The (electronic) walls between us: How employee monitoring undermines ethical leadership

Abstract Ethical leaders are coveted for their notable ability to inspire positive employee behaviours, an influence portrayed in the ethical leadership literature as robust to most organizational conditions. Yet, we argue that a primary mechanism by which ethical leaders influence their employees (i.e., trust) is disrupted by a company practice that has become nearly as ubiquitous as emphasising ethicality in hiring—employee electronic monitoring. Specifically, drawing from social exchange theory, we propose that electronic monitoring undermines an ethical leader's ability to offer social benefits and thereby erodes trust. We tested our moderated‐mediation model with multi‐wave data from an organisationally diverse field sample of supervisors and their employees. The results provide support for our predictions. Considering the accelerated pace at which electronic monitoring technologies are being adopted, this research makes timely contributions.