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 Australasian Journal of Law, Ethics and Governance (AJLEG)

Volume 3 • Issue 2 • October 2017

ISSN 2206-4370
www.ajleg.net.au

The Role of Ethical Leadership in Developing Sustainable

Organization
Hasanuzzaman Tushar

Graduate School of Human Resource Development, National Institute of Development Administration, Bangkok,
Thailand

Abstract

The purpose of this paper is to explore literature from various articles and books regarding the topic of ethical
leader and leadership to construct the path of sustainable success and find the possible role of ethical leadership
that guide an organization to be sustainable. The paper tries to examine the role of ethical leadership by defining
the notion of ethical leadership, sustainable development and organization, and the importance of ethical
leadership in an organization. A major research question guiding the study was: What is the role of ethical
leadership in developing sustainable organizations? The data were found from the carefully selected articles and
books. A four groups of keywords were used during the search process from different databases. The findings led
to develop a conceptual model as a stool with three legs representing the three dimensions (economic,
environmental, and social) of sustainable triple bottom line. A parallel rug (ethical leadership) used in the model to
stable the stool and put equal attention to all legs leading to serve its purposes. The three legs of the stool are
further strengthened by the interdependent braces of organization culture, performance, and resources. The
concepts of the model were discussed and recommended further research area.
Keywords: Ethical Leadership; Sustainability; Sustainable Organization; Three-legged Stool; Triple Bottom Line;
Human Resource Development

1. Introduction
Organizations have been changed by technological breakthroughs and industrially to a greater extent than
ever before, and there is no doubt they will change more dramatically in the decades ahead with increasing
the transforms of structure, intense global competition, content, and process of work. To cope with this
rapidly growing technological era, every organization should have good leaders who are highly committed
to three things: Excellence in terms of technical and professional quality and competence, ethical
orientation to remain successful over a long period of time (i.e., sustainable success), and engagement to get
the things well done (Barendsen and Gardner, 2007; Eldridge et al., 2013).
Ethics is the heart of leadership within these three things (Johnson, 2012). When someone becomes a
leader, they take for granted the ethical responsibilities that come with their positions. In the organizational
perspective, this argument is more clearly defined than in another field (Johnson, 2012). Conventionally, the
main goal of an organizational leader is to improve organizational profitability. Therefore, organizations
focus on short-term profit maximization may lead to corporate scandals, that is, the recent tremendously
increasing number of scandals in leading corporate business organizations, including Enron, World Savings,
Fannie Mae, WorldCom, HealthSouth, Galleon Hedge Funds, Guidant Medical devices, Qwest, and even
religious organizations where leaders failed ethically (Bello, 2012; Johnson, 2012; Mihelič et al., 2010;
Northouse, 2012). 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, as a whole, the caution

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 Australasian Journal of Law, Ethics and Governance (AJLEG)

call of long-term business growth (Wesarat and Yazam, 2017). In this regard, ethical leadership comes
into play an important role to develop a sustainable environment for the organization, which results in
a long-term success.
The concept of sustainability has emerged as a prominent theme in the business operations and also in
empirical literature, with a dramatic increase in related research in the last few decades. Although issues of
sustainability and sustainable development have become an important topic of research, there are few
studies on this topic in the field of HRD, specifically related to ethics and ethical leadership. Reiche (2017)
referred that sustainability is everywhere and everything is sustainable. From an organizational perspective,
leaders are expected to be responsible for serving and protecting their stakeholders as well as the
community as a whole. It focuses on the sustainability of the organization, including not only economic
condition but also environmental, social, and ethical issues (Joseph, 2013).
Ehnert and Harry (2012) make an argument to define sustainability with two thoughts: Process-oriented and
content-oriented, whereas process-oriented definition outlines organizations engage in sustainability (Constanza et
al., 1991) and content-oriented definition answers what sustainability should focus on. On the other hand,
Docherty et al. (2002) identifies three levels of sustainable development (individual, organizational, and societal)
and emphasize to put attention equally all the levels to balance. The HRD literature primarily focuses on the role
of HRD (as a whole) in developing employees or organizations on social, environmental responsibility (McGuire
et al., 2005; Pruetipibultham, 2010; Sheehan et al., 2014; Storberg-Walker, 2012). Few scholarly contributions are
on the role of leaders’ ethical orientation and sustainable development of an organization (Becker et al., 2010;
Scully-Russ, 2012). To understand the role of ethical leadership in developing the sustainable organization, it is
important to refer to the triple bottom line (TBL) model. This model is based on an assumption that sustainable
development can be achieved only when there is a balanced attention to the environmental, economic, and social
elements of the system through developing an organizational culture (Cavagnaro and George, 2017; Elkington,
2006; Wikström, 2010).

