An Integrative Governance Model for Understanding Ethical Behaviour: Evidence from Malaysian State-Owned Enterprises

Unethical behaviours result in financial and reputational losses. The paradigm of strengthening legal and regulatory institutions’ external governance to curb unethical behaviours has been ineffective. An integrative governance model based on Institutional Theory that includes both external governance’s and internal governance’s influence on ethical behaviour is needed. The research employed surveys and in-depth interviews to study the model. The key findings were that external governance and internal governance influence ethical behavior positively and the State influences both external governance and internal governance. The key contribution is an integrative governance model encompassing external governance and internal governance that influence ethical behaviour.