THE INFLUENCE OF ETHICAL LEADERSHIP AND ORGANIZATIONAL CULTURE ON EMPLOYEE COMPLIANCE BEHAVIOR
DOI:
https://doi.org/10.56127/ijme.v5i3.3095Keywords:
Ethical Leadership, Organizational Culture, Employee Compliance BehaviorAbstract
Organizational failures rooted in non-compliance and unethical conduct across manufacturing and service sectors in Indonesia highlight the urgent need to identify key drivers of consistent employee adherence to regulations, operational standards, and organizational values. While prior studies separately examine ethical leadership’s role in shaping attitudes or organizational culture’s link with performance outcomes, limited integrated empirical research clarifies their combined direct effects on compliance behavior, particularly within small-to-medium and corporate work environments in West Jawa critical contextual gap, as cultural norms and regulatory enforcement differ substantially from Western study settings. This quantitative research employs Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.2.9, collecting cross-sectional survey data from 150 full-time employees across private and public organizations in Bandung City using a five-point Likert validated measurement scale. Results of the measurement model confirm convergent validity (AVE > 0.50), discriminant validity via Fornell-Larcker criterion, cross-loadings, and HTMT (< 0.85), alongside robust composite reliability and acceptable VIF values (< 3.5) ruling out multicollinearity. Structural model analysis demonstrates ethical leadership exerts a strong positive significant effect on employee compliance behavior (β = 0.412, p < 0.001), and organizational culture also positively and significantly drives compliance (β = 0.387, p < 0.001), jointly explaining 58.4% variance (R² = 0.584) with adequate predictive relevance (Q² = 0.401). The findings resolve fragmented prior evidence by showing cultural norms amplify leader integrity, fairness, and transparent communication rather than acting independently. Practically, results indicate leadership training programs paired with structured value-integration cultural initiatives reduce rule violations, operational risks, and misconduct costs. Limitations include cross-sectional design restricting causal inference; longitudinal and sector-specific replication is recommended. This study establishes an evidence-based framework for human resource and governance interventions strengthening workplace compliance in emerging economy organizational contexts.
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