American International Group (AIG), Enron, Goldman Sachs, Lehman Brothers, Bernard Madoff, and R. Allen Sanford are all familiar names related to catastrophic business financial failures and frauds in recent years. Omitting the details leading up to each of these well-publicized business events, a common thread in each of these stories appears to be the result of a massive failure of ethical leadership, i.e. the Enron failure (Raghaven, Kranhold & Barrionuevo 2002). This paper describes a search for an educational solution to this failure of ethical leadership.
Purpose: The purpose of this paper is twofold; first, to describe a program for education and training in ethical leadership, and second to report on the preliminary evaluation of the success of the objectives of this program.
Scope: By definition as well as the availability of participants, this paper is limited to the training and evaluation of university students in ethical business leadership during the four-year pursuit of their baccalaureate degree.
Limitations: Prior to beginning this longitudinal study, an approval by the Institutional Research Review Board (IRRB) was required for use of undergraduate participants. Citing very strict concerns for student privacy under the Family Educational Rights and Privacy Act (FERPA) the IRRB strongly suggested that participants have the option to remain anonymous in this study. The beginning cohort of students elected as a group to remain anonymous for the entire course of this study. Statistical analysis is therefore limited to a comparison of pre- and post-program student cohort averages rather than a comparison of pre- and post-program individual changes in moral development.
Bowen (2005) stated that “Practically all leadership activities occur within the context of decisions made about good and bad, right and wrong. Leadership behavior is therefore a reflection of beliefs about ethics and morality.” Following Bowen’s line of thinking the mission statement of this university states that in addition to making our graduates competent in a chosen discipline, they should be prepared through training in critical and creative thinking as well as moral reasoning to confront the critical issues of society and to seek justice and peace. In other words the goal specified by the mission statement is that we aspire to educate and train future ethical business leaders. DuBrin (2010) comments that “one key contributor to a leader’s ethics and morality is his or her level of moral development. Some leaders are morally advanced, while others are morally challenged – a mental condition that often develops early in life.” Concurring with DuBrin’s suggestion, Rest (1979) identifies four thought processes or components that lead to ethical behavior, these are:
Component 1 is moral sensitivity. We first need to recognize that an ethical problem exists. In addition we must identify possible courses of action and determine the consequences of each strategy. Component 2 is moral judgment or reasoning, deciding which source of action is the right one to follow. Component 3 is moral motivation. The desire to follow moral principles generally conflicts with other values like security, social acceptance, or wealth. Ethical behavior will only result if moral considerations take precedence over competing values. Component 4 is moral action, the implementation stage of the model. (as cited in Johnson, 2001, p. 69)
The above clarifies the major premise of this paper is that the ethical leader has developed an advanced state of moral reasoning/decision making. Measuring the level of moral reasoning/decision making is described in a later section of this paper.
Myers (2003) notes that programs and work in leadership studies are becoming an important part of education in general and specifically in higher education. Colleges and universities are offering majors in leadership at both the undergraduate and the graduate level as well as majors in leadership combined with other areas of specialization, e.g., business & ethics. With the focus on leadership that is currently in vogue, this paper will turn a somewhat critical eye as to whether we can educate for ethical leadership and, if so, what this education would or should look like. Along this journey, the paper will describe some of the normative forms that leadership studies may take, and finally, this paper will briefly summarize attempts to evaluate the preliminary results of the education of future ethical business leaders in this program.
During the last century an array of explanations were offered as to what made someone a leader. One such approach focused on certain traits, some physical and some mental, but when no one single or group of traits began to consistently emerge, this idea fell out of favor (DuBrin, 2010). Another popular idea was that an individual became an effective leader because of the circumstances, this is to say, the situation produced leadership. This approach was met with similar misgiving since it appears that a variety of methods could transcend the circumstances (Hersey, Blanchard & Johnson, 2007). Finally, in this paper when the word “leader” is used we are not necessarily speaking of a manager in any of its current usages (boss, supervisor, CEO, team lead, Dean, etc).
Management is about organizational control and while this is an important facet of business, it is not the same as ethical leadership as described and discussed in this paper. What is the difference between just a leader and an ethical leader? To paraphrase DuBrin (2010) the ethical leader focuses on what is right and wrong, and on what the person should do rather than simply complying with regulations, laws and the decision rules of business. Ursery (2007) suggests that the practice of ethical leadership involves the use of moral values and assumptions to shape concepts and decision-making in both the public and the private business sectors. For the purposes of this paper the terms “ethical” and “moral” are used interchangeably when describing reasoning or judgment concerning values and obligations.
