An Empirical and Theoretical Exploration of Disconnections Between Leadership and Ethics

Journal of Business Ethics (2005) 59: 233-246DOI 10.1007/S10551-004-8205-4

Springer 2005

An Empirical and TheoreticalExploration of DisconnectionsBetween Leadership and Ethics

Andrea HornettSusan Fredricks

ABSTRJ'LCT. A comparison of two groups of collegestudents, at a public state university and a private religiousschool, yields the same results: undergraduates' interpre-tations of recent business scandals make distinctions be-tween public and private behavior. Students admire"family men" even when they are caught at firaud. Thestudents' interpretations illustrate a significant gap inethical theories: the benefits of a group perspective forcorporate citizenship versus individual family values. Mostleadership theories, including stakeholder theories, do notaddress this disjunction. This article describes the

Susan Fredricks received her Ph.D. in Communication Studiesfrom the University of Kansas and her M.A. degree inCorporate and Public Communications from Seton HallUniversity. An assistant professor at Penn State UniversityDelaware County in the Communication Arts and Sciencesprogram, her research includes topics relating to publicspeaking courses, business and organizational communication,international studies, and leadership development. She haspublished "Teaching Business Ethics to UndergraduateStudents" in The Successful Professor as well as"Creating and Maintaining Networks Among Leaders: AnExploratory Case Study of Two Leadership Training Pro-grams" in //le Journal of Leadership and OrganizationalStudies.

Andrew Hornett has a masters' degree from the University ofPennsylvania and a doctorate in organizational learning fromthe George Washington University, and 20+ years experi-ence in business. Dr. Andy teaches business strategy, lea-dership and research in the business program at Penn State'sDelaware County campus. She continues to investigateethical discernment and ethical dilemmas in business, ex-panding her research agenda on virtual organizations,knowledge management, and organizational learning. Herresearch is cited and published in a variety of books and

journals.

phenomenon and maps the ethics literature to locate thedynamic forces underlying the empirical and theoreticaldisconnections between leadership and ethics.

KEY WORDS: business scandals, ethics, leadership

Introduction

News accounts of scandals in business have causedmany to question the values of business leaders. In anentertaining parody of the situation Hochberg(2002) asks, "Who Stole My Cheese?" Meanwhile,professors in the Academy of Management are ex-horted to correct the messes made by materialisticgreed. They are not alone. Business schools quicklyresponded to the spate of scandals by adding ethicscourses and bolstering existing efforts to inculcateethics (Barrett, 2003). Publishers mailed revisedversions of management and organizational com-munication textbooks with compact discs andadditional texts and case studies of scandals andethics. The belief is that these activities will helpguide students through ethical decision makingprocesses. However, these activities may not beaddressing an ethical disjunction between public andprivate behavior. This article reports on ourexperiences teaching ethics and leadership in thecontext of scandals, what we learned about ethicaldisjunctions from students in two distinct environ-ments, and our interpretation of the literature, yield-ing the philosophical roots of disconnection betweentheories of leadership and ethics and between indi-vidual and group orientations to moral relativism.

234 Andrea Hornett and Susan Fredricks

Background

Caught up in the turbulence of scandals and facedwith the challenge of teaching leadership in scan-dalous times, we taught our respective undergradu-ate courses in business and communications, whileunethical behaviors and plea bargains were emergingeveryday in the media. We assigned Hackman andJohnsons' Leadership: A Communication Perspective(2000) and assumed that by employing leadershiptheories from the text to the various scandals, ourstudents could readily discern what went wrong.

Approach

Initially, our approach was exploratory and notderivative of ethics or leadership research. We sim-ply wondered what sense our undergraduates wouldmake, if any, of stories of greed and legal transgres-sions by major corporate executives. We thought wemight learn something interesting but we did notattempt to structure what that might be.

Research questions

We wondered if there would be a discernable dif-ference between our business students and ourcommunications students, and we were open tolearning about teaching leadership and ethics. Fromthese considerations, we derived three researchquestions: (1) what patterns emerge from the stu-dents' projects and discussion; (2) what do theysuggest about leadership and theories of leadership;and, (3) what can we learn about educating studentsin ethical leadership and theories of leadership?

Lessons and scandals

Students selected leaders from a hst we prepared ofthose who had been in the news (Table I). Eachstudent analyzed a particular leader using one lead-ership theory of his or her choice from the text(Hackman and Johnson, 2000) that provides nearlytwo dozen distinct leadership theories.

We treated the two classes differently. TheCommunications class, at a private religious college.

