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Personnel ReviewDo as I say and do as I do? The mediating role of psychological contract fulfillmentin the relationship between ethical leadership and employee extra-roleperformanceIfzal Ahmad, Magda B.L. Donia, Asadullah Khan, Muhammad Waris,Article information:To cite this document:Ifzal Ahmad, Magda B.L. Donia, Asadullah Khan, Muhammad Waris, (2019) “Do as I say and doas I do? The mediating role of psychological contract fulfillment in the relationship between ethicalleadership and employee extra-role performance”, Personnel Review, Vol. 48 Issue: 1, pp.98-117,https://doi.org/10.1108/PR-12-2016-0325Permanent link to this document:https://doi.org/10.1108/PR-12-2016-0325Downloaded on: 04 February 2019, At: 04:27 (PT)References: this document contains references to 87 other documents.To copy this document: [email protected] fulltext of this document has been downloaded 287 times since 2019*Users who downloaded this article also downloaded:(2018),”Am I treated better than my co-worker? A moderated mediation analysis of psychologicalcontract fulfillment, organizational identification, and voice”, Personnel Review, Vol. 47 Iss 5pp. 1133-1151 https://doi.org/10.1108/PR-04-2016-0090(2018),”Ethical leadership and work engagement: The roles of psychological empowerment andpower distance orientation”, Management Decision, Vol. 56 Iss 9 pp. 1991-2005 https://doi.org/10.1108/MD-02-2017-0107Access to this document was granted through an Emerald subscription provided by emeraldsrm:157274 []For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emeraldfor Authors service information about how to choose which publication to write for and submissionguidelines are available for all. Please visit www.emeraldinsight.com/authors for more information.About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The companymanages a portfolio of more than 290 journals and over 2,350 books and book series volumes, asDownloaded by University of Derby At 04:27 04 February 2019 (PT)well as providing an extensive range of online products and additional customer resources andservices.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of theCommittee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative fordigital archive preservation.*Related content and download information correct at time of download.Downloaded by University of Derby At 04:27 04 February 2019 (PT)Do as I say and do as I do? Themediating role of psychologicalcontract fulfillment in therelationship between ethicalleadership and employeeextra-role performanceIfzal AhmadSchool of Business and Management, Karakoram International University,Gilgit, PakistanMagda B.L. DoniaTelfer School of Management, University of Ottawa, Ottawa, Canada, andAsadullah Khan and Muhammad WarisFaculty of Industrial Management, University of Malaysia Pahang,Pahang, MalaysiaAbstractPurpose – The purpose of this paper is to investigate the impact of ethical leadership on two importantemployee extra-role behaviors; organizational citizenship behaviors (OCBs) and creative performance (CP).Drawing on social exchange and organizational support theories, psychological contract fulfillment (PCF)was proposed as the mediating mechanism explaining this relationship.Design/methodology/approach – Data were collected via questionnaire from 248 employee-supervisor/colleague dyads employed in a large fast-moving consumer goods multinational company in Pakistan.The hypotheses were tested using structural equation modeling.Findings – Supervisors’ ethical leadership style (ELS) was positively related to employees’ OCBs and CP. Thepredicted mediating role of PCF in the relationship between ELS and extra-role behaviors was also supported.Research limitations/implications – While it benefitted from dyadic data, a significant limitation of thisstudy is the cross-sectional nature of the data. A noteworthy implication of the findings is the important role thatsupervisors’ ELS plays in employees’ behaviors within the organization. Furthermore, it appears that ethicalleadership is a significant factor in employees’ evaluations of PCF and their ensuing behavioral responses.Originality/value – This study contributes to addressing the inconsistent findings in prior research onethical leadership. An additional novel contribution is that it identifies PCF as an underlying mechanismlinking ethical leadership and employees’ extra-role behaviors.Keywords Quantitative, Creativity, Psychological contract fulfilment,Organizational citizenship behaviour (OCB), Ethical leadership stylePaper type Research paperIntroductionIn what is increasingly referred to as the “post-truth” era in which basic ethical conductappears unnecessary for leadership success (Egan, 2016), the notion of ethical leadershipmay seem to some as outdated and even a nuisance. Such societal reality stands in contrastto research in fields such as organizational behavior and industrial and organizationalpsychology that view ethical leadership as increasingly relevant in light of recent large scalecorporate scandals such as Volkswagen’s “Dieselgate” (Smith, 2016). Indeed, researchersagree on the importance of ethics in the workplace and of ethical leadership in particular(e.g. Ciulla 1995; Javed et al., 2016; Mo and Shi, 2015).Personnel ReviewVol. 