A number of different leadership theories have been described in the literature (Johnson, 2001). A brief description of several of these theories is summarized below. In the late 1970’s, James McGregor Burns attempted to isolate a set of learned behaviors that can “transform” the individual into a leader. Transformational leadership focused on actualizing needs rather than satisfying maintenance needs, the latter, which Burns calls the transactional approach (Johnson, 2001). Another popular model of leadership is what Robert Greenleaf calls the servant leadership model. This model suggests that leaders should place the needs of the followers before their own. The Good Samaritan story is often used to provide an example of the altruistic behavior required of the servant-leader. When this model is discussed: values like empathy, self-awareness, spirituality, stewardship, humbleness, and healing are often mentioned; all worthy values, but when considered from a normative perspective, allowing oneself to be used, often as a mere means to an end, is problematic (Johnson, 2001). Recently a model of servant leadership was proposed that would in addition facilitate knowledge creation through a sharing of leadership responsibilities with followers (Rai & Prakash, 2012). A third model, the Hersey-Blanchard model, describes situational leadership. This model suggests that the leader should put greater or less focus on the task and/or the relationship between himself and the followers, depending on the development level of the followers (Hersey, et al., 2007). A fourth model that should be mentioned here is that proposed by James Rost. In many respects, his is more an anti-model since he is mostly responding to what he calls the “industrial models.” Rost argues that leaders and followers should pursue the common good; that any intended changes should justly reflect their shared goals: “leadership is an influence relationship between leaders and followers who intend real changes that reflect their mutual purposes” (Ciulla, 2003). The Rost model as a social theory, attempts to “shift the focus of citizens from individual rights to communal responsibilities” (Johnson, 2001).
Dr. Daniel S. Papp (2008) shared his view of the definition of authentic leadership in his “Top Nine Elements of Authentic Leadership.” Papp’s nine elements are paraphrased, and very briefly summarized below:
Element #1 – the leader should be value centered. Your values come from many different sources but you should know what they are.
Element #2 – base your actions on your values. Ask yourself the question – “Could I comfortably explain my reasons for taking this action to my mother?”
Element #3 – understand that at some times, values will conflict. An authentic leader must recognize that conflicts of values can and do exist in different societies, different cultures, etc.
Element #4 – seek input. The authentic leader must get as much information as he/she can from as many different reliable sources as possible.
Element #5 – share knowledge and authority. Don’t be a stand-alone icon, bring others into the decision process.
Element #6 – An authentic leader will in conjunction with others set goals that mean something both to the leader and to others. In Papp’s words “Goals by themselves are valueless, and goals that are not shared are rarely attainable.”
Element #7 – as you strive to achieve shared goals, have high expectations of yourself and others.
Element #8 – know what others expect of themselves. Element #9 – know what others expect of the leader.
For an expanded discussion of the Papp’s nine elements see his article “Authentic Leadership,” (Papp, 2008).
Ursery (2007) has cited several principles for good leadership that can be used in forming a foundation for the education and training of ethical leaders. Two of these principles listed below are:
Principle #1: Leaders examine dilemmas and situations from different perspectives. Vincent Ruggiero (1997) describes three. One perspective is to know to whom we are obligated, not just locally, but globally. Another perspective is to identify and anticipate the consequences of each choice. And finally Ruggiero says that we must understand what values are involved in our beliefs and actions.
Principle #2: Leaders have the habit of ethical reflection and critical perception. We should educate others to apprehend the objective data of their world through reflection, not by reflex and habit, as do animals (Freire, 1973). Leadership theories listed above are used as the foundation for developing a model curriculum for education in ethical business leadership.
Clint Sidle (2007) has written about the leadership wheel that, in Sidle’s words, “has withstood the test of time for thousands of years.” The cardinal directions of the compass (Mandelas) provide a “framework for not only defining leadership, but also developing leaders who do well while doing good in the world.” (Sidle, 2007)
The ethical leadership curriculum described in the next section attempts to synthesize as many as possible of these leadership studies into a coherent program of education in ethical business leadership.
Ethical Leadership Curriculum
This section contains a listing of the required course sequence and a course description for each of the core courses that are fundamental to this program. The course sequence consists of one course at each level of the degree program; one course during the freshman year, one course during the sophomore year, one course during the junior year, and a final (capstone) course during the senior year. Each course has as a prerequisite the successful completion of each of the preceding courses in the sequence as listed.