2. Purpose of the Study and Research Question

The paper focuses on the role of ethical leadership to develop a sustainable organization. The purpose
of this paper is to explore literature from various articles and books regarding the topic of ethical
leader and leadership to construct the path of sustainable success and find the possible role of ethical
leadership that guide an organization to be sustainable. This exploration of the literature then leads to
the development of a conceptual model connecting ethical leadership with organizational climate and
culture leading to develop a sustainable organization. This model is expected to be a guidance for
HRD researchers and practitioners to develop a sustainable organization. However, my desire is that
this exploration of literature will stimulate discussion and embed within the development and
implementation of HRD interventions that lead to sustainability outcomes (Scheier and Dearing,
2011). “Both HRD researchers and practitioners should be concerned about both the short-term
outputs and the long-term outcomes,” (Russ-Eft, 2014. p. 3) therefore, establishing ethical leadership
may lead to organizational sustainability.
One major research question is guiding this paper: What is the role of ethical leadership in
developing sustainable organization?

2.1. Significance of the study

While the whole world tries to ensure everything sustainable and to meet the needs and aims of
sustainable development, there is very less research that covers importance and role of ethical
leadership in developing sustainable organization. Referring to the recent corporate scandals
disclosed to us the result of unethical and irresponsible behavior of a leader. Such organizational
culture and climate questions the survivability of the organization in intense global competition
whether ethical leadership plays an important role to develop sustainable outcomes. The purpose of
this research, then, is significant because it will demonstrate the issues that are very important in the
context of organization and the community as a whole.

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 Australasian Journal of Law, Ethics and Governance (AJLEG)

3. Method
The purpose of this study is to explore the literature to answer “what is (and what could be) the role
of ethical leadership in developing sustainable organization?” To address this question, I adopted a
pragmatist epistemology (in between idealism and realism) to conduct the literature review and
hopefully included well-accepted researches in the field of ethics, ethical leadership, importance of
ethical leadership in an organization, sustainable development in organization, and HRD.
At first, I selected four AHRD-associated journals focusing on the aforesaid field from: Human
Resource Development International; Advances in Developing Human Resources; Human Resource
Development Quarterly; and Human Resource Development Review. I searched in those journal for
articles with four groups of keywords that produced a match for the search string including, (1)
“ethical (or moral) leadership,” (2) “sustainable (or sustainability) development,” (3) “sustainable
organization,” and (4) “sustainability and ethical leadership (or leader).” A time frame from 2000 to
2017 was chosen for the search the literature to inform the updated thoughts. However, the search
process with matching keywords identified 21 relevant articles (Table 1).
Surprisingly, only two studies (Ardichvili, 2013; Becker et al., 2010) are related with ethical
leadership and sustainability; whereas in other articles, ethics has received very less importance in
sustainable development among HRD scholars. Further research may discourse the reason why scholars in
the field of HRD are not addressing ethics as an important variable in sustainable development.
Second, therefore, I expanded the search process to cover others major journal through online
social science databases, available at my university (Academic Source Premier, Science Direct, Web
of Science, Emerald Management, Academic Search Complete, and Springer Link).
The general search allowed me to identify key journals (i.e., European Journal of Training and
Development; Journal of Leadership & Organizational Studies, Journal of Business Ethics;
International Journal of Corporate Sustainability, and name a few) publishing the bulk of articles
relevant to this study in the same time frame (2000–2017). Notably, most of the empirical studies on
ethical leadership were conducted after Brown et al. (2005) developed the ELS instrument. However,
few sources which seem to be important in this study were included even though those were
published before 2000. Carefully selected books, article reviews, and conceptual papers are also
included in this study.
Callahan (2010) article in constructing a manuscript provides an important note that is in
general, “conceptual and theoretical manuscripts do not have methodology sections” (p. 302).
However, I included the section to make it clear for the readers about two important things of
systematic review: From where and how the literature was found.
The remainder of this article is structured as follows. First, I briefly overview the key concepts
of ethical leadership, sustainable development and organization, and then examines the importance of
ethical leadership in the organization. Second, I present the discussion of the conceptual analysis and
review of those studies regarding different role and position of ethical leadership in the context of
developing the sustainable organization. Finally, implications and possible further research directions
were suggested at the end of this paper.

