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Article

The Mechanism Underlying the Sustainable Performance of Transformational Leadership: Organizational Identification as Moderator

by
Mou Lin
1,2,
Azura Abdullah Effendi
1,* and
Qaisar Iqbal
3,*
1
School of Management, Universiti Sains Malaysia, Georgetown 11800, Malaysia
2
School of Management, Sichuan University of Science and Engineering, Zigong 643000, China
3
IRC for Finance and Digital Economy, KFUPM Business School, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia
*
Authors to whom correspondence should be addressed.
Sustainability 2022, 14(23), 15568; https://doi.org/10.3390/su142315568
Submission received: 14 October 2022 / Revised: 13 November 2022 / Accepted: 16 November 2022 / Published: 23 November 2022
(This article belongs to the Special Issue Modern Approaches to Management and Leadership for Sustainable Business Performance)
Browse Figure
Versions Notes

Abstract

:
This current study aimed to investigate the relationship among green transformational leadership (GTL), organizational citizenship behavior towards the environment (OCBE), organizational identification, and sustainable performance. Data from 201 manufacturing firm representatives in the northeast of China were collected by using an online survey form and then analyzed using PLS-SEM. Findings revealed that GTL is positively related to sustainable performance, and OCBE mediates the relationship between GTL and sustainable performance. In addition, the moderating role of organizational identification between GTL and OCBE has not been proved in the current study. This current study enriches the literature on sustainable performance, finding that GTL plays an important role in sustainable performance. Moreover, this study provides information to employers who want to improve sustainable performance by implementing GTL practices. It further enables them to understand the significance of OCBE in improving sustainable performance.

1. Introduction

Sustainable development has gained increasing attention from scholars. These scholars are engaged in investigating ways to improve the sustainable performance of organizations. Sustainability depends on how well we can manage our environment [1]. In recent years, on one hand, more and more organizations have been realizing that not only economic performance but also environmental performance and social performance should receive attention [2]. In addition, due to environmental awareness, stakeholders are building pressure on organizations to improve sustainable performance (i.e., environmental performance, economic performance, and social performance) [3]. On the other hand, the manufacturing industry contributes significantly to the economic growth of developing countries [4], so it often places great emphasis on economic benefits at the expense of social and environmental aspects [5]. For instance, energy-intensive carbon emissions from manufacturing firms are one of the major causes of environmental issues such as global warming, air pollution, and solid waste [6]. Therefore, it is important for manufacturing firms to solve environmental issues and keep the balance between economic, environmental, and social performance.
China has been developing rapidly in recent years, and it is considered to have the most substantial market [7]. In 2010, China became the largest manufacturing country in the world, and the manufacturing industry contributed about 40% of China’s GDP [8]. At the end of 2020, China owned 3,846,747 manufacturing firms in total [9]. However, due to the substantial carbon emission, the sustainable performance of manufacturing firms is debated [10,11,12]. Hence, this study aims to study the sustainable performance of the manufacturing industry in China and its antecedents.
Usually, pro-environmental behaviors (PEBs) are adopted to address environmental issues and improve the sustainable performance of manufacturing firms [10]. PEBs are behaviors that have a positive impact on the environment [11]. PEB-specific aspects such as organizational citizenship behavior towards the environment (OCBE) have been studied in previous studies, e.g., [12,13]. OCBE is necessary and important for each organization and each sector in an organization. However, OCBE has received less attention from researchers and employers. Hence, there is an urgent need to focus on OCBE and sustainability issues. Additionally, leadership is also an antecedent of sustainable performance according to past studies. Sustainable leadership [14] and responsible leadership [15] have been studied as independent variables that improve the sustainable performance of manufacturing firms in China.
Along with technological advancement, globalization, and the intensely competitive environment in the current world economy, the better performance of organizations is contingent not only on their financial resources and advancement in their technologies, but also on their committed, competent, and trained human resources. Therefore, the key role of leaders is critical because they are the ones an organization requires to attract, manage, and retain human resources [16]. Hence, leadership that underlines predicting, understanding, and controlling the personal and interpersonal dynamics of how subordinates interact to achieve common goals [17] can be a good predictor of sustainable performance. Among many types of leadership, transformational leadership is considered one of the most effective types of leadership [18]. Moreover, under stakeholder pressure for environmental management in organizations [19], green transformational leadership (GTL) has been recommended by some scholars, e.g., in [20,21], as it motivates employees to demonstrate green behaviors to achieve green performance. Accordingly, the impact of GTL on green employee behaviors has become a research topic. In addition, ref. [22] has emphasized the need to examine the mediating role through which transformational leadership can contribute to improved organizational performance. Thus, the first objective of this research is to investigate whether the employees’ OCBE can function as a mechanism through which GTL improves the sustainable performance of organizations.
There is no doubt that GTL plays an important role in developing good OCBE, but employees with high organizational identification are also key to demonstrating green behaviors. Employees with high organizational identification regard the success of organizations as their own success [17,23], which contributes to positive behaviors of employees such as OCBE. Thus, this suggests that organizational identification can act as an alternative to GTL. In other words, the effect of GTL on OCBE can be attenuated by high organizational identification. However, previous studies have not provided empirical evidence regarding organizational identification as a moderator between GTL and OCBE. Therefore, introducing organizational identification as a moderator which interacts with GTL to influence OCBE is the second objective of this study.
In past studies, sustainable performance was usually studied as a unidimensional variable. In this study, to better understand sustainable performance, it is studied as a multidimensional variable. In addition, this study extends the literature on the social exchange theory (SET) by studying the role of GTL in improving sustainable performance through OCBE. This study also contributes to the literature in the context of social identity theory (SIT) by investigating the conditional effect of organizational identification between GTL and OCBE. This relationship has seldom been studied before according to the authors’ knowledge.

