Table of Contents

ABSTRACT...............................................................................................................................2
INTRODUCTION......................................................................................................................3
RESEARCH PROBLEM...........................................................................................................4
Research Question..................................................................................................................5
Research Objectives...............................................................................................................6
Research Gap.........................................................................................................................6
Significance in a Pakistani Society............................................................................................6
Literature Review.......................................................................................................................7
Work Ethic.............................................................................................................................7
Leadership..............................................................................................................................8
Social Cognitive Theory........................................................................................................8
Social Learning Theory..........................................................................................................9
Motivation............................................................................................................................10
Intrinsic Motivation & Extrinsic Motivation.......................................................................10
Herzberg Hygiene Factors....................................................................................................11
Pakistan Perspective.............................................................................................................11
Hypothesis................................................................................................................................12
Research Model........................................................................................................................13
Methodology............................................................................................................................13
Analysis....................................................................................................................................14
Descriptive Statistics............................................................................................................14
Factor Analysis Tests...........................................................................................................15
Revised Hypothesis..................................................................................................................19
Revised Research Model..........................................................................................................19
Theoretical Framework............................................................................................................20
Discussion................................................................................................................................20
Results......................................................................................................................................22
Conclusion................................................................................................................................23
Limitations...............................................................................................................................23
Future Implications..................................................................................................................24
References................................................................................................................................25

1
Appendix..................................................................................................................................27

2
 ABSTRACT

The study explores and evaluates the relationship how the ethical leadership and

motivation can influence the employees’ performance in Knowledge Intensive Firms. This is

quantitative study in which principal component analysis is used for further extracting of

factors which influences the employees’ performance. A sample of 40 respondents was

chosen for our research study. The data was collected through a comprehensive structured

questionnaire. Our data shows that all the factors which were extracted by PCA are

convergent to the existing literature. This research is significant for different organizations in

Pakistan as it will give them information and better understanding of the concept that in

organizations the ethical leadership and motivation can enhance the employee performance.

3
 INTRODUCTION

The motivation is referred to as forces which exist within a person that affect their

decisions direction, the intensity and the persistence of the behavior of the motivated

employees who are willing to exert a level of effort for an amount of time directing towards

the goal. All the organizations especially the Knowledge Intensive Firms want to increase the

motivation of all their employees to enhance their productivity. Different organizations use

different methods of motivating their employees some use rewards and benefits which can be

monetary or non-monetary.

Motivation as a source of need fulfillment of individuals has been studied by many

popular theorists and practitioners and a lot of research studies has been conducted on the

issue that how an individual can be motivated in organizations. Maslow’s hierarchical need

theory is one of the most popular motivational need theories. An extensive literature review

on understanding the concept of motivation and ethical leadership then linking these with the

employees’ performance has been carried out. The paper tells us how the ethical leadership

and motivation can influence the employees’ performance in organizations.

Nowadays there are obvious ethical scandals in all types of organizations, and the

importance of the ethical leadership seems prominent. Nevertheless, to understand the ethical

leadership the philosophers have described it as how leaders should actually behave in

organizations. The observers believed that the personal trait such as integrity, honesty and

trustworthiness depicts ethical leadership (Den Hartog, House, Hanges, Ruiz-Quintanilla, &

Dorfman, 1999).

Ethical leaders are expected to consider the employees’ developmental needs and

place them in positions where they can fit and develop a sense of meaning in their jobs. Such

4
leaders treat their employees with respect which should result in the employees experiencing

a strong sense of meaning at work since their individual goals are in line with the

organizations goals.

The study will find out how the employees’ performance is linked to the motivation

and ethical leadership in Knowledge Intensive Firms. This study will improve our

understanding of employee motivation and ethical leadership which would eventually help

the organizations in designing the non-monetary rewards which will accomplish certain

employee needs increase the employee performance.

RESEARCH PROBLEM

This research study examines how the ethical leadership and motivation can influence

the employees’ performance in an organization. Employers often mention a strong work ethic

to be the most desirable trait in a new employee (Denka, 1994) (Petty, 1991). A good work

ethic is an integral characteristic of a good employee, as employee who possess strong work

ethic will show better results and overall performance to their employers (Hill & Fouts ,

2005), this is the reason that employers keep on looking for employees with a strong work

ethic because of the economic benefits they bring to the business (Ali & Falcone, 1995) and

(Hill & Fouts , 2005). In recent years applied psychological literature has provided little

guidelines to address the issues related to work ethics, even though practitioners have shown

a high concern about the decreasing level of commitment to the value and importance of

work (Miller, Woehr, & Hudspeth, 2002).

In today’s world ,the key to success for any organization is its ability to manage, train,

develop, and reward (Vroom, 1960) a satisfied (Herzberg, 1968) and motivated workforce

(Lawler, 1968) at all levels of its organization (Van Der Hulst & Jansen, 2002). This research

5
paper suggest that not only the manager but all members of the firm plays a significant role

regarding to effective implementation and execution of ethics at workplace , and their

collective actions can generate fruitful benefits to the organization and its stakeholders

(Alford & Bebensee, 2010).

By keeping the past literature in mind, the substantial purpose of this research study

will be to answer following research question in Pakistani cultural context:

How the ethical leadership and motivation can influence the employees’ performance

in organizations?

