This paper elaborates on a previous case study of the leader-member exchange (LMX) theory through evaluation of unethical leadership behavior and the occurrence of reporting such behavior through a mechanism known as whistle blowing. Whistle blowing is defined as “An individual who discloses wrongdoing by an organization to the authorities or public” (Brodnik, M. S., McCain M. C., Rinehart-Thompson, L. A., & Reynolds, R. B., 2009, p. 486). Given the increasing number of corporate frauds and the corresponding significance of whistle blowing as a reporting mechanism, it is hypothesized that perhaps the impact of the dyadic relationship formed in the LMX relationship there may potentially be a link between the behavior of the subordinate, particularly when it comes to the lack of reporting unethical behavior of the leader.
The LMX theory is one of the most widely researched theories in leadership (Goertzen & Fritz, 2004). Within this theory, leaders have special relations with an inner circle, or the in-group, who typically get preferential treatment, higher levels of responsibility, and overall have more influence than those in the out-group. Northouse explains that in-group subordinates typically work harder, have greater expectations of being committed to tasks beyond their job descriptions, and are held to a much high standard of commitment to their leaders. Conversely, subordinates in the out-group are given low levels of choice and influence and in turn put constraints and limitations towards the leader. These subordinates are content in coming to work, completing their predefined job duties, and going home (Northouse, 2007).
Bhal and Dadhich conducted a study that consisted of eighty-one students from postgraduate programs of a top enginerring institute in India. Their involvement was completely voluntary. Each participant was given a one page document containing two paragraphs. The