Ethical culture and leadership for sustainability and governance in public sector organisations within the ESG framework

• Published in: Journal of Open Innovation: Technology, Market, and Complexity
• Main Author: Zahari A.I.; Said J.; Muhamad N.; Ramly S.M.
• Format: Article
• Language: English
• Published: Elsevier B.V. 2024
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85184478172&doi=10.1016%2fj.joitmc.2024.100219&partnerID=40&md5=89852a1f5d4ef358df957cc6da0e1df2

Purpose: The purpose of this study is to explore how ethical leadership behaviours within government organisations impact the development and sustainability of a positive organisational culture, which, in turn, has implications for ESG alignment. Design/methodology/approach: A survey was conducted with 155 government employees in the Central region of Malaysia, utilising a validated questionnaire covering ethical leadership behaviours, ethical culture, and integrity violations related to ESG compliance. The collected data were subjected to analysis using Smart PLS to examine the hypothesised relationships and assess the model fit. Findings: The study's findings established the role of ethical leadership in reducing integrity violations, particularly in the context of ESG compliance. Ethical leaders contribute to a culture where adherence to ESG principles is prioritised. However, the analysis did not find a statistically significant direct link between ethical culture and integrity violations related to ESG compliance, suggesting the need for further exploration of this relationship in future research. Research limitations/implications: The study faces limitations related to sample representativeness and self-reporting bias. The findings are context-specific to the Malaysian public sector, and generalisation to other settings should be approached with caution. Nevertheless, the implications of these limitations have broad relevance for understanding the interplay between ethical leadership and ESG alignment. Practical implications: The results of this study offer practical insights for public sector leaders and policymakers in Malaysia who aim to enhance their ESG performance. Understanding the role of ethical leadership in shaping organisational culture not only fosters a more ethical and positive work environment but also guides leadership development programs and strategies geared towards ESG alignment. Originality/value: This study adds value to the existing literature by examining the specific context of the Malaysian public sector and by emphasising the relationship between ethical leadership and organisational culture within the ESG framework. The use of Smart PLS as an analytical tool enhances the robustness of the analysis, making the findings especially valuable for public sector organisations looking to enhance their ESG alignment through ethical leadership. © 2024 The Authors