Exploring Leadership’s Role in Sustainable Development: The Moderating Impact of Community Involvement in SMEs Across Pakistan, India, and Taiwan

Abstract

This research examines the connection between leadership and sustainable development, emphasizing how community involvement moderates it. It seeks to analyze the impact of leadership styles on sustainable development practices in three distinct cultural and economic contexts: Pakistan, India, and Taiwan. The study participants include managers, entrepreneurs, and consultants. A quantitative research methodology, which included questionnaires and statistical analysis, was used to collect data from business professionals in these three nations. This study considers the viewpoints of both general business leaders and the insights provided by small and medium-sized enterprises, which play a crucial role in driving economic growth in these areas. For example, 99% of Pakistan’s enterprises are small and medium-sized enterprises. However, due to financial constraints, small and medium-sized enterprises face obstacles such as limited innovative capacity. Small and medium-sized enterprises are vital to economic growth in Taiwan and India as well. Small and medium-sized enterprises generate many jobs and contribute substantially to GDP. Effective leadership is critical for promoting sustainability goals, as the findings show that leadership benefits sustainable development projects (H1). Sustainable development outcomes are greatly improved when the community is actively involved (H2), further demonstrating the significance of community involvement as a key component of effective sustainability measures. Contrary to expectations (H3), community involvement did not moderate the relationship between leadership and sustainable development as hypothesized; rather, it appeared as an independent factor that positively influenced sustainability outcomes. The findings highlight the broad relevance of effective leadership practices in various socioeconomic contexts. This study offers valuable insights for policymakers seeking to promote sustainable growth by emphasizing the importance of effective leadership practices and active community engagement within small and medium-sized enterprises.

1. Introduction

Academics and practitioners debate several contentious issues, including climate change, severe poverty, limited resources, cultural conflicts, political instability, disruption caused by human migration, and globalization [1,2,3]. The United Nations established a global framework called the Sustainable Development Goals (SDGs) to tackle these issues. According to [4], the Sustainable Development Goals aim to protect the environment, promote social trust among varied stakeholders, end global poverty, and facilitate extensive economic progress.

According to this study, leadership is the process of persuading people to understand and concur on what needs to be done and how, as well as supporting individual and group efforts to reach common goals [5]. Ref. [6] asserts in Leadership in Organizations that effective leadership is essential for steering organizations toward the attainment of long-term strategic objectives, especially those pertaining to sustainable development. Specifically, we focused on transformational leadership qualities like inspiration, vision, and moral conduct, often linked to sustainability initiatives. According to [7], community involvement is the active participation of local stakeholders, such as neighbors, civil society organizations, and customers, in establishing and promoting the company’s sustainable practices. Using these definitions, we aim to clarify how these concepts interact in the context of SMEs to influence sustainable development outcomes.

As an innovative and vital concept, sustainable development has gained recent attention. Its main goal is to balance human needs now with the ability of future generations to meet theirs [8]. Today’s decisions should not jeopardize the future by causing poverty or limited options. Sustainable development aims to lessen the negative environmental impact of human activities, emphasizing the importance of harmony among economic, social, and environmental factors [9]. Its ultimate aim is to promote the entire community’s well-being, not just its members.

Ensuring long-term economic sustainability is a key focus of the plan. According to [10], this approach emphasizes the importance of fiscal responsibility and careful resource management to prevent depleting vital resources or jeopardizing future economic opportunities. Essentially, it promotes the development of financial systems that facilitate wealth accumulation while ensuring that future generations can do the same. Social sustainability, which emphasizes the well-being of both current and future generations, is also essential. It involves creating equitable access to healthcare, education, and other opportunities for everyone [11]. Social sustainability aims to build inclusive societies that embrace individuals from diverse backgrounds, foster personal growth, and ensure no one is marginalized [12]. According to [13], generating shared value unites social advancement with commercial success, providing SMEs with a means of incorporating sustainable development into their main business plans while encouraging innovation and expansion.