TABLE IList of situations students researched

1 Adelphia's John Rigas2 Joseph Berardino of Arthur Andersen who shredded

files regarding his client, Enron.3 Enron's Ken Lay, former CEO; also,4 Rick Causey, former Chief Accounting Officer at5 Enron. Sherron Watkins, whistleblower.6 Joseph Nacchio of Qwest7 Global Crossing CEO Gary Winnick8 ImClone Systems' CEO Sam Waksal, his friend9 Martha Stewart of Martha Stewart Living, OmniMe-

dia. Inc., and their10 Merrill Lynch broker Peter Bacanovic.11 Dennis Kozlowski of Tyco12 Robert Pittman, formerly head of America On-Line

and Time Warner13 Jeffrey Bewkes of Home Box Office;14 Don Logan of Time, Inc.15 Jack Welch, retired CEO from GE16 WorldCOM's Bernard J. Ebbers, former CEO;17 Scott Sullivan, former CFO;18 Cynthia Cooper, vice president of internal audit.19 John Sidgmore, WorldCom.20 Jack Grubman telecommunications analyst at Salo-

mon Smith Barney.21 Max E. Bobbitt, Chairman of the Board's Audit

Committee, WorldCom.22 Bert C. Roberts, former chairman of MCI and

current chairman of WorldCom.23 Melvin Dick, currently the Chief Financial Officer at

Coldwater Creek24 David F. Myers, fonner controller, WorldCom.25 Richard Scrushy, Health South26 Frank Quattrone, Credit Suisse First Boston27 Richard (Dick) Grasso, New York Stock Exchange28 Gregory Parseghian, Freddie Mac29 Peter Scannell, Putnam Investments;30 John HiU, board chief, Putnam;31 former CEO Lawrence Lasser, Putnam.32 The Partners in Alliance Capital Management Holding,

LP32 Parmalat - Calisto Tanzi, founder33 Cesare Geronzi, Chairman of Capitalia34 Luca Sala consultant &35 Louis Moncada, banker36 Boeing former CEO Philip Condit;37 Michael Sears, former CFO, Boeing.

An Empirical and Tlieoretical Exploration of Disconnections Between Leadership and Ethics 235

wrote papers. The Business class, at a pubhc stateuniversity, was assigned to prepare annotated bibli-ographies and give in-class power-point presenta-tions. However, there was commonality in the focusof their work. The students chose which leaders andrecent scandals to research from the same list(Table I), and ethics formed a key theme in classdiscussions and assignments.

Communication leadership class

This course was conducted at a small, private reh-gious college in the eastern United States. The totalenrollment for the course was eleven students. Theprimary textbook was Leadership: A CommunicationPerspective by Hackman and Johnson (2000). A sup-plementary textbook was the Drucker Foundation'sLeader of the Future (Hesselbein et al., 1997). Thiscommunication class studied leadership in organi-zations and in public by exploring nearly all thetopics in Hackman and Johnson (2000), includingleadenhip styles, development of leadership, power,influence and ethics. According to Hackman andJohnson (2000), "While the manager is moreabsorbed in the status quo, the leader is more con-cerned with the ultimate direction of the group"(p. 12). This defmition is important because it aidedour determination of the list of leaders for analysis bythe students (Table I). Students were assigned tostudy leaders who met Hackman and Johnson'sdefinition because they provided the ultimatedirection for their organizations.

Class and course activities were aimed at achiev-ing three goals: (1) a better self-awareness on the partof each student as to his/her current use of leadershipskills; (2) an awareness of what type of leader s/hewants to become; and (3) an increased awareness ofleaders, their styles, skills, and circumstances. Afterreading the weekly assignment and conducting someself-exploration about what they learned, studentswere given an activity that correlated to that week'stopic. For example, students considered the com-ponents of ethical behavior and ethical dilemmasinvolving honesty, responsibility, power and loyalty(Hackman and Johnson, 2000). After reading aboutthe importance of being an ethical leader and how tobe courageous leaders and followers, students wereassigned the case study of the "Missing Wallet"

(Hackman and Johnson, 2000, p. 344), to analyzethe components of trust and how they apply inorganizations, relationships, and groups.

In addition to these weekly activities, studentswere required to provide articles on current eventsand analyze them using a particular leadership con-struct of their choice. This activity was done in ordermake students more aware of how leadership isviewed in the media as well and how leadershiptheories can be applied to current events. Thesemester ended with students reporting on theirleadership and on specific leaders from Table I.These final two projects were a culmination ofeverything they had learned throughout the semes-ter. The goal of the students' research papers was toanalyze a leader while employing various leadershiptheories.

Business leadership class

The business class was taught at a public university'ssuburban location, a commuter campus, also in theeastern United States. The total enrollment for thecourse was 25 students. In addition to using Hack-man and Johnson (2000) as a reference, these stu-dents employed Howell and Cosdey's (2001)behavioral model, Tannen's (1994) researchon gender communications, and Schein's (1992)cultural leadership theory in class assignments pre-paratory to developing their final class assignments:annotated bibliographies and presentations on aleader selected from Table I.

Howell and Costley's behavioral model. Howell andCosdey (2001) provide a basic model of leadershipthat depicts five distinct behaviors that can be ob-served. The first type of leadership is "directive" and isevident when a leader "assigns followers specific tasks,explains methods, clarifies expectations, set goals, andspecifies procedures" (p. 22). Second is "participa-tive" and is seen when the leader "involves followersin making decisions by consulting to get suggestionsand ideas" (p. 22). Third is "charismatic" and isindicative of the leader who "displays high expecta-tions, confidence and competence". This type"communicates vision with ideological goals whichreflect follower needs" (p. 22). Perhaps more familiarto the undergraduate is "reward and punish" the


behavior that "provides intrinsic and extrinsic bene-fits" (p. 22) and "punishment for unwanted followerbehaviors" (p. 22). However, many undergraduatesalso knew the "supportive behavior" that "showsconsideration, acceptance, and concern for the needsand feeling of followers" (p. 22).

