Electronic Resource
Article - Transformational Leadership, Organizational Innovation, and ESG Performance: Evidence from SMEs in China Volume 15, Issue 7, Artikel No. 5756 (Halaman 1–23)
ESG is a sustainable development concept that integrates environmental, social, and corpo-
rate governance. Most studies on ESG have been conducted based on secondary data from listed
companies and have not used questionnaires as a method for analysis. Given this research gap, this
paper examines whether transformational leadership influences ESG performance in SMEs, whether
organizational innovation mediates the relationship between transformational leadership and ESG
performance, and the moderating effect of external social capital on transformational leadership and
organizational innovation. Based on higher-order theory, resource-based theory, stakeholder theory,
etc., we tested this hypothesis by conducting a regression analysis with a questionnaire collected
from SMEs in China. After controlling for firm ownership, firm size, firm industry, and years in
business, the results of the study indicate that transformational leadership has a positive effect on
ESG performance and that organizational innovation partially mediates the relationship between
transformational leadership and corporate ESG performance. Furthermore, external social capital
moderates the direct relationship between transformational leadership and organizational innovation
and moderates the role of organizational innovation as a mediator between transformational leader-
ship and ESG performance. This study adds to our further understanding of the relationship between
transformational leadership and ESG performance in SMEs, expanding the antecedent research on
ESG performance and providing a basis for sustainable SME development.
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