48 No. 1, 2019pp. 98-117© Emerald Publishing Limited0048-3486DOI 10.1108/PR-12-2016-0325Received 19 December 2016Revised 5 June 20172 October 20173 December 20176 February 201826 March 2018Accepted 4 June 2018The current issue and full text archive of this journal is available on Emerald Insight at:www.emeraldinsight.com/0048-3486.htm98PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)Defined as “the demonstration of normatively appropriate conduct through personal actionsand interpersonal relationships and the promotion of such conduct to subordinates throughtwo-way communication, reinforcement, and decision-making” (Brown et al., 2005, p. 120),copious research has established the positive impact of ethical leadership on subordinates’attitudes and behaviors. For example, there is much evidence of the impact of ethical leadershipon employees’ well-being (e.g. Chughtai et al., 2015), performance (e.g. Walumbwa et al., 2011),organizational citizenship behaviors (OCBs); (e.g. Mo and Shi, 2015; Mayer et al., 2012),academic citizenship behavior (Arain et al., 2016), safety performance (Khan et al., 2018), jobsatisfaction (e.g. Yozgar and Mesekiran, 2016), creativity (e.g. Chughtai, 2014; Feng et al., 2016)and innovative work behaviors (Yindong and Xinxin, 2013).Importantly, the relationship between ethical leadership and employees’ involvement inextra-role behaviors also provides encouraging evidence of the importance of this leadershipstyle on valuable discretionary employee behaviors (Boehm and Dwertmann, 2015).However, there are not only limited studies focusing on discretionary behavioral outcomessuch as OCBs and creative performance (CP) but the existing studies also have some notableinconsistencies in their findings (Lu, 2014). For example, Arain et al. (2016) found both directand indirect effects of ethical leadership on students’ academic citizenship behavior, Mayeret al. (2012) found a direct positive relationship between ethical leadership style (ELS) andOCB, while Mo and Shi (2015) found only an indirect relationship between ELS and OCBmediated by organizational concern. On the other hand, Feng et al. (2016) identified acurvilinear relationship between ELS and OCB. Similarly, Javed et al. (2016) found bothdirect and indirect effects of ELS on creativity through empowerment, whereas, Chughtai(2014) identified only an indirect effect of ELS on creativity, mediated by leader-memberexchange and psychological empowerment.These differential findings suggest the importance of uncovering and better understandingof potential mechanisms by which ethical leadership impacts employees’ OCBs and CP. Brownand Mitchell (2010) also stressed on conducting more research to better understand theimplications of ethical leadership. Among the most prominent studies exploring mediatingpaths are those considering the roles of moral identity (Arain et al., 2016; Bavik et al., 2017),employee controlled motivation (Bavik et al., 2017), safety culture and safety consciousness(Khan et al., 2018), trust (Xu et al., 2016), leader-member exchange (Chughtai, 2014; Walumbwaet al., 2011), procedural justice and organizational concern (Mo and Shi, 2015), psychologicalempowerment (Javed et al., 2016), knowledge sharing and self-efficacy (Ma et al., 2013),employee voice and psychological ownership (Avey et al., 2012; Chen and Hou, 2016), intrinsicmotivation (Feng et al., 2016) and work-related stress (Elci et al., 2012).Defined as the promissory understandings and beliefs of an employee about the chances offulfillment of the pledges made by their organization (Rousseau, 1995), psychological contractfulfillment (PCF) has been identified as a strong predictor of important outcomes such asturnover intentions (Collins, 2010), commitment (Fontinha et al., 2013), innovative workbehavior (Chang et al., 2013), OCBs (Mo and Shi, 2015; Turnley et al., 2003), job performance(Conway and Coyle-Shapiro, 2012; Rodwell et al., 2015) and perceived organizational support(Chaudhry and Tekleab, 2013). In line with Mo and Shi’s (2015, p. 1) argument that “little wasknown regarding the underlying mechanism through which ethical leadership enhancesemployees’ OCB”; we contend that the value of exploring the role of PCF toward explainingthe manner through which ethical leadership impact employees’ behavioral outcomes is high.Extant studies also emphasized on studying other mediating variables (such as PCF) becauseof the increasing attention to research on ethical leadership (Hoch et al., 2016). Studies suggestthat the outcomes of PCF are stronger in strength with fulfillment of commitments than theisolated commitments itself (Lambert et al., 2003). Therefore, it is expected that mediating roleof PCF between ethical leadership and employees’ extra-role behaviors, such as creativity andOCB, will unfold its vast potential implications.99The mediatingrole ofpsychologicalcontractDownloaded by University of Derby At 04:27 04 February 2019 (PT)Drawing from social exchange theory (Blau, 1964) as an overarching theory for this studyalong with the support of organizational support theory (Aselage and Eisenberger, 2003), wefirst investigate the direct impact of ELS on employees’ OCBs and CP. We then explore the roleof PCF as an explanatory mechanism linking ELS with OCBs and CP. Our contention is thatthe concept of a moral manager and the ensuing fair treatment associated with ELS will makeemployees more perceptive to report high PCF and in turn engage in more OCBs and CP.Conceptual framework and hypothesesEthical leadership, social exchange theory and organizational support theoryThe value of ethical leadership is increasingly apparent in this age when ethical and moralideals seem less rewarded and valued in the current business and political stage. Leadershiptheorists argue that for organizations to run effectively, the ethical conduct of leaders isimperative (Ciulla, 1995). Ethical leaders demonstrate a high level of integrity, morality andethical behavior in the workplace (Yozgar and Mesekiran, 2016) and encourage