THE ROLE OF ETHICAL LEADERSHIP IN ORGANIZATIONAL

PERFORMANCE OF LOCAL GOVERNMENT UNIT

OF SAN PASCUAL, BATANGAS

A Thesis
Presented to the Faculty of
College of Accountancy, Business, Economics and
International Hospitality Management
Batangas State University
Batangas City

In Partial Fulfillment
of the Requirements for the Degree
Bachelor in Public Administration

By:

Bacay, Ann Nesley D.

November 2019
 Chapter I
THE PROBLEM

Introduction

Ethical leadership has been recognized as one of the effective leadership whether
in a private or public sector. Growing numbers of organization is attributed to the
leadership competencies. Hence, organizations give attention to the leadership style of
their people. This leadership style reflects to the organization itself. It influences the
group’s moral and values. It impacts the quality of organizational performance as
members of the group adheres to ethical leadership. Also, in this competitive and
changing environment, leadership plays a vital role in order to cope up, maintain and
improve their organizational performance.
However, for the past years, ethical leadership of private and public organization
has been in the spotlight due to various issues and scandals. Importance of ethics has
been neglected and produce numerous problem in the performance of organization.
Moreover, effort to address these issues is considered by the involved organizations.
This study aims to present the role of ethical leadership in organizational
performance of Local Government Unit of San Pascual and to recommend ways of
improving the existing ethical leadership and performance of organization.

Background of the Study

Ethical leadership has been an increasingly important topic within the Philippine
government, such as Philippines is ranked 35th from among the most corrupt countries
in the world in 2016 Corruption Perceptions Index (CPI), signifying a worst scenario in
Philippine governance. According to the records of Ombudsman's Finance and
Management Information Office, the number of administrative and criminal cases against
erring local government official range from 2,697 in 2015 to 2,799 in 2016. There were
1,700 cases filed against city/municipal officials, 892 against village officials, and 204
cases against provincial officials which signifies that the local government units are the
forerunners in the graft and corruption cases (Dalipe, 2017). This unethical and
irresponsible behavior of the leaders damaged the credibility and trust of an organization.
As a consequence, this culture might decline their performance with regard to
environmental and social responsibility (Wesarat and Yazam, 2017).
Presenting the public with an image of ethical leadership has become critical for
firms, as the political and social landscape changes in 20th century have increased
pressure and competition for workers, customers, and resources. (Javidan & House,
2001). That is why government institutions are establishing an ethical image through their
leadership as ethical leadership involves leading in a manner that respects the dignity
and rights of another human being (Ciulla, 2004).
Furthermore, ethical leadership has been questioned not just in the government
but also in a corporate organizations. Ethical leadership have received considerable
attention in recent years due to various corporate scandals that aroused around the world
including Tyco International, WorldCom, Adelphia, HealthSouth, and Enron (Ponnu &
Tennakoon, 2009) and many others. According to Conrad, (2013) ethical leadership is
the basis for any organization's effective management and success and this is realistic in
those countries where corruption is at higher levels. Ethical leadership is about model
ethical behavior, where a leader must adhere to high ethical standards, treats others with
respect and authenticity, willing to talk honestly about ethical choices in working life, adopt
transparency in decision-making and communications, recognize and reward examples
of ethical behavior and treats ethics as an ongoing learning journey (Thorton, 2013).
On the other hand, ethical leadership has always been linked with the performance
of an organization. Organizational performance is a combination of financial and non-
financial measures in the determination of performance. Monday et.al (2014) noted that
financial measures includes profits, return on assets, and return on investment and sales
while non-financial measures include cotunees satisfaction, delivery time, waiting line and
employee’s turnover. That is why efforts have been made to promote ethical standards
of public servant. Hart (2001) believes ethics cannot be effective without proper
leadership and ethical leadership focuses on how the leaders use their social power in
different ways to motivate, engage, and influence their followers (Gini, 1997).With
increasing competitive nature of global economy and other surrounding pressures, the
array of required leadership skills has also expanded (Montgomery, 2003).
The current administration focuses primarily in providing a people centered, clean,
and effective governance. The main agenda is to diminish corruption, provide an efficient
and effective public service, improve governance, and empower civil service and citizens
(PhilippineDevelopment Plan 2017-2022). Laws such as the Anti-Graft and Corrupt
Practices Act or the Republic Act (RA) 3019, The Government Procurement Reform Act
or RA 9084, and the Code of Conduct and Ethical Standard for Public Officials and
Employees have been constant reminders to all government officials and employees that
they are elected, appointed, or hired as public servants providing goods and services to
people with honesty and integrity.
On the othe hand, public servants have to exercise administrative discretion while
performing their duties. Public trust on the government depends on the manner through
which these duties are carried out. Therefore it is crucial to maintain ethical standards in
the implementation of government functions. Leadership can have considerable effect on
the enhancement of overall ethics in the public service. The administrative leaders should
unswervingly take part in all the stages of ethics program - from planning to
implementation- sincerely abide by the code of ethics and encourage ethical behavior in
the organization by being role models (Hejka-Ekins, 2001).

