The Impact of Ethical Leadership on Employees’ Ethical Behavior through Ethical Climate

This study explores the impact of ethical leadership on employees’ ethical behavior through ethical climate with special reference to the garment factories in the Katunayake free trade zone. The study employed a quantitative approach, and primary data was collected from 242 supervisory-level employees in the garment factories using a questionnaire. Structural equation modeling (SEM) was used to test the model and data analysis was carried out using structural equation modelling-partial least square technique (SEM-PLS). The results revealed a significant positive relationship between ethical leadership and the ethical behavior of employees. Further, the study found that ethical climate partially mediates between ethical leadership and employees’ ethical behavior. Overall, this study concludes the crucial role of ethical leadership in fostering ethical behavior among employees and highlights the importance of nurturing an ethical climate within organizations. Moreover, this study responds to recent calls for more research to identify factors that may strengthen or mitigate the influence of ethical behavior in the workplace.