Building on the stakeholder theory, this paper proposes a conceptual framework that looks into the effects of ethical and socially responsible practices on the financial and non-financial performance of SME in Malaysia. This paper argues that ethical and socially responsible commercial practices are seen critical in order to build a strong ground for harmonious business dealings among the multiracial community in Malaysia which could subsequently affect the overall performance of the SMEs. The varying commercial interests, distinct cultural perspectives, and historically distinct skill and trades could provide a rich perceptual framework for understanding the ethical and socially responsible practices in commercial settings. Even though it has been reported that there is minimal cultural distance between Malays, Chinese and Indians, it is likely that the various challenges faced in the commercial settings have some bearings on their perception of ethics and social responsibility. It is envisaged that this research will provide a better insight into the intercultural variation in regards to values, ethical and socially responsible practices among entrepreneurs in Malaysia and promote a better understanding of the linkage of personal values held by three racial groups in Malaysia and their business practices.
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