Statement of the Problem

1. What are the demographic profile of the respondents in form of:

1.1 Gender
1.2 Age
1.3 Educational Attainment
2. How may the role of ethical leadership of Local Government employees of San
Pascual be described in terms of:
2.1 Honesty
2.2 Fairness
2.3 Trustworthiness
 2.4 Respect
2.5 Service
2.6 Justice
2.7 Community
3. To what extent do Local Government Unit of San Pascual exhibit organizational
performance?
4. How do the role of ethical leadership and organizational performance relate? Is
there a significant relationship?
5. Do ethical leadership of employees differ when grouped according to their
department? Based on the findings, what plan of activities may be proposed to
enhance the ethical leadership of Local Government employeesof San Pascual?

Theoretical Framework

Ethical Organizational
Leadership Performance
ins
ins

 Honesty
 Fairness
 Influenced
 Trustworthiness
environment
 Respect
 Achieved objective
 Service
 Recognized features
 Justice
 Community

According to Brown et.al (2005). Ethical leadership is a normative and appropriate

management. Indicator of honest, fair and trustworthiness through interpersonal and
interpersonal relationships. Also, Northouse (2015) described the five principles of ethical
leadership which influence individuals to be an ethical leader who could be used as a role
model. These are respect, service, justice, honesty and community. Furthermore, these
principles help leaders and followers to build as a sound ethical leadership in an
organization.
Folan’s theory performance is influenced by the environment, the objectives to be
achieved and the relevant and recognizable features.

Conceptual Framework

INPUT

 The Role of PROCESS OUTPUT

Ethical Leadership
in Organizational  Survey  Action Plan for
Performance of Questionnaires the Local
Local  Statistical Government
Government Unit Analysis Unit of San
of San Pascual, Pascual
Batangas

The input of this study is about the role of ethical leadership in organizational
performance of Local Government Unit of San Pascual, Batangas. Ethical leadership has
been interconnected to organizational performance.
In gathering information, survey questionnaires will be used by the researchers.
Set of questions will be asked and answers will be attained through this. Also, certain
statistical treatment will be used to analyze the data gathered. Through this procedure, it
is expected to get a valid information that will help to determine the role of ethical
leadership in organizational performance.
After that, Action Plan will be proposed based on the results of the study.
Hypothesis of the Study

Ho: There is no significant relationship between ethical leadership and organizational

performance.

Ha: There is a significant relationship between ethical leadership and organizational

performance.

Scope and Limitations of the Study

This study focused on the role of ethical leadership in organizational performance

of Local Government Unit of San Pascual. The researcher will determine the role of ethical
leadership with the use of questionnaires.
This study is delimited to the employees of Local Government Unit of San Pascual.

Significance of the Study

This study identified to be beneficial to the following:

Local Government Unit. This study will help them to be knowledgeable and
aware on how they can improve the existing ethical leadership of the employees by
observing their organizational performance. This can also provide information that can
increase their knowledge and skills as the basis of improving organizational performance.
Public Officials, Employees and Staffs. This study will help to become aware
about the ethical leadership existing in the organization. This will help them to see and
realize their capability in improving their management. It will also help them in establishing
their work attitude and moral conduct
Community. This study will help them in raising awareness of what they can
contribute to the existing ethics in the place. This will also help the community in building
relationship and trust to the public officials, employees and staffs.
 Instructor. This study will help them as their guide or basis to teach student about
the role of ethical leadership in organizational performance which may help them in their
future career.
Students. This study may serve as an additional reference for them on how they
can improve their knowledge in their chosen field in the future.
Future Researchers. This study will serve as their reference in conducting further
studies on/or about the role of ethical leadership in organizational performance in Local
Government Unit.

Definition of Terms

Leadership. The power- and value-laden relationship between leaders and

followers/constituents who intend real changes that reflect their mutual purposes and
goals.
Ethical Leadership. The demonstration of normatively appropriate conduct through
personal actions and interpersonal relationships, and the promotion of such conduct to
followers through two-way communication, reinforcement and decision-making
Organizational Performance. The measure of an organization progress, that
demonstrates how well an organization is achieving its goals.
Local Government Unit (LGU). Institutional units whose fiscal, legislative and executive
authority extends over the smallest geographical areas distinguished for administrative
and political purposes.
 Chapter II
REVIEW OF RELATED LITERATURE

This chapter deals with the review of related concepts and studies found in
previous literature. It also presents a synthesis of reviewed research literature.