and promotesuch behaviors among their employees through various incentives (both instrumental andnon-instrumental) and disciplinary procedures (Brown et al., 2005).While an ethical dimension is common to many of our more studied leadership theoriessuch as charismatic, transformational, transactional and authentic leadership styles(Ahmad et al., 2015; Vlachos et al., 2013), ethical leadership goes a step further with greateremphasis on ethical and moral behavior (Brown et al., 2005). Indeed, a focus on ethicalconduct, moral behavior, fairness and integrity are central aspects of ELS (Yozgar andMesekiran, 2016). Such moral behaviors not only reflect the good image of such leaders butalso extend a strong direction for followers in the workplace (Mo and Shi, 2015). Studiessuggest that leaders personify and represent the organization whereby “[…] in the workingrelationship between leaders and followers, leaders represent the personal actualization ofotherwise abstract, impersonal existence of the organization” (Wieseke et al., 2009, p. 126).Hence, leaders’ behaviors, actions and thinking are thought to influence followers’ beliefsabout their organizations (Vlachos et al., 2013).We argue that as organizational representatives, leaders play a key role in influencing andshaping various key strategies including recruitment and selection, reward management, fairtreatment, ethical standards, health and safety and career development. Social exchangetheory (Blau, 1964) presents an apt theoretical grounding for understanding the outcomes ofethical leadership. In social exchange theory, the interaction between two parties is consideredas interdependent and mutual (Cropanzano and Mitchell, 2005). This concept ofinterdependence suggests that every action will have a reaction as reciprocity. A positiveaction from an individual will trigger similar (i.e. positive) reaction and a negative action willtrigger a negative reaction (Gergen, 1969). Since one party’s reaction is contingent upon other’sactions therefore, this interdependence creates an atmosphere of cooperation, mutual respectand reduces risk (Cropanzano and Mitchell, 2005). Likewise, the reciprocity associated withthe social exchange theory is also considered as a norm and those who fail to comply arepunished (Mauss, 1967). Norms provide guidelines of acceptable behaviors and the followersof these norms are obliged to reciprocate the same behavior (Cropanzano and Mitchell, 2005).In line with this theory, by walking their talk and engaging in fair treatment of theiremployees, ethical leaders inspire their subordinates to reciprocate the conduct extendedtoward them. Therefore, ethical leaders tend to develop a trusting relationship with theiremployees. While trust is not a legal obligation or an openly negotiated notion, the conceptof reciprocity plays a key role in such a relationship (Blau, 1964). The interactions betweenleaders and subordinates thus lead to mutual exchanges based on the norms of fairness andtrust. Applying this concept to the relationship between ethical leaders and their employeesin the workplace, van Prooijen and Ellemers (2015) argued that the moral and ethical100PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)behavior of managers will compel employees to reciprocate in a similar manner in the formof various positive employee outcomes.Likewise, organizational support theory suggests that employees’ perceptions are formed fromthe employer’s appraisal of their well-being and care. This theory covers the socio-emotional side,i.e. care, esteem and admiration, etc. between the employer and employee relationship (Ahmadand Zafar, 2018). This is important as employees tend to consider their leaders as representativesof their organizations rather than merely as individuals (Eisenberger et al., 1986). Together, thesetheories help explaining the mediating role of PCF. In support of this contention, researchers haveargued that social exchange theory focuses more on behavioral responses whereas symbolicresponses are largely overlooked (e.g. Zagenczyk et al., 2011). This means that if one partyprovides benefit to another party, the other party must reciprocate (Blau, 1964), suggesting abehavioral response. Whereas, symbolic response focuses on the attached value and respect fromone party (i.e. employer in this case) to another party (i.e. employees) in this reciprocal exchangewhich also play a key role in shaping their behaviors (Restubog et al., 2008). We believe thatorganizational support theory complements social exchange theory by its focus on the symbolicexchange which is important for long term relationship between employee and employer.Ethical leadership and OCBsOne important way that subordinates may reciprocate ethical leaders is in their performance ofOCBs. Capturing extra-role volunteer behaviors which are discretionary and are not rewardedby a formal reward mechanism (Organ, 1988), OCBs are valuable contributions and crucial atcritical times such as during a downsizing, in the face of economic pressure, and during anyother change management process (Chun et al., 2013). Pro-social behaviors such as OCBs aregrounded on a strong ethical element (Stouten et al., 2013) and are very important fororganizational change and sustainability (Mayer et al., 2009). Five common dimensions ofOCBs in the extant literature reflect their value to the organization: altruism, capturing thesupport to other colleagues and teams in the workplace; conscientiousness, capturingdedication and engagement in work beyond that formally assigned; sportsmanship, reflectingdealing with routine pressures and workloads by not complaining while maintaining a positiveattitude