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ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XIV October 2025 | Special Issue on Management
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Bridging Ethics and Engagement: A Review of Psychological Safety
in Ethical Leadership Research
Nor Ananiza Azhar, Mohd Firdaus Ruslan
*
, Mohd Shafiz Saharan, Roseamilda Mansor, Norhafiza
Hashim
Faculty of Business and Management, Universiti Teknologi MARA (UiTM), Kedah Branch
*
Corresponding Author
DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG00193
Received: 10 October 2025; Accepted: 16 October 2025; Published: 11 November 2025
ABSTRACT
This review synthesises recent empirical studies that examine the relationship between ethical leadership,
psychological safety, and employee engagement across diverse organisational and cultural contexts. Guided by
the PRISMA framework, a systematic search of Scopus and Web of Science databases identified seven empirical
studies that met the inclusion criteria. The findings reveal that ethical, benevolent, inclusive, and authentic forms
of leadership consistently enhance trust, fairness, and psychological safety, which subsequently promote
engagement, creativity, and innovation. Psychological safety emerges as the primary mediating mechanism
through which moral conduct translates into behavioural and emotional engagement, supported by
complementary mediators such as trust, job satisfaction, and workplace friendship. Cultural factors, including
power distance and collectivism, influence the strength and expression of these relationships, suggesting that
ethical leadership is interpreted differently across contexts. The review integrates insights from Social Exchange
Theory and Social Learning Theory, framing ethical leadership as both a relational and cognitive process that
shapes the moral–psychological climate of organisations. It concludes that ethical leadership should be viewed
as a strategic capability that nurtures psychological safety, engagement, and well-being, particularly within the
evolving realities of hybrid and cross-cultural workplaces.
Keywords: Ethical Leadership; Psychological Safety; Employee Engagement
INTRODUCTION
In a time of rapid change, blurred organizational boundaries, and mixed work styles, leadership in organizations
is more important than ever. The COVID-19 pandemic has brought many changes, such as a revolution in remote
collaboration, changes in employee expectations, and increased public scrutiny of corporate ethics. This demands
leaders in organizations who can balance ethics with efficiency. Ethical leadership, once considered a values-
based style, is now seen as a way to drive long-term performance and employee health. Companies are beginning
to understand that being ethical is not just about following the rules; it is also about making the workplace a
place where employees feel safe to speak up, ask questions, and grow.
Recent empirical research supports this shift in perspective. Ethical leadership, characterized by the display of
normatively acceptable behaviors through personal actions and interpersonal relationships, along with the
promotion of those behaviors among subordinates (Brown, Treviño, & Harrison, 2005), has been shown to foster
trust, fairness, and psychological safety in teams. Hassan et al. (2017) found that ethical leaders can improve
performance by maintaining moral standards and fostering an emotional environment that encourages
engagement and learning. This is consistent with research by Liu, Zhang, and Liu (2023), which shows that
ethical leadership can foster innovative work behavior through the dual mediation of psychological safety and
work engagement. Ethical leaders can also generate a more open and fulfilling environment by creating a space
where people can communicate and respect each other (Guo, 2022). These findings suggest that ethical
leadership functions as an external regulatory mechanism and psychological driver, enhancing creativity,
belonging, and commitment.
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A central theme of this growing debate is psychological safety. People believe they can take social risks without
being ridiculed or punished (Edmondson, 1999). This links ethical behavior at the top to dedication at the bottom.
When leaders are open and honest, they make employees feel part of the organization and can trust them, which
is essential for true work engagement (Niu, 2023; Qasim et al., 2022). A bibliometric synthesis by Dong, Li, and
Roxas (2024) shows that the convergence of research on ethical and psychological safety reflects the growing
recognition that ethical leadership is essential for employee well-being and innovation. In many ways, ethical
leadership can translate abstract moral principles into concrete feelings of safety that enhance group
performance.
However, the literature remains fragmented. Some research highlights trust as the primary explanatory
mechanism (Eluwole et al., 2022), while others, such as Meng et al. (2022) focus on meaningful work, and Zainal
(2023) posit organizational culture as a mediating pathway. Various efforts have been made to integrate these
perspectives into a coherent explanatory framework. Contextual nuances introduce complexity: hierarchical
distance, bureaucratic inertia, and digital communication barriers can reduce psychological indicators of ethical
intent. This challenge has sparked interest in examining the conditions and mechanisms through which ethical
leadership can sustain psychological safety in diverse cultural and structural contexts.