2. Theory and Proposition

2.1. Theoretical Background

The relationship between GTL, OCBE, and sustainable performance can be better understood through the lens of social exchange theory (SET) [24]. The concepts of SET and the norm of reciprocity [25] have been employed to understand employee attitudes and behaviors for many years. Leader–member exchange is considered as the key to social exchange relationships in an organization. It is believed that transformational leadership can facilitate high-quality exchange relationships between leaders and their subordinates by showing concern, trust, and support for subordinates [26]. Then, subordinates will reciprocate with positive attitudes and behaviors such as OCBE, which refers to an employee’s voluntary behavior which contributes to sustainability for organizations [27]. Hence, it is a good way to develop OCBE from GTL’s perspective. Finally, the OCBE developed in the workplace can contribute to the sustainable performance of organizations.
Social identity theory (SIT) can be utilized to explain the moderating role of organizational identification between GTL and OCBE. Organizational identification refers to the “perception of oneness with or belongingness to the organization” [28]. Social identity refers to an individual’s knowledge that he or she belongs to some social group and which includes value and emotional significance due to his or her group membership [29]. When an individual’s social identity is strong, he or she may define himself or herself based on a deep sense of belonging to the organization. Hence, the stronger the individual’s identification with the organization, the more they can think and act from the perspective of the organization, and the more they can make efforts for the organization [30]. According to SIT, employees with high organizational identification are likely to show behaviors that benefit the organization rather than those that benefit their individual self-interest [31]. Hence, when employees have a high level of organizational identification, they are more likely to be engaged in OCBE compared with employees with low organizational identification.

2.2. Hypotheses Development

2.2.1. GTL and OCBE

Transformational leaders are able to motivate their subordinates to demonstrate good behaviors beyond basic expectations [32,33]. Transformational leadership has four elements, namely idealized influence, inspirational motivation, individualized consideration, and intellectual stimulation [34]. These elements contribute to improved employee behaviors when the subordinates perceive the influence of these elements [35]. Specifically, a transformational leader acts as a role model that avoids using power for personal benefits, demonstrates high moral standards, and sets challenging goals for the subordinates, which can be studied by his or her subordinates. In addition, a transformational leader involves his or her subordinates in visualizing attractive future states, sets high expectations, and shows commitment to goals and a shared vision. Furthermore, a transformational leader pays much attention to development needs and personnel achievement of his or her subordinates. In addition, a transformational leader strives to inspire innovation in his or her subordinates. Therefore, these subordinates are likely to behave beyond expectations because of their transformational leaders [32]. In addition, according to SET, when employees perceive that their leaders treat them well, they are likely to reciprocate their leaders by demonstrating good behaviors. GTL is defined as a leadership behavior of which the primary objective is to provide subordinates with a clear vision, inspiration, and motivation while supporting development needs of subordinates to achieve environmental goals of the organization [36]. Accordingly, the employees are likely to show green behaviors such as OCBE. Therefore, the following hypothesis is proposed:
Hypothesis 1 (H1).
GTL is positively related to OCBE.