Table 1: Distribution of the articles across the four AHRD journals (2000–2017)
Keywords ADHR HRDI HRDR HRDQ Total
“Sustainable Development” 2 5 2 2 9
“Sustainable Organization” 1* 1* 0 1 3
“Ethical Leadership” 2 1 1 3 7
“Sustainability and Ethical 0 1* 2 0 2
Leadership”
Totals 4 6 5 6 21
*The articles share the same title. ADHR: Advances in developing human resources, HRDI: Human resource development
international, HRDR: Human resource development review, HRDQ: Human resource development quarterly

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4. What is Ethical Leadership?

Ethics is a common term used in every profession, including in the field of business and management,
the emphasis on ethical leadership gained attention after the enormous scandals that happened in the
corporate world in the last few decades (Treviño et al., 2003). Ethics is a branch of philosophy, and
there is no universally accepted definition to define ethics. But generally, ethics are described as the
standard of human interaction with each other. Gilbert (2016) define ethics as “a study of
interpersonal and social values and the rules of conduct that derives from these values. It is about the
right and wrong actions and intentions in our dealings with others” (p. 28). Ciulla (2014) remarked
that “ethics is about how we distinguish between right and wrong, or good and evil in relation to the
actions, volition, and characters of human beings. Ethics lie at the heart of all human relationships
and hence at the heart of the relationship between leaders and followers” (p. 15).
In general, societies believe ethics as an important part of every successful leader. However, this
could not always hold true. There are a number of successful leaders who have succeeded in their
mission but failed to act ethically in achieving their mission. Hence, it is crucial to understand the
differences between a leader and ethical leader. Trevino et al. (2003) conducted an explanatory study
to understand what ethical leadership is by interviewing several executives in different industries in
the United States. They concluded that to be an ethical leader just being an ethical person is not
enough, but he/she has to gain the reputation of being an ethical person. Through this research, they
identified two important aspects of an ethical leader. They are (a) the “moral person” aspect and (b)
the “moral manager” aspect. Someone to be an ethical leader will have to acquire both the moral
person aspect and moral manager aspects. The moral person aspect is about the personality traits
(integrity, honesty, trustworthiness) and behavior (being open, personal morality, etc.) of the person.
The moral manager aspect includes the leader’s effort to influence others to act ethically. This
includes being a role model to subordinates, constantly communicating the ethical standards and also
using reward and punishment to promote ethical behavior within the subordinates.
Brown (2007) proposed a definition which reflects the conclusion of the above-mentioned study.
He 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” (p. 141). 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.

4.1. 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).

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4.2. 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.

4.3. 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” (p. 18). 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.

4.4. 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.

4.5. 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

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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.