Conceptual Literature

According to Rost (1993) leadership is defined as a power- and value-laden

relationship between leaders and followers/constituents who intend real changes that
reflect their mutual purposes and goals. Leadership signifies a relation between a leader
and his followers within a situational and organizational context. Leadership in the context
of normative organizational ethics would be defined with regard to how individuals should
or ought to behave in an organization. Ethical leadership is crucial and vital in providing
direction that enables the organization to fulfill its mission and vision and achieve declared
goals (Kanungo & Mendonca, 1996). Ethical leadership is regarded as a key factor in the
management of an organization’s reputation in the external environment and in
comparison with competitors (Blanchard et.al, 1996). An organization’s moral health
depends upon the standards and the example of the chief executive (Kelly, 1990).
According to Hitt senior leadership has two key responsibilities: 1) to ensure that ethical
decisions were made; 2) to develop an organizational climate in which ethical follower
conduct was fostered (Hitt, 1990).
Ethical leadership is a construct that appears to be ambiguous and includes
various diverse elements (G. Yukl, 2006). Instead of perceiving ethical leadership as
preventing people from doing the wrong thing, authors propose that it is need to view it
as enabling people to do the right thing (Freeman & Stewart, 2006). An ethical leader is
a person living up to principles of conduct that are crucial for him. To be an ethical leader
one needs to adhere to a more universal standard of moral behavior (Thomas, 2001).
Leading ethically is believed to be a process of inquiry – asking questions about what is
right and what is wrong – and a mode of conduct – setting the example for followers and
others about the rightness or wrongness of particular actions (Guy, 1990).
 Ethical leadership can be viewed in terms of healing and energizing powers of love,
recognizing that leadership is a reciprocal relation with followers. Leader’s mission is to
serve and support and his passion for leading comes from compassion (Kouzes & Posner,
1992). That ethical leadership is starting to receive attention is even shown in an effort to
boil ethical leadership down to love (Kouzes & Posner, 1992).
Brown (2007) described ethical leadership as “the demonstration of normatively
appropriate conduct through personal actions and interpersonal relationships and the
promotion of such conduct to followers through two-way communication, reinforcement,
and decision-making”. In this definition, normatively appropriate implies generally
accepted traits of a role model leader (traits such as honesty and fairness) and promotion
of conduct implies that an ethical leader will encourage followers to follow the ethical
conduct and facilitates ethical policies and procedures. Moreover, reinforcement implies
reward and punishment for ethical and unethical behaviors, respectively. The decision-
making part implies that ethical leaders consider the ethical consequences of their
decisions and these decisions can be emulated for others.
Northouse (2015) has discussed the five principles of ethical leadership and these
five principles influence individuals to be an ethical leader who could be used as a role
model. Furthermore, these principles help leaders and followers to build a sound ethical
leadership in an organization: Respect, service, justice, honesty, and community. The
following sections discuss these in greater detail.
Respect others. According to philosopher Immanuel Kant (1724–1804), it is our
duty to treat others with respect all the time, (Gilbert, 2016). Beauchamp and Bowie (1988)
suggested that treating others as ends rather than as means requires that we treat other
people’s decisions and values with respect; failing to do so would signify that we were
treating them as a means to our own ends. Respect for others is a complex ethic that is
similar to but goes deeper than the kind of respect that parents teach little children
(Northouse, 2015). Respect means that a leader listens to his followers and community
as a whole. It means treating others in ways that affirm their beliefs, attitudes, and values.
When a leader exhibits respect to subordinates, they can feel competent about their work.
Ethical leaders are those leaders who respect others and do not push them to change
themselves, with creative wants and desires (Kitchener, 1984).
 Serve others. Many ethical theories highlight a concern for the interests of others
(ethical altruism). In the workplace, altruistic service behavior can be observed in activities
such as mentoring (Greenleaf and Spears, 2002), empowerment behaviors, team building,
and citizenship behaviors, to name a few (Kanungo and Mendonca, 1996). The leader’s
ethical responsibility is to serve others and he or she has a duty to help others pursue
their own legitimate interests and goals (Beauchamp and Childress, 1994). The idea
behind such service is contributing to the greater good of others. In the business world,
the idea of serving the “greater good” is common. Every ethical leader must be willing to
work on being follower centered, must give priority in others’ (all internal and external
stakeholders) interests in their work, and must act in ways that will benefit others in
practicing the principle of service.
Demonstrate justice. All ethical leaders are very concerned about the matter of
fairness and justice. They want to treat every individual subordinate as well as the whole
community equally; if any unequal decisions need to be made, and then the decision is
based on the quality or competence of that individual (Gilbert, 2016). Kishore and Santosh
(2015) stated that “ethical actions should treat all human beings equally, or if unequally,
then fairly based on some standard that is defensible”. As a rule, nobody will get any
special treatment or special consideration except when their particular situation demands
it. Gilbert (2016) stated that a concern with issues of fairness is necessary for all people
who are cooperating together to promote their common interests. We always have a limit
on goods and resources, and there is often competition for those limited goods and
resources. The leader plays an important role in here to distribute resources and reward
or punishments. If we expect fairness from others in how they treat us, then we should
treat others fairly in our dealings with them.
Display honesty. In our childhood, parents taught us “never tell a lie.” If you want
to be good, you must be truthful. The lesson for the leaders remains same: To be a good
leader, one must be honest. The duty of being honest comes with the role of becoming a
leader (Gilbert, 2016). The importance of being honest can be understood more clearly
when we consider the opposite of honesty: Dishonesty (Jaksa and Pritchard, 1988).
Dishonesty brings a lot of objectionable outcomes which create distrust (Northouse, 2015).
When leaders are dishonest, subordinates lose faith and trust in the leader and followers
may do similar dishonest act. Dalla Costa (1998) has argued that being honest means
more than not deceiving (cited in Northouse, 2015). For leaders in organizations, being
honest means, “Do not promise what you can’t deliver, do not misrepresent, do not hide
behind spin-doctored evasions, do not suppress obligations, do not evade accountability,
and do not accept that the “survival of the fittest” pressures of business release any of us
from the responsibility to respect another’s dignity and humanity” (Dalla Costa, 1998, p.