Research Question
The research study will seek to answer to what is the role of ethical leadership and

motivation in influencing the employees’ performance in organizations. The important

concern is how the employees’ can be motivated and how ethical leadership is implemented.

The data is collected from male and female employees of different ages from different

organizations. Hence this research study is mainly quantitative in nature.

Research Objectives
Main objective of this research study is to find the answer to specific research

question. The core purpose of this study is to evaluate the dimension of ethical leadership and

what motivates employees to give best performance at their work place, based upon

background discussion, research question and literature review.

Another objective of this study is that leaders and managers will be able to restructure

their policies as well as procedures to motivate their employees and to increase their long

term commitment, through non-monetary rewards and benefits. The organizations will be

able to make cost efficient polices. This study explains the important rewards used by the

6
organizations, the impact of the reward system on the motivation of the employees and it

demonstrates the motivational approaches in an organization.

Research Gap
This paper will contribute in the literature of employee motivation and show linkage

between ethical leadership and their influence on the performance of employees’. Most of the

studies regarding both these effects on the employee performance have been conducted in

European countries but not on the South Asian countries where there is the expectation for

different results. The study will help in understanding and exploring the relationship of

ethical leadership and motivation on employee performance in South Asian countries and

especially in Pakistani organizations.

Significance in a Pakistani Society

This research is significant especially in the context of the Pakistani society; the

results of this study will be beneficial to organizations in retaining their human capital

without providing capital. This will be useful for organizations to harvest the pool of

extremely ambitious team of employees along with their ethical leadership. This will be

encouraging for organizations to identify their employees socially so that they can be

motivated by the ethical leadership of the managers. It will be valuable for Pakistani

organizations to encourage such programs and develop such a culture where the employees

feel inspired and express a sense of responsibility to their organizations. It is the chief

objective of every organization to produce such tools for motivation, and ethical leadership

which are cost efficient.

7
 Literature Review
Work Ethic
The conceptual development of work ethic was emerged in 20th century from the

writings of the famous scholar, Max Weber, who highlighted the importance of work

commitment and raised questions about why some people pay greater importance on work

and consequently appears more diligent than others (Van Ness, Seifert, & Franko, 2005).

According to (Hill & Fouts , 2005) work ethics can be described as a set of attitudes and

traits in which an employee allocate merit and importance to the work , those with strong

work ethic assign a positive value on doing their job and consider their work as an intrinsic

value to them (Cherrington, 1980). Work experiences of employees have a strong relation

with the development of work ethic (Mulligan, 1997) as employees who are more satisfied

with their job, tends to view work as more favorably than those who have some

disappointments related to work. Prior researches suggest that employees who experience

work environment to be somehow undesirable might hold negative feelings towards work

ethic (Hill & Fouts , 2005).

Leadership
Leadership is an important circumstantial factor that shape up employees’ ethical

conduct in the workplace (Grojean, Resick, & Smith, 2004). The social learning theory

(Bandura, 1977), suggests that individuals learn appropriate behavior by observing others’

actions and their consequences; they propose that significant others, namely leaders, may

influence follower ethical behavior through modeling. Specifically, they suggest ethical

leaders act as “models of ethical conduct that become the targets of identification and

emulation for followers” (Shao , Resick , & Schaubro, 2011). According to (Browna,

Treviñob, & Harrison, 2005) suggest ethical leaders as ‘‘models of ethical conduct who

become the target of both identification and emulation for followers’’ which means that

employee observe their leader’s actions and build their cognitive ability in terms of

8
recognition of moral issues and judgments and tends to behave in a same manner as their

leader do (Jones, 1991). Most of the researches have shown the positive impact of ethical

leadership on employee behavior and beliefs.

Social Cognitive Theory

However, social cognitive theory framework works on the assumption , (Bandura,

1977) that employees develop beliefs about those behaviors which are moral or acceptable by

observing their leaders, and then these beliefs nurture the self-control one needs to make

judgments and adjust behavior accordingly (Bandura, 1977) thus, the behavior of leaders

might affect employee’s beliefs in their ability to act ethically. The confidence in one’s

ability to act ethically is stated as moral or ethical efficacy (Hannah, Avolio, & May, 2011)

(Mitchell, Palmer, & Schminke, 2008) (Youssef & Luthans, 2005).Moreover, when

employees observe their leaders involved in practicing immoral behavior, the employees get

influenced by their unethical actions and find it easy to rationalize their own unethical acts.

This process is being named as moral disengagement (Bandura, Social cognitive theory of

moral thought and action., 1991) in which one ignores personal standards and find means to

justify his or her unethical behavior.

Social Learning Theory

Generally, social learning theory (Bandura, 1977) is being used by scholars to

highlight behavioral modeling as the means by which leaders affect their followers (Browna,

Treviñob, & Harrison, 2005). In extension of Bandura’s social learning theory to social

cognitive theory, he has proposed two important psychological factors that are particularly

related to ethical decision-making processes: self-efficacy and moral disengagement

(Bandura, Social cognitive theory of moral thought and action., 1991). The behavioral model

suggest that the followers’ moral judgment process is initiated when a leader influence them

by exhibiting a behavioral response to an ethical dilemma, by actions along with justifications

9
, the leaders set an example for the followers of how to respond in a specific ethical dilemma.