The course description of the first course in this sequence titled Critical Thinking and Research is listed below. In addition to what is described below, this course introduces the student to the Ruggiero (1997) model of approaching moral decision-making. Ruggiero described a four step model that can be used to evaluate moral issues. The basic criteria for judging moral issues are derived from the principle of respect for person. These criteria are: obligation (duties), consequences (effects), and ideals (values). The course description below uses the Ruggiero model as the method to reach a decision about complex moral issues. A caveat to emphasize here is that the Ruggiero model is just one way of viewing moral dilemmas and coming to decisions about them. Jenkins (2012) points out that “. . . global leaders” also “need critical- thinking skills flexible enough to adapt to rapidly changing environments” (p. 95).
The university catalog description of this first course:
Critical Thinking and Research: This is a university mission course that not only orients entering students to the programs and policies of the university but also acquaints them with the services available to them from the university at large. While the course’s emphasis on critical thinking, research, writing and reasoning skills is intended to prepare students for general academic success, it also lays the foundation for subsequent mission courses in keeping with the university’s purpose and goals by integrating moral decision making into the analysis of contemporary, value-laden issues. In the process, students explore and clarify their personal values as they proceed through the various writing assignments that lead to the preparation of an argumentatively sound and properly documented position paper in which they apply the principles of moral decision making in reasoning to a conclusion on a controversial issue.
The second course in this sequence, Ethical Analysis continues to develop the concept of critical thinking by introducing ethical theories and their application in ethical, that is, normative decision making. In addition to what is described below the, course introduces the student to the Kantian Ethical Theory, Utilitarian Ethical Theories, and Social Contract Theory as well as several other normative principles that are considered the foundation of most ethical codes. These foundational principles include: Principle of consistency, Principle of impartiality, Principle of rationality, and the Principle of least harm.
The university catalog description of this second course:
Ethical Analysis: Philosophical ethics can be described as the attempt to think clearly and deeply about fundamental moral questions that arise for us as humans. Ethics is concerned with evaluating appropriate action, proper character, the characteristics of the good life and what is involved in right actions. The course explores readings in foundational ethical theory, including the systematic analysis of moral beliefs, as well as the application of philosophical ethical theory to particular issues in applied ethics.
The third course in this sequence is titled Fundamentals of Ethical Leadership. In addition to what is described below this course introduces the student to the theories of ethics and leadership through the study of the works of Plato, Machiavelli, Hobbes as well as other more contemporary thinkers.
The university catalog description of this third course:
Fundamentals of Ethical Leadership: This course examines major leadership theories, how these leadership theories are evolving and how these leadership theories relate to business models in practice today. The class continues on to critically examine foundational ethical tenets throughout history as well as ethical decision-making models. Major leadership theories are then integrated with contemporary examples of the ethical challenges of leadership in business.
Students will complete a written course research project that includes an evaluation of their own leadership strengths and how those can be merged with the model of ethical leadership.
The fourth and final course in this sequence is titled Moral Issues in Society. This course is considered to be the capstone course in the process of education for ethical business leadership. As described below this course blends the elements of business, ethics, and leadership into the final product – the ethical business leader.
The university catalog description of this fourth course:
Moral Issues in Society: This mission course provides the opportunity for students to successfully integrate a variety of skills identified in this university’s mission statement, including identification and analysis of a controversial value- laden business issue or problem and independent library research and on-line research on the issue to discover various points of view and proposed solutions. The final paper includes evaluation and ranking of the various solutions and adoption of a final solution whose defense is based on normative ethical principles and critical thinking. The format of the course allows for a wide variety of topics and for student-initiated research and problem solving. The course also allows for a service-learning component if the student so chooses.
This section completes a brief description of the curriculum with a snapshot description and catalog description for each of the courses that currently are included in the program. Following sections describe the research methodology used in evaluating the program outcomes.
The introduction earlier in this paper stated that a major premise is that the ethical leader is a person that possesses or has developed an advanced state of moral reasoning and in turn ethical decision-making. The goal of the curriculum described in this project is to refine and/or develop the level of moral development of the ethical business leader. Research question – Did the level of moral reasoning of respondents (future business leaders) improve during the course of this four-year program?
The primary hypothesis tested in this study is: There was a positive change in the level of moral reasoning demonstrated by participants in this study.
The corresponding null hypothesis tested in this study is: There was no change in the moral reasoning demonstrated by participants in this study.
Lawrence Kohlberg (1976, 1984) described the level of moral development as moving through three levels of cognitive moral development and each of these three levels was further divided into two stages. The higher the level of development in Kohlberg’s model the greater the ability to make better moral decisions. See Table 1 for a listing and brief description of Kohlberg’s three levels that are further subdivided into six stages of moral development.
Kohlberg’s Levels and Stages of Moral Development
I: Pre-Conventional 1: Punishment and Obedience.