and willingness to sacrifice; courtesy, reflecting employees’ willingness to help otherswhile not creating additional problem for them; and, civic virtue, referring to taking ownershipand showing proactive behavior in solving work-related challenges (Podsakoff et al., 1990).It is contended that ethical leadership is expected to elicit employees’ OCBs. As a result ofbehaviors such as ensuring fair compensation, equal developmental opportunities for all, openand honest communication, and maintaining high standards of ethical and moral conduct,ethical leaders will inspire their employees to go beyond their legal obligations of work in anattempt to reciprocate the actions of their leader. In line with social exchange theory, asemployees develop a feeling of indebtedness to their leader, they will be compelled toreciprocate their leaders’ fair and ethical behaviors. One means of doing so will be throughtheir enactment of OCBs (Mayer et al., 2009). Through their example and fair allocation ofrewards to their followers, ethical leaders are expected to reinforce the notion of ethics amongtheir subordinates (Brown et al., 2005), and in turn, lead employees to feel obliged toreciprocate such behaviors in the form of additional effort beyond their contractualrequirements. Furthermore, in line with organizational support theory, ethical leaders maketheir employees feel valued and respected in their organization thereby triggering employees’willingness to invest their time and energy for the benefit of the organization beyond theirlegal obligations by engaging in OCBs. This is in line with the past studies which found thatethical leaders inspire employees’ extra-role behaviors (e.g. Jordan et al., 2013; Mayer et al.,2009, etc.), including OCBs (Arain et al., 2016; Lu, 2014). We therefore expect that:H1. ELS will enhance employees’ OCBs.101The mediatingrole ofpsychologicalcontractDownloaded by University of Derby At 04:27 04 February 2019 (PT)Ethical leadership style and CPA second anticipated important outcome of ethical leadership is subordinates’ CP – an employeebehavior that is crucial for organizational success in today’s competitive world (Ahmad et al.,2015). For example, CP has been found to be associated with the novel and unique ideas andprocesses which are useful for organizations to thrive in a competitive environment (Oldham andCummings, 1996). The extant literature on CP also suggests that it can be a source of competitiveadvantage (Amabile, 1988) and that organizations whose employees do not engage in suchbehaviors face higher risk of failure (Oldham and Cummings, 1996).In line with organizational support theory, we contend that in addition to generating adesire among subordinates to reciprocate to their leaders (social exchange theory), employeesof ethical leaders also experience enhanced confidence, self-efficacy (Chen and Hou, 2016),sense of fairness (De Hoogh and Den Hartog, 2008), empowerment and self-worth (Javed et al.,2016). Ethical leaders are likely to encourage constructive debates on organizational issues,listen to their subordinates, incorporate their inputs in decision making, correct their mistakesand appreciate their contributions. In fact, studies have found that ethical and moral leadersseldom cheat nor take credit for the good work of their employees (Bauman and Skitka, 2012).Employees’ are likely to view ethical leaders’ as representatives of the organization and tointerpret their behaviors as organizational policies (Vlachos et al., 2013). Resultantly, they willfeel that they are part of a truly ethical organization where sharing their minds and ideas willbe rewarded and/or appreciated. Given that employees tend to reciprocate the favorable andfair treatment they receive from their ethical leaders and that ethical leaders tend to generate aclimate in which employees feel supported, it is expected that subordinates of ethical leaderswill be prone to sharing unique ideas, coming up with novel solutions to the challenges andopenly making contributions, all characteristics of CP. Therefore, such leaders promote anenvironment where employees feel empowered to make their own decisions and makemistakes (Ahmad et al., 2015). Resultantly, employees will feel proud to be working under suchleadership which enhances their self-confidence, self-efficacy, and self-identity (Chen and Hou,2016). An empowered employee with enhanced self-confidence will feel more relaxed and safeto come up with creative solutions to their daily challenges without the fear of threat to theirjob, status, or career (Kahn, 1990). This is in line with previous research identifying a positiverelationship between ethical leadership and employees’ creativity (e.g. Javed et al., 2016;Ma et al., 2013). We therefore expect that:H2. ELS will enhance employees’ CP.The mediating role of PCFWe argue that one mechanism by which ethical leadership impacts employee extra-rolebehaviors is through employees’ PCF. Written contracts cover only limited expectations in theemployee-employer relationship because of the complexities involved in the process(Rousseau, 1995). Hence, on the basis of reciprocal trust (Blau, 1964), they will also formpsychological relationships with their employer. Psychological contracts thus reflect“individual beliefs, shaped by the organization, regarding terms of exchange agreementbetween individuals and their organization” (Rousseau, 1995, p. 9). Such promissoryunderstandings and beliefs between employees and their employer will capture key sharedexpectations (Arnold, 1996; Conway and Briner, 2005), suggesting that some sort of mutualitywill exist in this relationship. For example, both employer and