2.2.2. OCBE and Sustainable Performance

  • OCBE and environmental performance
Sustainable performance refers to the economic, social, and environmental-related performance of an organization in an era of sustainable development [37]. There are three dimensions of sustainable performance, namely environmental performance, economic performance, and social performance. In order to achieve sustainable performance, organizations need to overcome sustainability challenges arising from imbalances in the three dimensions [38]. The pro-environmental behaviors of employees have a crucial effect on improving environmental performance in organizations [32]. As a pro-environmental behavior, OCBE is a voluntary, unrewarded employee behavior that aims to improve the environment [39]. It is an important contributor to the sustainability and environmental management of organizations. OCBE is the key factor for the successful implementation of environmental management system [40]. It represents the willingness of employees to go beyond their duties by cooperating with the organization to show behaviors that benefit the natural environment [39]. Employees show OCBE are willing to reduce negative impacts on the environment, participate in environmental activities of organizations, and encourage their coworkers to pay attention to the environment [13], thereby boosting good environmental performance.
Furthermore, researchers, e.g., the authors of [27,41,42], have studied the relationship between OCBE and environmental performance and have found that there is a positive relationship between OCBE and environmental performance. Therefore, the following hypothesis is proposed:
Hypothesis 2 (H2).
OCBE is positively related to environmental performance.
  • OCBE and economic performance
Pro-environmental behaviors in the workplace are critical not only to environmental performance but also to economic performance [43]. OCBE is one of the main types of pro-environmental behaviors. It includes many sustainable activities, such as waste management, carbon reduction, recycling, and empowering employees to carry out more environmentally friendly behaviors [44]. In other words, employees that exhibit OCBE usually take actions to minimize the use of energy and resources [13], such as reusing waste paper, printing on both sides, and turning off lights after leaving the office. In addition, employees that exhibit OCBE encourage their colleagues to work in an environmentally friendly way [13]. Only then will organizations be able to achieve long-term profitability and successful economic performance. In a word, OCBE is able to improve economic performance by committing to minimizing costs, reducing insurance expenses, and improving the reputation of organizations [45].
In addition, OCBE has been proved to have a positive relationship with economic performance [10]. Therefore, in addition to environmental performance, OCBE makes a significant contribution to the economic performance of organizations [46]. Therefore, the following hypothesis is proposed:
Hypothesis 3 (H3).
OCBE is positively related to economic performance.
  • OCBE and social performance
Social performance represents how an organization deals with its employees; stakeholders; and the well-being of societies, communities, and employees [47]. When employees demonstrate OCBE to solve environmental problems, a socially responsible image of organizations can be developed [13]. Due to the positive image, organizations can achieve numerous benefits such as improved employee satisfaction, enhanced stakeholder relationships, a more acceptable brand image [48], increased employee morals and customer loyalty and satisfaction [49], satisfactory recruitment and retention, and innovation [50]. Moreover, the role of OCBE is critical in motivating employees to exhibit a good commitment to organizational sustainability [51], create green processes, and produce green and safe products. In addition, pollution that is associated with diseases such as lung cancer, neurobehavioral disorders, and asthma [52] can be reduced through OCBE, which can improve the health and welfare of society. Meanwhile, OCBE brings about human well-being and social progress. These factors can contribute to the better social performance of organizations, thus achieving sustainability. In addition, in [10], OCBE is proved to have a positive relationship with the social performance of organizations. Therefore, the following hypothesis is proposed:
Hypothesis 4 (H4).
OCBE is positively related to social performance.

