of the development of intellectual capital for the growth and competitiveness of the organization. Future research from different industry segments in which the development of intellectual capital is also imperative to their competitiveness and growth would encompass comprehension and develop applicability to other environments.
Sixth, convenience-sampling technique was used, because the population being surveyed has fair understanding of the required subject, therefore, provides ample room to obtain the data comparatively fast and in an economical way. Convenience sampling may involve inherent bias, which means that the sample is unlikely to be representative of the population being studied. This may undermine the ability to make generalizations from the sample to the population being examined. Future research may pursue and contemplate by taking probability-sampling techniques to validate further research studies within the contemporary domains.
Seventh, the current research was performed in Pakistan, subsequent in the apprehension that the results may not be generalized to the West. Therefore, the influence of ethical leadership on the culture, intellectual capital, and CSR of Pakistani organizations may be different from those on Western organizations. Accordingly, it is anticipated that scholars may repeat this study in other countries having different contexts and cultures to witness and support the generalizability and validity of the contemporary study. Eighth, with the development of the study on the ethical leadership in Pakistan, seeing Pakistan's cultural and social realism, it is encouraged that more examinations about the ethical leadership, which rooted in Pakistani perspectives must be done and Pakistani culture features must also be incorporated into the future study.
Social desirability bias is another limitation. Business ethics and CSR are considered as sensitive topics. Participants avoid to answer the sensitive questions or misreport on sensitive questions, answering according to what they believe is socially expected. Such types of misreporting or failing to report, institute key sources of error in the study. It will be imperative in the future to gain more knowledge about how sensitive topics affect the quality of data collection related to business ethics studies.
Finally, the contemporary study is limited with regard to generalizability because it was performed in the manufacturing firms instituting a specific category; also, the possibility of a selection bias cannot be ruled out as the participant firms were those, which were quite willing to offer their input for this research. Hence, further research may pursue to validate the research findings on a wider sample.
Conclusion
CSR is imperative to the business performance, competencies, and competitive advantage. There subsists a desperate urge to enhance the value and magnitude of CSR. The multi-layered mind campaign must begin with a definite goal to make different stakeholders and organizations understand the need and benefits of CSR and eliminate any misinterpretations identified with it. With this strengthened mind, there is a need for discussion among stakeholders, governments, the business sector, civil society, and the academic community. A pertinent and empowering CSR strategy should be formulated by the Government with the contribution of all stakeholders and to be made mandatory.
The present model integrates organizational ethical culture and intellectual capital facets (human capital and social capital) as vital aspects of the relationship between CEO ethical leadership temperaments and CSR practices. This study employed upper echelon theory and social learning theory, which integrate ethical culture and intellectual capital facets (social capital and human capital) as there is a dire need of mediators of the association between the CEO ethical leadership temperaments and CSR perceptions. As a whole, this study explains how ethics counts ultimate when it narrates to use CSR practices. The current research findings support ethics, CSR, organizational culture, and strategic management studies by verifying the association of ethical leadership and CSR with previously understudied variables, for example business culture, human capital, and social capital.
Author ORCIDs
Irfan Ullah, 0000-0002-0285-104X.
