Institutional Theory and Employment of Persons with Disabilities in Service Industries: A Conceptual Framework

Institutional Theory and Employment of Persons with Disabilities in Service Industries: A Conceptual Framework

Simranpreet Kaur Hansaram^*, Rudzi Binti Munap

Faculty of Business, Unitar International University

* Corresponding author

DOI: https://dx.doi.org/10.47772/IJRISS.2025.90500067

Received: 21 April 2025; Accepted: 24 April 2025; Published: 30 May 2025

ABSTRACT

This conceptual paper is presented to study the low employment of persons with disabilities, which remains a critical global concern, as notable disparities continue to exist despite the implementation of various legislative and regulatory initiatives. The paper begins by reviewing the literature on the past employment of persons with disabilities and their challenges. Many quantitative studies discuss the above topic, however, the approach to using institutional theory is lacking. The findings can add value to today’s body of knowledge. Key findings can firstly be used to highlight the importance of implementing policies to address employment disparities of persons with disabilities (PWDs). Second, to offer valuable insights for governments and businesses to enhance employment of persons with disabilities by aligning with Sustainable Development Goal 8 (Decent Work) and Sustainable Development Goal 10 (Reduced Inequalities), while emphasizing the need for more robust institutional frameworks to harness the untapped potential of Persons With Disabilities’ and foster equitable economic growth aligned with Malaysia’s Madani agenda.

Keywords: Persons with Disabilities (PWDs), service industry, institutional theory, employment, Sustainable Development Goals (SDGs) 

INTRODUCTION

The global population has an estimated 1.3 billion Persons with Disabilities (PWDs), according to the report from the World Health Organization (WHO) in 2024. Within this considerable number, the key concern is that some PWDs are still excluded from employment.  Although there are verifications of employment of PWDs across the globe, where countries worldwide have implemented diverse programs to enhance the employment of PWDs, yet challenges of them having jobs persists (WHO, 2024; Munsell, E. G., et.al., 2024; Sundar, V., O’Neill, et.al., 2018). Evidence of such matter can be found in countries such as US, Australia, UK, and other European countries including Poland, Spain, Germany, Netherlands and Sweden. Efforts to support those with disabilities, for example, face barriers like high unemployment and limited outcome (Schmidt et.al., 2025; European commission, 2021).

Further in countries like Latin America, despite ratifying the Convention on the Rights of Persons with Disabilities, employment rates remain low due to significant integration barriers (Mañas-Viniegra, L., et.al.,2023).

In the same vein, in Nordic nations job opportunities are available for persons with disabilities where they leverage on redistributive policies (Medeiros, A. D. A., et.al., 2021), however, the fact remain, in many other countries like Japan and Finland, there are only some success in employment of persons with disabilities (Tanaka et al., 2021). Kenya and Bangladesh (Opoku, M. P., 2017) also faced similar challenges where implementation of employment quotas and job placement programs is hindered by employment policy uncertainty and inadequate data. The preceding arguments demonstrated these grave situations and highlight the need for continuous assessment and refinement of global disability employment policies. The foregoing arguments pointed that although government policies are in place, employment of persons with disabilities remain low in many countries.

Malaysia, similar with many other countries across the Globe, faced a consistent rise in the official number of registered PWDs in recent years, however, the employment of persons with disabilities is less. The Department of Social Welfare in Malaysia reported there are 637,537 PWDs as at the year 2023, which is about 1.9% of the population. This figure is an escalation from 586,558 in 2020 and 674,548 in 2022. The National Health and Morbidity Survey (NHMS) 2022 report provide a more accurate estimation of persons with disabilities in Malaysia. The report stated that, 11.1% Malaysians above 18 years old have disabilities. 1 in 4 Malaysian adults experience functional difficulties in one or more of the following domains: seeing, hearing, remembering, walking, self-care and communicating and 4.7% children aged 2-17 years old have functional difficulty in at least one domain, including hearing, vision, communication/comprehension, learning, mobility and emotions.

Although the number is high, the worry is, workforce participation among working-age Malaysians with disabilities is small, with approximately only 4,500 workers in public and private sectors as of 2018, which is barely 1% of the number of registered persons with disabilities in the country. Despite this increase also, PWDs encounter formidable barriers to employment, leading to neglect in their economic, social, and psychological well-being. Based on the allocated 1% of employment quota to PWDs, there should be at least 162,000 PWDs in employment, but to date, only 12,000 are employed even though they represent a huge pool of talents (Malaysian Employers Federation, 2023). Furthermore, only 0.3 percent of civil service employees were PWDS, falling short of the long-standing 1 percent target set in 1988. Some employment challenges persist due to employer scepticisms regarding the capabilities of PWDS to fulfil job responsibilities. PWDs also face barriers such as workplace discrimination and accessibility issues, a clear sign of fairness and justice issue (Vijayasingham et al., 2020). Moreover, slow implementation of policies and employer reluctance due to concerns about productivity and costs are among the contributing factors (Talib et al., 2020). Even initiatives, including Disability Equality Training (DET), aimed to improve employer awareness and accessibility to PWDs employment, have yet to meet the objectives set by the government. (United Nations Development Programs, 2024).

