This study investigates the relationship between ethical leadership and employee performance, using data from a major pharmaceutical company in China. The research examines leader–member exchange (LMX), self-efficacy, and organizational identification as mediators of this relationship. The findings indicate that ethical leadership is positively related to employee performance, which is fully mediated by LMX, self-efficacy, and organizational identification, controlling for procedural fairness. The study contributes to the literature by integrating social exchange, social learning, and social identity perspectives to explain the complex relationship between ethical leadership and employee performance. Practical implications suggest that managers should focus on developing strong LMX, enhancing self-efficacy, and fostering organizational identification to improve employee performance. The study also highlights the importance of ethical leadership in promoting effective organizational functioning.This study investigates the relationship between ethical leadership and employee performance, using data from a major pharmaceutical company in China. The research examines leader–member exchange (LMX), self-efficacy, and organizational identification as mediators of this relationship. The findings indicate that ethical leadership is positively related to employee performance, which is fully mediated by LMX, self-efficacy, and organizational identification, controlling for procedural fairness. The study contributes to the literature by integrating social exchange, social learning, and social identity perspectives to explain the complex relationship between ethical leadership and employee performance. Practical implications suggest that managers should focus on developing strong LMX, enhancing self-efficacy, and fostering organizational identification to improve employee performance. The study also highlights the importance of ethical leadership in promoting effective organizational functioning.