2.2.3. The Mediating Role of OCBE

  • Mediating role of organizational citizenship behavior towards the environment between green transformational leadership and environmental performance
OCBE is a voluntary behavior, not rewarded by organizations, that promotes environmental performance [53]. Employees that show OCBE in the workplace are passionate about unrewarded work and putting effort into an organization that has a positive impact on environmental performance [13]. According to SET, when employees work in an organization where they receive sufficient attention and encouragement from their leaders, they are more likely to reciprocate with better behaviors. When leadership aims to achieve the organization’s environmental goals, subordinates are motivated to demonstrate green behaviors, such as OCBE, that ultimately contribute to environmental performance.
Higher organizational performance can be promoted by transformational leadership, but what links the two constructs remains unresolved, which is of particular interest to researchers [54]. Previous research argued that organizational performance results from the efforts of employees [55] rather than directly from transformational leadership. It is transformational leadership that creates a context which fosters OCBE of employees such that when employees make extra efforts, participate in activities of organizations, and help coworkers, the ultimate organizational performance is high [56]. Similarly, OCBE has thus been proposed as a link between GTL and environmental performance. Moreover, in [57], OCBE has been proved as a mediator between green transformational leadership and sustainable performance. Therefore, the following hypothesis is proposed:
Hypothesis 5 (H5).
OCBE mediates the relationship between GTL and environmental performance.
  • Mediating role of OCBE between GTL and economic performance
Economic performance can be assessed by various indicators, such as assets, liabilities [25], profit, income [58], and market share [59]. When employees exhibit OCBE in an organization, they are willing to reduce the cost of energy and resources voluntarily, which leads to better economic performance. According to SET, when employees have leaders that behave as role models, involve subordinates in visualizing attractive future states, pay attention to subordinates’ achievement, and encourage innovation among subordinates, for the sake of the organization’s environmental objective, they are likely to reciprocate with OCBE which contributes to economic performance.
GTL has a role in establishing a context that encourages OCBE of employees [60,61,62]. Moreover, it has been observed that OCBE contributes to economic performance [10] and sustainable performance [10,63,64]. Moreover, there is also evidence about the mediating effect of OCBE on the sustainable performance of transformational leadership as well [57]. OCBE has thus been proposed as the link between GTL and economic performance. Therefore, the following hypothesis is proposed:
Hypothesis 6 (H6).
OCBE mediates the relationship between GTL and economic performance.
  • Mediating role of OCBE between GTL and social performance
OCBE is a main kind of pro-environmental behavior that assists organizations in strengthening their impact on society [65]. Organizations can benefit from the positive image developed by OCBE in the organization [48]. These benefits such as improved employee satisfaction, enhanced stakeholder relationships [48], increased employee morals, and loyalty and satisfaction of customers [49] can lead to better social performance. According to SET, when transformational leadership provides subordinates with a clear vision, inspiration, and motivation while supporting the development needs of subordinates to achieve the organization’s environmental goals, employees perceive that they are valued and respected by their leaders and organizations and are likely to reciprocate their leaders and organizations with OCBE, thus ultimately improve social performance.
GTL creates a background that promotes OCBE among employees [60,61,62]. Moreover, OCBE has been proved to contribute to social performance [10] and sustainable performance [10,63,64]. Furthermore, it has been proved that OCBE mediates the relationship between GTL and sustainable performance [57]. Based on the above discussion, we propose the following hypothesis:
Hypothesis 7 (H7).
OCBE mediates the relationship between transformational leadership and social performance.

2.2.4. Moderating Role of Organizational Identification

Organizational identification refers to a “perception of oneness with or belongingness to the organization” [28]. Employees who have a high level of organizational identification can better internalize the values, norms, and benefits of their organizations into their self-concept and promote their perception and understanding of organization-related factors [66]. Therefore, organizational identification can lead to positive attitudes and behaviors in the workplace [66].
According to social identity theory, when employees have a high level of organizational identification, they are more involved in good behaviors. In other words, if employees internalize the values, norms, and interests of organizations into their own, they have more motivation to perform well [67]. They are likely to exhibit good behaviors which benefit the organization rather than themselves [31]. Therefore, employees that highly identify with their organizations are more likely to align their behaviors with organizations’ goals and norms [68]. Accordingly, their need for GTL is low. As a result, OCBE can be generated even without GTL. In other words, the relationship between GTL and OCBE will be attenuated when there is a high-level organizational identification. In contrast, GTL is needed more to motivate employees to show OCBE when there is a low-level organizational identification. Therefore, it can be hypothesized that:
Hypothesis 8 (H8).
Organizational identification moderates the role of green transformational leadership and OCBE.