Accordingly, this review synthesises empirical studies published between 2020 and 2025 to elucidate how ethical
leadership enhances employee engagement through psychological safety and related psychological mechanisms.
Specifically, it addresses three guiding questions:
1. What mechanisms enable ethical leadership to promote psychological safety?
2. How does psychological safety mediate or moderate the relationship between ethical leadership and
engagement?
3. What contextual and cultural factors influence these dynamics?
By weaving together insights from the most recent literature, this paper reframes ethical leadership not merely
as a form of moral guidance but as a psychological infrastructure for engagement and innovation. It argues that
ethical leaders do more than uphold principles; they shape the mental and emotional spaces in which modern
organisations can endure, adapt, and excel.
LITERATURE REVIEW
Ethical Leadership and Moral Foundations
Ethical leadership is recognised as a leadership approach grounded in equity, integrity, and concern for others
(Brown et al., 2005). In recent years, however, research has gradually shifted its focus from leaders simply
modelling behaviour for subordinates to viewing ethical leadership as a deeper moral compass that shapes the
tone and integrity of the organisational climate. Leaders who demonstrate moral courage and integrity do more
than establish rules; they set moral standards that subtly influence how people behave and make decisions (Tu
& Lu, 2023). From a social learning perspective, employees closely observe these leaders, internalising ethical
principles through modelling, reinforcement, and the emotional impact of daily interactions.
Empirical studies conducted between 2020 and 2025 support this broader perspective. Bai et al. (2021) found
that ethical leadership fosters emotional trust among employees, thereby encouraging creativity and collaborative
behaviour. Similarly, Demirtas et al. (2023) show that perceived moral consistency in leaders enhances their
credibility, promotes psychological comfort, and conveys fairness throughout the organisation. Collectively,
these findings suggest that ethical leadership forms the moral and emotional foundation on which trust,
transparency, and engagement are built. Ethical leaders not only explain what is right, but also influence how
people feel about doing the right thing in group settings.
Psychological Safety as a Mediating Mechanism
Psychological safety refers to the belief that one can share thoughts and admit mistakes without fear of shame or
punishment (Edmondson, 1999). It is recognised as a key psychological channel linking leadership and employee
engagement. Ethical leadership models foster environments where people feel able to communicate openly and
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where everyone is treated fairly (Qasim et al., 2022). In such settings, employees experience a sense of belonging
and safety to express their ideas, which encourages creativity, vocal behaviour, and innovation (Aboud & Niu,
2023).
Recent empirical evidence supports this mediation process. Liu et al. (2023) demonstrated that psychological
safety and work engagement sequentially mediate the relationship between ethical leadership and innovative
work behaviour, highlighting the cascading effect of ethical influence. This aligns with Dong et al. (2024), who
found that leadership ethics is a key antecedent in contemporary psychological research, indicating a shift from
structural interpretations to psychological engagement. Their study identified psychological safety as an
important mechanism through which leadership translates moral values into concrete performance outcomes.
Psychological safety thus provides ethical leadership with its emotional currency by converting abstract ethical
goals into everyday freedom of action.
Ethical Leadership and Employee Engagement
Employee engagement is typically defined as a state of mind that is pleasurable and enjoyable at work, marked
by enthusiasm, dedication, and immersion (Schaufeli et al., 2002). Ethical leaders encourage people to engage
in the workplace by building trust, fairness, and a sense of purpose (Eluwole et al., 2022). Ethical leaders use
intrinsic motivation to inspire employees to align their personal values with organizational objectives, while
transactional leaders rely on compliance and performance-oriented incentives.
Recent research supports this theoretical view. Meng, Tan, and Li (2022) show that meaningful work serves as
a mediator in the relationship between ethical leadership and employee engagement, while Guo (2022) highlights
the importance of transparent communication as a conduit to lasting satisfaction and engagement. These findings
suggest that ethical leadership fosters engagement through a variety of psychological mechanisms, including
trust, psychological safety, and perceived purpose. Engagement is not a random outcome of moral leadership; it
is a planned and developed outcome of ethical settings.
Contextual and Cultural Influences
Although ethical leadership generally predicts engagement through psychological safety, this correlation is
inconsistent across contexts. Research in high power distance and collectivist societies, particularly in Southeast
Asia, suggests that hierarchical norms can both promote and hinder psychological safety (Zainal, 2023). For
example, in Malaysia, ethical leadership often operates in bureaucratic systems where people may not be able to
speak to their superiors, even when leaders mean well.