This class applied the model in analyzing a prisonwarden as a leader using the film "Brubaker", star-ring Robert Redford. Students could correcdyidentify examples of each of the five leadershipbehaviors as demonstrated in the movie.

Schein's cultural leadership theory. Building on theirexperience analyzing Brubaker, the Business studentsalso compared and contrasted Brubaker's leadershipwith Karen Silkwood's in the film "Silkwood,"starring Meryl Streep and Cher. Both films are basedon true stories that occurred in the United States inthe 1970s. Students employed Schein's (1992) thesisthat leadership and organizational culture are inex-tricably linked. Schein theorizes that the processes ofculture creation and management are the essence ofleadership. Accoirdingly, if leaders want to change anorganization, they must first understand thedynamics of the culture. Neither culture nor lead-ership can be understood or addressed separately.Students analyzed both Brubaker's and Silkwood'ssituations for evidence that the relative success orfailure of these leaders depended on their under-standing the cultures of their respective organiza-tions.

In addition to writing papers on this topic, stu-dents compared and contrasted Brubaker and Silk-wood in an in-class organized debate in which teamsargued who better understood the organization'sculture, Brubaker or Silkwood. Students supportedtheir arguments by identifying ways each leaderchanged his/her organization.

In a fashion similar to the communication leader-ship class, this business leadership class maintained atheme around ethical issues. Students considered theethics of Brubaker's prison board and the governorand the ethics of Brubaker raising the prisoners' hopesand then getting fired. They also discussed Silkwood'sUes and deceptive practices and evaluated theiracceptability, given both her character and her cause.The semester culminated in the students preparingannotated bibliographies and delivering presentations

on leaders from the list (Table I), while employing atheory from Hackman and Johnson.

Analysis

The students' work was analyzed to discern patterns.The content of seven papers and 22 annotated bibH-ographies, including copies of articles cited, andpower point presentations (nearly a thousand pages)were analyzed to detect some themes and form anunderstanding of how undergraduates make meaningof leadership theories in the context of scandals. Aniterative approach was used. First, working alone, theprofessors each read and coded all the documents.Then, they made a comparison of their independentwork and confirmed several similar patterns. Theresearchers returned to the newspaper accounts andthe students' work repeatedly, in an iterative fashion,over several months, to ensure that their analysis was asaccurate as possible and documented in a mannerconsistent with recommendations for establishingtrustworthiness (Lincoln and Guba, 1985), includinginvolving a neutral third party's review of their work.As patterns were identified, they were clustered intodistinct categories that became the framework forfurther analysis of the findings. In this way, a quali-tative, exploratory study, looking for emergingpatterns from the students' analyses was created.

Biases

With content analysis there is always a concern fortrustworthiness, including whether or not the anal-ysis coven the range of meaning (Babbie, 1998)supplied by the students. By working both apart andtogether in an iterative fashion, the researchen at-tempted to estabHsh trustworthiness (Lincoln andGuba, 1985).

Some researcher biases do exist. We deliberatelychose cases for analysis which represented flawedleadership in our opinion and in the context ofpublic reportage.

Limitations, and Delimitations

This study is confined to one semester, two classes intwo different disciplines at two different institutions.

An Empirical and Theoretical Exploration of Disconnections Between Leadership and Ethics 237

one religious and one public,. with a differentnumber of students enrolled in each class. Never-theless, the students' independent analyses showedevidence of similarity.

Findings

The students from the two courses formed verysimilar judgments. Accordingly, rather than com-paring and contrasting the two sets of assignments,the analysis of findings integrates them and addressesthe research questions, the patterns that emerged,and what these patterns suggest about leadership,theories of leadership and ethics, and the pedagogyof ethical leadership.

Students' analyses

The students worked on the situations identified forthem (Table I). Appendix A depicts the topics theycovered and provides brief summaries of thecircumstances of each case based on the students'research.

Emerging patterns

Three patterns are common to the students' inter-pretations, despite their separate classes and differentdiscipHnes. First, the students sympathize with anyleaders who seem to value family or try to protecttheir family. They admire leaders who try to takecare of their families or employ family members,regardless of any other wrong doing. Second, theyascribe the downfall of some leaders to bad luckrather than to abrogation of personal accountabilityor public responsibility. Third, they accept theproposition that the alpha males get to keep all thetoys. These three patterns, bad luck, family values,and winner-takes-all, indicate the students' sympa-thy for their analysands.

Bad luck

The students beheve that the leaders' fall from gracewas not due to their behavior entirely, but ratherdue to unfortunate circumstances or bad luck. Forexample, a student claimed that Jack Welch becamepart of this study "only because he filed for divorce". If it

was not for that "owe unfortunate incident" the amountof his retirement package and his perks would nothave been revealed. Welch "increased GE's rate ofgrowth and created more value than any CEO in history".One student wrote: "Personally, I have gained a greatdeal of business leadership knowledge reading about JackWelch's many leadership styles and techniques ... Hiscompassion [sic\for business leaves one with a sense of aweand respect. He is an inspiration because he is someone whoworked hard and got what he wanted, a true Americansuccess story. He lived the dream of almost every workingclass person." (Table II).