Sustainable development is most commonly associated with the idea of ecologically responsible development. It protects the planet’s ecosystems and resources [14]. The capacity of the Earth to support life and preserve ecological equilibrium in the future must not be compromised by current actions. The conservation and proper utilization of resources are critical components [12].

Thus, sustainable development is considered a comprehensive plan to guarantee people’s and the Earth’s long-term prosperity. Thinking about how our actions will play out in the future, making ethical decisions, and crafting policies with the well-being of future generations in mind are all things that this prompts us to do. The concept of sustainable development is gaining importance as the world’s population faces persistent challenges related to climate change, resource depletion, and inequality. According to [12], it guides individuals toward a more equitable, sustainable, and prosperous future for all.

Visionary and proactive leadership is essential for advancing sustainable development initiatives globally [15]. Inspiring transformative change at many levels of society is possible when leaders prioritize economic success, social fairness, and environmental protection by implementing policies and initiatives [5].

Development programs can be more culturally sensitive and responsive to local demands when leaders involve communities in decision making and promote intercultural communication. On the other hand, governments, NGOs, enterprises, and other interested parties must work together to achieve global sustainable development. Efforts to tackle complicated sustainability issues can be amplified when leaders collaborate across sectors and nations [16].

The implementation of sustainable development techniques is influenced by varied geographical, cultural, and socioeconomic conditions at the regional level. Ref. [16] argues that regional organizations like ASEAN, the African Union (AU), and the European Union (EU) are vital in coordinating regional efforts to tackle shared problems and advance sustainable development.

To achieve sustainable development goals within their borders, national governments are crucial in establishing policies and programs. Priorities and targets for attaining sustainable development outcomes are outlined in national development plans, which are influenced by international frameworks such as the SDGs. Strong leadership and governance institutions are necessary to put these plans into action, mobilize resources, and coordinate activities across sectors. Local communities must be included in making decisions to ensure development projects are inclusive and relevant to the area [16].

When it comes to sustainable development and community involvement, there are clear gaps in the existing literature. Sustainable practices directly impact clients, although they are often neglected in social work. More efficient cooperation between protected areas and local people is necessary for sustainability. To achieve the SDGs, it is crucial to have stronger links between cities, ecosystem services, and green infrastructure [17]. In conclusion, CSR programs improve communities in many ways, including economically, socially, environmentally, and spiritually. The importance of integrating sustainability concepts into many aspects of community involvement has been highlighted in earlier studies [18].

Finally, this study looks at how SMEs in Pakistan, India, and Taiwan might benefit from strong leadership and community engagement to promote long-term sustainability. Gaining insight into the leadership dynamics that propel sustainability is of utmost importance as these developing nations face the twin specters of economic development and environmental accountability. This study examines the moderating role of community involvement, positing that engagement with local communities may strengthen the effect of leadership on sustainable practices in SMEs. This research focuses on key stakeholders such as consultants, managers, accountants, and entrepreneurs to develop a nuanced understanding of how leadership and community factors converge to impact sustainable development outcomes across various regional contexts. The study is organized around three primary hypotheses: (1) the direct impact of leadership (Independent Variable) on sustainable development outcomes (Dependent Variable), (2) the moderating effect of community involvement on sustainable development, and (3) the interactive influence of leadership and community involvement on sustainability outcomes in SMEs. By delving into an under-explored topic within the setting of developing economies—the unique impact of leadership on the formation of sustainable growth within SMEs in these three nations—the research will fill a substantial need in the current literature. Leadership processes within SMEs in the Global South, particularly regarding the moderating influence of community involvement, have received scant attention, in contrast to the numerous studies that have focused on sustainable practices in larger firms. Furthermore, there is a gap in our understanding of how leadership and community involvement work together to drive sustainability in SMEs. To address this knowledge vacuum, this study collects data from Pakistan, India, and Taiwan to show how sustainable practices are affected by strong leadership and active community involvement. The findings will apply to these countries’ cultures and contexts.

The following central research questions guide this study:

How does leadership impact sustainable development outcomes in Pakistan, India, and Taiwanese SMEs?

In such settings, how does community engagement impact the relationship between leadership and sustainable development?

