Nurturing subjective wellbeing through ethical climate: The mediating role of psychological empowerment

Background In the past couple of years, the concept of “ethical climate” has evolved into an increasingly popular keyword dominating news headlines, producing a worldwide interest. The existence of unethical work environments and ethically dubious business practices has sparked a surge in curiosity about the ethical climate. Objective The main purpose of this study is to examine the potential impact of ethical climate on employee subjective wellbeing, directly as well as indirectly, through a mediator psychological empowerment. Methods A theoretical framework is created by utilizing the situational strength theory. The postulated hypotheses were examined through the analysis of cross-sectional survey data obtained from 435 employees from the Indian IT industry via an online questionnaire. The model was evaluated using SmartPLS 4.0 software. Results The current study established a positive nexus between ethical climate and subjective wellbeing. Additionally, psychological empowerment partially mediates the nexus between ethical climate and subjective wellbeing. Conclusions The present study advanced the ethical climate literature by demonstrating that the ethical climate affects employees’ psychological empowerment and subjective wellbeing. Furthermore, the proposed theoretical model can be applied to different industries inside the country and other countries with similar features.