<p>Existing studies have primarily examined the influence of ethical conflict on team dynamics and individual members, often assuming that members within a team are equally involved in the conflict and that its impacts are limited to those directly engaged. Yet, recent work indicates that many employees merely serve as third parties during conflicts, without expressing differing viewpoints or behaviorally taking sides. Thus, whether and how observed ethical conflict shapes third-party employees’ subsequent workplace behaviors remains unclear. In this article, we draw on the dual-system theory of ethical decision-making to address this question. We suggest that observed ethical conflict can elicit anxiety in third-party employees, which leads to increased ethical silence. Meanwhile, we propose that observed ethical conflict fosters moral reflection, which contributes to increased ethical voice. We also theorize that observers’ implicit theories of morality may serve as a key boundary condition. Entity theorists experience stronger anxiety and are more inclined to remain silent about ethical issues, while incremental theorists are more likely to engage in moral reflection and ethical voice after witnessing ethical conflict. Across one scenario-based experiment and two time-lagged field surveys, we largely found support for the hypotheses. Implications for theory and practice are discussed.</p>