Foundational Leadership Theory: The Inward and Outward Approach to Examine Ethical Decision-Making

Western societies tend to rely on societal norms to guide decision making. However, decisions based solely on societal norms may fluctuate between acceptable/unacceptable. As a result, leaders are paying heavy fines, asked to resign and in some cases found guilty in courts due to these fluctuations. This has become problematic for ethical leadership decision-making. This study introduces the foundational leadership theory which builds on ethic position theory by applying leader-member exchange concepts. Research confirmed that foundational leadership-integrity, assurance and pragmatism significantly predict organization commitment. Therefore, foundational leadership theory establishes employees’ ethical perception of their leader and influences organizational commitment. CEOs, leaders, managers and supervisors should apply this foundational leadership model to evaluate ethical decision-making.