How can leadership and community involvement influence sustainable development practices in small and medium-sized enterprises (SMEs)?

This study aims to fill these knowledge gaps in hopes of advancing sustainability in small and medium-sized enterprises (SMEs) through new ideas in theory and practice. Policy makers, corporate executives, and practitioners in emerging economies can use the findings to inform their efforts to incorporate sustainable development into their operations while also adding to our theoretical knowledge of the leadership–sustainability nexus.

2. Literature Review

2.1. Leadership and Sustainable Development

Since leadership affects the attitude and actions of an organization’s employees, it is crucial for sustainable development [19]. Managing competing visions and bringing stakeholders together under a common sustainability goal are essential for sustainable development leadership. The focus should not be on personal ambitions but on adjusting to the larger objective of social transformation and sustainable development. It necessitates valuing the region’s strengths, characteristics, social cohesiveness, and individual identities [20]. To achieve long-term success, a leader must unite divergent goals and objectives. The ability to “vision between visions” and learn from the future predictions of others is essential for a network leader. Despite appearances, a dynamic interplay between components, groups, and people is intricate and ever-changing [21].

The NRBV theory states that eco-friendly resources are required to achieve greater organizational performance sustainably [22]. A psychologically secure workplace is one in which employees feel comfortable sharing information and asking questions, as stated by [23] and supported by [24]. Therefore, a psychologically safe atmosphere drives productive learning inside an organization. Also, according to [25], sustainable leadership practices center on the following: innovation, a focus on the long term, building capacity, acting ethically, fostering a culture of information sharing, and taking responsibility for social and environmental issues. Sharing goals for the future affects how a company learns, according to [26]. An organization’s knowledge can be more widely disseminated when its leader models sustainable practices, such as encouraging open communication [27].

Investing in new types of sustainability is a challenge for areas in today’s post-industrial world. One way they can achieve this is by creating “eco-economic innovations” that consider each area’s unique characteristics and use resources like water, terrain, and forests. Each region becomes more viable and resistant to over-exploitation and short-lived rivalry when its distinctiveness is emphasized. The benefits of sustainable regions less reliant on global competitiveness have been brought to light by the current worldwide “credit crunch” and the subsequent rise in livelihood instability. These economies exhibit a wide range of socioeconomic characteristics, and their leaders are focused on implementing systemic changes that will make them more sustainable [1,28]. According to other research, strong leadership is important to long-term regional planning [29].

Leaders can facilitate THEY-dimensional connections between networks and institutional systems to address emerging sustainability issues. Institutions, regulations, and prevailing ideologies often act as a “glass ceiling” when they try to break through. The empirical research uncovered a set of tactics that leaders used to overcome this barrier and generate the ability to take action [30]. We will go over three of these tactics in this article. To start, leaders shaped the difficulties by constantly relating their narrative. They tried to reach out to those in authoritative positions to convey the shared vision formed in networks (the WE dimension). As a second point, change agents used a tactic known as “open innovation” [31] to seek information from sources outside their immediate circle. New coalitions were established with knowledge institutes in the case study areas. Leaders sought to apply insights gained from other regions to their context. Third, leaders attempted to alter the established regulations. In the case studies, leaders navigated the distinct realms of policy, practice, and science across various scales. When faced with obstruction from local civil servants, they mobilized supporters at higher levels of governance through a “leapfrog strategy”, or they created opportunities for behind-the-scenes negotiations, leveraging their position, status, or personal competencies to exert influence via informal contacts, media, and political pressure.

Recent studies have highlighted the importance of leadership in achieving sustainable results in small businesses and entrepreneurial environments, particularly in emerging nations. Green product innovation was a mediating factor, and transformational leadership was identified as a significant moderator in a study [32] of the relationship between environmental management practices and the sustainable performance of entrepreneurial enterprises in Pakistan. This demonstrates how leadership conduct affects sustainability programs and emphasizes the possibility of more research in various economic circumstances.