The growth of digital and hybrid work environments further complicates matters. Tan and Ong (2024) argue that
in the absence of nonverbal cues and a lack of social presence, employees may not feel that things are fair,
accessible, or empathetic. Therefore, ethical leadership in virtual environments requires intentional enhancement
of trust and inclusiveness through transparent, consistent, and ethical communication. Contextual insights
suggest that ethical leadership is dynamic; its effectiveness depends on its adaptability to cultural norms and
technological realities. So, leaders need to be careful as they navigate the changing landscape if they are to
maintain psychological safety and engagement in the modern workplace.
METHODOLOGY
This review uses a systematic and integrative methodology to present the latest empirical research on ethical
leadership, psychological safety and employee engagement. The methodological design adheres to the Preferred
Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) framework guidelines, while
incorporating interpretive flexibility appropriate for organizational behavior research. The primary goal was to
find and critically analyze peer-reviewed empirical studies that examine the relationship between ethical
leadership, psychological safety and engagement at work.
A comprehensive search of the Scopus and Web of Science (WoS) databases was conducted. Both are well-
known for having many reputable journals in management, psychology and organizational studies. Table 1 shows
how the search strategy was carefully designed using Boolean operators and key terms to ensure that it covered
a wide range of topics while remaining relevant.
INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)
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Table 1
Database
Search String
Scopus and Web of Science (WoS)
(“ethical leadership” OR “moral leadership”) AND (“psychological safety”
OR “trust climate” OR “psychological climate”) AND (“employee
engagement” OR “work engagement” OR “organisational commitment”).
The initial search yielded 14 documents in the Web of Science database and 5 documents in Scopus.
Subsequently, all retrieved articles were screened based on the specified inclusion and exclusion criteria. Only
empirical, peer-reviewed journal articles written in English were retained. To ensure consistent methods and
relevant results, we did not include concept papers, book chapters, editorials, or conference proceedings.
After eliminating duplicates and ineligible studies, seven articles met the inclusion criteria and were selected for
a comprehensive analysis. Each study was reviewed for its theoretical framework, sample characteristics,
analytical methodology, and key findings. Figure 1 shows how the review process worked, with the stages of
identification, screening, eligibility, and inclusion of the PRISMA model. This methodical yet interpretive
approach facilitates both rigor and contextual sensitivity, ensuring that the synthesis encompasses not only
empirical trends but also the theoretical and cultural subtleties that characterize ethical leadership in modern
organizational development.
DISCUSSION
The six empirical studies analyzed in this review span a variety of industries and cultural contexts across Asia,
yielding convergent evidence that ethical and related leadership styles, such as benevolent, inclusive, and
authentic leadership, promote employee outcomes that promote research through psychological mechanisms.
The majority of studies use quantitative methodologies, using cross-sectional data surveys analyzed through
techniques such as structural equation modeling (SEM), AMOS, or partial least squares (PLS). A study
conducted by Ochiai and Otsuka (2022) advances the methodology of progress by validating psychological
safety measures. Collectively, these studies illustrate that ethical leadership increases employee engagement,
innovation, and prosocial behavior by fostering psychological safety, trust, and a sense of purpose in the
workplace.
Figure 1: Flow of Review Process
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The main theoretical frameworks of this study are Social Exchange Theory (SET) and Social Learning Theory
(SLT), which explain the relational and observational mechanisms that link moral leadership to follower
behavior. Psychological safety is the most stable mediating construct, followed by trust, satisfaction, and
meaningfulness, which explain how moral climate transforms ethical intentions into action.
Ethical Leadership as the Foundation of Psychological Climate
Ethical leadership is the moral and emotional foundation of the workplace. Liu et al. (2023) found that leaders
who demonstrate fairness, integrity, and genuine concern for the well-being of employees significantly increase
psychological safety and job engagement, thereby fostering innovative behavior. Khairy et al. (2023) reached
similar conclusions, showing that benevolent leadership, an ethics-driven approach founded on compassion,
fosters a climate of caring and reciprocal trust that encourages engagement. Junaidi (2024) also noted that ethical
leadership increases trust and job satisfaction, both of which serve as mediators between leadership and
engagement. These findings suggest that moral consistency fosters emotional safety and loyalty among
employees.
Chaudhary and Panda (2018) also argue that leadership based on moral values makes people feel more
psychologically connected and engaged. Employees perceive ethical behavior from leaders as an affirmation of
their professional purpose and identity. In general, this study is based on one main idea: ethical leadership is not
a way to get people to follow rules, but rather a way to build trust and purpose, which are what keep people
engaged over time.