Rigas, an early pioneer in cable television, wentdoor to door in the 1950s to enlist subscribers. Hegrew his company, Adelphia, as a family business,employing his sons. One student felt sorry for whathappened to Rigas, an old man, and focused on hisgood deeds at home in Coudersport, PA, saying:"Even before Rigases [sic] success with Adelphia CableCompany, Rigas was a giving and compassionate man".Another student claims that as the company grew,"Rigas focused more on what he could gain and not on whatthe company would gain almost as if it became an entitle-ment for him". Two students, one from each of theclasses, believed that Rigas became confused aboutthe difference between what was his and what is the

TABLE IIThree patterns and the evidence

Patterns Brief summary of keyevidence

(1) Bad luck

(2) Family values

(3) Winner takes all

Lay's initial defense: hedidn't know what was goingon at Enron. Students see Rigas, Welch,and AOL-Time Warner asunlucky. Rigas - Adelphia Cablewas a family business. Waksal - father anddaughter sold stock. Kozlowski - ex wife postsbail. Welch is seen as a greatbusiness leader who deservesperks. Excess (e.g. Kozlowski,Rigas, Welch) is admired.


company's. Press accounts tend to agree (Moules andLanen, 2002). Both students did not seem to graspthe magnitude of the fraud or the nature of the vic-tims (stockholders). Both felt that Rigas did well intaking care of his family and the people of his smallhome town. The students' explanation for Rigas'behavior was simply "bad luck". "He was too confusedto use judgment and he just got caught".

There are other examples of bad luck. One isJoseph Nacchio. A student claims that: If the mergerbetween Qwest Communications and US West hadnot taken place, then "the accounting scandal would notbeen uncovered". Similarly, with regard to Scott Sul-livan at WorldCom, one student said: "To get wherehe ended up, at such a young age of 40, Sullivan hadovercome many obstacles. However, the one that surfacedafter July 2000 would ultimately be the demise of him".

The final example, one that did not involve al-leged criminal activity even though it cost investorsmilHons, is that of AOL-Time Warner. The AOL-Time Warner merger was unusual in that Davidbought Goliath. Now that the dust has settled,observers are generally agreed that it was a bad deal,too cosdy, and without fulfillment of the expectedsynergies and valued growth. The problems with thismerger, the students assert, "were not the fault" ofBewkes, Logan or Pittman, but rather just a "string ofincidents" that affected the final outcome. During thetransition from promise to reality, executives reor-ganized to appease analysts and investors who werelooking for evidence of success. One of the "victimsof reorganization was Pittman the creator of MTV and theleader who changed television through creative programmingand program development at HBO". The survivor,current HBO head, Jeffrey Bewkes, is clear ofscandal and seems to have used his charismatic styleand innovative nature to survive the loss of RobertPittman. Students labeled Pittman a "scapegoat" andBewkes a "bystander".

In these examples, the students indicated that theleaders ran into bad luck rather than unethicalbehavior or greed. The students also sympathizewith the leaders' families.

Family values

Students sympathize with leaders who take care oftheir famihes. This may be why defense attorneys

tend to go public with family issues, or why leadersuse families as an excuse. For example, Nacchio ofQwest continued to receive "consulting feeds"while he resigned from his position to spend timewith his family. CFO Sullivan at WorldCom made aploy for sympathy as the sole caretaker of his toddlerson since his wife Carla's diabetes had caused her tobe hospitalized. Regarding SuUivan, one studentsaid: "People that he worked with throughout the yearsand his associates on Wallstreet [sic] all had trust andconfidence in him as a fellow businessman and as a familyman ... Like many successful and influential leaders, hehas many good qualities in his personality and the fewundesired [sic\". There are other examples of fallenleaders as family figures. Students cited the loyalty ofKen Lay's wife; Sam Waksal's expression of concernfor his daughter; John Rigas' sons; and DennisKozlowski's ex-wife posting his bail as examples oflovable family men.

Winner-take-all

Students consider Welch's halo as America's mostadmired CEO is untarnished by an extra-martial affairand a listing of perks in his subsequent divorce filing.Even Welch seemed a tad embarrassed as he scaledback on some of the perks in a mea culpa to thepubHc. The students' reactions to Welch's experi-ences give credence to the cultural notion that theguy on top is entitled to the most goodies, even be-yond tenure in the job. They laugh about the showercurtains that cost thousands of dollars in the homes ofWelch and Koslowski but they also believe thatwealth is their entidement for making it to the top.

Disconnection

Because students make a distinction between publicand private acts. Table III displays the students'appraisal of some of the leaders' public and privateimages as positive or negative. Table III does notrepresent all the leaders in Table I because inseveral cases students did not make enough of ajudgment about the leader's behavior for us todiscern whether they can distinguish betweenpositive reputations or images either publicly orprivately.