In this way a leader influences a follower’s ethical efficacy beliefs- beliefs in their ability to

act ethically when they encounter an ethical dilemma. However, if the followers lack

confidence in their ability to act ethically, they may feel it easy to react unethically. This

reaction comes under the domain of moral disengagement where a person provides a

justification for behaving in a way one believes to be unethical.

Leaders have the power to influence their employees by setting examples that must be

ethics driven. Their actions can maneuver ethical beliefs among followers or can mislead

them to look for rationales against unethical conducts. For example, justification of an

unethical conduct practiced by a leader may directly affect similar rationalization on the part

of followers. Once a moral disengagement occurs, it is expected to have influence on all

followers’ behaviors. This research paper suggests that leaders have the ability to influence

their followers both by ethical efficacy beliefs and moral disengagement processes.

Motivation
Motivation can be “defined as purposeful behavior that is ultimately directed toward a

fundamental goal which can be measured in terms of individual difference in various

categories of behaviors and interest” (Bernard, Mills, Swenson, & Walsh, 2005). (Pinder,

1998) describes work motivation as a combination of internal (individual needs and motives)

and external forces (organizational reward systems, the nature of the work being

performed)that influence an employee’s work related behavior. Whether you are ethical or

unethical, negative or positive, the behavior of every employee is influenced either by

intrinsic or extrinsic factors (Rosanas & Velilla, 2003). Although the behavior of employees

can be influenced by intrinsic or extrinsic factors but most commonly observed reason for an

employee to remain loyal and committed to an organization is due to the presence or desire of

10
attaining extrinsic factors within an organization such as receiving a promotion, getting an

increase in pay , getting recognition etc. (Rosanas & Velilla, 2003).

Intrinsic Motivation & Extrinsic Motivation

Motivation that is intrinsic in nature can arise when people indulge in an activity

which they find enjoyable and interesting whereas extrinsic motivation takes place when

individuals participate in activities where they expect receiving a reward or other incentives

(Miller, Woehr, & Hudspeth, 2002). According to (Bernard, Mills, Swenson, & Walsh,

2005), motivation is a psychological force that can influence employees’ behavior towards

the attainment of organizational goals. According to Maslow’s Hierarchy of Needs theory

which offer insights about the fundamental needs of human beings that are being divided into

five levels, once the primary needs of employees’ are being met then comes the safety need

and after safety needs have been secured there comes social needs. Throughout the social

needs level, people must be able to socialize and communicate with one another (Youssef &

Luthans, 2005).

Herzberg Hygiene Factors

This research study suggest, as employees’ reaches to social level needs, their

communication and interaction increases with leaders and other members of organization

which could bring alliance among their actions and serve as a base for inculcating ethical or

unethical behaviors. According to (Herzberg, 1968) there are two factors that influence

employees’ motivation at work: hygiene factors which can demotivate employees when they

are offensive and motivators that endure efforts (Basset-Jones & Lloyd, 2005). (Basset-Jones

& Lloyd, 2005) suggests that individuals stay in a neutral stat between satisfaction and

dissatisfaction and can only move from a neutral to satisfaction state when they experience an

increment in pay, promotion or supervision. On the contrary side, the employees will move

11
from the neutral state to feelings of dissatisfaction when there is a decline in pay, bad

supervision or no chances of getting a promotion.

Pakistan Perspective
Although (Ryan & Deci, 2000) believe intrinsic motivation as one of the most

powerful forms of motivation but according to Pakistani culture, extrinsic motivational

factors such as promotion , pay and benefit, recognition of work seems to be more desirable

by the employees. It can be stated overall when the employees’ hold more positive feelings as

compared to negative ones , the employees can find reasons to stay and work with a leader

who seems to care more about the personal and professional wellbeing of employees.

This research study provides an integrative literature review and attempts to establish

a link between ethics, leadership and motivation. The managers in an organization act as a

role model for the employees, so the managers must ensure that their behavior is ethical that

complies with organizational goals and objective. Managers must need to address the

motivational factors of each employee as motivation can be influenced by personal and

situational factors that have the tendency to exert a strong impact on the ethical behavior and

job performance of an employee which ultimately affect the achievement of organizational

goals. This research study also highlights a significant concern that, ‘how well an employee’s

goal are aligned with the goals of organization’. The leaders must provide timely feedback on

the performance of their employees in order to make them motivated towards ethical conduct

which will lead to achievement of higher levels of desired performance in the favor of

organization.

12
Hypothesis
H0: Influence of ethical leadership and motivation on employees’ performance.

H1: Ethical leadership and employee motivation would not influence the employee

performance.

Research Model
Figure 1

Ethical
Leadership Motivation

Employees'
Performance

Theoretical model shows the link influence of ethical leadership and motivation on

the employees’ performance (See Figure 1).

13
 Methodology
The research approach of our study is to identify and explore the influence of ethical

leadership and motivation on employees’ performance. We have used quantitative research

methodology in which we used a comprehensive questionnaire which involved four control

variables and nineteen questions related to measuring the influence of ethical leadership and

motivation on employees’ performance.

For this purpose a non-probability sampling, i.e. convenience sampling technique is

used for recording the responses of 40 respondents. The convenience sampling is used

because the information gathered from those respondents who were accessed conveniently. A

sample size of 40 questionnaires was distributed to employees of different organizations.