Psychological Safety as the Mediating Core
In every model examined, psychological safety consistently emerged as a significant link between ethical
leadership and employee outcomes. Liu et al. (2023) described a sequential mediational pathway in which ethical
leadership influences psychological safety, which in turn increases work engagement and innovation. Khattak et
al. (2022) also found that inclusive leadership promotes prosocial rule-breaking and vocal behavior specifically
by increasing psychological safety and leader identification.
These results suggest that psychological safety translates moral intentions into behavioral energy. Employees
who feel safe are less afraid of being embarrassed or punished, which makes them more creative, willing to try
new things, and emotionally committed to their jobs. Chaudhary and Panda (2018) assert that psychological
meaning, a construct closely related to safety, also mediates the relationship between authentic leadership and
creativity. Collectively, these insights suggest that psychological safety serves as an important component of a
comprehensive empowerment system that fosters an ethical climate. Thus, ethical leadership not only changes
what employees think is right, but also what they feel safe to do. This transforms ethical behavior into everyday
courage.
Complementary Mediators: Trust, Satisfaction, and Friendship
Psychological safety is the strongest mediator, but there are other mechanisms that help explain how ethical
leadership leads to greater engagement. Junaidi (2024) identified trust and knowledge sharing as sequential
mediators, confirming that fairness and transparency in leadership foster open communication networks that
increase engagement. Khairy et al. (2023) presented workplace friendships as an alternative interpersonal
pathway, observing that leaders who demonstrate empathy and concern foster stronger social connections among
employees, thereby increasing engagement.
These results suggest that ethical climates are always group-based. Safety and trust extend beyond the
relationship between leaders and followers. They also create a larger team environment in which people respect
and cooperate. This type of environment promotes both emotional bonding (through friendship and happiness)
and cognitive safety (through trust and fairness). Liu et al. (2023) also found that personal traits, specifically
openness to experience, compound this effect, suggesting that personality factors can enhance the benefits of a
psychologically safe and ethical environment.
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Cultural and Contextual Influences
C Contextual variation significantly moderates the effects of ethical leadership on engagement. The studies
examined span diverse cultural contexts, including China, Egypt, Indonesia, Pakistan, India, and Japan, each
characterized by unique social values related to authority, harmony, and collectivism.
In collectivist contexts such as China and Indonesia, ethical leadership has significant influence because moral
behavior is consistent with cultural norms regarding welfare and relational responsibility. Liu et al. (2023) found
that workers in the Chinese service industry Favor leaders who are morally consistent and care about their
colleagues, which makes the group stronger. Similarly, Junaidi (2024) found that Indonesian workers value
fairness and honesty as important moral traits that build trust and a sense of shared identity.
Khattak et al. (2022) observed that in the high-power distance culture of Pakistan, inclusive leadership reduces
hierarchical barriers by fostering respect and voice, thereby helping to restore psychological safety. In Japan,
Ochiai and Otsuka (2022) confirmed that psychological safety is closely related to leader fairness and support,
thus confirming the diversity of constructs while highlighting the importance of norms of harmony. These
findings emphasize that while psychological safety is a basic human need, its manifestation is culturally
dependent. Leaders must define safety in their specific context, using open dialogue, respectful interaction, or
emotional congruence, and tailor their ethical communication accordingly.
Integrative Synthesis
This synthesis yields three key insights.
1. Ethical leadership strengthens the moral and psychological framework of engagement. Ethical and
benevolent leadership styles consistently increase trust, fairness, and warmth in relationships across
industries and cultures, thereby fostering environments that encourage collaboration and innovation.
2. Psychological safety serves as a means of connecting the center. It transforms moral behavior into
motivation and creativity by encouraging employees to speak up, take responsibility, and participate
fully.
3. Contextual and individual factors influence the process. Cultural dimensions such as power distance and
collectivism, along with personal characteristics such as openness and relationship dynamics such as
trust and friendship, influence the magnitude of this effect.
In theory, these results support Social Learning Theory, which states that employees imitate the moral behavior
of their leaders, and Social Exchange Theory, which states that fairness and trust lead to cooperative efforts. So,
ethical leadership does not work like a straight line; it works like an interactive system that depends on how well
people get along and how sensitive they are to other cultures.
In practice, evidence suggests that fostering ethical leadership should be considered a psychological-climate
intervention. Organizations should create leadership programs that prioritize empathy, equity, and open
communication. In hierarchical or collectivist settings, human resource systems should reward people who are
honest and consistent. Ultimately, leaders who combine moral integrity with relational sensitivity create a
workplace where people can feel safe and engaged, which is good for both people and the organization.