employee concur that employerwill provide healthy and safe working conditions, fair and equal opportunities for careeradvancement and growth, fair compensation and supportive work environment in return fortheir commitment and good job performance (Conway and Briner, 2005; Dabos and Rousseau,2004). Hence, the notion of reciprocity associated with social exchange theory (Blau, 1964) isan intrinsic underlying mechanism in such a relationship which lends support to this study.102PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)The extant literature describes two types of psychological contracts; transactional andrelational contracts (Guzzo and Noonan, 1994). Transactional contracts are short termrelationships which has its origins in the concept of reciprocation with a primary focus onextrinsic rewards thus, more instrumental in nature whereas, relational contracts are morelong term and non-monetary relationships of common interests between the employee andemployer such as career development opportunities, fair treatment, respect, value and safety(Raja et al., 2004). However, PCF consists of overall evaluations of fulfillment of unwrittenobligations covering both transactional and relational contracts (Colquitt et al., 2014),therefore, it will also be measured as an overall concept as suggested by Rousseau (1995).Lambert et al. (2003) explained PCF as a continuum from lower commitments and itsdelivery at a later stage to higher commitments and its delivery.While prior research has focused heavily on understanding conditions which lead to, andoutcomes of, psychological contract breach (e.g. Raja et al., 2004; Robinson, 1996), PCF isincreasingly considered as a key antecedent through which employees make fine grainedjudgments about their employers (Lee et al., 2000), which in turn affects their attitudes andbehaviors (Chaudhry and Tekleab, 2013). Studies suggest that when employees fulfill theirside of the psychological contract, they expect the same from their employers in line with thenorm of reciprocity and interdependence (Rousseau, 1995). Fulfillment of these obligationswill lead to enhancement of their in-role performance (e.g. Kickul et al., 2002) and extra-rolebehaviors (e.g. Rosen et al., 2009). Hence PCF serves as a potential mediator.Since ethical leaders are considered as moral, ethical and honest people who inspire andpromote such behaviors from their subordinates and colleagues in the workplace throughfair and equitable rewards and discipline (Khan et al., 2018; Ahmad et al., 2015; Brown et al.,2005), we expect that they will also positively impact their employees’ PCF. Employeesunder an ethical leader are expected to form positive judgments about their leaders’ ethicalconduct, and experience greater fulfillment of their unspoken contract, given the tendency ofthese leaders to act ethically and fairly toward them. Regardless of psychological contracttype, it is likely that all employees who perceive their leaders as moral and ethical andtherefore unlikely to renege on their commitments toward them (van Prooijen and Ellemers,2015), thus experiencing PCF. Given that perceptions of leaders are often also extended tothe organization as a whole (Aselage and Eisenberger, 2003), their organizations are alsolikely to be viewed as moral and expected to not engage in cheating or backstabbingbehaviors, leading to enhanced PCF (Bauman and Skitka, 2012).Consequently, employees’ experience of PCF resulting from working under ethicalleaders is expected to compel them to engage in enhanced job performance and engagementin extra-role behaviors (Rousseau, 1995) such as OCB. A recent study also supports thiscontention suggesting that PCF will lead to enhancement in OCB (Ahmad and Zafar, 2018).Likewise, Gergen (1969) argued that if a person receives a benefit, he/she must respond withkindness. Our contention is also in line with previous studies who suggest that PCF leads topositive organizational outcomes (Katou and Budhwar, 2012; Vantilborgh et al., 2014).Therefore, we contend that employees of ethical leaders are more likely to happily spendmore time at work and invest more energy even if they are not legally required to do so.We therefore expect that:H3. PCF will mediate the relationship between ELS and OCB.Similarly, we expect that leaders are ethical and fair in their treatment of their employeeswho are seen as fulfilling their commitments and promises, are viewed as meetingemployees’ contractual expectations. In line with the past studies (e.g. De Hoogh andDen Hartog, 2008), we also expect that this enhanced feeling of PCF will reduce employees’fears and anxiety at work, leading to feelings of greater satisfaction, empowerment, andconfidence to take risks and suggest novel and unique ideas through CP for the benefit of103The mediatingrole ofpsychologicalcontractDownloaded by University of Derby At 04:27 04 February 2019 (PT)the organization. Ethical leaders often operate in a transparent manner and deliberatelycreate an environment where organizational policies are critically analyzed and uniquesuggestions are encouraged thereby enhancing CP (Ahmad et al., 2015). This contention isalso in line with past findings suggesting that the psychological contract is affected byresponsible and ethical practices of an organization (Rayton et al., 2014). Recent studies alsofound a positive impact of PCF on extra-role behaviors and other positive behavioraloutcomes (Ahmad and Zafar, 2018; Katou and Budhwar, 2012; Vantilborgh et al., 2014).Prior studies have also shown that PCF enhances employees’ emotional attachment, theirdesire to remain and work with the organization for longer time (Hess and Jepsen, 