The questionnaire constructed contains four major sections: first section of our

questionnaire involves all the control variables that are Gender, Age, Income Level and

Education, second section contains five questions regarding the ethical leadership, third

section contains seven questions which are indicators of motivation and last section of our

questionnaire has six questions whose result will measure employee performance.

SPSS software was then used for analysis of the data which came from our research

tool. Descriptive statistics which involve minimum, maximum, range and standard deviations

of all variables is done. Correlations among all variables are also checked.

The study also used the extraction method for all the factors which is the Principle

Component Analysis as it was the default setting of SPSS and we ran our analysis on SPSS.

The literature states that “either that there is almost no difference between principal

components and factor analysis, or that Principal component analysis is preferable”. This is

the reason why Principle component analysis is preferred in the study for the analysis.

14
 Analysis
Descriptive Statistics
Descriptive Statistics
Mean Std. Deviation Analysis N Missing N
ethical leadership 3.63 .994 41 0
ethical leadership 4.07 .685 41 0
ethical leadership 4.17 .803 41 0
Motivation 4.37 .662 41 0
Motivation 3.85 1.108 41 0
Motivation 3.34 .965 41 0
Motivation 3.93 .932 41 0
Employee Performance 4.59 .499 41 0
Employee Performance 4.17 .972 41 0
Employee Performance 4.15 .727 41 0
Employee Performance 3.41 .921 41 0
Table 1

Factor Analysis Tests

Factorability of the correlation matrix

Table suggests that in our study all variables have some correlation values which are

above 0.30 with other variables so, factor analysis can be used for this research (see table in

appendices).

KMO and Bartlett's Test:

In this research study, the KMO value is 0.603 which is near to 0.7 so, according to

Kaisen this study is applicable for factor analysis (See Table 1).

This actually suggests that in this research study the correlation matrix is not an

identity matrix (See Table 1).

So both the above tests discussed suggest that we can use factor analysis for our

study.

15
 KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .603
Approx. Chi-Square 76.880
Bartlett's Test of Sphericity Df 55
Sig. .027

Table 2

Total Variance Explained

The next output for factor analysis represents that factors extracted from analysis

along with their eigenvalues, the percent of variance attributable to each factor, and the

cumulative variance of the factor and the previous factors. From table 3, it can be concluded

that the first component explains 22.093% of the variance, the second 18.793%, the third

11.948% and lastly the fourth 9.305% while all the other factors are insignificant as their

eigenvalues are less than 1.

Total Variance Explained

Component Initial Eigenvalues Extraction Sums of Squared Rotation
Loadings Sums of
Squared
Loadingsa
Total % of Cumulative Total % of Cumulative Total
Variance % Variance %
1 2.430 22.093 22.093 2.430 22.093 22.093 2.257
2 2.067 18.793 40.886 2.067 18.793 40.886 1.796
3 1.314 11.948 52.834 1.314 11.948 52.834 1.331
4 1.024 9.305 62.139 1.024 9.305 62.139 1.810
5 .846 7.694 69.833
6 .825 7.504 77.338
7 .739 6.721 84.058
8 .593 5.393 89.451
9 .440 4.005 93.455
10 .422 3.835 97.291
11 .298 2.709 100.000
Extraction Method: Principal Component Analysis.
a. When components are correlated, sums of squared loadings cannot be added to obtain a
total variance.

16
Table 3

Scree Plot

In this research study, Figure 2 indicates that the data should be analyzed for three

components as 3 values in the scree plot are showing eigenvalue which is higher than 1.

Figure 2

Rotation

17
Table 4

Component Matrixa
Component
1 2 3 4
ethical leadership .814
Employee Performance .726
ethical leadership .524 -.417
Motivation -.709 -.324
Motivation .659
ethical leadership .347 .579
Employee Performance .365 -.527 .346
Motivation -.851
Employee Performance -.588 .634
Employee Performance .324 .481 .558
Motivation .419 -.413 .472
Extraction Method: Principal Component Analysis.
a. 4 components extracted.

Table 5

Rotated Component Matrixa

Component
1 2 3 4
ethical leadership .815
Employee Performance .687 .303
ethical leadership .656
ethical leadership .585 .327
Motivation .751
Employee Performance .703
Motivation -.755
Employee Performance .727
Motivation -.362 .608
Motivation .835
Employee Performance -.421 -.699
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.

18
 Table 6

Component Transformation Matrix

Component 1 2 3 4
1 .868 .480 .010 .125
2 .293 -.552 .780 .026
3 .148 -.010 -.029 -.988
4 -.372 .681 .625 -.081
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.

From table 5 it can be observed that Varimax rotation only shows cross loading in three
variables which values around 0.4 which are ignored and higher values are considered.
First factor involves five variables which are all related to the behavior of the leader;
therefore the label created for this factor is “Leader Behavior”. Second factor involves two
variables which are closely measuring the concept of extrinsic motivational factor; therefore
the label created for second factor is “Extrinsic Motivational Factor”. Third factor involves
three variables which are closely computing the concept of ethical performance of
employees; therefore the label created for this factor is “Employee Ethical Performance”.
Fourth factor involves two variables which are all related to intrinsic motivational factors of
employees; therefore the label created for this factor is “Intrinsic Motivational Factor”.