164). Everyone will follow an ethical leader because they know they can trust him to do
the right thing and ethical leaders are always honest.
Build community. A leader drives a group of individuals to achieve a common goal
(Northouse, 2015). This statement has a defined ethical dimension because it refers to a
common goal. The ultimate goal of this ethical dimension may be found as what Aristotle
called the common good of all (Knapp and Carter, 2007). The term common good of all
suggests a leader not to impose their decision on others. They need to find other goals
that are well suited to everyone. Ethical leaders are a role model for other organizations
and the community in the context of taking the initiative of common goals. The
organization can move forward from narcissism and consumerism to being community
centered and creativity focused which emphasizes more about sustainable organization
(Carter and Donahue, 2012).
These principles help leaders to build a sound ethical climate in an organization:
Respect others (listening, treating, and decision-making with respect), serve others
(mentoring, empowerment behaviors, team building, and citizenship behaviors),
demonstrate justice (fairness and justice to distribute scarce goods and resources),
display honesty (role model), and build community (common good for all). These five
principles are the heart of ethical leadership. If a leader respects others, serve others,
demonstrate justice, be honest, and build community, it will obviously bring a long-term
(sustainable) success of an organization.
Furthermore, ethical leadership is defined as the leadership that is grounded by
ethical beliefs and consciously forwards fair treatment, respect and the value of rights
among members of an organization (Northouse, 2013; Masood & Zia-ur-Rehman, 2017).
It is important to consider ethical leadership, that “a more functional organization will be
actualized” for the performance to attain successful outcome (Northouse, 2013; Masood
& Zia-ur-Rehman, 2017). Dermitas (2015) provides details that “ethical leadership refers
to the actions, talks, and other behaviors which consist of appropriate norms.
On the other hand, ethical leadership is advantageous to the public sector because
it emphasizes on the involvement of the state in certain aspects of the society through
corporate social responsibility. Embracing a wide range of activities ranging from security,
education, urban planning, administration, health among others, it becomes imperative
that the utilization of ethical leadership will enhance the delivery of service within the
purviews of equity and fairness. Giessner and Quaquebeke (2010) argue that the
integrated approach of leadership allows leaders of public sector to be held accountable
to a wide range of stakeholders and citizenry. It follows to note that with public leaders
expected to perform in their service delivery by meticulously conforming to the higher
standing of personal morality, it is key that the process of public administration will uphold
value within the independent exploration of leadership.
In addition, a host of values that are commonly resonated with transformation and
transaction of public sector shapes the understanding of ethical values and public
expectations thus potentially allowing for incorporation of ethical consideration into the
holistic integrated approach to leadership in public sector. According to Rehman (2011),
ethical leadership in has reinforced mutually appropriate behavior that optimizes idealist
concepts of efficiency and business excellences. Evidently, through the foundations of
ethical leadership, public sector has been managed in a manner that fosters transparency
and reduced corruption, thus contributing to the overall spectrum of ethical responsibility.
In view of this, the increasing expectation of leaders and the public to meet a wide array
of prototypical standards represents the basis of ethical leadership.
Most leaders in public sector are characterized by defensive personality conflicts.
In light of this, it is clear that the underlying reason for the failure in leaders in public sector
occur due to increases selfishness and ignorance. As Buble (2012) notes, it is a common
occurrence that such leaders often feel excused from the requirements of moral
dispensation. The reasoning that establishes this perspective is the sense of leadership
seen as separate from the self of a leader. In light of this, public sector leaders are more
likely to excuse themselves from practicing ethical management.
 In public sector, the role of ethical leadership in increasing efficiency rests on the
pedestal of ethical leadership behavior. This is built on the model of psychological
empowerment where the leader mediates the interplay between the performance,
expectation and relationships with the employees. Within the perspective of moral identity,
Hsin-Kuang, Chun-Hsiung and Dorjgotov (2012) share the conceptualization that the
intermediate influence of ethical leadership in improving efficiency portends a variable of
moral identity. According to Rehman (2011), leaders in public sector are mandated to set
leading examples on issues of trust and integrity that determines that the activities of the
public sector are not detrimental to the values of the society but rather enhance the utility
of human needs.
By exhibiting ethical behaviors, leaders in public sector inspire their followers to
engage in what is right, good and just. This approach helps in elevating the moral
awareness of the followers leading to a highly motivated workforce, high rate of job
satisfaction, self-actualization and increased effective in service delivery. In light of this,
the views of Litschka, Suske, and Brandtweiner (2011) demonstrate a critical appreciation
of contemporary management placing ethical leadership on the axis that encompass the
consistence in an effort to foster ethical behavior. In light of this, Giessner and
Quaquebeke (2010) point out that through ethical leadership business and activities in
public sector have succeeded in investing into more expanding and hybrid public policy
initiatives allowing a high production index. With regard to this, it can be concluded that
ethical leaders participate in creating the right environment and the necessary condition
for a culture of success, transparency and accountability. While this fosters moral
development among the followers, it enhances the efficiency in productivity.
In the research of performance in business, the definition of performance has led
Folan (2007) to highlight three priorities or objectives of governance of performance:
Firstly, performance should be analyzed by each entity within the limits of the environment
in which they decide to operate. For example, a company’s performance needs to be
analyzed in the markets in which it operates and not those that are not relevant to its
operations. Secondly, performance is always linked to one or several objectives set by
the entity whose performance is analyzed. Therefore, a company measures its
performance against objectives and targets established and accepted internally rather
than on those used by external bodies. Thirdly, performance is reduced to the relevant
and recognizable features.
According to Folan’s theory, performance is influenced by the environment, the
objectives to be achieved and the relevant and recognizable features. Folan uses several
definitions for the concept of performance as it should be analyzed and quantified from
several points of view.
Khadimfar & Amiri, (2013) concluded that ethical leadership not only make positive
influence on employees attitudes and behaviors but also improves the organizational
performance

