Ethical Leadership and Antecedents of Organizational Ethical Culture towards Corporate Sustainability

Tan, Pei Xuan (2024) Ethical Leadership and Antecedents of Organizational Ethical Culture towards Corporate Sustainability. Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

This research aim to study the role of ethical leadership in influencing on corporate sustainability. In today's business landscape, sustainability has emerged as a crucial component of corporate governance, transcending its traditional confines and permeating through enterprises, including Small and Medium Enterprises (SMEs). In Malaysia, where SMEs comprise 97% of all businesses, their significance as economic drivers underscore the importance of integrating sustainability principles into policies and frameworks. Despite the Malaysian government's commitment to sustainability, evidenced by initiatives such as the Ministry of Finance's pledge to support firms engaging in Sustainable Development Goals (SDGs), a notable gap persists in the commitment to sustainability among corporations and SMEs. Low awareness levels among SMEs further impede their ability to leverage sustainability as a competitive advantage. This research aims to uncover the underlying causes of this gap and propose strategies to bridge it. Employing Social Exchange Theory as the theoretical framework, the study examines the influence of Ethical Leadership, Organizational Ethical Culture, and Employees’ Well-Being on Social Sustainability commitment in Malaysian enterprises. Data collected from two hundred respondents via Google survey form are analysed, revealing significant relationships and mediating effects. While findings support the positive influence of Ethical Leadership and Employees’ Well-Being on Organizational Ethical Culture, Corporate Ethics Programme's mediating role between Ethical Leadership and Organizational Ethical Culture, as well as Job Satisfaction's mediation between Ethical Leadership and Employees’ Well-Being, are also evident. However, Organizational Ethical Culture's direct impact on Social Sustainability commitment remains inconclusive. Ultimately, the study contributes to understanding the dynamics between ethical leadership, organizational culture, and sustainability in the Malaysian context, emphasizing the need for further exploration of factors influencing social sustainability practices in organizations