Revised Hypothesis

The influence of ethical leadership and motivation is measured on the employees’

performance.

H1: Ethical leadership positively leads to employees’ performance.

H2: Intrinsic motivational factors positively influence the employees’ performance.

Revised Research Model

Employees’
Ethical
Efficacy

Employees’
Leader Motivation Employees’
Ethical
behavior
Behavior Performance
19
Theoretical Framework
The theoretical framework of this research paper is based upon the literature review

relevant to the research problem of ’’ How the ethical leadership and motivation can

influence the employees’ performance in an organization? It shows that leadership behavior

is considered to be ideal for all the followers working within an organization, by observing

leader’s behavior towards an ethical dilemma , the employees build their ethical efficacy –

confidence about one’s ability to act ethically in a confronted situation. Employees’ ethical

efficacy leads to motivation of employees’ which is driven by intrinsic or extrinsic

motivational factors within an organization. Later on, employees’ ethical behavior is

accounted for organization’s overall performance.

Discussion

Leaders have the power to influence their employees by setting examples that must be

ethics driven. Their actions can maneuver ethical beliefs among followers or can mislead

them to look for rationales against unethical conducts. For example, justification of an

unethical conduct practiced by a leader may directly affect similar rationalization on the part

of followers. Once a moral disengagement occurs, it is expected to have influence on all

followers’ behaviors. This research paper suggests that leaders have the ability to influence

their followers both by ethical efficacy beliefs and moral disengagement processes.

The second and fourth factors of this research study are convergent with the

Herzberg’s two factor theory. The third factor is extracted from the literature review and is

considered as the dependent variable of this research paper. Motivation that is intrinsic in

nature can arise when people indulge in an activity which they find enjoyable and interesting

20
whereas extrinsic motivation takes place when individuals participate in activities where they

expect receiving a reward or other incentives (Miller, Woehr, & Hudspeth, 2002).

Although (Ryan & Deci, 2000) believe intrinsic motivation as one of the most

powerful forms of motivation but according to Pakistani culture, extrinsic motivational

factors such as promotion , pay and benefit, recognition of work seems to be more desirable

by the employees. It can be stated overall when the employees’ hold more positive feelings as

compared to negative ones , the employees can find reasons to stay and work with a leader

who seems to care more about the personal and professional wellbeing of employees.

The conceptual development of work ethic was emerged in 20th century from the

writings of the famous scholar, Max Weber, who highlighted the importance of work

commitment and raised questions about why some people pay greater importance on work

and consequently appears more diligent than others (Van Ness, Seifert, & Franko, 2005).

According to (Hill & Fouts , 2005) work ethics can be described as a set of attitudes and

traits in which an employee allocate merit and importance to the work , those with strong

work ethic assign a positive value on doing their job and consider their work as an intrinsic

value to them (Cherrington, 1980). Work experiences of employees have a strong relation

with the development of work ethic (Mulligan, 1997) as employees who are more satisfied

with their job, tends to view work as more favorably than those who have some

disappointments related to work. Prior researches suggest that employees who experience

work environment to be somehow undesirable might hold negative feelings towards work

ethic (Hill & Fouts , 2005).

Whether you are ethical or unethical, negative or positive, the behavior of every

employee is influenced either by intrinsic or extrinsic factors (Rosanas & Velilla, 2003).

Although the behavior of employees can be influenced by intrinsic or extrinsic factors but

21
most commonly observed reason for an employee to remain loyal and committed to an

organization is due to the presence or desire of attaining extrinsic factors within an

organization such as receiving a promotion, getting an increase in pay , getting recognition

etc. (Rosanas & Velilla, 2003).

According to (Browna, Treviñob, & Harrison, 2005) suggest ethical leaders as

‘‘models of ethical conduct who become the target of both identification and emulation for

followers’’ which means that employee observe their leader’s actions and build their

cognitive ability in terms of recognition of moral issues and judgments and tends to behave in

a same manner as their leader do (Jones, 1991). Most of the researches have shown the

positive impact of ethical leadership on employee behavior and beliefs. Although leaders are

‘‘models of ethical conduct who become the target of both identification and emulation for

followers’’ which means that employee observe their leader’s actions and build their

cognitive ability in terms of recognition of moral issues and judgments and tends to behave in

a same manner as their leader do (Jones, 1991). Most of the researches have shown the

positive impact of ethical leadership on employee behavior and beliefs.

From the literature, it can be concluded that our all three factors such as, Intrinsic

motivational factors, extrinsic motivational factors, and leader behavior have a strong effect

on the employees’ performance level.

Results
Table 1 presents the means, standards deviations, minimum, maximum and ranges for all

controls and other variables.

By using principal component extraction analysis method, four factors were deduced from 11

different variables. These four factors were named as Leader behavior, extrinsic motivational

factor, intrinsic motivational factor, Employee ethical performance.

22
From these four variables based upon the literature and theoretical framework, the study

deduced employees’ performance as dependent variable and Ethical leadership, intrinsic

motivational factor, extrinsic motivational factor as independent variables which are already

discussed in the above section. Two hypothesis were established which can be further tested

by other analysis techniques although the literature supports the entire hypotheses developed

but these can be further tested by using different statistical results.

