as far as i recall, in WCIII & WCIV there are two types of morale, ship morale and individual pilot morale, choices you make in the game increase and decrease each, for example if you punch paladin ship morale goes up, whereas if you "score points with the admiral" it goes down, I would suspect that this would change the performance of generic pilots, gunners etc. for flying ability, accuracy etc. pilot morale seems to affect just one main plot pilots performance at a time, and if a pilot has a low morale he fights worse and some of his/her comms are changed.
morale can also affect endings and certain in game choices, for example if flint has a low moral, (eg you ground her etc) she may be unavailable as a love option in the bar scene.
If, in WCIV, you side with hawk more than panther and win the game, you get the "evil" ending with Blair as an admiral rather than the "good" ending with Blair as an instructor.
is there morale in WCP though?