Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China
Abstract
:1. Introduction
2. Theoretical Background and Research Hypothesis
2.1. Transformational Leadership and ESG Performance
2.2. Transformational Leadership and Organizational Innovation
2.3. Organizational Innovation and ESG Performance
2.4. The Moderating Role of External Social Capital
3. Methodology
3.1. Data and Samples
3.2. Variable Measurement
3.3. Reliability and Validity Test
3.4. Confirmatory Factor Analysis
3.5. Multicollinearity Analysis
4. Research Results
5. Discussion
5.1. Theoretical Significance
5.2. Practical Significance
5.3. Prospects and Limitations
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Construct | Items | Statement |
---|---|---|
Transformational leadership (TL) | TL1 | The leader shows determination in accomplishing goals. |
TL2 | The leader is respected by all for the way they handle things. | |
TL3 | The leader does not care about personal gain or loss for the sake of the team or collective good. | |
TL4 | The leader demonstrates competent, driven and confident traits. | |
TL5 | The leader is very focused on the interests of the organization. | |
TL6 | The leader expresses expectations for high performance to their subordinates. | |
TL7 | The leader portrays an inspiring future to everyone. | |
TL8 | The leader conveys a sense of mission to everyone. | |
Organizational innovation (OL) | OL1 | The company introduced a new management system. |
OL2 | The company introduces new practices of organizational improvement (process reengineering, quality management, etc.). | |
OL3 | The company introduces new management processes (new work manual, new recruitment and assessment system). | |
OL4 | The company introduces a new approach to planning and budgeting. | |
OL5 | The company actively implements new policies to improve organizational performance. | |
External social capital (sc) | SC1 | The company maintains good relationships with government departments. |
SC2 | The company can get support and resources from the government. | |
SC3 | The company establishes good relationships with its partners. | |
SC4 | The company regularly conducts technical exchanges with its partners. | |
SC5 | The company establishes good relationships with financial institutions. | |
SC6 | The company maintains good cooperative relationships with its suppliers. | |
Environmental performance (EP) | EP1 | The company takes the initiative to use low-carbon energy-saving products and equipment. |
EP2 | The company uses clean energy and fuels. | |
EP3 | The company has a comprehensive energy-saving system and measures for energy conservation, comprehensive recycling of resources, green office, etc., and has implemented them effectively. | |
EP4 | The company has built a perfect environmental protection organization management system and environmental management system. | |
EP5 | The company reduces environmentally harmful behaviors. | |
EP6 | The company actively participates in various social environmental causes and environmental protection acts such as ecological protection. | |
Corporate social responsibility (CSR) | CSR1 | The company encourages employees to develop their skills and careers. |
CSR2 | The company pays attention to the needs of employees. | |
CSR3 | The company attaches great importance to the training of employees. | |
CSR4 | The company values the welfare of its employees. | |
CSR5 | The company focuses on the improvement of employees’ production and operation conditions. | |
CSR6 | The company supports the assistance of community personnel (vulnerable groups). | |
