ESG institutionalisation in Malaysia: a systematic literature review of theories, mechanisms and organisational outcomes

Purpose This study aims to systematically synthesise environmental, social and governance (ESG) scholarship in Malaysia to explain its development, institutional conditioning and organisational implications while identifying insights relevant to comparable emerging-market settings. Design/methodology/approach Guided by the scientific procedures and rationales for systematic literature reviews, this review combines bibliometric mapping with content analysis using a fit-for-purpose theory–context–theme–characteristics–methodology framework. This review analyses 77 peer-reviewed empirical articles published between 2004 and 10 August, 2025, identified through Web of Science, Scopus and backward and forward snowballing. Findings Malaysian ESG scholarship has expanded rapidly but exhibits regulatory-led research path dependence, remaining concentrated on disclosure, financial performance, governance, listed firms and quantitative archival designs. Dominant theories explain different levels of the same organisational process. Stakeholder, legitimacy and institutional perspectives explain the external pressures initiating ESG engagement; agency and upper-echelon perspectives explain how governance and managerial mechanisms translate these pressures into organisational choices; and resource-based and dynamic capability perspectives explain the depth of ESG internalisation. These findings indicate that ESG outcomes depend on governance, ownership structures, organisational capabilities and institutional logics rather than regulation alone. Research limitations/implications This review excludes grey literature and non-empirical studies. Its single-country design prioritises contextual depth over statistical generalisation, and the transferability of identified mechanisms requires examination in comparable emerging-market settings. Practical implications Regulators should complement disclosure mandates with stronger assurance and capability-building, while firms should strengthen governance and organisational capabilities to move ESG beyond compliance into strategy and operations. Social implications Substantive ESG integration can strengthen accountability, reduce symbolic reporting and build stakeholder trust. Originality/value This study provides a dedicated institutional and organisational synthesis of one of Association of Southeast Asian Nations’ most extensively studied ESG settings. It advances a multilevel view of ESG institutionalisation linking external pressure, organisational translation, capability development and outcomes while distinguishing context-specific conditions from theoretically transferable mechanisms relevant to emerging economies.