Several government efforts towards employment of PWDs include incentive of RM600 per month for three months for employers who hire PWDs since January 2023 through the Daya Kerjaya Programme, a double deduction for employers for the remuneration paid to certified disabled employees with a Disabled Person’s Card (Kad OKU) and double deduction for employers who train non-employee PWDs. Also, there are other tax reliefs for employment people with disabilities including tax relief of up to RM6,000 for purchasing special tools for PWDs. In addition, the Human Resources Ministry (KESUMA) has also launched programs to help PWDs access employment, encompassing the MYFutureJobs Satellite Centre and the Return-To-Work program.

Problem statement

Compared to persons without disabilities, PWDs have long experienced employment gaps, as shown by poorer labor force participation, unemployment, underemployment, lower wages earned, and lower educational attainment (Bureau of Labor Statistics, 2023; Sevak, P., Houtenville, A. J., et al., 2015). This is despite policies are in place to encourage their employment (Department of Social Welfare Malaysia, 2023). Boundaries on persons with disabilities vary widely, depending on the point of view. There are limits from the point of view of social services, education, health, and employment. Measurement of the PWDs’ well-being inventory revealed that, the community suffered many complicated issues that trigger negative drawbacks in their sociological and physiological well-being (Ibnu Syamsi, 2022).

In Malaysia alone, there are 637,537 PWDs registered with the relevant authorities, however, less than 12,000 of the registered PWDs are in employment (MEF, 2023). To make things worse, PWDs generally work in lower paying jobs that offer limited opportunities for advancement and have less job security (Shahidi, F. V. et.al., 2023; Gunderson & Lee, 2015). Shifts in the labor market account for some of the employment disparities experienced by PWDs (Bobsin, T. S. et.al., 2023). Further, in this country, despite government initiatives of offering several incentives for employers to hire PWDs in Malaysia, the rate is only 0.3% in the public service workforce comprising PWDs (Department of Social Welfare Malaysia, 2023).

Consequently, the less number of PWDs employment is alarming in light of the growing numbers of those whowere born or became PWDs due to chronic disease (Loke et al. 2016). This is documented in the National Health and Morbidity Survey in 2023, which shows that 1 in 5 Malaysian adults experienced functional disabilities: seeing, hearing, remembering, walking, self-care, and communicating. Currently, 2.1% of the population held Disabled Person’s Card (Department of Social Welfare Malaysia, 2024). Additionally, with the country’s aging population at 14.5% by 2040 (UNDP, 2024); DOSM, 2023), PWDs may be the potential untapped labour workforce. Given that PWDs face significant obstacles to employment (Hansaram, R., Kaur, S., 2024), it will result in disregard for their economic, social, and psychological well-being. According to the designated 1% employment quota for PWDs, a minimum of 162,000 PWDs should be employed; however, the number is not encouraging despite their substantial talent pool (Malaysian Employers Federation, 2023). Moreover, merely 0.3 percent of civil service personnel were PWDs, failing to meet the targeted number. The obstacles are also because employers doubt PWDs abilities to meet employment requirements (Morwane et al., 2021)

Service Industry context

The focus of this study is in the service sector because the sectors are the major employers in Malaysia that employs between 70 and 80 percent of the workforce and accounts for more than 60% of GDP. It is a critical driver of economic growth; yet people with disabilities (PWDs) encounter considerable impediments to employment. This is despite, the Department of Statistics Malaysia (DOSM, 2024) reported that the sector saw a consistent increase in employment, particularly in areas like wholesale and retail trade, food and beverage services, and information and communication activities. It is important to employ PWDs in this sector, because here they can use their ability to perform specific tasks because of the availability of accessible workplaces, and they can bring positive impact on customer service and workplace culture (Kim, B., et,al., 2025; Doan, T., Mooney, S., & Kim, P. B., 2023). But the hiring does not materialize as targeted by government due reasons such as a lack of qualified candidates with disabilities, the perceived high cost of accommodating disabilities, concerns about increased healthcare costs, and a lack of knowledge or information among employers (Omar, M. K., et.al., 2024).

Also, despite progressive regulations, such as a 1% employment quota for people with disabilities (PWDs) in large businesses, only about 0.7% of PWDs are formally employed in the industry (DOSM, 2023). This underrepresentation is the result of ongoing issues such as employer bias, insufficient workplace accessibility, and a mismatch between the capabilities of persons with disabilities and the expectations of the service industry. According to an OKU Sentral survey from 2021, 60% of employers in the retail and hospitality industries considered people with disabilities (PWDs) to be less productive, showing continuing attitudinal hurdles. The urban-rural divide exacerbates these issues, with 78% of employment for persons with disabilities (PWD) concentrated in metropolitan regions (World Bank, 2022), resulting in less chances for rural PWDs.

