Research on unethical pro-organizational behavior (UPB) has predominantly focused on its consequences for the employees engaged while overlooking how observing such behavior might affect their leaders’ psychological experiences and downstream responding behaviors. Integrating moral heuristics theory and social exchange theory, we argue that leader moral identity and relationship quality with the UPB conductor (i.e., LMX) may interact with the leader’s perception of employee UPB, leading to leader moral dissonance and influencing their subsequent helping and undermining behavior toward the UPB conductor. We examined the hypothesized relationships with two studies. The first study was a three-wave, multisource field study consisting of 684 employees across a total of 150 work teams and their 150 direct supervisors from a prominent pharmaceutical company located in northwestern China. The second study was an experimental study on an English platform, Prolific, recruiting 240 full-time employees from the United States, United Kingdom, and Canada. The results of both studies provide support for our predictions. Our research offers insights into moral literature and the consequences of UPB in organizations.