2009) andtheir psychological well-being (Gracia et al., 2007) whereas, it reduces their psychologicalstrain (Gakovic and Tetrick, 2003). We believe that all these factors are imperative forenhancing employees’ interest and involvement at work and in work. Under suchcircumstances, employees are likely to stay focused on their work, remain unconcerned fromexternal worries/anxieties and are likely to take risks, explore new solutions and experimentnew pathways in decision making and work processes (Oldham and Cummings, 1996)which will enhance their CP. Therefore we expect that:H4. PCF will mediate the relationship between ethical leadership and employees’ CP.MethodologySample and proceduresA survey methodology was employed to collect employee-supervisor/colleague dyadic data.Data were collected from a large multinational company in the fast-moving consumer goodssector operating in Pakistan. The first author approached the HR department and asked fortheir official permission to collect the data. The organization was reluctant to providewritten approval and to intermediate the data collection due to the fear of legal issues.However, they allowed the first author verbally and through personal and professionalcontacts to approach their staff directly and invite their participation in this study.Employees were directly contacted by the first author with a verbal permission of theorganization and asked to voluntarily fill out questionnaires containing statementson demographics, ELS, and PCF. Employees were also asked to identify a person(i.e. supervisor or colleague) who could rate them on their CP and OCBs on a separatequestionnaire to be placed in an envelope which was provided at the time of distribution ofthe surveys. In line with Stewart et al.’s (2009) admonition of intrinsic problems of inflatedratings resulting from self-rated techniques, we aimed to control these by also includingother-rated outcomes. The questionnaires contained the names of the respondents on theback which was used only for identification and matching purposes. These survey wereadministered in English because it is taught in Pakistan as a compulsory subject starting asearly as grade one. Likewise, English is used for all official communication in the countryand hence, a working knowledge (i.e. reading, writing, and verbal communication) isexpected from all staff in white collar positions. Complete confidentiality was assuredwhereby the names of the respondents were only disclosed to supervisors/colleague forrating their CP and OCBs. Supervisors/colleagues identified by their employees were thusapproached and asked to rate the remaining part of the questionnaire and put it back in thesame envelope. Both employees’ and supervisors’/colleagues’ responses were keptconfidential from each other. We ensured no supervisor/colleague rated more than threerespondents in order to avoid the challenges of personal bias and within group issues ofinflated results. This methodology of data collection is in line with the previous studies(e.g. Naseer et al., 2016).Participants were given two weeks to fill the questionnaires after which time the firstauthor visited the premises again for their collection. A total of 500 questionnaires were104PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)distributed of which 248 were completed by employees. Of these, a final sample of 112supervisors/colleagues rated the outcomes variables and were successfully matchedwith 248 employees’ responses resulting in a 49.6 percent employees’ response rate(i.e. 248/500 × 100). Among the 112 respondents from supervisor/colleagues group, only6 were colleagues whereas the remaining 106 were supervisors identified by the employees.Each supervisor rated a minimum of one to a maximum of three employees whereas thecolleagues rated only one employee each. Since the number of colleagues who ratedemployees was very low therefore, no significant difference was noted between theresponses of colleagues and supervisors.Among the participants, 62.1 percent were male whereas 37.9 percent were female.Various levels in the organization were represented: 40.7 percent were in non-managerialpositions, 23.8 percent were comprised of lower management, 23.4 percent were in middlemanagement and 12.1 percent were in senior management positions. In total, 18.5 percent ofparticipants had a higher secondary school education, 22.6 percent had an undergraduatedegree, and 58.9 percent had a masters or above qualification. Among them, 45.6 percenthad been with the organization for five years or less, 20.6 percent had been with theorganization from six to ten years, and 33.9 percent had been with the organization for tenyears or more.MeasuresELS, PCF, and OCBs were measured using a 1 (strongly disagree) to 5 (strongly agree)Likert scale. CP was measured using a 1 (not original) to 5 (very original) Likert scale.Ethical leadership. Ethical leadership was measured using Brown et al.’s (2005) ten itemscale. A sample item is “My leader/manager makes fair and balanced decisions.” Cronbach’sα for this measure was 0.97.Psychological contract fulfillment. PCF was measured using Rousseau’s (1995) three-itemscale. A sample item is “This organization has carried out what it said to me.” Cronbach’s αfor this measure was 0.96. As stated earlier, PCF is an overall evaluation of the fulfillment ofthe obligations therefore, an overall measurement scale was considered appropriate for itsassessment as suggested by Rousseau (1995).Creative performance. CP was measured using Oldham and Cummings’ (1996) three-itemscale. A sample item is “How ORIGINAL and PRACTICAL is [Employee name’s] work?”Cronbach’s α for this scale was 