Toddler: One to Three Years old.
2. Instrumental Exchange. Preschool: Three to Six Years old.
II: Conventional 3: Interpersonal Conformity.
Middle Childhood: Six to Twelve Years old.
4: Social system and conscience maintenance(law and order
Adolescence through Adulthood: Twelve Years and older.
III: Principled 5: Prior rights and social contract.
6: Universal ethical principles.
Note: For additional information on this table see Kohlberg (1976, 1984).
Kohlberg used the interview method in asking participants to solve dilemmas and explain the process of moral reasoning used in making their decisions. Carefully listening to the response of each participant, Kohlberg would identify the participant’s level of moral development as Level I: Pre-Conventional, Level II, Conventional, or Level III, Principled. In the Kohlberg schema a person scored at Level III is considered to be at the most advanced personal state of moral reasoning, see Table 1.
The evolution of the next generation of research instruments used to measure ethical reasoning and moral decision making led to scenario-based instruments (Rest, 1979). Using scenario-based instruments the respondent reads a scenario and is then asked to provide an objective response explaining his/her interpretation and answer to an ethical dilemma posed in the scenario. The validity of scenario based instruments has been documented by Rest, Toma, & Edwards (1997). Five different instruments were initially considered for use in this research project. These instruments include: (1) the Paradice instrument (Paradice, 1990; Dejoie, Fowler & Paradice (1991); Taylor & Benham, 1999), (2) the Defining Issues Test (DIT) (Rest, et al., 1997), (3) the Assessment Test for Moral and Ethical Reasoning (ATMER) (Myers, 2003), (4) the Assessment of Moral and Ethical Reasoning Instrument (AMERI) (Myers, 2003), and
(5) The revised Defining Issues Test (DIT2) (Rest, Narvez, Thoma, & Bebeau, 1999). All five instruments listed above are scenario-based instruments in which the respondent after reading a scenario provides a response concerning the ethical/moral situation and decision described in the scenario of the test instrument. The DIT and the DIT2 also report on the process used by each respondent to make the ethical/moral decision. Each of the above named instruments were evaluated and documented in pilot studies. The pilot studies revealed that either of the two versions of the Defining Issues Test would be appropriate to use in this study. The author made the final determination to use the more recent revised version of the Defining Issues Test (DIT2) (Rest, et al., 1999) as the primary research instrument for this study.
Defining Issues Test (DIT2)
For an expanded discussion of this section the reader should refer to the Defining Issues Test Guide written by Bebeau & Thoma (2003). The Defining Issues Test is a paper-and-pencil measure of moral judgment derived from Kohlberg’s theory (1976, 1984). Instead of scoring free-responses to hypothetical moral dilemmas in an interview (as in the Kohlberg procedure), the Defining Issues Test presents 12 issues related to a hypothetical dilemma, for a participant to rate and rank in terms of their individual importance in reaching a decision. Hence the Defining Issues Test data consists of ratings and rankings instead of interview responses. A trained judge scores the ratings and rankings made by the respondent. Instead of envisioning the scoring process as classifying responses into Kohlberg’s six (6) stages, the Defining Issues Test analyzes responses as activating three schemas. The scores represent the degree to which a participant uses the Personal Interest, Maintaining Norms, or Post-Conventional Schema. The schemas have a close relation to Kohlberg’s stages, yet they are different (See Table 2). As with Kohlberg’s theory, the schema scores purport to measure developmental adequacy – in particular, how people conceptualize how it is possible to organize cooperation in a society. In short, the Defining Issues Test is a measure of the concepts of social justice.
Summary of the characteristics of respondents as measured by the Defining Issues Test, Version 2
I: Personal interests.
II: Maintaining norms.
3: Transitional; Personal interests secondary schema.
Note: For additional information on this table see Thoma and Rest (1999).
Depending on the schema preference and whether the profile is consolidated or transitional, it is possible to envision seven different types within the three schemas of the Defining Issues Test. See Table 2 for a listing and brief description of the three schemas that are further subdivided into the seven stages of moral development as measured and described by either version of the Defining Issues Test.
The DIT2 instrument was administered twice in this study; first, to cohorts of first-year business students entering the program at the beginning of the first course in the four course sequence. As a longitudinal study the second administration was made to the corresponding business student cohort in the fourth-year of the program. A limitation in the conduct of a longitudinal study conducted over the course of four years is that there is some expected attrition and change in the membership of the student cohorts between the first (n=34) and the second (n=24) administration of the instrument (a four year interval). Each student in the surviving cohort was tested on his/her level of developmental adequacy as described above.