In view of the above, a comprehensive approach is required to increase the participation of persons with disabilities in the service industry. Improving the implementation of the employment quota, combined with penalties for non-compliant enterprises, will encourage greater accountability (Ministry of Finance, 2024).  By overcoming these obstacles also, Malaysia may realize the untapped potential of people with disabilities, building a more inclusive and successful services sector. Regrettably as yet, PWDs have found it difficult to have employment opportunities with different experiences than their own (Gumelar, R. F. A., & Sardi, M., 2021). This is a concerning condition in light of the growing number of PWDs, who account for 16% of the global population, according to the World Health Organization, 2022, forecast. This is even so, as of 2024, 2.1% of Malaysia’s population possessed PWD cards issued by the Department of Social Welfare demonstrating the increasing numbers of PWDs.

Based on the above, this study aims to examine the factors affecting the employment of persons with disabilities (PWDs) in Malaysia using the lens of institutional theory as the theory is valuable for studying disability employment because it helps understand how societal norms, regulations, and organizational practices, rather than individual attitudes or abilities, influence the inclusion of people with disabilities in the workforce (Lu, S. E., et.al., 2024; Abd Manaf, A. R.,  et.al., 2018). Also, it provides a framework to examine how these external forces shape employment outcomes for this group. The study will also investigate the deficiencies and strategies to improve equity, inclusion, and society perceptions of persons with disabilities (PWDs). The primary study topic is what factors influence the employment of persons with disabilities in the service industry. The purpose is to identify and investigate the factors influencing the employment of persons with disabilities (PWD) in Malaysia’s service industry.

This study fills a critical gap in specific research on employment of PWDs. Anticipated outcomes encompass more inclusive employment and the advancement of PWDs in the workplace. These findings are expected to significantly contribute to the social, economic well-being, and cultural integration within the MADANI Society. Moreover, the study’s insights can inform policy changes within the Ministry of Human Resources and the Ministry of Women, Family, and Community Development, promoting greater inclusivity in PWDs employment. This effort seeks to bridge the gap between PWDs and employment opportunities, therefore, nurturing social sustainability.

LITERATURE REVIEW

Persons with Disability (PWDs) and Employment

The 1975 UN Declaration on the Rights of Disabled Persons (the Declaration) defined a “disabled person” as anyone “unable to ensure by himself or herself, wholly or partly, the necessities of a normal individual and/or social life, as a result of deficiency, either congenital or not, in his or her physical or mental capabilities. This definition stresses the inabilities of persons with disabilities and their dependence on assistance. Since the Declaration was adopted, attitudes towards disability have shifted. For instance, the term “disabled person” has been largely replaced in common use by “persons with disabilities,” since the later places’ emphasis on the person rather than on the disability. In Malaysia the definition is in accordance with the Persons with Disabilities Act 2008, PWDs, encompass those who suffer from long term physical, mental, intellectual or sensory impairments, preventing their full and effective participation in society when faced with challenges.  The government does not ostracize PWDs but instead provides services for them.  There are 7 categories of PWDs under which they can be registered namely, hearing disability / impairment, visual disability / impairment, speech disability / impairment, physical disability/impairment, learning disability, mental disability / impairment, and multiple disabilities / impairments.

In recent years, the employment of persons with disabilities (PWDs) in Malaysia has risen markedly. In 2024, there are 3,724 disabled civil servants, predominantly comprising individuals with physical disabilities (2,551) (Department of Social Welfare and Ministry of Women, Family and Community Development, 2024).  A majority of these employees occupy support roles (66.1%), including administrative and clerical tasks, which are frequently customized to meet their particular requirements and abilities (Ali, H., & Abdullah, M. (2023).

The private sector has had an increase in the employment of persons with disabilities, with 3,186 individuals employed across many industries (Department of Social Welfare and Ministry of Women, Family and Community Development, 2024).  The predominant positions for persons with disabilities in the private sector are in service and sales (956 employees), succeeded by technical and manufacturing occupations (Smith et al., 2024).  This growth signifies the heightened acknowledgment of the contributions that persons with disabilities (PWDs) offer to the workforce, alongside the execution of legislation and programs designed to foster inclusive employment practices (Brown, S., & Jones, M., 2023). Notwithstanding this advancement, obstacles persist even in the service industry.  A significant number of persons with disabilities remain employed in low-skilled, low-paying positions, so constraining their prospects for professional progression and financial autonomy (Ortiz García, P., & Olaz Capitán, Á. J. (2021). Moreover, there is a necessity for enhanced knowledge and training among employers to foster more employment of PWDs in the workplaces that cater to the different requirements of PWDs (International Labour Organization, 2022).