In keeping with this line of research, Ref. [33] looked into how green product innovation mediated the impact of green entrepreneurial leadership on company performance. Their results highlight how innovation can be stimulated and corporate outcomes improved by leadership based on sustainability principles. This research, however, was mainly limited to single-country assessments, which provides a compelling argument for investigating whether equivalent leadership-driven mechanisms yield comparable results in different economies. Therefore, this study adds to the body of previous work by examining the moderating impact of community involvement in the relationship between leadership and sustainable growth in SMEs across Pakistan, India, and Taiwan.

Consequently, we propose the following hypothesis:

Hypothesis H1.

Strong leadership greatly contributes to long-term sustainability.

2.2. Moderating Role of Community Involvement

Building robust, resilient, and affluent communities requires active participation (or engagement) from the community. According to [34], it entails people actively participating in a range of initiatives and activities directly linked to the community’s overall welfare and shared interests. Being actively involved is a crucial part of being involved in the community. It necessitates individuals to transcend physical presence and actively mold the fate of their community [12]. Volunteering, joining organizations, and participating in community clean-ups are all examples of active involvement essential to a thriving community [12].

According to [35], community engagement is all about people, groups, and organizations actively participating in decisions and programs that affect their everyday lives. The ensuing policies and programs reflect the genuine needs, aspirations, and interests of the impacted communities, strengthening the legitimacy of public decisions. Locals’ participation in planning and decision-making can bring attention to issues that could otherwise go unnoticed by those working on the inside [36]. According to [35], numerous perspectives and areas of expertise can be included when the community is involved in public planning and decision-making.

When all community members and other interested parties work together to shape policies and programs that will improve their lives, we say there has been participation [10]. According to [37], significant community involvement in the planning, execution, and assessment of projects promotes empowerment and a sense of communal ownership, two elements that might be crucial in SMEs’ pursuit of sustainable development results. Furthermore, as [38] points out, engagement allows locals to be a part of project development and execution while also encouraging governments to be accountable.

Community participation has the potential to boost the economy in the area. Local businesses and organizations often benefit from the time, energy, and money engaged residents put into community projects and initiatives [11]. As a result, the community’s economy thrives, more people find jobs, and everyone’s living conditions improve.

Furthermore, environmental sustainability is closely related to community involvement. Protecting natural resources, reducing waste, and promoting eco-friendly activities are all possible outcomes of community investments in environmental conservation and sustainable practices [39]. This community-based strategy for environmental protection has the potential to make a big difference in the fight against climate change and the protection of ecosystems for generations to come. Education and understanding of environmental issues are also promoted through community involvement. Sustainable behaviors, including renewable energy, waste reduction, and responsible consumerism, can be taught to individuals through community-led projects [40]. With this knowledge, locals may be better prepared to lobby for long-term solutions at various governmental levels and make informed decisions.

Similarly, Ref. [41] looked at how entrepreneurial networking influences the relationship between entrepreneurial alertness and venture success, indicating that relational and contextual factors, like community involvement, may greatly impact how well entrepreneurs perform. These results support the idea that local factors, such as community involvement, may act as moderating influences in the correlations between leadership and performance. Therefore, we postulate the following based on the theory above, shown in Figure 1.

Hypothesis H2.

Sustainable development benefits greatly from community involvement.

Hypothesis H3.

Stronger relationships between leadership and sustainable development are associated with higher community involvement.

3. Methodology

Using a quantitative research strategy, this study investigates how SMEs in Pakistan, India, and Taiwan perceive the importance of leadership in achieving sustainable development. Finding out how community involvement acts as a moderator in this relationship is the main objective. Consultants, managers, accountants, and entrepreneurs working with small and medium-sized enterprises (SMEs) were surveyed using a standardized questionnaire. To ensure efficient distribution and collection of responses, data were collected via Google Forms.

The study’s target demographic consists of important players in small and medium-sized enterprises (SMEs) in the three nations above. Members of this group often have a substantial say in organizational decisions and are thus in a prime position to shed light on leadership and sustainability dynamics. To guarantee statistical significance and for rigorous analysis of the links being explored, a sample size of 245 respondents was established for this study.