Conclusion
The aim of the study was to explore the influence of ethical leadership and employee

motivation on the employees’ performance but after factor analysis two components that are

intrinsic motivational factors and ethical leadership are also seen as an influence on the

employees’ performance. The result suggests, if the employees are given recognition by

providing different promotional opportunities and appreciation for their work and if they are

acknowledged and praised for their work done well, their motivation level will get influenced

which would lead to a better performance by the employee.

Limitations
There are certain limitations or constraints to the generalizability of the study as the sample

size is very small that is 41 which cannot be a representation of the sample. Another

limitation is the time constraint due to which we were unable to take a larger sample which

could be the representation of overall population of Pakistan.

Also, another limitation is that the number of knowledge intensive firms respondents’ in our

study is only two. The technique of research used is only principal component analysis and

methodology could have been used with interviews and questionnaires for data gathering

techniques. The result could be more generalizable if it leads to more components for

23
measuring employee motivation and ethical leadership as it is a huge concept and can be

explored in many dimensions.

Future Implications
Future guidelines for this study must also be noted. The future study must focus on collecting

the data from different organizations i.e. more number of private and public organizations so

that a true picture may be depicted that how these factors actually motivate employees.

Sample size should be greater so that it could be the representation of whole Pakistani society

organizations and can be generalizable as the representative of whole Pakistani culture. Also,

the study should be replicated in different cultural contexts so that its wide generalization

could be possible. Instead of principal component analysis, researcher must try to use parallel

analysis as they are preferred by many authors for studying such concepts as mentioned in

analysis section.

This research study suggest , as employees’ reaches to social level needs, their

communication and interaction increases with leaders and other members of organization

which could bring alliance among their actions and serve as a base for inculcating ethical or

unethical behaviors. This research study provides an integrative literature review and

attempts to establish a link between ethics, leadership and motivation. The managers in an

organization act as a role model for the employees, so the managers must ensure that their

behavior is ethical that complies with organizational goals and objective.

24
References

Alford, J., & Bebensee, M. (2010). Managing Workplace Ethics Can Generate Competitive
Advantage. The Clute Institute.

Ali, A., & Falcone, T. (1995). Work ethic in the United States and Canada. . Journal of
Management Development, 26-35.

Bandura, A. (1977). ‘Self-Efficacy: Toward a Unifying Theory of Behavioral Change’, .

Psychological Review 84,, 191-215.

Bandura, A. (1991). Social cognitive theory of moral thought and action. Handbook of moral
behavior and development: Theory, research and applications.

Basset-Jones, N., & Lloyd, G. (2005). “Does Herzbergs Motivational Theory have staying
power”? . Journal of Management Development, Vol.24, No.10.

Bernard, L., Mills, M., Swenson, L., & Walsh, R. (2005). An evolutionary theory of human
motivation. . Genetic, social, and general psychology monographs., 129-184.

Browna, M., Treviñob, L., & Harrison, D. (2005). Ethical leadership: A social learning
perspective for construct development and testing. Organizational Behavior and
Human Decision Processes.

Cherrington, D. J. (1980). The work ethic: Working values and values that work. New York:
American Management .

Den Hartog, D., House, R., Hanges, P., Ruiz-Quintanilla, S., & Dorfman, P. (1999).
Culturally specific and cross-culturally generalizable implicit leadership theories: Are
attributes of charismatic/transformational leadership universally endorsed? The
Leadership Quaterly, 219-256.

Denka, A. (1994). Work ethic top job skill. CPA Journal, 9-10.

Grojean, M., Resick, M., & Smith, D. (2004). ‘Leaders, Values, and Organizational Climate:
Examining Leadership Strategies for Establishing an Organizational Climate
Regarding Ethics’, . Journal of Business Ethics 55, 223–241.

Hannah, S., Avolio, B., & May, D. (2011). Moral Maturation and moral conation: A capacity
approach to explaining moral thought and action. . Academy of Management Review.

Herzberg, F. (1968). “One More Time: “How do You Motivate Employees?” . Harvard
Business Review 46 (1), 53-62.

Hill , R., & Fouts , S. (2005). Work Ethic and Employment Status: A study of Jobseekers.
Western Carolina University & University of Georgia .

25
Jones, T. M. (1991). Ethical Decision Making by Individuals in Organizations: An Issue-
Contingent Model. The Academy of Management Review.

Lawler, E. (1968). “A Correlational-Causal Analysis of The Relationship Between

Expectancy Attitudes and Job Performance.” . Journal of Applied Psychology 52,
462-468.

Miller, M., Woehr, D., & Hudspeth, N. (2002). The Meaning and Measurement of Work
Ethic: Construction and Initial Validation of a Multidimensional Inventory. Journal of
Vocational Behavior 60, 451-489.

Mitchell, M., Palmer, N., & Schminke, M. (2008). Understanding the influence of ethical
efficacy. . Academy of Management .

Mulligan, C. B. (1997). Work ethic and family background. . University of Chicago, IL:
Employment Policies Institute. .

Petty, G. C. (1991). Development of the occupational work ethic inventory. . Unpublished

manuscript, The University of Tennessee-Knoxville, TN .

