Transformational Leadership for Effective Corporate Governance in Public Sector Enterprises: A Malaysian Experience

Introduction

The Covid-19 pandemic has severely changed the business landscape, resulting in businesses operating differently worldwide. If anything, it has helped to expose inefficient and weak governance processes, deep-rooted inequality, and a lack of social security in corporations and nations (Lateef & Akinsulore, 2021). Conversely, the pandemic has altered the corporate governance structures conducive to an organisation’s survival and success, which may result in long-term changes for businesses to govern their operations (Gelter et al., 2021). Moreover, sound corporate governance is crucial and essential to structure the decision process and direct organisations to incorporate the expectations of various stakeholders strategically. In the long term, responsible governance based on solid fundamentals, values and integrity can provide positive spillovers and synergistically influence individual and institutional actors' practices, structures, and behaviour. The Covid-19 pandemic, like other businesses, also impacted public sector enterprises. With increasing stakes and the rising intellectual of the public, the expectation for proper corporate governance among companies, including public sector enterprises, has grown profoundly in recent years. The incessant stream of governance failures, fraud, inefficiency, corruption, and poor internal control and financial management were some of the primary issues faced by public sector enterprises worldwide.

Conversely, the Covid-19 pandemic that brought massive adversities globally added more burden to public sector enterprises in keeping up with their mission. The challenge is further compounded by the dynamic social media, where people tend to pose displeasure with services they encounter in the public sector. Consequently, public sector enterprises worldwide are now under pressure to justify the sources and utilisations of public resources and improve their service delivery performance. Hence, managing a public sector enterprise is no longer straightforward. More needs to be done by the leaders of such public sector enterprises to ensure most, if not all, stakeholders are adequately managed. In this context, transformational leadership is recognised as a primary factor in promoting corporate governance (Elmasry & Bakri, 2019; Hamran Mohamad et al., 2014), enabling public sector enterprises to handle issues more effectively where ethics, professionalism and vital characteristics are crucial. Moreover, transformational leadership occurs when leaders inspire and motivate employees toward new ways of working and thinking (Cleavenger & Munyon, 2013). Leaders, in broad terms, must manage the significant financial and human resources allocated for such enterprises with proper control and discipline. Leaders who promote moral values and provide clear visions and missions could attract their followers to share good universal values, enhancing the organisation's accountability. Therefore, having leadership charisma and capabilities is crucial to driving the organisation to achieve its ultimate corporate goal as a protector of this nation. This could promote accountability among the employees in public sector enterprises in achieving the purpose of serving the country and working for social well-being (Aziz et al., 2015). Continuous development of the leaders should be prioritised as it directly affects the public sector accountability. Strong leadership is imperative for good corporate governance in public sector enterprises.