Research Literature

According to Ciulla (2005) ethical leader is an effective leader. In practice though,

more frequently find effective and unethical or ineffective and ethical leaders. Ciulla
argues that at times just the fact that one is regarded as ethical and trustworthy makes
him effective, whereas sometimes being highly effective makes one ethical. There is also
the problem of criterion of good leadership as such; sometimes being ethical seems
reasonable and appropriate in the short run and it is not right in the long run. A particular
behaviour might be correct from the intra-organizational perspective but is incorrect in
society. Sometimes it occurs that leaders have moral intentions, but due to their
incompetence create unethical outcomes.
Enderle proposes two goals of (managerial) ethical leadership, the first is to
explicitly state the ethical dimension that exists in each and every managerial decision,
whereas the second is to formulate and justify ethical principles (that are an essential aid
for responsible leadership) which cannot substitute for personal responsibility in decision-
making (Enderle, 1987). Being ethical involves “doing more than fulfilling moral minima
and moral courage” (Murphy & Enderle, 1995). A person with an ethical mind, according
to Howard Gardner, a professor at Harvard Graduate School of Education asks himself
the following question: “What kind of a person, worker and citizen do I want to be? If all
workers in my profession adopted the mind-set I have and did what I do, what would the
world be like? (Kannair, 2007).
 Ethical leadership practice in public sector has existed in the basis of strategic
reevaluation. The maintenance of ethical leaders has served to enhance the integrated
approach that allows leaders to understand the environment of their business practice
and initiate moral foundation programs on administrative ethics. The primary role of this
trajectory is to enhance the spirit of competence coupled with ethical decision making
process that drives the public interest, and societal expectations. Evidently, the
association of quality production within the purviews of transformational leadership serves
the needs of ethical leaders in the public sector (Hsin-Kuang, Chun-Hsiung, & Dorjgotov,
2012). Through initiatives such as risk taking as well as commitment, it is plausible to note
that the systematic reasoning of public risk taking initiative sustains quality commitment
added to the public sector ethical climate. With regard to this, it is evident that ethical
leaders have focused on aspects of both transactional and transformational leadership to
potentially execute clear cut approach that benefits the extensive dimension of service
delivery within the environment of the public sector.
Trust and commitment are positive externalities that are associated with ethical
leadership (Berrone et.al, 2007). Trust is a positive expectation that another will not act
opportunistically (Robbins, 2008). Employees’ trust in leaders results to better employees’
performance, and compliance to ethical standards, while low level of trust result to strife,
ineffectiveness and inefficiency (Robbinson, 1996; Covey, 1998; Van Zyl & Lazeny, 2002,
as cited in Ponnu & Tennakoon, 2009). Organizational commitment on the other hand is
a state in which an employee identifies with a particular organization and its goals and
wishes to maintain membership in the organization (Meyer & Allen, 1991). High level of
ethical leadership has been found to be associated with higher level of employee
commitment and by extension better quality of products, reduced cost, decreased
employee turnover and higher customer loyalty (Mize, 2000, as cited in Zhu, May & Avolio,
2004; Ponnu & Tennakoon, 2009; Upadhya & Singh, 2010; Bello, 2012). Ethical
leadership is related to corporate governance due to their characteristics and principles
(Heath & Norman, 2004; Scott, 2007).
According to Koontz & Donnell (1993), organizational performance discusses the
ability of an organization to reach objectives such as good quality products, high profits,
a big market share, decent financial results, using relevant strategies for action. As stated
by Choudharry et.al (2013), there are various indicators to evaluate the performance of
an organization, most of them are tangible; cost reduction, profits, sales volume, asset
turnover, equity turnover, and inventory turnover. Otherwise, some intangible
performance indicators such as customer satisfaction and product development are used
rarely (Rhodes et.al, 2008). As said by Hamon (2003), organization performance is a
measure of an organization progress, that demonstrates how well an organization is
achieving its goals.
In accordance with Lusthaus (2002) to ensure organizational success, the
important step is analysis of organizational performance, but there is little agreement that
due to the complexity of the construct there is still lack of valid set of criteria to measure
organizational performance.
Didier Noyé (2002) believes that the performance consists in ʺachieving the goals
that were given to you in convergence of enterprise orientationsʺ. In his opinion,
performance is not a mere finding of an outcome, but rather it is the result of a comparison
between the outcome and the objective. Author Michel Lebas (1995) characterizes the
performance as future-oriented, designed to reflect particularities of each organization /
individual and is based on a causal model linking components and products. He defines
a ʺsuccessfulʺ business as one that will achieve the goals set by the management
coalition, not necessarily one that achieved them. Thus, performance is dependent as
much of capability and future. Unlike other authors, Michel Lebas noted the difference
between ʺa performanceʺ, ʺperformanceʺ and ʺbeing performantʺ. ʺA performanceʺ is