5. Rationale of Sustainable Development and Sustainable Organization

Roughly, every 20 years world’s economy is doubling, the population is doubling every half a
century, but natural resources are not growing at all (Meadows, 1998). But on the process of
developing ourselves and our organizations (as a leader), we are exploiting natural resources, which
endangered the ecosystem of the world. Development is a continuous and indispensable process, a
fact that we cannot deny. Now, the question is how we can continue our development process without
doing any harm to ecosystem and social life. To find out the answer to these questions, the term
“sustainable development” or “sustainability” came into the scene. There are plenty of literature on
sustainable development, surprisingly, there is no generally accepted practical definition, and often, it
describes as an elusive broad umbrella term for various forms of sustainability (Hahn and Figge,
2011; Kramar and Jones, 2010; Sheehan et al., 2014; and Yamnill and McLean, 2013). However, the
most commonly cited definition (Brundtland) of sustainable development is as follows:
“…Development that meets the needs of the present without compromising the ability of future
generations to meet their own needs. It contains within it two key concepts: The concept of
“needs,” in particular, the essential needs of the world’s poor, to which overriding priorityshould
be given; and the idea of limitations imposed by the state of technology and socialorganization on
the envi-ronment’s ability to meet present and future needs” (WCED, 1987. p.41).
The term “sustainable development” was primarily widely used and developed in global context,
notably, it has been increasingly applied in the organizational context nowadays. This study is concerned in
developing sustainable organization under the role of ethical leadership practices. Practically, TBL is the
commonly used sustainability definition among organizations. It is one of the pioneers in developing
organizational sustainability. This approach materializes Brundtland Commission’s proposal for the
business world. The major success of this approach is to determine three dimensions of sustainability. John
Elkington in his famous book Cannibals with Elkington (1998) expresses concern about the
misunderstanding of the organizational sustainable development from Brundtland Commission Report (Our
Common Future). He also pointed out the lack of direction for the organizations to contribute toward
sustainable development. Therefore, he came forward with the issues organizations need to address for
sustainable development. He mentioned three dimensions of sustainability as three bottom lines (i.e.,
environmental, social, and economic) of the sustainability process, which are interdependent. Bottom lines
are compared to as moving continental plates as three dimensions fluctuate independently and by some
other forces like political pressure (Elkington, 1998). Many researches (including this conceptual study) are
based on Elkington’s three dimensions or pillars of sustainability. Elkington emphasizes on socially and
environmentally responsible behavior by organizations to achieve financial benefit as well as overall
improved performance (Gimenez et al., 2012). Sometimes, TBL is compared with 3Ps (profit, planet, and
people) and balanced scorecard (Hindle, 2009) as an organizational diagnosis tool to measure and report
sustainability.
Docherty et al. (2002) identified three levels of sustainable development: “The individual, the
organizational, and the societal. Sustainability at one level cannot be built on the exploitation of the
others … ” (p.12). Equal attention should be put into all levels to ensure sustainable development:
“Just as physical sustainability considers the consequences of organizational activity for material and
physical resources; social sustainability might consider how organizational activities affect people’s
physical and mental health and well-being – the stress of work practices on the human system.”
(Pfeffer, 2010. p. 35). To develop a sustainable organization, a leader or manager needs to be socially
and environmentally responsible with moral obligation and need to integrate principles of
sustainability in all its organizational processes and practices.

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Nowadays, biggest organizations of the world, such as Toyota, Honda, GE, Puma, Unilever, and
so on are keen to transform their organization into sustainable (green) as without any doubt they
know the major issues of the future business world (Benn et al., 2014). The sustainable organization
is based on a balanced TBL (economic, environmental, and social approach), which values to a higher
level knowledge and the other resources that are available and attracted by the organization, creating
and influencing financial, social, and environmental performances which is validated by employees,
market, society, and nations as a whole (Galpin et al., 2014). The role of a leader to develop a
sustainable organization, Ionescu (2009) stated that an organization must be led by leaders with
strategic vision and moral values, advanced technologies, resources (material and financial), and
organizational culture. At present, employees are also aware of their own environmental
responsibility and more interested to work under an ethical leader who is equally or more committed
to develop a sustainable workplace (Abichandani and Dirani, 2011). Ionescu. (2009) identified the
internal potential of a sustainable organization into four strategic variables including complex of
resources (human resources, research and development resources, commercial resources, and
financial resources), organizational culture, competitive ability, and competitive position.

6. Why Ethical Leadership is Important for an Organization?

When someone asks the question - why leaders have to be ethical in their profession? - the most
obvious answer could be to avoid legal consequences. This could be a core reason for leaders to be
ethical, but this is obviously not the only reason. There are several studies which demonstrated that
ethical leadership helps to create a better work environment and boost employee’s performance in
many ways and consequently develop a sustainable organization.
Piccolo et al. (2010) conducted a study to identify the relationship between ethical leadership
and other components of the job characteristic model (i.e., task significance and job autonomy). They
found that an ethical leader positively influences a follower and subordinate by allowing their voice
in decision-making and using reward to facilitate ethical behavior. Furthermore, an ethical leader also
strives to enhance ethical values in every business activity and improve the autonomy and the
significance of the work for the followers. These factors, then, enhance the efforts of the followers
and the citizenship aspect of their job performance.
Mize et al. (2000) found that there is a significant positive relationship between ethical leadership
behavior and employees’ commitment and their performance. Moreover, a consistent conclusion was made
by Kim and Brymer (2011) by stating that an ethical leadership in the executive level increases job
satisfaction and commitment for middle-level managers. Furthermore, Zhu et al. (2004) stated that an
ethical leader will listen to all stakeholders of the business and always be transparent in their actions. These
behaviors gain the respect of the employees and create a solid basis for a sustainable organization with high
performance. Walumbwa et al. (2011) also argued that ethical leadership is essential for the effective
function of any organization, and it not only increases employees’ performance but also enhances the
quality employees’ self-efficiency and identification with the organization. Ofori (2009) stated that ethical
leadership also enhances employee satisfaction with the leaders and encourages transformational leadership
and transformational culture in the organization.
Stouten et al. (2010) conducted a study to identify the relationship between workplace bullying
and ethical leadership. In this study, they found that ethical leaders strive to harmonize the work
environment by regulating appropriate workload for the employees and continually trying to improve
the working conditions of the employees. These positive characteristics of ethical leaders reduce
bullying in the work environment, which positively affects employee’s performance. The return of
ethical leadership is infinite for any organization. Thus, as mentioned above, ethical leadership is not
only important to avoid legal costs but also helps to increase organization’s performance by creating
positive relationship between employees and leaders, increasing employees’ commitment, and
building trust among all the stakeholder.
The organizational culture or climate is a key element that affects ethical leadership practice.
Creating an environment that facilitates ethical behavior includes placing and implementing formal