The Service Industry

The structure of Malaysia’s service industry reveals various vital growth sectors that drive national advancement. According to the World Bank (2022), digital economy services such as e-commerce and fintech have grown to be particularly strong sectors, accounting for 23.2% of GDP in 2023.

Employment growth in the service sector demonstrates its critical role as Malaysia’s primary job generator. According to the Ministry of Human Resources (2023), employment in the service industry increased from 9.8 million in 2020 to 10.6 million in 2022, representing 64.8% of total employment. This is supported by the Asian Development Bank (2022), which demonstrated that the increase has coupled with higher labor productivity and has risen from RM78,543 per worker in 2020 to RM82,917 in 2022. Nonetheless, challenges remain in the workforce development, with the Malaysia Digital Economy Corporation (2023) projecting that 45% of service workers will require digital skill upgrade by 2025 to meet shifting sector requirements. Government policies and initiatives have had a significant impact on the service sector’s development trajectory. The Institute of Strategic and International Studies Malaysia (2022) analysed the Services Sector Blueprint 2021-2025, which outlines strategic objectives to increase competitiveness. Initiatives such as My DIGITAL aim to position Malaysia as a regional digital economy leader, with a goal of total 4G coverage by 2025 and increased e-commerce involvement among SMEs (Ministry of Communications and Digital, 2023). The government efforts have created an atmosphere conducive to service sector growth while addressing structural challenges through targeted reforms.

Employment of Persons With Disabilities (PWD)

When a person is employed, to excel, factors to consider are training and development, performance evaluation, and compensation and benefits that can improved organisational performance (Hansaram, S. K., et.al (2023). Three major competences were identified in this case, results-oriented character, interpersonal competence and technical competence/flexibility. The most common method to identify potential was performance appraisal by immediate superiors Juhdi, N., et.al., (2015). This is similar to People with Disabilities (PWDs) employment. Especially in Malaysia’s service sector, their employment is a strategic necessity that bolsters social inclusion, improves company performance, and adheres to legal and international obligations.

The Persons with Disabilities Act 2008 and Malaysia’s National Policy for Persons with Disabilities 2021–2025 stipulate equal job opportunities, underscoring the country’s commitment to an inclusive workforce (Ministry of Women, Family & Community Development report, 2024). Moreover, Budget 2024 implemented tax incentives for firms employing persons with disabilities, so promoting corporate engagement in disability inclusion (Ministry of Finance report, 2024).  In addition to legal compliance, employing persons with disabilities (PWDs) corresponds with Malaysia Madani’s aspiration for a caring and equitable society (Economic Planning Unit, 2024).

Persons with Disabilities (PWDs) Employment in the Service Sectors

The current statistics on employment of persons with disabilities pointed to the lower level. This shows that obstacles persist in their employment, such as attitudinal impediments, inadequate accessibility, and insufficient awareness. To address these challenges, Malaysia has implemented MS ISO 9001:2024 standards, which encompass guidance for disability-inclusive workplaces (SIRIM, 2024).  Public awareness initiatives such as #KerjaUntukSemua (Jobs for All) seek to diminish stigma and advocate for inclusive employment practices (Ministry of Women, Family & Community Development report, 2024). In this manner, the service sector in Malaysia can derive considerable economic and social advantages by actively engaging PWDs. It is possible for businesses to nurture a workforce that is more inclusive, imaginative, and competitive by increasing the enforcement of legislation, providing incentives to corporations, and working together with the public/private sector. As a result, the employment of persons with disabilities in critical service professions, which might range from retail and hospitality to digital service, helps businesses to improve their operational efficiency, increase the number of interactions they have with customers, and cultivate a society that is more equal.

Governments and organizations in Malaysia have the ability to foster an inclusive workforce that is beneficial to individuals with disabilities, employers, and society as a whole if they address the behavior of employers, the demands from the outside world, and the perceived support from the organization. It would be in conformity with Malaysia’s sustainable development objective, notably objective 8 and 10, as well as Malaysia MADANI, which would promote a more equitable future that includes more diversity, equality, and inclusion. This would meet the requirements of the sustainable development goal. These ideas, when taken as a whole, constitute a comprehensive framework that can be utilized to comprehend and advance the employment of individuals with disabilities in the service industry throughout the entirety of Malaysia. However, PWDs continue to have a difficult time finding work in the service sector, despite the fact that this sector is extremely important to Malaysia’s economy. This continuous issue is caused by a number of interconnected challenges, which calls for rapid attention and comprehensive solutions because they are interconnected.

