Unlocking the paradoxical impact of ethical leadership on employees’ pro-social rule-breaking behavior: the dynamics of employees’ psychological empowerment and ethical climate within the organization

Purpose This study aims to investigate the impact of ethical leadership on employees’ pro-social rule-breaking behavior, focusing on the mechanisms of psychological empowerment and the moderating influence of ethical climate within the organization. Design/methodology/approach Conducting a survey across three waves, the research involves 515 nursing staff in various Pakistani hospitals. Partial least squares structural equation modeling is used for data analysis. Findings Contrary to expectations, this study uncovers a positive association between ethical leadership and employees’ pro-social rule-breaking behavior. The relationship is mediated by psychological empowerment, and ethical climate is found to moderate this association. Research limitations/implications While challenging traditional assumptions, this study acknowledges limitations related to sector focus and employee perspectives. Future studies are encouraged to explore multiple sectors and incorporate management perceptions for wider generalizability. Practical implications The results highlight the need for organizations to consider the unintended consequences of ethical leadership. Managers are advised to be mindful of employees’ psychological dynamics and the organizational environment to navigate the complex interplay between ethical leadership and pro-social rule-breaking. Social implications Understanding the paradoxical influence of ethical leadership extends beyond organizations to broader societal implications. The research encourages organizations to adopt strategies aligning ethical leadership with desired employee behaviors. Originality/value This study challenges established perceptions of ethical leadership, prompting a reevaluation of its universally perceived positive nature. It emphasizes the paradoxical influence of ethical leadership on organizational dynamics. The mediating role of psychological empowerment and the moderating effect of ethical climate contribute to the understanding of the relationship between ethical leadership and employees’ pro-social rule-breaking.