CSR7 | The company’s operations will not have a negative impact on the community. | |
CSR8 | The Company participates in various charitable activities. | |
CSR9 | The company participates in long-term social welfare activities. | |
CSR10 | The company attaches great importance to customer satisfaction. | |
CSR11 | The company provides customers with comprehensive and accurate information about the products it sells. | |
CSR12 | The company respects the protection of consumer rights. | |
Corporate governance (CG) | CG1 | The company has a good information disclosure mechanism. |
CG2 | The company fully considers the interests of shareholders and other stakeholders. | |
CG3 | The company has a good anti-risk response mechanism. | |
CG4 | The company has good business ethics. | |
CG5 | The company has a good anti-bribery mechanism to eliminate corruption. | |
CG6 | The company operates legally and compliantly. |
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Characteristic | Options | No. | Percentage |
---|---|---|---|
Gender | Male | 165 | 47.14 |
Female | 185 | 52.86 | |
Age | 20–30 years old | 90 | 25.71 |
30–40 years old | 103 | 29.43 | |
40–50 years old | 97 | 27.71 | |
Over 50 years old | 60 | 17.14 | |
Education | High school | 83 | 23.71 |
College degree | 107 | 30.57 | |
Bachelor’s degree | 78 | 22.29 | |
Master’s degree or above | 82 | 23.43 | |
Years in business | Less than 5 years | 122 | 34.86 |
5–10 years | 31 | 8.86 | |
10–20 years | 110 | 31.43 | |
More than 20 years | 87 | 24.86 | |
Firm ownership | State-owned enterprise | 87 | 24.86 |
Private enterprise | 82 | 23.43 | |
Foreign enterprise | 98 | 28.00 | |
Others | 83 | 23.71 | |
Firm industry | Manufacturing industry | 41 | 11.71 |
Finance and insurance industry | 21 | 6.00 | |
Culture, sports, and entertainment industry | 25 | 7.14 | |
Wholesale, retail, and service industry | 29 | 8.29 | |
Real estate industry | 35 | 10.00 | |
Information transportation, computer services, and software industry | 41 | 11.71 | |
Scientific research, technical services, geological prospecting, and energy industry | 38 | 10.86 | |
Health and social security industry | 33 | 9.43 | |
Transportation industry | 26 | 7.43 | |
Education industry | 32 | 9.14 | |
Others | 29 | 8.29 | |
Firm size | 0–50 people | 81 | 23.14 |
50–200 people | 72 | 20.57 | |
200–500 people | 115 | 32.86 | |
More than 500 people | 82 | 23.43 | |
Total | 350 | 100.0 |
Construct | Items | Factor Loading | Variance Explained | Cronbach’s Alpha | KMO Value |
---|---|---|---|---|---|
Transformational Leadership (TL) | TL1 | 0.863 | 0.576 | 0.895 | 0.932 |
TL2 | 0.746 | ||||
TL3 | 0.737 | ||||
TL4 | 0.731 | ||||
TL5 | 0.724 | ||||
TL6 | 0.755 | ||||
TL7 | 0.772 | ||||
TL8 | 0.739 | ||||
Organizational innovation (OL) | OI1 | 0.866 | 0.601 | 0.834 | 0.845 |
0I2 | 0.777 | ||||
OI3 | 0.748 | ||||
OI4 | 0.754 | ||||
OI5 | 0.723 | ||||
External social capital (SC) | SC1 | 0.868 | 0.631 | 0.882 | 0.903 |
SC2 | 0.821 | ||||
SC3 | 0.799 | ||||
SC4 | 0.785 | ||||
SC5 | 0.705 | ||||
SC6 | 0.777 | ||||
Environmental performance (EP) | EP1 | 0.911 | 0.633 | 0.884 | 0.893 |
EP2 | 0.771 | ||||
EP3 | 0.765 | ||||
EP4 | 0.796 | ||||
EP5 | 0.772 | ||||
EP6 | 0.751 | ||||
Corporate social responsibility (CR) | CSR1 | 0.903 | 0.603 | 0.940 | 0.917 |
CSR2 | 0.753 | ||||
CSR3 | 0.773 | ||||
CSR4 | 0.761 | ||||
CSR5 | 0.752 | ||||
CSR6 | 0.757 | ||||
CSR7 | 0.809 | ||||
CSR8 | 0.769 | ||||
CSR9 | 0.774 | ||||
CSR10 | 0.753 | ||||
CSR11 | 0.741 | ||||
CSR12 | 0.763 | ||||
Corporate governance (CG) | CG1 | 0.905 | 0.651 | 0.892 | 0.901 |
CG2 | 0.811 | ||||
CG3 | 0.777 | ||||