0.95.OCB. OCB was measured using Organ et al.’s (2006) five-item scale. A sample item“[Employee name] does extra work than the organization required.” Cronbach’s α for thisscale was recorded as 0.95.Data analysis and resultsTable I contains the means, standard deviations, and correlations of our study variables.Since, no demographic variable has significant correlation with the latent variables understudy; therefore, no significant difference was noted in the results while controlling forthe demographic variables. Confirmatory factor analysis was performed to measure thereliability and validity of the scales used and data collected. Further, various tests(i.e. Herman’s single factor and common latent factor (CLF)) were performed to assesspotential threat of common method variance (CMV). Finally, path analysis was performedusing AMOS to test the proposed hypotheses.Confirmatory factor analysisTo assess the adequacy of the scales used, confirmatory factor analyses wereperformed utilizing AMOS 18. The results of the measurement model following the105The mediatingrole ofpsychologicalcontractDownloaded by University of Derby At 04:27 04 February 2019 (PT)overall recommendation of Bentler (1990) and Hair et al. (2010) which indicate that the datafit our model well: χ2 ¼ 317.57 ( po0.05); χ2/df ¼ 1.7 (o2); GFI ¼ 0.90 (⩾ 0.90); NFI ¼ 0.94(W0.90); CFI ¼ 0.97 (W0.90); RMSEA ¼ 0.05 (⩽ 0.08), in line with established minimumcut-off values (e.g. Hair et al., 2008; Hair et al., 2010, etc.). Similarly, as shown in Table II, thestandard factor loadings (SFL) were well above the minimum value of 0.5, therefore,convergent validity was achieved. No SFL was below 0.70. Similarly, the average varianceextracted (AVE) and composite reliability (CR) values were also well above their minimumrequired values of 0.5 and 0.7, respectively. These results suggest that all variables satisfiedthe criteria for convergent validity. Likewise, as a rule of thumb, the AVE of a constructMean SD 1 2 3 4 5 6 7 81 Gender 0.38 0.49 –2 Position 1.07 1.06 -0.03 –3 Qualification 1.4 0.79 0.01 0.40** –4 Experience 0.88 0.89 0.01 0.45** 0.08 –5 ELS 3.6 0.98 -0.04 0.05 -0.11 0.09 –6 PCF 3.6 1.01 0.09 0.09 0.02 0.05 0.57** –7 OCB 3.7 0.80 -0.05 -0.05 -0.03 -0.06 0.35** 0.30**8 CP 3.7 0.96 -0.04 -0.06 0.03 -0.01 0.54** 0.55** 0.28** –Notes: ELS, Ethical leadership style; PCF, psychological contract fulfillment; OCB, organizational citizenshipbehavior; CP, creative performance. *po0.05; **po0.01 (two tailed)Table I.Means, standarddeviations (SD) andcorrelationsItem number SFL α CR AVE Ethical leadership style (ELS)ELS1ELS2ELS3ELS4ELS5ELS6ELS7ELS8ELS9ELS10Psychological contract fulfillment (PCF)PCF1PCF2PCF3Creative performance (CP)CP1CP2CP3Organizational citizenship behavior (OCB)OCB1OCB2OCB3OCB4OCB50.970.970.760.890.860.870.890.890.870.890.890.900.780.960.970.920.950.960.960.950.960.880.940.930.940.950.950.780.820.870.880.910.94 Notes: SFL, Standard factors loading; CR, composite reliability; AVE, average variance extracted.2χ¼ 317.57 (po0.05); χ2/df ¼ 1.7 (o2); GFI ¼ 0.90 ( ¼ 0.90); NFI ¼ 0.94 (W0.90); CFI ¼ 0.97 (W0.90);RMR ¼ 0.03 (o0.1); RMSEA¼ 0.05 (o0.08)Table II.Factor loadings,reliabilities andvalidity results106PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)must be larger than the corresponding squared inter-construct correlations suggesting theachievement of discriminant validity as recommended by Hair et al. (2008) and Hair et al.(2010) (see Table III for results).Assessment of CMVFor controlling the effect of method bias, procedural remedies as recommended byPodsakoff et al. (2012) were adopted such as data collection from different measures i.e.predictor measures from one person and criterion from another (see Podsakoff et al., 2012 forfurther details). Likewise, to assess the threat of CMV, we employed Herman’s single factorapproach as recommended by Podsakoff et al. (2003) using confirmatory factor analyses todetermine whether all the latent variables are explained through a single factor. The resultsindicate that a chi square for a single factor recorded was w2 189 ¼ 2830:43 and χ2 for a fourfactor model was recorded as w2 183 ¼ 317:57. Since the fit of a single factor model issignificantly worse than the four factor model (Dw2 5 ¼ 2; 512:86), we have evidence toconclude that are no serious threats of CMV in this data. A similar procedure was adoptedfor the OCB and CP data provided by supervisors. We also employed the CLF approachrecommended by Podsakoff et al. (2003) to assess the threat of CMV in our study. Theseresults are provided in Table IV and also support the conclusion that there is no seriousthreat of CMV in our data. IC0.570.540.350.570.550.30.540.550.280.350.30.28AVE0.760.920.880.78SIC0.320.290.120.320.30.090.290.30.080.120.090.08SIC0.32, 0.29, 0.120.32, 0.3, 0.090.29, 0.30, 0.080.12, 0.09, 0.08ELS – PCFELS – CPELS – OCBPCF – ELSPCF – CPPCF – OCBCP – ELSCP – PCFCP – OCBOCB – ELSOCB – PCFOCB – CPELS constructPCF constructCP constructOCB construct Notes: IC, Inter-construct correlation; SIC, squared inter-construct correlation; ELS, ethical leadership style;PCF, psychological contract fulfillment; CP, creative performance; OCB, organizational citizenship behaviorTable III.Convergent validity2χ2χ/df GFI NFI CFI RMSEA One factor (4 latent variables)One factor (2 latent variables i.e. ELS and PCF)One factor (2 latent variables i.e. CP and OCB)Four factor model (ELS, PCF, CP and OCB)2,830.43942.02777.31317.5714.9814.4938.871.70.450.680.630.900.500.760.620.940.560.770.620.970.240.230.390.05 Notes: CP, Creative performance; OCB, organizational citizenship behavior; ELS, ethical leadership style;PCF, psychological contract