Pinder, C. (1998). Motivation in work organizations. . Upper Saddle River, NJ.

Rosanas , J., & Velilla, M. (2003). Loyalty and trust as the ethical bases of organizations.
Journal of Business Ethics 44 .

Ryan, R., & Deci, E. (2000). Intrinsic and Extrinsic Motivations: Classic Definitions and
New Directions. Contemporary Educational Psychology.

Shao , P., Resick , C., & Schaubro, J. (2011). Ethical leadership and motivation: Examining
promotion and prevention regulatory FOCI. The Michigan University.

Van Der Hulst, M., & Jansen, E. (2002). ”Effects of Curriculum Organization On Study
Progress in Engineering Studies.” . Higher Education, 489-506.

Van Ness, R., Seifert, C., & Franko, G. (2005). “Hofstede’s Cultural Dimensions: Are
Individual Differences Important?” . International Journal of Business Research,
2(1), 161-166.

Vroom, V. (1960). Some Personality Determinants of The Effects of Participations. .

Englewood Cliffs, NJ: Prentice-Hall.

Youssef, C., & Luthans, F. (2005). A positive organizational behavior approach to ethical
performance. Positive Psychology in Business Ethics and Corporate Responsibility.

26
 Appendix

Ethical Motivatio
Leadership n

Employees'
Performance

Figure 1

Figure 2

27
 Employees’
Ethical
Efficacy

Employees’
Leader Motivation Employees’
Ethical
behavior
Behavior Performance

Intrinsic Motivational Extrinsic Motivational

Factors Factors

-Job satisfaction -Promotion

-Belief in mission -Pay and benefit

and vision
- Recognition
-Job security

-Work environment

Figure 3

28
 Descriptive Statistics
Mean Std. Deviation Analysis N Missing N
ethical leadership 3.63 .994 41 0
ethical leadership 4.07 .685 41 0
ethical leadership 4.17 .803 41 0
Motivation 4.37 .662 41 0
Motivation 3.85 1.108 41 0
Motivation 3.34 .965 41 0
Motivation 3.93 .932 41 0
Employee Performance 4.59 .499 41 0
Employee Performance 4.17 .972 41 0
Employee Performance 4.15 .727 41 0
Employee Performance 3.41 .921 41 0

Table 1

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .603
Approx. Chi-Square 76.880
Bartlett's Test of Sphericity df 55
Sig. .027

Table 2

Total Variance Explained

Component Initial Eigenvalues Extraction Sums of Squared Rotation
Loadings Sums of
Squared
Loadingsa
Total % of Cumulative Total % of Cumulative Total
Variance % Variance %
1 2.430 22.093 22.093 2.430 22.093 22.093 2.257
2 2.067 18.793 40.886 2.067 18.793 40.886 1.796
3 1.314 11.948 52.834 1.314 11.948 52.834 1.331
4 1.024 9.305 62.139 1.024 9.305 62.139 1.810
5 .846 7.694 69.833
6 .825 7.504 77.338
7 .739 6.721 84.058
8 .593 5.393 89.451
9 .440 4.005 93.455
10 .422 3.835 97.291

29
11 .298 2.709 100.000
Extraction Method: Principal Component Analysis.
a. When components are correlated, sums of squared loadings cannot be added to obtain a
total variance.

Table 3

Correlation Matrix
ethic ethic ethic Moti Moti Moti Moti Empl Empl Empl Emplo
al al al vatio vatio vatio vatio oyee oyee oyee yee
leade lead lead n n n n Perfor Perfor Perfor Perfor
rship ershi ershi mance mance mance mance
p p
Corre ethica
lation l 1.00
.444 .143 -.019 -.027 .055 -.030 .090 .040 .180 -.322
leader 0
ship
ethica
l 1.00
.444 .386 -.061 -.117 -.114 .282 .237 .093 .480 -.326
leader 0
ship
ethica
l 1.00
.143 .386 -.215 -.084 .246 -.083 .181 -.166 .256 -.064
leader 0
ship
Motiv
-.019 -.061 -.215 1.000 -.062 -.357 .166 -.286 .289 .250 -.050
ation
Motiv
-.027 -.117 -.084 -.062 1.000 .025 -.083 -.067 -.046 -.159 -.306
ation
Motiv
.055 -.114 .246 -.357 .025 1.000 -.222 .198 -.224 -.180 .034
ation
Motiv
-.030 .282 -.083 .166 -.083 -.222 1.000 -.013 .317 .164 -.168
ation
Empl
oyee
.090 .237 .181 -.286 -.067 .198 -.013 1.000 -.005 .172 -.215
Perfor
mance
Empl .040 .093 -.166 .289 -.046 -.224 .317 -.005 1.000 .211 -.165
oyee
Perfor
mance

30
 Empl
oyee
.180 .480 .256 .250 -.159 -.180 .164 .172 .211 1.000 -.280
Perfor
mance
Empl
oyee
-.322 -.326 -.064 -.050 -.306 .034 -.168 -.215 -.165 -.280 1.000
Perfor
mance

Table 4

Communalities
Initial Extraction
ethical leadership 1.000 .541
ethical leadership 1.000 .726
ethical leadership 1.000 .573
Motivation 1.000 .639
Motivation 1.000 .745
Motivation 1.000 .504
Motivation 1.000 .571
Employee Performance 1.000 .648
Employee Performance 1.000 .535
Employee Performance 1.000 .601
Employee Performance 1.000 .751
Extraction Method: Principal Component Analysis.