Economic Benefits of Employment Persons with Disabilities

From an economic standpoint, enterprises that adopt disability inclusion frequently witness enhanced revenue growth, increased creativity, and greater consumer loyalty.  A 2023 International Labour Organization analysis indicated that firms employing inclusive hiring methods achieve 28% superior financial performance, whilst a 2024 Deloitte study emphasized that such firms are 1.7 times more innovative than their counterparts.  Prominent Malaysian companies, have shown enhanced employee retention and customer satisfaction following the adoption of PWD-friendly policies (Gupta, V., & Sahu, G., 2025).  Persons with disabilities possess distinctive problem-solving abilities and adaptability, which are especially advantageous in the service industry, where client engagement and operational efficacy are paramount (Harvard Business Review, 2023).

Culture and Social Impact of Employment Persons with Disabilities

Beyond economic advantages, employing persons with disabilities cultivates a more affirmative workplace culture.  Organizations that emphasize inclusivity experience elevated employee morale, enhanced collaboration, and improved workplace cohesion (Forbes, 2023).  This is particularly pertinent in the service sector, as frontline personnel engage directly with clients.  A 2024 Nielsen poll indicated that 73% of customers favour businesses that support persons with disabilities, suggesting that employment of PWDs can improve brand reputation and customer loyalty. Notwithstanding these benefits, hardly 0.7% of persons with disabilities in Malaysia are formally employed, underscoring a considerable unexploited potential (DOSM, 2024). To mitigate this deficiency, the government has initiated programs like SOCSO’s Career Support Programme, which offers complimentary training and employment placement for PWDs (SOCSO, 2024).  The private sector plays a vital role; organizations such as Starbucks Malaysia have effectively educated persons with disabilities as baristas, demonstrating that with minimal workplace modifications, service industry positions may be significantly accessible (The Edge, 2024).

Challenges in Physical and Systemic Accessibility of Employment Persons with Disabilities

The service industry poses several physical obstacles that prevent those with disabilities from obtaining meaningful employment. Numerous restaurants, retail centers, and hotels are deficient in fundamental accessibility elements, including ramps, tactile paths, and modified service counters (Social Welfare Department, 2023). The communication deficit is as alarming, as few enterprises offer Braille menus, sign language interpreters, or sensory-friendly settings (Malaysian Deaf Federation, 2022).  These accessibility deficiencies hinder individuals with disabilities from obtaining services and finding jobs within these companies.

Rigid Employment Frameworks and Regulations of Employment Persons with Disabilities

The inflexible work demands of the service sector constitute another considerable obstacle.  Numerous occupations require rigid schedules, nocturnal hours, or physical endurance, thereby disqualifying certain PWDs (ILO, 2023).  Alarmingly, hardly 18% of Malaysian service enterprises provide flexible work arrangements suitable for employees with disabilities (Ministry of Human Resources, 2023). This rigidity in work structures unjustifiably excludes numerous qualified candidates who could otherwise make significant contributions with minimal adjustments.

Discrepancies in Policy Execution of Employment Persons with Disabilities

Despite Malaysia’s implementation of progressive regulations such as the Disability Act 2008, enforcement is notably inadequate, especially within the commercial service sector.  Adherence to accessibility standards in Kuala Lumpur’s retail environments is currently under 30% (KL City Hall, 2023).  Current incentives, including tax advantages for firms hiring persons with disabilities, are hindered by bureaucratic intricacies that deter participation (Ministry of Finance, 2023).  These implementation shortcomings diminish the potential efficacy of otherwise robust programs.

Deficiencies in Training and Skills Development of Employment Persons with Disabilities

Vocational training programs frequently inadequately equip persons with disabilities for the requirements of the service sector.  Present programs seldom encompass essential skills such as the operation of digital point-of-sale systems or customer service competencies (Ministry of Education, 2023). Employers frequently identify this training deficiency as a significant issue when evaluating candidates with disabilities (Malaysian Employers Federation, 2022). In the absence of focused skills development, numerous persons with disabilities remain ill-equipped for existing roles in the service industry.

Dependent Variable – Employment of Persons with Disabilities

Employment of persons with disabilities (PWDs) is the dependent variable in this research. A foundation for the rights of people with disabilities has been established by the ratification of the United Nations Convention on the Rights of Persons with Disabilities (UN CRPD) and the passage of the Persons with Disabilities Act of 2008. Efforts made by the government, such as the implementation of job quotas and educational reforms, have been directed toward expanding these opportunities. It aligns with two of the Sustainable Development Goals (SDGs), specifically Goal 8 and Goal 10 of the SDG Initiative. An inclusive labor market has been fostered as a result of the implementation of Sustainable Development Goals 8 and 10, which have also influenced policy, employment, accessibility, and education for people with disabilities (Tah & Mokhtar, 2018).

Sustainable Development Goals

SDG 8: Decent Work and Economic Growth

Indicators such as the employment of people with disabilities, the quality of work conditions, and the economic engagement of people with disabilities are used to evaluate the success of Sustainable Development Goal 8. The target to achieve in 2030 is to achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. The indicators are the average hourly earnings of female and male employees, by occupation, age and persons with disabilities and unemployment rate, by sex, age and persons with disabilities.