Table III offers a ready reference for consideringthe students' disjunction between public and private


TABLE IIIExamples of public/private disjunctions

Leader + PubUc + Private - Public Private

1. Adelphia's Rigas2. Berardino at Enron3. Lay at Enron4. Causey at Enron5. Qwest, Joseph Nacchio6. Global Crossing CEO Gary Winnick7. CEO Sam Waksal, ImClone Systems8. Martha Stewart of OmniMedia, Inc.9. Merrill Lynch's Peter Bacanovic

10. Tyco, Dennis Kozlowski11. Robert Pittman, America On-Line and Time Warner;12. Jeffrey Bewkes of Home Box Office;13. Don Logan of Time, Inc.14. Jack Welch, retired CEO from GE15. WoddCOM's Bernard J. Ebbers16. Scott Sullivan, fomier CFO World Com17. Cynthia Cooper, WorldCom18. John Sidgmore WorldCom19. Jack Grubman Salomon Smith Barney.20. Max E. Bobbitt, WorldCom board.21. Bert C. Robberts, WoddCom.22. Melvin Dick, WorldCom.23. David F. Myers, WoddCom.

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behavior. In trying to understand what these stu-dents' interpretations were teUing us, we returned tothe literature.

Literature

We did not realize at first that ethical theory, ratherthan leadership theory, might indicate why the stu-dents' interpretations were less judgmental than ourown and many of the press accounts. Initially, wewere working with leadership theories (Hackmanand Johnson, 2000) and we were questioning howstudents would make sense of the scandals based onleadership theories. It was only after we had exam-ined the students' interpretations that we went to theethics literature to see if we could explain what wewere finding.

Definitions

We had relied on the text to guide the students butwhen we returned to the text to get our bearings onthe findings, we reahzed that few of the nearly twodozen leadership theories include ethical judgment.Indeed, our leadership text (Hackman and Johnson,2002) dealt with ethics in a separate chapter. Ethicsare standards of moral conduct; judgments aboutwhether human behavior is right or wrong (Hack-man and Johnson, 2002). For leaders, ethics involvedilemmas of "deceit, responsibility, power, privilege,loyalty and responsibility" (Hackman and Johnson,2002, p. 317), each of which poses a unique chal-lenge to leadership. However, one's orientation tothese ethical dilemmas varies depending on wheredecisions are situated on the continuum from moralrelativism to moral absolutism, the two poles ofethical thought.

240 Andrea Homett and Susan Fredricks

ME (self): ValuesClarificationVirtue Ethics

US (group):Moral Developmenl;Situational Values; ActUtilitarianism; SocialContract; Rawls Justice

NORMS/Rules/Shoulds:Rule Utilitarianism; Kantianism;Divine Command;

Figure 1. Ethical theories by moral focus.

Ethics literature

Our simpUfication of the ethics Uterature is depictedin Figure 1. There are three distinct foci for moralreasoning: the self, the group and norms. In the firstcategory, one asks: "What wiU benefit me and myweU-being?" In this case, the correct ethical choicewiU be one that leads to fuUer development of theindividual as a human being, or as a citizen from theperspective of Aristode's idea of developing virtuouscharacter to Uve the virtuous Ufe (virtue ethics). Inthe second category, one asks: "What best benefitsthe most people?" Here, the correct choice is onethat leads to the fuUer development of society or thegroup. In the third category, one asks: "What is themle?" (Quinn, 2004). Here, one appUes norms thatsociety has promulgated in one's culture to deal with"best" behavior. Related to this third category aretwo distinct sub-categories: divine command, whereone does the will of a supreme being; and servant/leadership where the leader is obUgated to do thatwhich develops the foUowers as human beings. Ofcourse, outside of these groups is the area of cultural

relativism that suggests that reaUty is subjective, notobjective, and therefore the ethical course of actionis to rely on one's perceptions or on the nomis of theculture where one is making the ethical decisionbecause there are no absolute universal mores ofright and wrong.

These ethical systems of thought are spUt betweenmoral absolutism and relativism (Figure 2). Thisfurther disconnects the focus and orientation ofthose who would make ethical judgments. Arrayingtheories of ethics between the polarities of ethicalrelativism and absolutism (Figure 2) depicts thephilosophical landscape the students unwittinglytraversed. The students' reports that made a dis-tinction between public and private behavior reflectthe distinction in focus on an ethical situation andone's relationship to it. Further, the student'sapparent moral relativism may be reflective of thedisconnection between norm based and affinitybased orientations to ethics.

Figure 3 depicts the ethical landscape displayed inFigure 2 with the addition of our generalizations ofthe analyses reported by the students in bold italics.

[Cultural & Subjective]

(Gilligan) Moral Development (Kohlberg; Rest)Situational Values:

Values Cladfieation (Rokeaeh)Act Utilitarianism (Hobbes)

Social ContractRawls' Principles ofjustice

Kant's Categorical ImperativeRule Utilitarianism (Hobbes)(e.g. Friedman's Stockholder Theory)

Servant / Leader

Divine CommandVirtue (e.g. Aristotle)

Figure 2. Mapping ethical theories by moral relativism.

An Empirical and Titeoretical Exploration of Disconnections Between Leadership and Ethics 241

However, the students' interpretations are not directdescendants of the theories depicted. Rather they arepost-modem interpretations reflecting new ways ofthinking and judging.

What we initially labeled as the students' failure toengage in ethical discernment may be evidence thatwhen strong group allegiance (i.e., focus) is missingand there are no clear mles or competing mles (e.g.,make money versus behave ethically), the studentsrely on a focus on self In this context, "family values"or a "winner-take-all" ethos seem rational even whenthe latter is narcissistic and the former is inherentlyamoral in its disregard of other considerations.