Table 5

Component Matrixa
Component
1 2 3 4
ethical leadership .814
Employee Performance .726
ethical leadership .524 -.417
Motivation -.709 -.324
Motivation .659
ethical leadership .347 .579
Employee Performance .365 -.527 .346
Motivation -.851
Employee Performance -.588 .634
Employee Performance .324 .481 .558

31
Motivation .419 -.413 .472
Extraction Method: Principal Component Analysis.
a. 4 components extracted.

Table 6

Pattern Matrixa
Component
1 2 3 4
ethical leadership .796
ethical leadership .683
Employee Performance .681
ethical leadership .595
Employee Performance .758 .358
Motivation -.756
Motivation .595
Motivation -.841
Employee Performance -.388 .687
Motivation .760
Employee Performance .693
Extraction Method: Principal Component Analysis.
Rotation Method: Oblimin with Kaiser Normalization.
a. Rotation converged in 10 iterations.

Table 7

Structure Matrix
Component
1 2 3 4
ethical leadership .832
Employee Performance .694 .372
ethical leadership .648

32
ethical leadership .574 .400
Motivation -.774 .316
Employee Performance .701
Motivation .643 -.413
Motivation -.833
Employee Performance -.463 .701 -.308
Motivation .753
Employee Performance .716
Extraction Method: Principal Component Analysis.
Rotation Method: Oblimin with Kaiser Normalization.
Table 8

Component Correlation Matrix

Component 1 2 3 4
1 1.000 .107 -.036 .146
2 .107 1.000 .022 -.196
3 -.036 .022 1.000 -.009
4 .146 -.196 -.009 1.000
Extraction Method: Principal Component Analysis.
Rotation Method: Oblimin with Kaiser Normalization.
Table

Sample Questionnaire

Research Topic

The role of ethical leadership and employee motivation on employees’ performance.

Dear Participants,
33
Thank you for agreeing to fill out this questionnaire!

We are MS students at University of Central Punjab, Lahore. We are conducting a research

study for our project and our research objective is to find out the impact of work place
incivility in knowledge intensive firms on employees’ performance. You could help us in our
research by filling out this questionnaire. We would greatly appreciate your participation in
this study.

We ensure you that any information obtained in connection with this study, will remain
highly confidential in any written report or publication, no one will be identified and only
aggregate data will be presented. They are no “trick” questions, so please answer each item as
frankly and as honestly as possible. It is important that all the questions be answered.

Once again thank you for your cooperation!

Section – A

This section of the questionnaire refers to Background or Biographical information. Once

again, we assure you that your response will remain anonymous. Your Co-operation is highly

appreciated.

Kindly Tick (✓) the option which best suits you.

1. Gender:

Male Female

2. Age:

20-25 26-30 31-35 36-40 Above 40.

3. Income Level:

34
 Less than 21,000 to 40,000 41,000 to 60,000 61,000 to 80,000 81,000 to 100,000

20,000

4. Education:

Middl Matric Intermediate Bachelors Post-Graduation and above

SECTION -B

This section of questionnaire consists of questions regarding role of ethical leadership,

motivation and employees performance.

To what extent do you agree with each of the following questions? Please indicate your

answer using the following 5-point scale where:

1: Strongly disagree 2: Disagree 3: Neutral 4: Agree 5: Strongly Agree

A: Ethical Leadership

Strongly Agre Strongly

Disagree Neutral
Disagree e Agree

1. My supervisor makes fair and balanced 1

2 3 4 5
decision

2. My supervisor keeps his\her words. 1 2 3 4 5

35
3. My supervisor explains what is expected
1 2 3 4 5
of me

4. My supervisor compliment employees

how to behave according to the ethical

1 2 3 4 5
guidelines

5 My supervisor holds me responsible for

1 2 3 4 5
things that are not my fault

B. Motivation

Strongly Agre Strongly

Disagree Neutral
Disagree e Agree

7. My Supervisor always give me constructive

1 2 3 4 5
feedback.

8. I feel motivated when I am appreciated

1 2 3 4 5
for the work I do.

9. Good salary is the main source of

1 2 3 4 5
motivation for me to work

10. Promotion opportunities are equal

1 2 3 4 5
within my organization.

11. Even when I do poorly in a task, I try 2 3 4 5

to learn from my mistakes

1

36
12 Compare with other colleagues in my
1 2 3 4 5
organization, I expect to do well

13. Performance evaluation system in my

1 2 3 4 5
organization operates satisfactorily.

C. Employees’ Performance

Strongly Strongly
Disagree Neutral Agree
Disagree Agree

14. I ensure to be punctual on my job 1 2 3 4 5

15. My job enables me to make use of my

1 2 3 4 5
skills and abilities.

16. Feedback enhances my performance. 1 2 3 4 5

17. I am willing to spend extra time at

1 2 3 4 5
work when required

18. I enjoy working in a team. 1 2 3 4 5

19. I am sure I can do an excellent job on

the problems and tasks assigned to me in 1 2 3 4 5

the organization.

Thank You for Your Precious Time and Participation!

37