SDG 10: Reduced Inequalities

As for the achievement of SDG 10, it is measured by indicators such as the reduction in employment inequality, inclusiveness of organizational practices, and fairness in the workplace. The by 2030 is to empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. Also, in the same year, the goal is to empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. The indicators are the proportion of people living below 50 per cent of median income, by sex, age and persons with disabilities

The SDGs are regarded as the intended outcomes and the objectives this research aims to achieve these by 2030. In this context, employment practices and other associated factors function as independent variables that affect the attainment of SDG-related objectives. For instance, the objective 8.5 is to attain full and productive employment, as well as decent work for all individuals, including women, men, youth, and persons with disabilities, ensuring equal remuneration for work of equal merit. The variables in 8.5.1 indicate the average hourly earnings of female and male employees categorized by occupation, age, and disability status. The indicator specified in 8.5.2 is the unemployment rate categorized by gender, age, and disability status.

The attainment of SDG 10 is evaluated by criteria including diminished employment gaps, inclusive organizational practices, and workplace equity. Indicator 10.2 promotes and supports the social, economic, and political inclusion of all individuals, irrespective of age, gender, handicapped, race, ethnicity, origin, religion, or socioeconomic status. Indicator 10.2 aims to promote and facilitate social, economic, and political inclusion for all individuals, irrespective of age, gender, handicap, race, ethnicity, origin, religion, or economic status. Additional indicators, such as 10.2.1, indicate the percentage of those living below 50% of the median income, categorized by gender, age, and disability status.

Independent Variables – Institutional Theory Construct

Within the framework of the employment of persons with disabilities (PWD) in the service sector of Malaysia, Institutional theory is one of the most popular theories in the fields of sociology, political science, and organizational studies is called the Institutional Theory. This theory investigates the ways in which institutions have an impact on social behavior, decision-making, and organizational structures. It investigates the origins of laws, norms, and practices, as well as the influence that these things have on the relationships that exist inside a society. According to Meyer and Rowan (1977), the term “institutions” can be used to refer to both formal structures like laws and organizations, as well as informal norms and cultural ideas when used in this context. The concept was initially conceived in the middle of the twentieth century, and it was driven by the research conducted by academics such as Philip Selznick, John Meyer, and Paul DiMaggio, who explored the influence that institutional frameworks have on organizations and governance (DiMaggio & Powell, 1983).

Institutional Theory is defined by several fundamental elements, which include institutions as social structures. Institutions endure societal structures that influence human behavior. They are divided into regulatory systems (legislation and policies), normative systems (social expectations and cultural norms), and cognitive systems (collective ideas and ideologies) (Scott, 1995). Institutionalization is the process by which practices and standards become deeply embedded in organizations and society. This occurs as a result of regulatory pressures, which are official regulations and statutes that require compliance. Normative Pressures, social ideals and professional norms that shape behavior. Mimetic Pressures, ideas and cognitive frameworks that shape perception and decision-making (DiMaggio & Powell, 1983).

A crucial framework for comprehending the ways in which institutions have an impact on both societal behavior and the actions of corporations is Institutional Theory. There is a wide range of uses for it, and it offers insights into the stability, transformation, and adaptation of complex systems. According to DiMaggio and Powell (1983) and Scott (1995), the theory will continue to be applicable for the analysis of contemporary crises and transitions even as institutions continue to develop. It offers a fundamental foundation for comprehending the ways in which institutions have an effect on the behavior of corporations and society.

Institutional Pressures in Malaysia’s Service Sector

Institutional theory illustrates how the Malaysian service sector may improve employment of persons with disabilities. Initially, it examines how organizations comply with legal and regulatory obligations. The Persons with Disabilities Act 2008 and the Malaysian Policy on Persons with Disabilities 2007 create a legislative framework mandating equal opportunities and appropriate accommodations (Social Welfare department, 2020). The theory clarified how firms implement inclusive employment practices to comply with legislation and avoid penalties. To ensure compliance as well, the Malaysian government offers incentives, such as tax rebates, to encourage the employment of individuals with disabilities, thus improving compliance (Ministry of Finance Malaysia, 2021). In the service sector, for example, where customer interaction is vital, employment individuals with disabilities can enhance an organization’s brand and foster customer loyalty. Establishments like hotels and restaurants that prioritize inclusivity are often perceived as socially responsible, attracting customers who value diversity (Rahman, S. Y. B. A., et al., 2021).

Secondly, institutional theory underscores the need of legitimacy and social accountability. Employing individuals with disabilities aligns with societal expectations around corporate social responsibility and ethical business conduct, hence improving an organization’s brand. In order to demonstrate their dedication to social accountability and to enhance stakeholder involvement, Malaysian firms, have incorporated disability inclusion into their corporate social responsibility programs (AirAsia, 2021).