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ethical systems (e.g., policies and procedures, ethical codes, corporate ethics audit, etc.) throughout the
organization (Neubert et al., 2009). This demands commitment from all stakeholders of a business, which
itself is a big challenge to develop a sustainable organization. An organization with poor ethical standards
and high rates of unethical practices will apparently affect their subordinate’s behaviors and encourage
unethical decisions among them. On the other hand, an organization with high ethical standards with less
tolerance for unethical behavior will discourage their subordinates to be unethical. An organization with a
strong normative culture will have clear goals and vision, and also the expectations from employees are
clearly communicated. Hence, it is easier for employees to make ethical decisions, when comparing to an
organization with a weak culture with unclear goals, vision, and behavior expectations (Trevino, 1986).
Another informal factor that influences ethical behavior through organizational culture is the compensation
plan for the employees (Paine, 1994). The ethical climate of an organization depends on employee
compensation plan (Madhani, 2014). Reward, incentive, and appropriate pay structure always inspire
employees to act ethically (Mitchell et al., 2005), therefore, the whole organization is to make ethical
decision that will not hamper environmentally or socially.

7. Discussion
Up to this point, I have defined the key concepts of ethical leadership, sustainable development in
organization, and also identified the importance of ethical leadership in an organization. Now, I turn
to examine and discuss the role of ethical leadership to develop a sustainable organization through the
development of a conceptual model (Figure 1). As discussed earlier, dimensions of the TBL
(Elkington, 1998) must be present to achieve sustainable development. This study took those three
dimensions as a central concept to develop the model.
The three-legged stool is widely used model to define and unify many concepts and theories, for
example, HRD theory (Swanson, 1995); environmental sustainability (Newport et al., 2003);
sustainable community development (Dale and Newman, 2008); and sustainable agriculture (Doran,
2002); it is helpful, especially when it comes to the notion of balancing. I have not found any
evidence defining sustainable organization development with three-legged stool; therefore, I
considered it to achieve sustainable organization through the practices of ethical leadership.
A simple way of explaining the conceptual model of this sustainable organization is to think of it
as stool with three legs, representing the economic (profit, cost savings, R and D), the environmental
(using natural resources and pollution prevention), and the society (community, equal opportunity,
education, and standard of living). All the legs are needed to put same importance. If any leg is more