Practical factors and the chance to investigate various socioeconomic and cultural situations had a role in the choices of Pakistan, India, and Taiwan for this study. Despite their many differences, Pakistan and India have a similar colonial past and face comparable developmental obstacles, especially in the SME sector. Taiwan offers a counterexample with a more advanced economy and distinct political and cultural systems. Examining leadership and community involvement in sustainable development across a range of developed and emerging contexts is made possible by this comparative design. A greater comprehension of how contextual factors may affect the association between leadership and sustainability practices in SMEs is made possible by the diversity between these countries, strengthening the findings.

A questionnaire based on a 5-point Likert scale, including “strongly disagree” (1) and “strongly agree” (5), was used to gather data. This scale can more easily measure leadership practices and community involvement in sustainable development. Leadership and community involvement are two of the many aspects that the survey aimed to measure. Our primary goal was to gather data in three main areas: leadership practices (to determine the role of leadership for promoting sustainability), community involvement (to decide how involved communities are in sustainability initiatives), and sustainable development outcomes (to get a sense of how SMEs see the results of their sustainability efforts).

The major analysis tool used for quantitative data analysis is SmartPLS version 4.0. By utilizing structural equation modeling (SEM), this program makes evaluating intricate interrelationships between variables possible. The sample’s demographics will be summarized using descriptive statistics, and results of the research on the connections between leadership, community engagement, and sustainable development will be tested using inferential statistics. To determine how community involvement acts as a moderator, methods like regression analysis might be employed. Due to cultural variations, leadership and sustainability may also be perceived and responded to differently in Pakistan, India, and Taiwan.

Leadership, community involvement, and sustainable growth in small and medium-sized enterprises (SMEs) in different cultural contexts can be better understood with the help of this methodology’s all-encompassing framework. The study improves response gathering efficiency and allows for real-time data visualization and analysis using Google Forms for data collection.

3.1. Measures

The constructs being evaluated are guaranteed to be reliable and valid because the variables in this study are measured according to well-established literature. Ref. [42] offers a paradigm for assessing community involvement that focuses on the significance of effective community engagement for SMEs. Small and medium-sized enterprises (SMEs) can become more competitive and sustainable with the help of this framework, which shows how community involvement can increase access to local resources, networks, and knowledge. Some examples of community involvement that the questionnaire will capture are corporate social responsibility activities, participation in local events, and collaboration with community organizations.

The models proposed by [43] will serve as the basis for evaluating leadership. Findings from this study highlight the most important leadership traits that contribute to long-term success for organizations. Transformational leadership, ethical leadership, and participatory decision-making are among the leadership approaches evaluated by the questionnaire. For leaders to cultivate a sustainable culture in their organizations, these aspects are vital.

The criteria laid out by [44] will be used to quantify sustainable development. These criteria center on the results of sustainability activities in small and medium-sized enterprises (SMEs). Evaluating social responsibility, economic feasibility, and environmental stewardship is all part of this. This survey will ask people to rate their company’s dedication to sustainable practices and how such policies have affected their bottom line.

This study intends to complete the evaluation of the links between leadership, community involvement, and sustainable development in SMEs throughout Pakistan, India, and Taiwan by using these validated metrics from the existing literature. Google Forms data can be statistically robustly analyzed using a structured questionnaire built on a 5-point Likert scale, enabling respondents to provide more nuanced answers.

3.2. Reliability Analysis

The reliability analysis is presented in

Table 1. Reliability analysis.

	Cronbach’s Alpha	Composite Reliability (rho_a)	Composite Reliability (rho_c)	Average Variance Extracted (AVE)
Community Involvement	0.914	0.917	0.946	0.853
Leadership	0.939	0.941	0.956	0.845
Sustainable Development	0.942	0.945	0.952	0.712

. Multiple statistical measures, such as Cronbach’s alpha, composite reliability (rho_a and rho_c), and average variance extracted (AVE), were evaluated to guarantee the validity and reliability of the constructs utilized in this work. All three constructs—Community Involvement, Leadership, and Sustainable Development—exhibited robust internal consistency, with Cronbach’s alpha values surpassing 0.9 (Community Involvement = 0.914, Leadership = 0.939, Sustainable Development = 0.942) and composite reliability values exceeding 0.7 (rho_c for Community Involvement = 0.946, Leadership = 0.956, Sustainable Development = 0.952), signifying exceptional reliability [45,46].

