ISSN: 2225-8329
Open access
This study highlights the importance of ethical leadership to succeed in reviving state agencies that have experienced deep systemic governance crises in Sabah, Malaysia. With the continuous deficiencies in governance and under-performing financially pointed out in the state-owned entities as the main reasons, this research aims at finding out the causes of the deterioration of the leadership and the collapse of the fiduciary ethics in the public services. Through a qualitative approach, the authors held semi-structured interviews with seven senior human resource practitioners to elicit their views on which competencies are most important for managing the multiple principal problems and the differing moral hazards that are typically found in state capitalism. The results have led to a solid outline of 11 separate indicators of ethical leadership, which have been grouped into three broad aspects: moral bases, behavioural implementation, and leadership ability. Regarding theory, this research draws together Social Learning Theory and Agency Theory to argue that governance knowledge and a long-term strategic focus are key internal mechanisms that can help prevent managerial slack and the misappropriation of public assets for political ends. Importantly, the paper highlights the “Culture of Pity” as a major cultural obstacle to meritocracy and describes it as a symptom of “Office Politics Error” where performance evaluations are influenced by social pressures and paternalistic logics. These 11 indicators offer a practical way to institutionalize accountability and bring state-owned agencies in line with international Environmental, Social, and Governance standards. The study, by calling for moving away from political patronage towards a merit-based evaluation system, provides a strategic plan on how to restore public confidence and make state institutions financially sustainable in the long term. In the end, this study adds to the Global South view of ethical leadership by turning moral ideals into concrete governance instruments that help achieve regional development goals like Sabah Maju Jaya 2.0. This study applies an exploratory qualitative approach and aims to develop contextually grounded ethical leadership indicators based on practitioners’ viewpoints, instead of creating causal relationship.
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