CG4 | 0.771 | ||||
CG5 | 0.777 | ||||
CG6 | 0.791 |
Model | χ2 | df | χ2/df | TLI | CFI | RMR | RMSEA |
---|---|---|---|---|---|---|---|
Six-factor | 1166.300 | 845 | 1.380 | 0.960 | 0.962 | 0.069 | 0.033 |
TL, SC, OI, EP, CSR, GC | |||||||
Five-factor | 1663.093 | 850 | 1.957 | 0.898 | 0.904 | 0.088 | 0.052 |
TL, SC + OI, EP, CSR, GC | |||||||
Four-factor | 2390.761 | 854 | 2.799 | 0.809 | 0.819 | 0.096 | 0.072 |
TL + SC + OI, EP, CSR, GC | |||||||
Three-factor | 3135.968 | 857 | 3.659 | 0.717 | 0.732 | 0.129 | 0.087 |
TL, SC + OI, EP + CSR + GC | |||||||
Two-factor | 3863.568 | 859 | 4.498 | 0.628 | 0.647 | 0.134 | 0.100 |
TL + SC + OI, EP + CSR + GC | |||||||
One-factor | 4362.877 | 860 | 5.073 | 0.567 | 0.588 | 0.132 | 0.108 |
TL + SC + OI + EP + CSR + GC |
Factor | Average Variance of Extracted AVE Values | CR Value of Combined Confidence |
---|---|---|
TL | 0.520 | 0.896 |
SC | 0.561 | 0.884 |
OI | 0.509 | 0.838 |
EP | 0.569 | 0.887 |
CSR | 0.569 | 0.940 |
GC | 0.588 | 0.895 |
Variable | VIF | 1/VIF |
---|---|---|
EP | 1.72 | 0.583 |
CSR | 1.62 | 0.616 |
TL | 1.56 | 0.640 |
CG | 1.53 | 0.648 |
SC | 1.49 | 0.673 |
OI | 1.43 | 0.698 |
Mean VIF | 1.56 |
Variable | Mean | SD | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
---|---|---|---|---|---|---|---|---|---|---|
Years in business | 2.460 | 1.203 | 1 | |||||||
Firm ownership | 2.510 | 1.107 | −0.049 | 1 | ||||||
Firm industry | 5.990 | 3.111 | 0.032 | −0.004 | 1 | |||||
Firm size | 2.570 | 1.087 | −0.065 | 0.019 | 0.020 | 1 | ||||
TL | 3.255 | 0.822 | 0.016 | 0.071 | 0.057 | −0.030 | 1 | |||
SC | 3.254 | 0.892 | 0.030 | −0.003 | 0.034 | −0.040 | 0.351 ** | 1 | ||
OI | 3.280 | 0.841 | 0.026 | 0.036 | 0.071 | 0.026 | 0.377 ** | 0.367 ** | 1 | |
ESG | 3.087 | 0.741 | 0.055 | −0.008 | 0.043 | −0.005 | 0.593 ** | 0.563 ** | 0.519 ** | 1 |
ESG Performance | Organizational Innovation | |||||||
---|---|---|---|---|---|---|---|---|
Variable | β | SE | t-Value | p-Value | β | SE | t-Value | p-Value |
Constant | 2.123 | 0.176 | 12.074 | 0.000 ** | 3.143 | 0.181 | 16.901 | 0.000 ** |
TL | 0.421 | 0.039 | 10.819 | 0.000 ** | 0.288 | 0.052 | 5.654 | 0.000 ** |
SC | 0.258 | 0.048 | 5.440 | 0.000 ** | ||||
TL * SC | 0.215 | 0.057 | 3.755 | 0.000 ** | ||||
Firm ownership | −0.035 | 0.027 | −1.305 | 0.193 | 0.010 | 0.033 | 0.294 | 0.769 |
Firm industry | −0.002 | 0.010 | −0.243 | 0.808 | 0.013 | 0.013 | 1.004 | 0.316 |
Firm size | 0.001 | 0.027 | 0.029 | 0.977 | 0.030 | 0.037 | 0.824 | 0.410 |
Years in business | 0.023 | 0.025 | 0.917 | 0.360 | 0.010 | 0.033 | 0.294 | 0.769 |
OI | 0.304 | 0.038 | 8.009 | 0.000 ** | ||||
R | 0.676 | 0.491 | ||||||
R2 | 0.457 | 0.241 | ||||||
F-value | 48.178 | 15.517 |
Effect | SE | LLCI | ULCI | |
---|---|---|---|---|
Total effect | 0.537 | 0.039 | 0.460 | 0.614 |
Direct effect | 0.421 | 0.039 | 0.344 | 0.497 |
Indirect effect | 0.116 | 0.020 | 0.079 | 0.157 |
TL—>OI—>ESG | ||||
---|---|---|---|---|
SC | Effect | SE | LLCI | ULCI |
Low group | 0.029 | 0.024 | −0.018 | 0.076 |
High group | 0.146 | 0.027 | 0.098 | 0.200 |
Differences between groups | 0.117 | 0.020 | 0.028 | 0.108 |
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Zhu, J.; Huang, F. Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China. Sustainability 2023, 15, 5756. https://doi.org/10.3390/su15075756
Zhu J, Huang F. Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China. Sustainability. 2023; 15(7):5756. https://doi.org/10.3390/su15075756
Chicago/Turabian StyleZhu, Jin, and Fei Huang. 2023. "Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China" Sustainability 15, no. 7: 5756. https://doi.org/10.3390/su15075756