Unethical Organizational Practices as a Stressor, Mediated by Moral Emotions and Moderated by Ethical Leadership

Abstract Theory and research have focused on the well-being and attitudinal costs of unethical actions committed by individuals, yet increasingly workers may care about their organization’s unethical practices. Drawing from social identity theory and cognitive dissonance theory, we theorized that moral emotions elicited by unethical organizational practices would be associated with negative mental health symptoms (depression symptoms and psychological strain) and organizational attitudes (affective commitment and turnover intentions). We proposed that these relationships would be moderated by ethical leadership. We conducted two studies with participants working for organizations and recruited from Prolific to test relationships. Study 1 was a time-lagged survey ( N = 334), and Study 2 was a replication and extension recall experiment ( N = 713). Guilt, shame, and moral anger about unethical organizational practices were associated with greater psychological strain and depression symptoms. In both studies, ethical leadership strengthened some negative relationships between moral emotions and organizational attitudes. Results suggest that ethical leadership does not buffer employees’ negative attitudes in response to unethical organizational practices. Instead, the typical attitudinal benefits of ethical leadership may be nullified when employees perceive unethical organizational practices, possibly through a sense of moral hypocrisy. Results extend theory on unethical behavior and well-being to the organization as the transgressor and further indicate how employee perceptions of ethicality at multiple levels (organizational, leadership) inform attitudes. These studies underscore the need for organizations to prioritize ethical practices to avoid potential costs to employee mental health and highlight the nuanced role of ethical leadership, with practical implications.