CONCLUSION
Recent empirical studies collectively confirm that ethical leadership functions as a psychological catalyst that
converts moral behavior into engagement, innovation, and well-being. Across a variety of organizational and
cultural contexts, such as China, Indonesia, Pakistan, Egypt, India, and Japan, ethical, kind, inclusive, and
authentic leadership consistently correlates with high levels of trust, psychological safety, and work engagement.
Common to these findings is the understanding that ethical leadership is more than just following the rules or
talking about morality. It creates mental states such as trust, fairness, and openness that enable employees to
make meaningful contributions, speak honestly, and generate new ideas without fear.
A consistent empirical theme in research, including Liu et al. (2023), Khattak et al. (2022), and Chaudhary and
Panda (2018), is the mediating role of psychological safety. When leaders are honest, open, and supportive,
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employees feel safe taking risks with each other. This makes them more engaged and creative. Psychological
safety acts as an important psychological conduit linking ethics to performance. This mechanism is further
strengthened by complementary mediators, such as trust, job satisfaction, and work camaraderie (Junaidi, 2024;
Khairy et al., 2023), which enhance affective relationships and team bonding. This pathway argues that the
effectiveness of ethical leadership lies not in authority or dominance, but in its ability to foster relational trust
and emotional safety. This is a hidden structure that makes the workplace enjoyable, adaptable, and creative.
The function of this mechanism is also influenced by culture. In societies with high power distance or
collectivism, ethical leadership is often seen as benevolent and protective rather than egalitarian. Studies
conducted in China, Indonesia, and Pakistan show that leaders who demonstrate moral consistency and
interpersonal concern are highly effective at fostering commitment and assertive behavior. Japanese research by
Ochiai and Otsuka (2022) shows that psychological safety is influenced by cultural norms of harmony and
fairness, suggesting that safety is a socially constructed phenomenon shaped by values and expectations. This
variation emphasizes that ethical leadership has no universal definition; it requires interpretation through local
cultural lenses and must be formulated taking into account hierarchy, harmony, and emotional norms.
This research conceptually synthesizes Social Exchange Theory (SET) and Social Learning Theory (SLT). As
SET suggests, employees are more engaged when they are treated fairly. As SLT suggests, they also follow the
moral behavior of their leaders. This dual perspective explains why ethical leaders consistently achieve high
levels of engagement and creativity among their employees: they inspire through role modeling and foster
reciprocity through fairness. To fully understand the psychological dimensions of this process, further research
could enrich the theory by incorporating frameworks such as Conservation of Resources (COR) or Self-
Determination Theory (SDT). This perspective would allow researchers to consider psychological safety as a
protective element against stress and a stimulus for intrinsic motivation.
Despite the increasing evidence, there are still some gaps in the research. Most current studies have used cross-
sectional designs, thus limiting causal inference. Future research should use longitudinal or experimental
methodologies to examine the gradual influence of ethical leadership on psychological safety and engagement
over time, particularly in the context of organizational change or crisis. There is also a clear need to adjust
measurement tools to fit different cultures. Research from Japan and other Asian settings suggests that Western-
developed instruments may not reflect the collectivist dimensions of psychological safety or the moral
underpinnings of ethical leadership relationships. As a result, future research must emphasize the creation of
context-sensitive scales that capture cultural scripts and implicit norms.
There is a need for more research on individual-level differences. Personality traits such as openness to
experience or moral identity can influence leadership ethics, thereby increasing or decreasing the impact of
engagement, as shown by Liu et al. (2023). In addition, structural and technological aspects of the contemporary
workplace require further investigation. Hybrid and virtual workplaces are changing.
In conclusion, the evidence from 2018 to 2024 suggests that ethical leadership is more than just a moral ideal; it
is also a strategic psychological skill. When leaders demonstrate fairness and kindness, they create an
environment of trust that encourages people to be themselves, to be curious, and to generate new ideas. In this
sense, psychological safety serves as a bridge between ethics and performance that is always present. Future
research should advance this understanding by investigating the dynamic, multilevel, and cross-cultural
mechanisms through which ethical leadership fosters safe and engaged work environments. The task ahead is
not to demonstrate the importance of ethics—that has already been acknowledged—but to understand how
ethical leadership can be systematically integrated into organizations, ensuring that morality, safety, and
engagement serve as interrelated foundations for sustainable human performance.
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