The ethical reasoning of each student was assessed at the beginning and the end of the four year program. Two numerical indices were calculated for each respondent at both the beginning and the end of the program. The “P” score is a numerical index of the level of moral reasoning developed originally by Kohlberg. The P score indicates the prevalence of post-conventional thinking presented as a percentage from 0 to 95. The P score is calculated by summing the scores from DIT answers corresponding to Stages 5 and 6 and it is then converted to a percentage.
A new index appeared with the release of DIT2. This new index the N2, takes into account both the prevalence of post conventional reasoning and the avoidance of pre conventional reasoning or personal interest schema (Rest, et al., 1999). The N2 index has been normalized to the same scale as the P score for comparison. The N2 index employs both rating and ranking data from the DIT2 and typically purges more data points than the P index due to missing data rules.
Because of changes in the membership of each cohort during the four year time period and limitations stated earlier, no attempt was made to match pre-program and post-program individual respondent scores. For statistical analysis, average scores for the pre-program cohort were compared to the average scores of the post-program cohort. The pre-program cohort consisted of 34 respondents with attrition down to 24 respondents at the time of the post-program administration of the DIT2. Table 3 presents the results of the pre-program and post–program administration of the DIT2. Table 3 contains the pre- and post-cohort averages and standard deviations for both the P score (DIT) and the N2 index (DIT2).
Summary of pre-program and post-program scores and indices for student cohorts.
Cohort Average Post Conventional
Cohort Average DIT-2
Source: Defining Issues Test, Version 2, Summary Statistics.
* Increase in the P Score from Pre-Program to Post-Program significant at the .95 level.
** Increase in the N2 Index from Pre-Program to Post-Program significant at the .90 level.
A review of the data in Table 3 shows that over the experimental treatment period the cohort P scores increased from 35.91 to 42.00, and the cohort N2 scores increased from 33.06 to 39.72, increases of 6.09% and 6.66% on the respective DIT and DIT2 scales.
The increase in value of both the P scores and the N2 indexes reported by the Defining Issues Test (DIT2) suggest that there has been an improvement or forward progress in the moral reasoning of the student cohorts. A t-test was used to test for the significance of the differences between cohorts that had been measured. Results of the t- test show that the increase in the P score is significant at the .95 level rejecting the Null Hypothesis that there is no difference between pre- and post-test scores. Results of the t- test also show that the increase in the N2 index is significant at the .90 level also rejecting the Null Hypothesis that there is no difference between pre- and post-test indexes.
A secondary research question involved comparing gender differences in the improvement of moral reasoning achieved by participants. Carol Gilligan in her 1982 landmark work, In a Different Voice, makes the seminal claim that women speak about ethics in a “different voice” than men do. This secondary research question was posed to further investigate whether there was or was not a gender difference in the ethical/moral development of participants. The sample sizes for gender of participants differ from the overall sample sizes because some participants failed to provide gender information on the response form. There was no significant difference between the increase in either P scores or the N2 index scores based on gender differences. These results support previous research findings that gender differences were not significant (Drake, Griffin, Kirkman, & Swann, 2005; Rest, 1979; & Toma, 1984, 2002).
As a first step in the evaluation of this program, we are encouraged with the initial results. The finding of significant changes in a positive direction by the respondents indicating a heightened sense of moral reasoning suggests that training and education can improve moral reasoning. We believe that the curriculum described in this paper may well improve the moral reasoning and in turn the ethical leadership of future business leaders.
The recommendation suggested to leadership educators is to consider implementing curriculum components similar to those described in this paper to enhance moral development and prepare students for ethical leadership.
As with any study of this type there are often as many more new questions uncovered as those that were answered. Continuing research is currently in progress to replicate the study documented here.
Suggestions have been made and we are considering the mechanics of how to add a control group to future studies. A control group would help in answering the question posed, that the increase in moral reasoning is a function of maturation or some other treatment not considered or measured in this study.
In addition to adding a control group we would like to conduct the same study by evaluating the change in individual respondent’s scores rather than the change in cohort average scores. By observing the change in individual respondents scores we could also answer other questions about other differences for example age and/or gender differences that might affect the development of moral reasoning.
It has been suggested and we are considering adding a mid-study measurement of changes in moral reasoning at the two year point in the four year study. This mid-study measurement may indicate differences in the contribution of the first-half and the second- half curriculum components.
An extended longitudinal study following the cohort members into their future leadership roles would be the ideal follow up to this study and perhaps that could be done in the future to validate the premise that the ethical leader has developed an advanced state of moral reasoning/decision making.
Realizing that nearly all research has imperfections the author would appreciate any comments and suggestions that you might have.
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