Sustainable Leadership: An Empirical Evidence of Its Effect on the Sustainable Performance of an Organization

Abstract

This study examined the role of sustainable leadership using the natural resource–based view (NRBV) and dynamic capability theory (DCT) on organizational consequences such as stress, learning and sustainable performance. Organizational learning was used as a mediator, and psychological empowerment was taken as a moderator between sustainable leadership and sustainable performance relationships. The study used a survey method to test the proposed model and finalized a sample size of 388 respondents. Structural equation modelling was applied to test the complex model using SmartPLS. The measurement model includes reliability, validity, VIF, R-squared, model fitness and structural model, including the proposed complex paths. Results confirmed that sustainable leadership leads to stress reduction. Furthermore, sustainable leadership was a valid predictor of sustainable performance. The mediation of organizational learning and moderating psychological empowerment was also significant and relevant. Sustainability is achieved through effective leadership and organizational outcomes and may be upheld through such leadership. The extended model confirmed that organizational stress is also linked to sustainable leadership. The study’s findings are salient in developing a deep understanding of the incorporated theories and can be used by the corporate sector to augment their performance. The study’s grounding on NRBV and DCT theories adds an original and valuable perspective to sustainable leadership and organizational outcome relationships. This empirical study explores sustainable leadership’s positive and negative relationships to understand its importance in explaining organizational performance and combating environmental challenges.