The third point is that mimetic forces encourage the widespread adoption of behaviors that are inclusive. Notable Malaysian companies, have successfully implemented disability inclusion projects. These projects have served as a benchmark for the industry, as they have encouraged other organizations to adopt similar practices and provided employment opportunities and training opportunities for individuals with disabilities (Rahman S. Y. B. A., et al., 2021).

In addition, institutional theory emphasizes the significance of professional norms and standards in the process of creating an inclusive environment for people with disabilities. When normative pressures are present, the influence of professional networks and industry norms is brought greater attention. (SIRIM, 2020) Organizations that demonstrate their commitment to inclusion by implementing the Malaysian Standard MS ISO 26000 are able to demonstrate their commitment. Through training and lobbying, industry organizations such as the Malaysian Employers Federation (MEF) push for the inclusion of people with disabilities in the workforce. Such organizations also encourage businesses to adhere to professional standards (MEF, 2021).

In the end, institutional theory is beneficial to organizations because it assists them in dealing with resistance to change. According to Ismail and Zainal’s research from 2020, there are some issues that can arise in Malaysia as a result of misunderstandings regarding the productivity and expenses involved with employing people with disabilities. Organizations may be compelled to solve these difficulties as a result of institutional pressures, such as rules imposed by the government and industry standards. The “1% PWD Employment Policy” implemented by the Malaysian government for public sector entities has resulted in private sector companies adopting initiatives that are comparable to those implemented by the government (Social welfare department, 2020). In the event that this level of comprehension is achieved, the service sector in Malaysia has the potential to effectively promote employment opportunities for those with disabilities while simultaneously nurturing a workforce that is more egalitarian and diverse.

Based on the above argument, the research questions is, what are the factors that influence the employment of persons with disability in the service industry. The sub research question is how do regulatory pressure, normative pressure, and mimetic, influence the employment of persons with disabilities in the Malaysian service sector. While the objective is to identify and analyze the factors that influence the employment of persons with disabilities (PWD) in the service industry in Malaysia. The specific objective is to explore how regulatory, normative, and mimetic pressures (institutional theory) influence the employment of PWD in the Malaysian service sector.

Hypotheses

The following are the hypotheses of the research.

H1: Regulatory pressure influences the employment of persons with disabilities in the service sector.

H2: Normative pressure influences the employment of persons with disabilities in the service sector.

H3: Mimetic pressure influences the employment of persons with disabilities in the service sector.

Conceptual Framework

Source: Greve (2003); DiMaggio, P. J., & Powell, W. W. (1991)

METHODOLOGY

Research Design

This section offers a summary of the research methodology, data collection procedures, and analytical tools that were utilized in this study to examine the factors that influence employers’ intentions to recruit individuals with disabilities (PWDs) in Malaysia. In order to get information from employers operating in the service industry in Malaysia, a quantitative technique was applied for the aim of this study. Additionally, a structured questionnaire was utilized to obtain relevant information from these employers. Employment of Persons with Disabilities (EPWD) is the dependent variable that will be evaluated through the use of the questionnaire. The goal of the questionnaire is to analyze components that are based on Institutional Theory (IT). The method is broken down into its component parts, which include the research design, the sampling strategy, the procedure for data collecting, the variable measurement, and the tools for data analysis.

Quantitative Cross-Sectional Design

The objective of this study is to investigate the relationships between the independent variables (regulatory pressures, normative pressures, mimetic pressures,) and the dependent variable (employment of persons with disability). Within the scope of this investigation, a quantitative cross-sectional research design was applied as the research methodology. Through the utilization of the cross-sectional method, which makes it simpler to gather data at a particular moment in time, it is possible to acquire an overview of the attitudes and intentions of employers about the employment of people with disabilities (PWDs).

Sampling Strategy

Target Population

In the context of this study, the population that is being targeted consists of employers and recruiting managers who are employed within the service industry in Malaysia. A number of different industries are included in this sector, including retail, hospitality, tourism, and finance, amongst others.

Sampling Technique

When it comes to the process of sampling, a technique known as purposive sampling is applied in order to find persons who are in possession of decision-making authority. These methodological criteria are adhered to by the purposive sampling methodology that targets employers and recruiting managers in Malaysia’s service industry. Additionally, the strategy ensures that the data collection process is realistic and practical.

According to Saunders et al. (2021), this methodology is especially useful for research projects that concentrate on specialized groups, such as those that involve recruitment decision-makers. This strategy ensures that only those individuals in Malaysia’s service business who have direct recruiting authority, such as Human Resource managers, employers, and senior recruiters, are included in the study, which in turn increases the validity of the research (Joy, S., & Rahi, M., 2024).). Purposive sampling, on the other hand, enables researchers to concentrate on information-rich situations, making it particularly ideal for exploratory and qualitative research (Palinkas et al., 2020).

