Abstract/Summary

This study explores ethical leadership and Islamic values in Saudi Arabian SMEs and their impact on employees’ behaviour. Using a qualitative methodological approach, data has been collected from semi-structured interviews with 30 employees and leaders representing five Saudi SMEs. The findings indicated that Saudi SME leaders act in accordance with Islamic principles and values and that in doing so, their behaviour and actions resemble ethical leadership. However, although most Saudi SME leaders exhibit ethical behaviour, others not – despite professing adherence to the Islamic faith. When leaders act ethically, their employees are more likely to do the same. Likewise, when leaders act unethically, their employees are more inclined toward unethical behaviours. Perhaps surprisingly, however, some leaders behave so ethically that they ultimately exert a negative influence on ethical employee behaviour. Furthermore, this study has found that Saudi SME leaders demonstrate four Islamic values – accountability, consultation, justice and trust – at three different levels: excessive, adequate and deficient. The behaviour of the leaders varies across the three levels, which also impacts the ethical behaviour of their employees. Based on the findings, it has been argued that an ‘adequate’ level of the four values is preferable to excessive or deficient levels. This is because at the adequate level, the four leadership values create a positive impact on employees. Contrarily, the impact of values at excessive and deficient levels is negative.