Ethical Leadership and Responsible Innovation in the Finance Sector

Abstract

This master’s thesis is a contribution to research within ethical leadership and responsible innovation, studying the research question: “How does ethical leadership contribute to responsible innovation within the finance sector?". This thesis provides useful interpretations and insights for professionals, both leaders and followers, especially those aiming to work with innovation. The project uses an abductive approach, based on an explorative study. It utilizes empirical data provided by twelve leaders from the financial sectors in Norway and the Netherlands, more precisely within banking. The theoretical background is made up from existing literature within ethical leadership and responsible innovation, contributing strongly to the development of the thesis’ research question, propositions, and model. The findings revealed by this thesis are that ethical leadership indirectly contributes to responsible innovation through several factors. Communication and role modeling enhance ethical leadership in the workplace through transmitting ethical values and practices, creating a safe work environment. This in turn contributes to enhancing employee creativity in voice behavior, facilitating responsible innovation. Synergies between communication and role modeling are discovered, as well as between employee creativity and voice behavior, both mainly caused by these factors thriving in similar environments. The results also emphasize the need for practical frameworks instituted by the companies themselves, surpassing the minimum requirements placed on them by legislative authorities. Ethical leadership is a concept which has been around for some time, although often overshadowed by other, more prominent, leadership styles. However, there are fair amounts of research available, but lacking in the context of responsible innovation. This is caused by the novelty of the research on responsible innovation, which is often pushed aside by bigger and more “trendy” research concerning ESG. Therefore, the combination of these two fields of research is less explored and should therefore add value to the current pool of literature, as well as encourage future research.