Conclusions

It is difficult at this initial exploratory stage of thisresearch to draw conclusions from these findings thatstudents make an ethical disjunction between publicand private behavior. We have rephcated thesepattems in subsequent semesters and are working ona variety of tests to confirm these pattems by othermeans. One explanation for the findings could bethat the act of researching a leader develops empa-thy. We are surveying peers outside of the classes totry to disconfirm this but without success.

There may be cultural values operating hereprecluding their judging or condemning the fallenleaders. A third explanation of our findings may bethat the leadership theories provided to the studentsfor their use in analysis do not readily encompassethical deliberations. For example, only one studentemployed a leadership theory that fially enabled himto determine unethical behavior. This was the stu-dent who employed Rest's model (Hackman andJohnson, 2000) to Sam Waksal and his role at Im-Clone. In addition, few cases contained informationthat would have enabled students to predict thatthere would be ethical problems. There are only twocases where the leader's biography contains fore-shadowing of unethical behavior. One is DennisKozlowski, formerly with TYCO, who onceworked for Michael MiUiken the junk bond king butescaped prosecution with MiUiken. The other is SamWaksal of ImClone. Our student's scorecard forWaksal, based on Rest's theories, concludes that hefailed the tests for honesty and responsibility and thatit is unclear whether he used power inappropriately.However, the student claims that Waksal does passthe test for loyalty because he showed concem forhis family, specifically his father, a holocaust survivorwho sold $6.85 million in stock and his daughter

[Cultural & Subjective]

(Gilligan) Moral Development (Kohlberg; Rest)Situational Values:

Values Clarification (Rokeach)Act Utilitarianism (Hobbes)

Social ContractRawls' Principles of Justice

Kant's Categorical ImperativeRule Utilitarianism (Hobbes)(e.g. Friedman's Stockholder Theory)

Servant / Leader

Divine CommandVirtue (e.g. Aristotte)

Bad Luck

(Situational)

[Not oriented tobenefaction of themajority.]

Family Values[Subjective A-Moral ]

Winner-Takes-AU

(Rule Based)

[Narcissistic, not civic]

Figure 3. Polarities of moral relativism and student interpretations of scandals.


who sold $2.5 million based on the insider knowl-. edge he provided her.

Implications for teaching ethical leadership

Use of leadership theory helped students analyzesituations. During this study, all students (excepttwo, one in each class) successfully employed atheory of their choice in making their reports.However, leadership theory does not preparestudents to see signs of a fall or fully appreciatecorruption, fraud or greed. It would help to knowmore about how greed corrupts both leaders andfollowers, beyond theories of group think (Janis,1972). These scandals and the students' analysessuggest that a materiahstic culture blurs the distinc-tion between success and greed; leadership theoriesneed to address that. Analysis of our students' papersand presentations identifies three lessons from thesescandals that might be used to inform pedagogy ofethical leadership: narcissism, family involvement,and relationship of the followers.

Narcissism

There is a narcissistic quahty to several of these fallenleaders that seems to get in the way of ethicalcorporate goals and visions. While the leaders' overtbehavior seems to indicate that they were workingfor the company, they were actuaUy working forthemselves. Their bank accounts and real estateholdings provide the evidence. Somewhere, some-how, they cross the Hne from company goals to whatthe self wants. The application of Rest's moral sen-sitivity (Hackman and Johnson, 2000) becomesessential here. "Moral sensitivity involves recogniz-ing that our behavior impacts others, identifyingpossible courses of action, and determining theconsequences of each possible strategy" (Hackmanand Johnson, 2000, p. 337). Either these leaders lostmoral sensitivity, never possessed it, or did not careto see how their behaviors would affect others.Teaching students to use Rest's components as asituational scorecard provides a way to Unk analysisof leaders with ethical discernment. It provides abridge across the disconnection between self-oriented ethics and group-oriented ethics.

Family

IronicaUy, while corporate Ufe tends to separatework from home, the scandalous leaders are re-deemed, in the students' eyes, because of theirfamilies. The leaders took the faU, but did not wantto disgrace their wives or children. Some of theseleaders used their family members to hide money,buy stocks, avoid taxes, and create bogus enterprises.Nevertheless, the students beUeved that when theleaders attempted to protect family members fromthe press, and openly worried about what their faUmight do to their families; this made the leaders lessunethical and more sympathetic. Ethical pedagogyneeds to help students distinguish between thepresence of family in a situation and the relationshipof family responsibilities and pubUc responsibiUties.

Role of followers

The foUowers' behavior in these cases is interesting.Most foUowers did not openly question what wasgoing on. If we accept the theory that the foUowerscreate the leaden (FoUett, 1987), we can understandhow everyone was caught up in beUeving businesswould boom and mitigate any issues. In this way, wecan understand why even the whisdeblowers camelate. For example, Cynthia Cooper went toWorldCom's Audit Committee more than a monthafter CEO Ebbers' departure. However, this line ofreasoning does not explain Enron. Sherron Watkins'memo to Enron CEO Ken Lay, her boss's boss,predicted the demise of Enron in a wave ofaccounting scandals. Unfortunately, she was withoutinfluence. It may be that the role of narcissism increating a culture of greed also contributes to a lackof influence by foUowers. This preUminary obser-vation needs further research.

