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Moral example is trust in the moral core of another, a role model, without the obvious mediation of any theory or language. It was cited by Confucius, Muhammad, Mohandas Gandhi and other important philosophers and theologians as the prime duty of a ruler - including the head of a family or the owner of a business.
This is considered far more important in some philosophies than satisfying any ethical code that originates elsewhere - although not more important than the moral code revealed by divinity or implied by compiling the lives of past moral examples, e.g. prophets, saints, righteous emperors.
This view has been criticized as leading to totalitarianism and an overly trusting civics - validated by history of China, India and Arabia to a degree. It is also true that since the exact circumstances and decisions of the lives of such moral examples cannot be reproduced or repeated, followers are often reduced to following their etiquette and customs, e.g. in ancestor worship.
However, all religion emphasizes moral example and none more so than Christianity which took it to extremes by encouraging Christ-like martyrdom - sacrifice of one's life in order to make a moral point. So it is probably incorrect to say that an emphasis on human moral example itself leads to dictators.
It is more reasonable to consider the role of intermediary figures and the trust placed in them by civics or politics in the institutions that pass on the stories. Since the lives of moral exemplars are not inspectable by people in the present, storytelling takes a central role in any culture built on moral example - leading to the idea of a 'moral of a story'.
Taken to extremes, a complex culture built on such stories can soon fall prey to a clique of experts who interpret them for the lay public. This has led in the past to institutions that sort through anecdotes to decide which of them are true, e.g. isnah in Islam by which the hadith are validated.
In modern life, celebrities are often criticized for failing to provide moral examples. They respond sometimes by saying, as Britney Spears did, that they felt comfortable as an 'inspiration' to others, but not as a 'role model'.
See also: moral core, moral code, exemplar, ethics, civics, etiquette.
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