subject generally to a measured result, higher than that provided for or arising from the
previous results. ʺA performanceʺ thus indicates always a positive connotation.
ʺPerformanceʺ can be both positive and negative and relates to past results.
For Whooley (1996), performance is not an objective reality, waiting somewhere
to be measured and assessed, but a socially constructed reality that exists in people’s
minds, if it exists somewhere. According to the author, performance may include:
components, products, consequences, impact and can also be linked to economy,
efficiency, effectiveness, cost effectiveness or equity. Both Lebas (1995) and Whooley
(1996) consider performance as subjective and interpretative, not least, being related to
the cost lines, which emphasizes the ambiguous nature of the concept.
 Rolstadas (1998) believes that the performance of an organizational system is a
complex relationship involving seven performance criteria that must be followed:
effectiveness, efficiency, quality, productivity, quality of work, innovation and profitability.
Performance is closely related to the achievement of the criteria listed above, which can
be regarded as performance objectives. According to Rolstadas, it can not be established
a precise definition of performance because it is dependent on the seven criteria of
performance, that can not be clearly defined.
Neely (2002) believes that performance should consider quantifying the efficiency
and effectiveness of actions. This quantification can be expressed both qualitatively and
quantitatively.
Kane (1996) argues that the performance is ʺsomething that a person leaves
behind and which exists outside the said purposeʺ. According to Kane, performance is
defined at the level of each individual within the organization or at organization level. It is
perceived as an understanding of the achieved results. The author emphasizes the
particular nature of the definition and the impossibility of outlining a general definition.
Therefore, we can speak of an accuracy of the definition at particular level and an
ambiguity of it at general level.
Bernadin (1995) points out that ʺperformance should be defined as the sum of the
effects of work, because they provide the strongest relationship with the organization’s
strategic objectives, the customer’s satisfaction and the economic contributionsʺ. As the
author says, performance must take into account both inputs (the effort put in) and outputs
(the result of the effort put in). This definition equates performance with the ʺsum of the
effects of workʺ. Performance is achieved when all efforts are focused towards achieving
the set objectives and meeting customer’s expectation.
A more comprehensive definition of performance is given by Brumbach (1988),
which refers to both behavior and results. ʺPerformance means both behaviours and
results. Behaviours are emanating from the performer and turn the performance of an
abstract concept into a concrete action. Not being just tools of obtaining some results,
behaviours are by themselves outcomes - the product of the physical and cerebral
exercise submitted for the execution of tasks and can be judged apart from resultsʺ. Thus,
the author defines performance closely related to behaviour and outcomes.
 Philippe Lorrino (1997) states that: ʺPerformance in the enterprise is what
contributes to improving cost-value couple and not just what helps to reduce the cost or
increase the valueʺ. The first stage of the ʺtranslationʺ of the cost- value couple in concrete
ʺpilotableʺ elements is to describe in global terms how the enterprise creates and will
create value. It is, therefore, about defining ʺvalueʺ in the view of future developments.
To design the value of tomorrow is to define a strategy. The first stage is therefore to
translate the cost-value couple in strategic objectives.
The above definition of performance can be translated into another equivalent
definition: ʺPerformance in the enterprise represents all that contributes to the
achievement of strategic objectivesʺ.
For the enterprise, performance is only what improves the cost-value couple, which
is what contributes to value creation. A company is efficient if it has the ability to create
economic value added, that is, a positive value after the remuneration of all factors,
including equity.
Bates and Holton (1995) define the concept of performance as ʺa multidimensional
abstract concept whose measurement depends on a variety of factorsʺ. Performance may
refer to both enterprise ʺorganizational performanceʺ and an activity / a department / a
manager / a performer. The authors say it is important to determine whether the
measurement objective is to assess the effects of performance or the performing
behaviour. The drawback of this definition is that it does not contain a rating that would
have a downwards applicability. The general definition given by Bates and Holton to
performance underlines its ambiguous nature, whose measurement depends on a variety
of factors.
Annick Bourguignon (1997) fails to define the concept of performance in one way
and therefore identifies three main senses of the word performance. Performance is
success. Performance does not exist in itself. It varies by representations of the ʺsuccessʺ
of businesses or actors. Performance is the result of action. This meaning contains only
value. Performance measurement is understood as an assessment of achieved outcomes,
in the course of a process, an activity. Performance is action. In this regard, performance
is a process, and not a result that occurs at a particular time.Performance is achieving
organizational objectives, according to Annick Bourguignon’s definition. This definition is
applied in all fields of management (management control, general politics, human
resources management). Performer is the one that reaches its objectives. Thus,