Implications for teaching leadership

These students' papers and presentations lead to fourimplications for teaching undergraduates aboutleadership. First, there needs to be a heightenedawareness of ethical leadership and how that con-nects to the profile of a successful business leader.Second, undergraduates need to be educated about


responsible followership (Follett, 1987; Hackmanand Johnson, 2000). Third, ethics needs to beemphasized and offered as the essential ingredient ofa leader and the exercise of leadership. Fourth,students need to be encouraged to acceptaccountability and responsibility as personal valuesand understand the consequences of any blamegame.

Heightened awareness

"Ethical behavior results if moral values take pre-cedence over other considerations" (Hackman andJohnson, 2000, p. 337). Consideration of moralvalues is difficult in a secular society but vital to themaintenance of the trust and stew^ardship necessaryfor long term economic viability of business enter-prise. The followers in these companies did notchallenge their leaders. Leadership theorists need tobetter understand what contributes to that dynamicand also what empowers the whistle blowers.

Teaching responsibility and accountability

Students and business employees struggle with thetensions between peer group acceptance and ethicalresponsibility. Standing out in a crowd is scary andmembership in the status hierarchy does not give

. immunity to scapegoats (e.g., Pittman and the AOL-Time Warner merger). Rest's approach seems to behelpful. The student studying Waksal of ImCloneconcluded that ethical failure occurs when one ofRest's four interpersonal processes malfunctions.Either other values become more important thanmoral ones, or leaders lack the will and skill toimplement an ethical decision. The Unks betweenintention, reputation and results needs to be rein-forced with students to bridge the disjunction foundin this study between judgments of public and pri-

vate behavior. More research is needed on how todo this.

Summary of conclusions

The distinction our students made between publicand private behavior is reflected in the philosophicalsplit between self- and group-focused theories ofethical conduct. Work needs to be done to addressthis schism and its implications for ethical reasoning,or lack of, in a post-industrial society. Similarly,leadership theories need to be re-addressed in termsof ethics. Students need to see the role that ethicsplays in a leadership system involving followers' trustand leaders' accountability and why that should beaccorded value. More research is needed here in therole that simulations and experiential learning canplay. Third, is the applicability of Schein's (1993)theory. Leaders create corporate cultures that rein-force their command and control. These cultures canimplode quickly when members of the organizationbecome suspicious or w i^thhold trust. Students needto develop an appreciation of this dynamic. Moreresearch is needed on ascertaining the value propo-sition of companies that are based on know-how orknow-what rather than physical assets. Fourth,Rest's theories offer a direct link for students ofleadership to learn to assess ethical dilemmas.

In summary, the students' papers and presenta-tions indicate that when analyzing news accounts ofbusiness scandals, executive greed, and corruption,students are able to describe the cases and see theleaders as transformed by circumstances. They areloathe to condemn individuals and quick to ascribeblame to unseen forces rather than hold individualsaccountable for their actions. Their analyses suggestthat teachers of leadership should not separate thediscussion of leadership from that of ethics. As onestudent said, "leadership comes with ethics. Otherwise.,you're not really a leader".

APPENDIX AIdentification of cases studied and descriptions made by students

Cases studied Synopses of students' descriptions

AdelphiaJohn rigas - CEO 1952-2002; SonTimothy CFO; Son Michael COO;

Built a great cahle tv empire that employed the entire family.Accused of using company money and debt for personal items houses, condos, planes, art, cars, golf courses. Accused of committing


APPENDIX AContinued

Cases Smdied Synopses of Students' Descriptions

Once the 6th largest cable companyin the U.S. Taking legal action againstDeloitte & Touche, auditors.

AOL- Time WamerRobert Pittman, formerly head of AmericaOn-Line - Time Warner conglomerate; orJeffrey Bewkes of Home Box Office orDon Logan of Time, Inc.

Computer AssociatesSanjay Kumar

EnronEnron's Ken Lay, former CEO; or, RickCausey, former Chief AccountingOfficer. (Cliff Baxter commits suicide.) Theiraccountant: Arthur Andersen's, Joseph Berardino.$47.3 biUion assets; 21,000 employees in40 countries.

General electricJack Welch, retired CEO from GE

Global crossingCEO Gary Winnick Jack Grubman, SalomonSmith Barney (SSB) touted this stockas well as WorldCom.