To collect data, the researcher will use professional networks, LinkedIn, or industry associations as a means of overcoming the barrier of gaining access to high-level recruitment professionals, this strategy makes strategic selection easier to accomplish (Creswell & Poth, 2016). Additionally, the researchers are able to maintain consistency and validate that only persons who have true decision-making authority are interviewed by using defined inclusion criteria, such as the number of years of experience or the job function (Etikan, I., Musa, S. A., & Alkassim, R. S., 2016).). This would result in the elimination of respondents who are less important, such as junior staff or administrative professionals (Taherdoost, 2022).

Sample Size Determination

In order to ensure that there is sufficient statistical power to identify medium effect sizes at a significance level of 0.05, the process of determining the sample size is carried out with the assistance of software. In order to determine the sample size, the G*Power software is utilized. This is a piece of software that has been specifically designed for quantitative research designs that make use of structural equation modeling (SEM). Its purpose is to determine the best sample size for this study.

In order to conduct the study, a linear multiple regression test will be utilized. The expected effect size was calculated to be medium, with Cohen’s f-value being 0.15. The significance threshold (α) was set at 0.05, and the statistical power was set at 80%. A minimum sample size of 146 respondents is required in order to properly discover the proposed connections, according to the findings of the study’s theoretical framework, which incorporates a number of predictors from the Institutional Theory. In order to handle any partial responses and ensure that the results are strong, the target sample size was determined to be 200 participants. The increased sample size is in accordance with the “10-times rule,” which is typically recommended for partial least squares structural equation modeling (PLS-SEM). This rule stipulates that the sample must be at least ten times the highest number of structural routes that are directed towards any single construct within the research model (Hair et al., 2011; Peng & Lai, 2012)

Data Collection Procedures

Survey Instrument

In order to collect data, a standardized questionnaire is disseminated online through a variety of platforms, including Google Forms and LinkedIn, amongst others. Items in the questionnaire are measured using a Likert scale of five points, with one representing “Strongly Disagree” and five representing “Strongly Agree.” Likert scales are used to measure items. Additionally, the questionnaire is broken up into sections that are specifically designed to address the theoretical topics.

For the purpose of conducting preliminary testing on the questionnaire, a small sample size of thirty respondents is utilized. The objective of this testing is to establish the clarity, reliability, and validity inherent in the questionnaire. Prior to the questionnaire being sent out to a much broader group, the input obtained from the pretest is utilized to enhance its qualities. There is no requirement for participants to submit their comments, and they are guaranteed that the anonymity of their responses will be maintained.

Ethical Considerations

With ethical issues in mind, the competent institutional review board has given their approval for the study to move forward from this point forward. Participants are given a form of informed consent, which contains information on the objective of the study, their rights, and the confidentiality of their responses. This consent is given to participants. In order to protect the confidentiality of the information, it is kept in a safe location, and only the findings that have been aggregated are distributed to relevant parties.

The purpose of this technique is to create a methodological framework that offers a systematic approach to the examination of the factors that influence the intentions of employers in Malaysia to hire individuals with disabilities. In order to provide meaningful insights into the obstacles and opportunities that are linked with inclusive employment practices in the service industry, the objective of this study is to provide such insights. The employment of robust theoretical frameworks and sophisticated statistical methodologies will be utilized in order to accomplish this goal. When it comes to formulating plans to improve the inclusion of persons with disabilities and accomplish sustainable development goals, the findings will serve as a guide for governments, business leaders, and organizations across the world.

CONCLUSION

The purpose of this study is to develop a comprehensive framework, that is measuring and conducting an analysis based on theoretical and empirical bases of employment of persons with disabilities (PWDs) within Malaysia’s service sector. This analysis included the incorporation Institutional Theory (IT). The investigation highlights a number of significant results regarding people with disabilities (PWDs) in Malaysia, including the fact that they remained to be underrepresented in the labor sector. This is in spite of the fact that there are progressive pieces of legislation, such as the Persons with Disabilities Act of 2008, as well as a variety of policy initiatives that are linked with the aims of sustainable development. As a result of the many challenges that are present, the employment rates for people with disabilities (PWDs) in the service sector in Malaysia are alarmingly low. Despite the fact that there is evidence that people with disabilities have a positive impact on customer satisfaction, persistent employer biases mistakenly view people with disabilities as being unfit for customer-facing occupations. In addition, those who are eligible are not accepted because they are physically inaccessible and have stringent work schedules. There are policies in place, but their effectiveness is restricted due to insufficient enforcement and obstacles posed by bureaucracy. In addition, there are structural challenges that continue to exist, such as attitudes that are biased, accessibility gaps, and a lack of understanding on the part of employers. These barriers continue to impede the employment of people with disabilities (PWDs) in Malaysia’s service sector, which is an area where diversity and customer involvement are extremely important.

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