2.3. Research Framework

The framework is presented in Figure 1. It is based on social exchange theory and social identity theory. According to social exchange theory, it is believed that positive behaviors such as OCBE can be facilitated by green transformational leadership as transformational leaders who pay much attention to the environment can influence their subordinates, so their subordinates will reciprocate with positive attitudes and behaviors, thus contributing to the sustainable performance of organizations. According to social identity theory, employees’ need for GTL is low when employees highly identify with their organizations. Hence, in this framework, GTL is studied as the independent variable, the dimensions of sustainable performance (i.e., environmental performance, economic performance, social performance) are studied as the dependent variables, OCBE is studied as the mediator, and organizational identification is studied as the moderator.

3. Research Methodology

3.1. Context, Sample, Data Collection

Considering the sustainable development goals, Chinese manufacturing firms are using traditional manufacturing approaches and dealing with polluted information [69]. In particular, the northeastern firms in China are still employing conventional processes in the power, machinery, and pharmaceutical sectors [64,65]. Ultimately, the northeast region of China is facing more natural environmental challenges as compared to other parts of the country [70,71]. Regarding this, the present study focuses on manufacturing firms in northeast China. The northeast region consists of four provinces: Inner Mongolia, Liaoning, Jilin, and Heilongjiang. Moreover, China is a highly contextual society and requires personal and professional relations to gain quality information [72]. In order to gain a good number of responses in the Chinese market, it is also crucial to have strong networking [73]. Thus, we made use of our personal and professional ties to reach manufacturing firms and collect data in the northeast region.
In this study, we have taken a list of 350 manufacturing firms, using random probability sampling, from a sampling frame [74]. Here, the sampling frame offers complete information about manufacturing firms in the northeast region of China. Thus, it was appropriate to adopt a probability sampling approach in the current research. At the start, we gained access to the HR department managers of these 350 firms. Fifty-three HR managers did not show any interest and were not ready to collaborate with us. Thus, we were left with 297 manufacturing firms. Manufacturing firms in the northeast region mostly deal with power, pharmaceutical products, and machinery, which have a major share in environmental pollution. Therefore, the organizational level processes and behaviors such as OCB towards the environment are vital to cope with environmental issues and enhance their sustainable performance [75]. In the present study, we designed an online survey form to collect responses from the manufacturing firm’s representatives. The online survey form consists of five sections: GTL, OCBE, sustainable performance, organizational identification, and demographic information.
Participants shared their completed survey form through their HR department and were assured about the privacy of data and its exclusivity only for research purposes. The running of G*Power application [76] mandated 103 responses to deliver reliable and valid empirical results in this study. According to Wang et al., (2021), the average response rate in social science studies is 35.50% [77]. Therefore, survey forms were distributed among 297 firms. By sending emails, we also gave two friendly reminders in a week. In this study, the data collection process lasted for four months, i.e., from April to July 2022. In the end, we secured 207 responses and were left with 201 valid and reliable cases. Therefore, response rate in this study is 67.67%.