performance depends on the objective/purpose. Performance is multidimensional when
goals are manifold; performance is a subset of action; performance is subjective because
it is the product of operation, which, by its subjective nature, consists of approaching a
reality to a desire.
As defined by Annick Bourguignon, performance is closely linked to the objectives,
which makes it impossible to isolate a uniform definition of this concept. Thus, the
fulfilment of any objective/purpose involves reaching a certain level of performance. We
should mention that since there is no default classification of the objectives, the concept
of performance can not be clearly defined. According to Bourguignon, performance can
only be achieved when targeted objectives are reached.
In the public sector, according to Demeestére quoted by Matei L. (2006), the notion
of performance is located at the intersection of three concepts in terms of implementation
of the orientations followed by the institution with the tools of its own policy. Focus on
target groups - customers, users and other actors in the public services provided by the
institution. Effective use of institutional resources to achieve the desired results.
According to the paper of the author Profiroiu (2001), defining performance in the
public sector involves ʺthe existence of a relationship between objectives, means and
results so that performance is the result of simultaneous exercise of efficiency,
effectiveness and adequate budgetary processʺ. The content of this definition is also
found in the work of the author Matei, L. (2006) and is graphically represented in the
following figure:
Bates and Holton (1995) define the concept of performance as ʺa
multidimensional abstract concept whose measurement depends on a variety of factorsʺ.
Performance may refer to both enterprise ʺorganizational performanceʺ and an activity /
a department / a manager / a performer. The authors say it is important to determine
whether the measurement objective is to assess the effects of performance or the
performing behaviour. The drawback of this definition is that it does not contain a rating
that would have a downwards applicability. The general definition given by Bates and
Holton to performance underlines its ambiguous nature, whose measurement depends
on a variety of factors.
Measuring organizational performance is a multi-dimensional concept.
Effectiveness and efficiency are the two fundamental dimensions of performance. This is
emphasized by Abasilim (2014) in the argument that effectiveness refers to the extent to
which stakeholders‟ requirements are met, while efficiency is a measure of how
economically the firm‟s resources are utilized when providing a given level of stakeholder
satisfaction. To attain superior relative-performance, an organization must achieve its
expected objective with greater efficiency and effectiveness than its competitors (Abbasi
& Zamani-Miandashti, 2013).
Financial measures of performance are derived from the accounts of a company
or can be found in the company‟s profit and loss statement or the balance sheet. In
addition, financial measures are also referred to as objective measures because they can
be individually measured and verified (ElKordy, 2013). However, it is essential to
introduce non-financial measures of performance in conjunction with financial measures
in order to fully measure performance. The non-financial measures are also known as the
subjective performance measures of performance. The use of non-financial measures of
performance supplements accounting measures and gives data on progress relative to
customer requirements or competitors and other non-financial objectives that may be
important in achieving profitability.
According to Erkutlu (2008) no one measure of performance should be taken on
its own. To obtain a true measure of how a company is performing, different measures
(financial and non-financial) should be used together on the basis of previous studies.
Therefore, in this study, organizational performance will be measured by use of financial
measures (Return on Assets (ROA), Return on Equity (ROE), sales growth, and
profitability growth) and non-financial measures (employee growth, customer satisfaction,
satisfaction with performance compared to competitors and overall satisfaction).
Chong (2008) stated that the combination of the two measures helps the owners
or managers to gain a wider perspective on measuring and comparing their corporate
performance. Monday, Akinola, Olegbenla and Aladeraji (2014) noted that the financial
measures include profits, return on assets, and return on investment and sales, while the
non-financial measures focus on issues pertaining to customer’s satisfaction and
customer’s referral rates, delivery time, waiting time and employee’s turnover.
Corroborating the aforementioned issues, Lebans and Euske (2006) provided a set of
definitions to illustrate the concept of organizational performance.
1. Performance is a set of financial and non-financial indicators which offer
information on the degree of achievement of objectives and results.
2. Performance is dynamic, requiring judgment and interpretation.
3. Performance may be illustrated by using a casual model that describes how
current actions may affect future results.
4. Performance may be understood differently depending on the person involved
in the assessment of the organizational performance (i.e., performance can be
understood dif-
ferently from a person within the organization compared to one from outside).
5. To define the concept of performance, it is necessary to know its elements and
the characteristics of each area of responsibility.
Based on the foregoing, corporate performance can therefore be defined as the
financial and non- financial outcomes of the tangible and intangible inputs for the
production of goods and/or services by a corporate organization.