Convergent validity was established with AVE values beyond the recommended threshold of 0.5 (Community Involvement = 0.853, Leadership = 0.845, Sustainable Development = 0.712), indicating that each construct accounts for a substantial portion of the variance in its indicators [47]. These results demonstrate that the measurement model is robust and appropriate for subsequent research.

4. Results

4.1. Demographics

The demographic analysis are shown in

Table 2. Nationality.

		Frequency	Percent	Valid Percent	Cumulative Percent
Valid	India	53	20.8	20.8	20.8
	Pakistan	110	43.1	43.1	63.9
	Taiwan	92	36.1	36.1	100.0
	Total	255	100.0	100.0

. According to the demographic data, 255 individuals from the study’s sample were SMEs from three nations (Taiwan, Pakistan, and India). Pakistan accounted for 43.1% of the overall sample (n = 110) of respondents, Taiwan for 36.1% (n = 92), and India for 20.8% (n = 53). The cross-cultural character of the research relies on this distribution, which emphasizes a broad representation of SMEs across these nations. A strong basis for investigating the effect of leadership on sustainable development and the moderating function of community engagement is provided by including individuals from these different cultural and economic backgrounds. With participants from a wide range of cultural backgrounds, we can be sure that the results accurately reflect the range of leadership styles and community involvement strategies SMEs use worldwide.

4.2. Outer Loadings

Figure 2 and

Table 3. Outer loadings.

	Community Involvement	Leadership	Sustainable Development	Community Involvement × Leadership
Community Involvement1	0.902
Community Involvement2	0.948
Community Involvement3	0.920
Leadership1		0.913
Leadership2		0.913
Leadership3		0.934
Leadership4		0.918
Sustainable Development1			0.736
Sustainable Development2			0.850
Sustainable Development3			0.886
Sustainable Development4			0.874
Sustainable Development5			0.812
Sustainable Development6			0.807
Sustainable Development7			0.891
Sustainable Development8			0.884
Community Involvement × Leadership				1.000

represent outer loadings for the constructs under consideration; the outer loadings show strong validity and dependability. In particular, the loadings for Community Involvement and Leadership are above the traditional criterion of 0.70, at 0.902 and 0.948 and 0.913 and 0.934, respectively, confirming good indicator dependability for both constructs.

All indicators for Sustainable Development have loadings between 0.736 and 0.891, much over the acceptable threshold of 0.70. This means that each indicator adequately represents this concept.

For single-item constructs in structural equation modeling frameworks, a loading of 1.000 is expected for the interaction term (Community Involvement × Leadership).

The results show that the measured constructs are very reliable and valid, providing a good empirical basis for future research into their interactions.

4.3. Fornell and Larcker

In

Table 4. Fornell and Larcker.

	Community Involvement	Leadership	Sustainable Development
Community Involvement	0.924
Leadership	0.785	0.919
Sustainable Development	0.813	0.762	0.844

, by using the Fornell and Larcker criterion [47], we determined that our three constructs—Community Involvement, Leadership, and Sustainable Development—had discriminant validity, with AVEs of about 0.924, 0.919, and 0.844, respectively.

The inter-construct correlations were as follows: between Community Involvement and Leadership: 0.785; between Community Involvement and Sustainable Development: 0.813; between Leadership and Sustainable Development: 0.762

Most pairs showed adequate discriminant validity compared to their square roots of AVEs; however, additional investigation may be necessary in the case of Community Involvement and Sustainable Development, which is on the borderline.

4.4. HTMT Ratio

Table 5. HTMT Ratio.