3.2. Demographic Information

In the current study, respondents are 201 manufacturing firm representatives in the northeastern region of China. Male participants (n = 114, 56.72%) dominate as compared to female respondents (n = 87, 43.28%). In this study, 20.50%, 42.78%, 28.36%, and 8.46% of participants have ages under 30, between 30 and 41, between 41 and 50, and above 51, respectively. Most of the participants (n = 131, 65.17%) have bachelor’s degrees, followed by those (n = 44, 21.89%) with master’s degrees. In this study, the lowest number of participants (n = 12, 5.97%) was recorded for high school education. In this study, 46.27% of participants (n = 93) have work experience of between 5 and 10 years, followed by those (n = 73, 36.32%) with above 10 years. The lowest number of participants (n = 35, 17.41%) was recorded for the working experience group of fewer than five years. Herein, the highest number of firm representatives was recorded for the role of manager (n = 88, 43.78%), followed by those in supervisor (n = 63, 31.34%) and general manager (n = 31, 15.42%) positions. The lowest number of participants (n = 19, 9.45%) was recorded for the group of directors. In this study, the highest number of firms (n = 95, 47.26%) was recorded for the number of employees between 751 and 1000, followed by those (n = 56, 27.86%) with a total number of employees above 1000 employees. The lowest number of firms in this study (n = 12, 5.97%) was recorded for a number of employees below 500. The demographic analysis further disclosed that this study is dominated by firms involved in the machinery business (n = 94, 47.71%), followed by power (n = 81, 41.12%) and pharmaceuticals (n = 26, 13.20%). In this study, the highest number of firm representatives was recorded for Jilin province (n = 77, 39.08%), and the lowest number of participants was recorded for Heilongjiang (n = 23, 11.67%). Additionally, 27.41% and 23.86% of participants come from Inner Mongolia (n = 54) and Liaoning (n = 47), respectively.

3.3. Measures

In this study, firm representatives rated the green transformational leadership practices on the basis of the 6-item scale developed by Chen and Chang (2013) [24]. Li et al. (2020) have also used this scale in the context of China and found it highly reliable [78,79]. Firms represented were asked to rate their OCB towards the environment on the basis of a 10-item scale. This scale was developed by Boiral and Paillé (2012) [16] and has been also employed by [69] in this study. In this study, firm representatives shared their perceptions about organizational identification on the basis of the six-item measurement scale developed by Mael and Ashfroth (1992) [33]. Cheema et al. (2020) have also used this scale in the Pakistani context and reported its high reliability [80]. We have adopted a 15-item measurement scale for sustainable performance to collect responses related to social, economic, and environmental performance [81]. Xuecheng and Iqbal (2022) have also used the same scale in the context of China and found it highly reliable [82]. According to Chen et al., (2018) and Faul et al., (2009), firm size is positively related to organizational performance, which may cause endogeneity [83,84]. Therefore, we have taken industry type and firm size as control variables in this study. Firm size is defined as the total number of employees in a firm [79,80,85,86,87,88]. The measurement items of all four continuous variables are presented below in Appendix A.

3.4. Analytical Approach

In the present study, the research framework, which comprises a mediator, a moderator, an independent variable, and dependent variables, is complex in its nature. Therefore, it requires multivariate analysis. Regarding this, structural equation modeling (SEM) analysis is useful and facilitates the analysis of multiple variables simultaneously [89,90]. SEM analysis is categorized into covariance-based SEM and partial least squares (PLS) SEM analysis. Their selection is highly reliant on the basis of research objectives, statistical assumptions, and fit indices [91]. CB-SEM concerns testing theory and confirmatory research. It delivers better results in the presence of data normality, reflective constructs, and a large sample size [92]. As the current research is prediction-oriented and revolves around both reflective and formative constructs, PLS-SEM analysis is employed here. The PLS-SEM comprises both measurement and structural model analysis. Prior to structural model analysis, it is necessary to evaluate the measurement models. In this study, we conducted PLS-SEM analysis in the smartPLS 3.0 version to evaluate both the measurement and structural models.