Synthesis

The literature and research findings reviewed and presented have substantial
bearings in the present study. The studies likewise provided very relevant and essential
insights to the researchers
Alshammari et.al (2015) indicates that ethical leadership affects the performance
of organizations in public sector. Previous research and the frameworks of
transformational leadership prove that ethical leadership affect the performance of the
organization. In essence, the qualities of an ethical leader play a leading role in
developing the transformational goal of leadership concerned with expressing the mission
of the organization and laying the necessary foundation for the policies, strategies and
procedures for leadership. The use of strategies and techniques by the leaders enhances
the ability of the leaders to empower the followers and extensively enhancing the
employees’ self-efficiency resembling to Tushar (2017) conclusion that there is a positive
relationship between organization performance and ethical leadership, whereas leader
knows how to use scarce resources (both material and financial) to develop a sustainable
organization
In his study Kang (2019) states that managers’ ethical leadership positively
influenced employees’ perceptions of an ethics code, which, in turn, enhanced their work
performance. These relationships were empirically verified. It was further found that
leader–follower proximity strengthened the indirect effect of ethical leadership on work
performance via perceived salience of the ethics code.
On the other hand, Malik, et.al (2016) affirm that organizational value plays a role
of moderator between ethical leadership and employees’ performance and further helps
to nurture the work efficiency of the employees by supporting leaders’ ethical context.
As per results, Butt, et.al (2016) concluded that ethical leadership positively
influences the corporate social responsibility, which in turn positively affects the
organizational performance. It is also concluded that corporate social responsibility
partially mediates the relationship ethical leadership and organizational performance. The
result of this study provides confirmatory finding which indicates that our results are
parallel with the previous studies. The results also signify the importance of ethical
leadership in banking sector organizations, that could lead towards the achievement of
organization's desired ends, in an ethical way.