	Community Involvement	Leadership	Sustainable Development	Community Involvement × Leadership
Community Involvement
Leadership	0.846
Sustainable Development	0.873	0.807
Community Involvement × Leadership	0.751	0.815	0.752

represents the results of the HTMT Ratio. The Heterotrait–Monotrait (HTMT) ratio serves as a method for evaluating discriminant validity within structural equation modeling. This analysis examines the correlation between various constructs (heterotraits) and the average correlation within each construct (monotraits). To establish discriminant validity, HTMT ratios should preferably be below 0.85.

The results and their implications are presented as follows:

Community Involvement and Leadership: HTMT ratio is 0.846, below the threshold of 0.85, suggesting adequate discriminant validity between the two constructs.

Community Involvement and Sustainable Development: HTMT ratio is 0.873, surpassing the threshold of 0.85, indicating that these two constructs may not be entirely distinct.

Leadership and Sustainable Development: HTMT ratio is 0.807, below the threshold of 0.85, thereby supporting the discriminant validity between these constructs.

Including the interaction term (Community Involvement × Leadership) in this analysis may not adhere to conventional methodology, as it is generally applied to latent variables rather than interaction terms. Interaction Term and Community Involvement: HTMT = 0.751; Interaction Term and Leadership: HTMT = 0.815; Interaction Term and Sustainable Development: HTMT = 0.752

These interaction term ratios are often misunderstood and may necessitate careful evaluation in diverse research settings.

To conclude the findings, the Heterotrait–Monotrait (HTMT) ratio was employed to assess discriminant validity among the three constructs: Community Involvement, Leadership, and Sustainable Development.

The findings indicated that although the majority of pairs exhibited adequate discriminant validity—such as Community Involvement and Leadership (HTMT = 0.846) and Leadership and Sustainable Development (HTMT = 0.807)—the comparison between Community Involvement and Sustainable Development produced an HTMT of 0.873, marginally surpassing the suggested threshold of 0.85.

This indicates that although there is typically robust support for the distinctiveness of most construct pairs, additional scrutiny may be necessary concerning the link between Community Involvement and Sustainable Development.

4.5. Model Fit

Table 6. Model fit.

	Saturated Model	Estimated Model
SRMR	0.043	0.066
d_ULS	0.219	0.519
d_G	0.210	0.277
Chi-square	317.361	356.928
NFI	0.917	0.907

and Figure 3 represent the results of the model fit, and

Table 7. Path coefficients.

	Original Sample (O)	Sample Mean (M)	Standard Deviation (STDEV)	T Statistics (|O/STDEV|)	p Values
Community Involvement and Sustainable Development	0.506	0.505	0.058	8.732	0.000
Leadership and Sustainable Development	0.196	0.200	0.066	2.955	0.002
Community Involvement × Leadership and Sustainable Development	−0.105	−0.104	0.027	3.817	0.000

represents the results of the path coefficient. All are explained below.

4.5.1. Leadership and Sustainable Development

Leadership has a beneficial impact on Sustainable Development; however, it is less than that of Community Involvement (path coefficient = 0.196). Additionally, this effect is statistically significant (p = 0.002), lending credence to the idea that Sustainable Development is favorably impacted by Leadership.

Our study confirmed Hypothesis H1, which states that Leadership benefits Sustainable Development, by revealing a statistically significant positive path coefficient (β = 0.196, p < 0.01) between the two. The evidence favors a positive (0.196) and statistically significant (p = 0.002) route coefficient connecting Leadership with Sustainable Development.

4.5.2. Community Involvement and Sustainable Development

Community Involvement strongly benefits Sustainable Development, as indicated by the path coefficient of 0.506. This effect is highly significant (p = 0.000), indicating a positive correlation between Community Involvement and Sustainable Development.

Evidence of a robustly positive influence (β = 0.506, p < 0.001) of Community Involvement on Sustainable Development significantly supports Hypothesis H2, which predicts that Community Involvement has a comparable function. The data support the hypothesis that a highly significant and positively skewed path coefficient (0.506) exists between Community Involvement and Sustainable Development (p = 0.000).

