Unveiling the dynamics of ethical leadership: how ethical culture moderates its impact on ethical behaviour using PLS-SEM

Purpose Organisations are recognising the importance of setting ethical standards to promote long-term success as ethical issues and misconduct become more prevalent. This study aims to demonstrate how a strong ethical culture can promote conduct, particularly in the dynamic context of India. It also illustrates the impact of ethical leadership (EL) on employees’ behaviour. Design/methodology/approach A self-administered questionnaire was used to collect data from 270 individuals across several sectors, including manufacturing, banking, IT, law, finance and telecommunications, using snowball sampling. The hypotheses were evaluated using SMART PLS 4.0 software and analysed via partial least squares structural equation modelling. Findings The results indicated that EL significantly influences ethical behaviour within the Indian context, particularly when leaders act as role models for their followers. The study emphasises the influence of moral culture in regulating this relationship, offering significant insights into how cultural factors can alleviate unethical conduct inside Indian business settings. The relationship between moral leadership and employee ethical conduct is significantly shaped by the existing ethical culture. Research limitations/implications Future research could benefit from adopting a longitudinal methodology, particularly focusing on diverse sectors in growing economies like India, as this study encompassed many industries within one nation. Future research may examine additional predictors shaping ethical conduct in the workplace; however, the present study focuses only on EL and ethical culture as primary determinants. Practical implications Given the deterioration of ethical standards and occurrences of corporate malfeasance, firms in India must prioritise ethical training for senior management and implement ethical initiatives, while also cultivating a strong ethical culture. Indian enterprises possess the capacity to create a robust foundation for lasting success and sustainable practices by fostering ethical conduct within the organisation. Originality/value The present study identifies ethical culture as a substitutive condition that limits or weakens the influence of EL on employees’ ethical conduct in a high-power distance organisational context and also illustrates how many cultural elements inside Indian companies influence, amplify or obstruct EL, in contrast to prior research. This research integrates EL, cultural diversity and innovation issues to provide a novel and nuanced view on leadership development and ethical decision-making that is academically and practically pertinent in the contemporary business landscape.