fraud by not disclosing $2.3 billion in bank debt. Rigas used wife'sand daughter's businesses to give appearance that loans were beingrepaid. Made sham transactions and created fictitious documents.Failed to fde a lOK form in 2001. Shares dropped from 70 to79 cents. Company lost 94% of its value. Students label Rigas"convincing," "passionate," and "generous".Students considered all three to be leaders and believed that it wasno crime that the AOL-Time Warner merger did not deliver on itspromises. They felt that Pittman was a hero for creating MTV andwas used as a scapegoat when the merger did not generate the valuepromised. They saw Bewkes as an innocent bystander even thoughPittman's departure caused Bewkes promotion to head of HBO.Students see HBO and Bewkes as the bright hope for the future ofthe company.This business was founded by Wang, the inventor of electronicword processing. Former whiz kid Kumar and inventor Wang mayhave engaged in insider trading. Sold 5.7 million shares trading at$38; stock fell to $16; also, paid $10 million to greenmail investorSam Wyly. This case is considered insignificant compared to Enronand WorldCom. Students see Kumar as only trying to makemoney.$9.5 biUion drop in equity ($81.39-0.40) due to scandal from over-stating earnings, lying about profits, and concealing debt. Usedemployee pension funds in temporary cover-up. Lay sold $300miUion shares as price began to fall while urging employees to buymore stock. Executives are keeping their earnings, their homes andvacation homes. Sherron Watkins, a woman, was the whistleblower in this case. Lay and Causey were seen as dupes of JeffreySkiUing the CFO. Causey specialized in the off-balance sheet dealsthat are at the center of the scandal. Jury found Andersen guilty ofobstructing justice by shredding files. Students characterize Lay asabusing two forms of power: positional and personal; see Causey asfollowing orders, and Andersen as comphcit in order to keep theEnron account.Students considered Welch a leader and not guilty of corruption.They felt that he mitigated any charges of greed by "graciously"returning some of his benefits received in his retirement from GE.His divorce filing exposed a scandal but not a crime and there wereno victims. He continues to be revered for changing GE's rate ofgrowth from 8% to 12% and achieving an overall gain of 20% vis avis the market's 12% during the same tenure. Students say Welch isnot only a leader but also a theorist about leadership from whom wecan all learn.Insider trading and accounting problems in fiber optic cable. Fourthlargest bankruptcy in US history. Winnick continues the $30 millionremodeling of his estate near the Bel Air Country Club. He & hisfamily made $650 million. Winnick offers to pay $25 million to theemployees 401 K (retirement funds) - a useless gesture since 3'^ '' partiescannot contribute to 401 K. Winnick characterized as "deal maker."

An Empirical and Titeoretical Exploration of Disconnections Between Leadership and Ethics 245

APPENDIX AContinued

Cases Studied Synopses of Students' Descriptions

ImCloneCEO Sam Waksal and his firiendMartha Stewart and her broker

Qwest communicationsJoseph Nacchio, President & CEO

TYCO Dennis Kozlowski $34 billionelectronics firm 250,000 employees

WorldCOM'sBernard J. Ebbers, former CEO;Scott Sullivan, former CFO;Cynthia Cooper, vice president of internalaudit, or Bert C. Robberts, fonner chairmanof MCI and current chairman of WorldCom.headed the WorldCom audits.David F. Myers, fonner controller.Jack Grubman - analyst withSalomon Smith Bamey touted WorldComstock. Allegations that SSB allocated IPO sharesto fiiends when the MCI-WorldCom dealwas IPO'd.

Waksal pled guilty to securities firaud, perjury, 2 counts of conspiracyto commit securities fraud. The press accounts of these charges claimthat he had insider infonnation (12/26) and used it that day and thenext. His father sold $6.85 Million of stock; his daughter $2.5 million;his firiend Martha Stewart 4000 shares. Waksal tried two brokers to sell$5 million (79,797 shares) but was refused without approval fromImClone's lawyers. Students sympathize with Waksal who publiclyregretted involving his daughter and his father, a holocaust survivor.Students are disappointed in Martha Stewart but continue to admireher success as an entrepreneur. [Their analyses pre-date her trial.]Cyber elite Nacchio resigned 6/2002. Made $250 million in 5 yearson sale of stock; received $10.5 M severance plus $1.5 million for eachof next 2 years for consulting (primarily testifying). Stock at $5/sharepeaked at $70 and went back to 5. Accounting scandal: bought fiberoptic networks. Booked assets and dragged out debts. Merger with USWest brought problems to light. He still holds 470,000 shares of stock.He claims he had little to do with accounting at the firm.Kozlowski is charged with enterprise corruption and grand larceny forusing loans of corporate funds to avoid taxes and secure personal items(a Renoir, a Monet, jets, homes, yachts, etc.). Angeles Kozlowski (ex2nd wife) posted $100 million bail (10% in cash). His Fifth Avenueapartment is up for auction with art and furnishings worth 11 million.Prosecutors claim he stole $160 million in Tyco funds and made $430million in fraudulent sales of stock. Tyco is suing Kozlowski and hisdirect reports, former CFO and former Chief Legal Counsel. Studentscall him a dealmaker and predict that he will never admit to anywrongdoing.In the biggest bankruptcy in history, Cynthia Cooper is a hero. Shewent over CFO Scott Sullivan's head to Bert Robberts and the auditcommittee and that began an implosion that is assessed as a $6 billionfraud. Cooper revealed that fees had been incorrectly assigned ascapital expense. Bert C. Robberts is seen as a leader who transformedMCI from a start-up to a billion dollar company that was acquired byWorldCom and who had to stand up to Ebbers and his gang. He is oneof the few responsible leaders in the panoply. Myers was consideredCFO Sullivan's "boy" and not a leader. He has already pled guilty to 3counts of fraud and will cooperate with attorneys seeking to prosecuteSullivan. CEO Ebbers was seen as a slick promoter and a technophobe.Because he did not use emails or record meetings, investigators lack"trails" of evidence in this case. Ebbers used a shell corporation,JoshuaTimberland, to handle loans of $360 nuUion. Still owes WorldComapproximately 400 million. Grubman at SSB was mixed up in this forboth boosting stocks and making loans.


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An Empirical and Theoretical Exploration of Disconnections Between Leadership and Ethics