Look up and around: How leaders and peers jointly shape unethical behavior

Unethical behavior in organizations has garnered considerable scholarly attention, with ethical leadership identified as a key factor in curbing misconduct. However, leaders are not the sole source of social influence—peers also play a profound role in shaping employees’ unethical conduct. While ethical leadership scholars have acknowledged that employees both “look up” to leaders and “look around” to peers for ethical guidance, how these influences, which may converge or diverge, interplay to affect employees’ unethical behavior is insufficiently understood. Drawing on substitutes for leadership and cue consistency theories, we develop competing hypotheses regarding the interaction between ethical leadership and observed peers’ unethical behavior in predicting individuals’ unethical behavior. Two multi-source studies provided converging evidence that perceiving workgroup coworkers engaging in higher levels of unethical behavior strengthened the negative effect of ethical leadership on individuals’ unethical behavior, supporting the hypothesis derived from substitutes for leadership theory. We discuss theoretical and practical implications of these findings.