fulfillment; CP, creative performanceTable IV.Common methodvariance (CMV) andmodel fit107The mediatingrole ofpsychologicalcontractDownloaded by University of Derby At 04:27 04 February 2019 (PT)Furthermore, we also adopted Podsakoff et al. (2012) procedure for assessing commonmethod bias (CMB) which is distinct from CMV. Meade et al. (2007) argued that “CMVimplies that variance in observed scores is partially attributable to a methods effect, CMBrefers to the degree to which correlations are altered (inflated) due to a methods effect” (p. 1).As per the procedure, we introduced another latent factor in the model which was directlyaffecting all the latent variables under study. Standard regression weights of this modelwere compared with the one without latent factor and the difference between the factorscores were calculated. As per recommended standards, the difference must not exceed 0.2in order to avoid CMB (Podsakoff et al., 2003). The result indicates that all the values wereless than the cut off value of 0.2 (see Table V). Hence, no issue of CMB was detected betweenthe study variables.Results for hypothesesThe next step was to test the proposed hypotheses with structural equation modeling usingAMOS 18. We first tested the model without the direct paths. The result was: χ2 ¼ 355.97( po0.05); χ2/df ¼ 1.9 (o2); GFI ¼ 0.89 (o0.90); NFI ¼ 0.94 (W0.90); CFI ¼ 0.97 (W0.90);RMSEA ¼ 0.06 (o0.08). Next, we tested a model including both the direct and indirectpaths, which yielded a better fit: χ2 ¼ 318.96 ( po0.05); χ2/df ¼ 1.7 (o2); GFI ¼ 0.90(o0.90); NFI ¼ 0.95 (W0.90); CFI ¼ 0.98 (W0.90); RMSEA ¼ 0.05 (o0.08), in line withestablished minimum cut-off values (e.g. Bentler, 1990; Hu and Bentler, 1999, etc.).We therefore retained the latter model. The hypotheses were then tested employing the pathanalysis technique utilizing AMOS 18.The results for our proposed hypotheses can be seen in Figure 1. In H1, we proposed adirect positive relationship between ethical leadership and OCB. The results support thishypothesis (β ¼ 0.26, po0.01). Similarly, a direct positive relationship between ELS and CPItemsEstimates with latentfactorEstimates without latentfactor Difference (with – without latent factor) ELS1ELS2ELS3ELS4ELS5ELS6ELS7ELS8ELS9ELS10PCF1PCF2PCF3CP1CP2CP3OCB1OCB2OCB3OCB4OCB50.7970.7570.7590.7890.7960.7550.7880.8050.8110.6490.8460.860.8510.8390.8350.8520.6420.7160.7110.7530.7930.8930.8580.8690.8880.890.8750.890.8930.9040.7790.9460.9610.9550.9410.9270.9410.8240.8720.8760.9110.9420.0960.1010.110.0990.0940.120.1020.0880.0930.130.10.1010.1040.1020.0920.0890.1820.1560.1650.1580.149 Notes: ELS, Ethical leadership style; PCF, psychological contract fulfillment; CP, creative performance; OCB,organizational citizenship behaviorTable V.Common methodbias results108PR48,1Downloaded by University of Derby At 04:27 04 February 2019 (PT)was proposed in H2. The results also support this hypothesis ( β ¼ 0.34, po0.01). Finally,the mediating roles of PCF between ELS and OCB (H3), and between ethical leadership andCP (H4) were tested. The findings also support these hypotheses for ethical leadership andOCB ( β ¼ 0.09, po0.01) and for ELS and CP (β ¼ 0.20, po0.01). Furthermore, total effectsof ELS on OCB and CP were recorded as ( β ¼ 0.35, po0.01) and ( β ¼ 0.54, po0.01),respectively. Since both the direct and indirect paths are significant, we conclude that PCFpartially mediates the relationship between ethical leadership and OCBs, and betweenethical leadership and CP.Discussion and theoretical implicationsThe study of ethical leadership is particularly relevant for our current societal context.Ethical leaders have the potential to influence employees’ behaviors because of their moraland ethical conduct (Brown et al., 2005). Through their use of rewards and disciplinaryprocedures these leaders also promote similar behaviors among employees such as inspiringthem to be honest, fair, and moral in their daily activities (Brown and Trevin˜ o, 2006). It is notsurprising that promoting and exercising ethical behaviors have been found to be essentialfor achieving continuous profitability in organizations (Yozgar and Mesekiran, 2016). Wetherefore sought to contribute to the literature by investigating the role of PCF as amechanism explaining when ethical leadership leads to positive employee level behavioraloutcomes. We expected that ethical leadership leads to a greater sense of PCF (real orperceived) and that this in turn motivates employees to engage in more OCBs and CP.Ethical leadership has received increasing attention in the aftermath of variouslarge scale corporate scandals around the world. Researchers have studied this leadershipstyle with a particular focus on employees’ outcomes. As we noted earlier, some of thiswork has resulted in inconsistent findings relating to a limited understanding ofboundary conditions and mediating mechanisms. For example, of the behavioral outcomesstudied, CP and OCBs have attracted some attention (Arain et al., 2016; Bavik et al., 2017;Yindong and Xinxin, 2013; Javed et al., 2016), but with inconsistent results. Chughtai(2014) found full mediation of psychological empowerment in the relationship betweenELS and creativity, Javed et al. (2016) found both direct and indirectrelationship between ELS and creativity, and Feng et al. (2016) found a curvilinearrelationship between ELS and creativity. Similarly, research on OCBs also resulted ininconsistent findings.ELS PCFCPOCB0.57**0.26**0.34**0.15**0.35**Notes: CP, Creative performance; OCB, organizational citizenship behavior;ELS, ethical leadership style; PCF, psychological contract fulfillment. **p

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