Figure 1: Three-legged Stool of Sustainable Organization

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or less important (i.e., shorter or longer) than the others, the stool will be unstable (but perhaps still
usable at least for a while). If any leg is missing, the stool simply will not work. Therefore, a parallel
rug (ethical leadership) used in the model to stable the stool and put equal attention to all legs.
Because if all three legs are the same length and equally get attention (i.e., environmental, economic
and social considerations), the result will be a well-balanced stool which will serve its purpose in
definitely a sustainable organizational stool. However, it is not very hard to push over a three -legged
stool in a slippery or cracked floor of the host organization. Thus, the three legs of the stool are
further strengthened by the interdependent braces of organization culture (socialization and
integration, ethical climate, justifying statuses, roles, and promotion systems), performance
(motivation, reward, compensation, balanced scorecard), and resources (material, financial, and
human).
There is an unwritten or untold agreement between business organization, environment, and
society. Businesses are expected to supply goods and services needed to the society using scarce
resources efficiently. In return, they earn a profit, and there is no conflict between earning a profit by
the business and using the available resources of the environment and society. However, the problem
arises as there is no certain measure to balance between these activities in case of unethical steps.
When profit-seeking surpasses social well-being or profit comes at the rate of long-term social and
environmental damage, there creates an imbalance. To balance this socioeconomic relationship,
ethical leadership plays an important role by practicing social and environmental responsibility.
Ethical leadership practices in an organization are committed to ensure these balances by
incorporating an ethical culture throughout the organizational environment. Some studies found that
ethical leadership by top management has a strong indirect trickle-down effect on managers’ ethical
leadership, which increases organizational or group level performance (Eisenbeiss et al., 2015;
Hubbard, 2009; Jabbour and Santos, 2008; Shin et al., 2014; Walumbwa et al., 2012). Corporate
social responsibility is a way to balance the relationships (Cadbury, 2006) and a commitment from the
organization that profit would not come at a cost of damaging society in the long run.
A strong and positive organizational culture represents an important prerequisite for
sustainability of an organization. All kinds of organizational resources are added the knowledge under
an ethical atmosphere, which tend to become increasingly important in all the resources of the
sustainable organization. Furthermore, organizations also have a major responsibility in the
sustainable development of the society; their part in this process is regarded as their own sustainable
development. The role of an ethical leader is to ensure an ethical climate and culture in where it
comes in the form of reducing negative impacts of emission, exploitation of natural resources, bad
practices in financial activities, unhealthy employee treatment, and so on.

8. Implication for Practitioner and Research

The conceptual model in Figure 1 emphasizes that success of sustainable organization depends on the
balance of all the legs and braces with moral values of a leader. Therefore, moral development and
individual knowledge about the importance of ethics should have possessed before joining the organization.
The observation has two important implications for HRD practices including (a) ethics and sustainable
development-related coursework should include in our higher education curriculum and (b) selection and
hiring decision need to take based on candidates’ knowledge and attitudes related ethics and sustainability.
In the model, there is a role for an ethical leader in affecting both individual and organizational practices. In
the individual level, they can provide ethical training for all employees, environmental education, and
incorporate ethics into leadership and executive development programs. These programs will provide a
strong foundation (rug in the model) of the organization; perhaps, it may take into account of the
sustainable organization. In addition, researches on sustainable development have been growing since the
last decade in all the applied discipline including the field of HRD. However, there are very few studies
conducted in the HRD. This literature review in HRD field and other areas, I believe HRD researchers and
practitioners will get a better understanding and can use the model in developing sustainable organization or
conduct a research.

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9. Future Research and Conclusion

In today’s intense competitive world, leaders face continuous pressure internally as well as externally due to
unrealistic demands. These pressures can lead to confusion and frustration in their job (Bennett, 2002),
which increases the temptation for unethical practices. These findings suggest that the researcher should
conduct further research about finding out the gap of trading between short term and long-term objectives.
Few studies of the relationship between leader and organizational sustainability conducted under HRD
interventions, whereas ethics has gotten less importance. The findings of literature search process suggested
conducting more studies. In addition, the framework in Figure 1 suggested various factors affecting the
development sustainable organizations along with ethical leadership. Studies should be undertaken to
examine each of the factors. Such studies will help to determine which factors are of greatest importance
for the development of a sustainable organization. On the other hand, organizational culture also varies
from country to country and depends on their national culture or social construction. Therefore, further
studies are needed about the effects of different national cultures on organization culture and a relationship
with sustainable organizations.
The purpose of this conceptual paper was to review literature to determine the role of ethical
leadership to develop a sustainable organization. The study developed a model incorporated with TBL
and found that ethical leadership practices set up a role model among the organizational culture with
moral values and ethical decision-making for the common goods. The study also identified from
systematic reviews 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.
Every leader has an ethical or moral dimension, and they always take effective decision for long-
term consequences along with nurturing followers and subordinates. They set a good example and
high ethical standards through their ethical behavior to influence their followers to obey the
behavioral boundaries within an organization. Good leaders (effective and ethical) are concerned for
the greater good instead of self-serving interests, obsessed with fairness, and see their activities in
terms of purpose to achieve a common goal - a win/win for subordinates and the organization, that is
what an organization needs in this unstable world, a good leader who dedicates his or her time and
energy to create value which helps an organization to sustain. Ethical leaders nurture followers with
organizational needs, values, and purposes to make a solid sustainable organization.

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