4.5.3. Community Involvement × Leadership and Sustainable Development

Combining high levels of Community Involvement and Leadership has a smaller impact on Sustainable Development than each factor alone, according to the interaction term’s negative coefficient of −0.105. The evidence does not support the hypothesis; the interaction effect exists but is negative (−0.105) instead of strengthening. There is statistical significance (p = 0.000) for this interaction term.

5. Conclusions and Discussion

This quantitative study examined the impact of community involvement as a moderator of leadership’s role in sustainable development among small and medium-sized enterprises (SMEs) in Taiwan, Pakistan, and India. The results support the first hypothesis that strong leadership greatly contributes to long-term sustainability. Consistent with previous research, this finding confirms that strong leadership is essential for establishing sustainable practices and attaining long-term viability in organizations. Since community involvement was determined to influence sustainable development positively, Hypothesis 2 (H2) was also accepted.

The results did not support the third hypothesis, which held that strong community involvement would mitigate the connection between leadership and sustainable development. Consequently, H3 was rejected. This indicates that although both elements are critical, their impact on sustainability outcomes is not amplified when interacting.

If small and medium-sized enterprises (SMEs) want to succeed in the long run, the report says they must include environmental, social, and economic factors when making decisions. To achieve sustainability, it is imperative that executives engage with local communities, cultivate good labor relations, and share visions.

By advocating holistic approaches that consider all stakeholders’ requirements, the results highlight the critical role of good leadership in propelling sustainable development within SMEs. To make sure programs address local needs and promote social justice, community involvement is crucial. Community involvement does not attenuate the association between leadership and sustainability outcomes, but further study is needed to understand why.

As a matter of practicality, CEOs of SMEs should embrace more integrated policies centered on sustainability and prioritize fostering good relationships with staff and communities. Improving reputation management and ensuring compliance with environmental protection regulations can boost financial performance and competitiveness.

While studies like this one are rare in Western contexts, they add to our theoretical knowledge of the factors that impact organizational commitment to sustainability in developing countries like Pakistan, India, and Taiwan.

Despite offering insightful information on how community involvement and leadership contribute to sustainable development in SMEs across Taiwan, India, and Pakistan, this study has some limitations. One significant drawback is using self-reported survey data from managers, accountants, and entrepreneurs. Although this approach is useful for spotting general patterns and connections, it lacks the qualitative depth required to completely comprehend the behavioral and environmental subtleties underlying the observed results. This is particularly crucial when analyzing the non-significant moderating effect of community involvement. To gain deeper insights and provide a more comprehensive explanation of complicated relationships, future research should benefit from including qualitative techniques like focus groups and interviews.

The geographic scope and sample size are further limitations. The findings’ generalizability is limited by the sample’s small size and regional specificity, even though the 250 replies were adequate for statistical testing. The cultural and economic variety across larger Asian or global contexts is not fully captured because the study only looked at three nations. To improve the external validity of the findings and give a more comprehensive picture of the dynamics of sustainable development in SMEs, the sample should be expanded to include more nations and a wider range of industries.

The study’s methodological scope was a simple quantitative technique. Although this was appropriate for verifying the hypotheses presented, future studies could use more sophisticated analytical methods such as multilevel modeling (MLM) or structural equation modeling (SEM). These methods would provide a deeper understanding of the intricate interactions between variables and latent structures. Specifically, they could assist in explaining why, contrary to early hypotheses, community involvement did not modulate the relationship between leadership and sustainability.

Future studies should use mixed-method approaches to bolster the body of knowledge in this area. Combining qualitative and quantitative methods can provide a more thorough insight into SMEs’ sustainability performance. Researchers should also consider broadening the geographic scope to include other regions, such as Southeast Asia, Sub-Saharan Africa, and Latin America, to enable more comprehensive cross-cultural comparisons. Investigating different moderators and mediators, such as corporate culture, government assistance, or industry-specific elements, may also reveal more dynamics affecting sustainable development. Last but not least, longitudinal designs would allow researchers to track the effects of community involvement and leadership on sustainability outcomes over time, instead of just taking a single picture. Future studies can provide more thorough, complex, and useful insights into sustainable development in small and medium-sized businesses by addressing these constraints and exploring the suggested directions.