4. Study Findings

4.1. Data Screening

A data screening process ensures the validity and reliability of a dataset in order to proceed with further analysis. It investigates missing values, outliers, normal distribution, and common method bias. As we collected data through an online survey form and marked it mandatory to check each item, there are no missing values in the dataset. Outliers are classified as univariate and multivariate outliers. In order to check the number of outliers, we ran a Z-score analysis and the Mahalanobis distance test. The Z-score values of two cases were found to be greater than 3.29 [85], which confirmed their presence as univariate outliers, and later on, they were removed from the dataset. Furthermore, the running of the Mahalanobis distance test in Statistical Package for Social Sciences (SPSS) disclosed the presence of one case as a multivariate outlier because its p-value was lower than 0.001.
The data normality is also categorized into univariate normality and multivariate normality. The univariate normality exists provided skewness and kurtosis values of continuous variables lie in the range of ±3 [79]. In this study, skewness values of transformational leadership, OCB towards the environment, organizational identification, economic performance, social performance, environmental performance, and sustainable performance fall in the range of −1.080 to −0.111. Moreover, their kurtosis values are found in the range of −1.259 to 0.653. Thus, the skewness and kurtosis values confirm the univariate normality of data. The significant Mardia’s coefficient values of skewness (β = 5.638, p-value < 0.005) and kurtosis (β = 50.534, p-value < 0.005) also support the multivariate normality of the dataset in this study.
Despite the existence of non-normal data, partial least square structural equation modeling (PLS-SEM) analysis can be conducted. To address the common method bias issue, we employed both Harman’s single-factor test and the correlation matrix procedure. Harman’s single-factor test disclosed that a single factor contributes 24.378% of the total variation, which is less than 50% [80]. Hence, the current dataset is free of common method bias. Moreover, the results of the correlation matrix procedures confirmed that all correlation values are lower than 0.90. Hence, this study is free of common method bias. In order to assess the distinctiveness of variables in the proposed framework, we have adopted the two-index strategy i.e., normed-fit index (NFI) and standardized root mean square residual (SRMR) [86,87]. The measurement model analysis showed that the six-factor hypothesized model is a better fit ( NFI = 0.966 > 0.960 ;   SRMR = 0.063 < 0.090 ) as compared to other alternative models.

4.2. Descriptive Analysis

In the current study, all continuous variables have been rated on a five-point Likert scale. Mean values of all continuous variables, namely transformational leadership (M = 3.671), OCB towards the environment (M = 3.468), organizational identification (M = 3.563), economic performance (M = 3.496), social performance (M = 3.800), environmental performance (M = 3.514), and sustainable performance (M = 3.603), are found in the range of 3.00–3.99 (see Table 1). Moreover, Sekaran et al. (2016) contended that mean values ≤ 2.99, between 3.00 and 3.99, and ≥3.99 indicate the presence of any variable at low, moderate, and high levels, respectively [88]. Therefore, it is evident that transformational leadership, OCB towards the environment, organizational identification, economic performance, social performance, environmental performance, and sustainable performance are being practiced at a moderate level among manufacturing firms in northeastern China. Yet, these manufacturing firms are highly inclined towards social performance.

4.3. Measurement Model Analysis

The measurement analysis focuses on the reliability and validity of the variables in the proposed framework. The reliability is related to indicator reliability and construct reliability. An indicator has acceptable reliability provided its factor loadings are greater than 0.50. In this study, indicator loadings of all items are found in the range of 0.597–0.937 (see Table 2), which are higher than 0.50. This means all items have acceptable indicator reliability. Normally, Cronbach’s alpha and composite reliability are employed to investigate the construct reliability. Cronbach’s alpha values of all six continuous variables fall in the range of 0.883–0.944. Their composite reliability values also lie between 0.867 and 0.936 (see Table 2). Considering Cronbach’s alpha and composite reliability as criteria, a construct has acceptable reliability provided these values are greater than 0.70 [89]. Therefore, these variables have acceptable reliability. The validity means construct validity, which has two dimensions, namely convergent validity and discriminant validity. A construct has acceptable convergent validity when its factor loadings are greater than 0.70 and its average variance extracted (AVE) is higher than 0.50. The AVE values of transformational leadership, OCB towards the environment, organizational identification, economic performance, social performance, and environmental performance are 0.516, 0.524, 0.551, 0.583, 0.668, and 0.659, respectively (see Table 2), and greater than 0.50. Therefore, all six continuous variables have acceptable convergent validity.
In order to check the discriminant validity of the construct, we have calculated the Fornell–Larcker criterion and heterotrait–monotrait ratio. According to Fornell–Larcker criterion, a construct has acceptable discriminant validity provided the square root of its AVE value is greater than its inter-construct correlation values in the proposed framework [90]. As shown in Table 3, the square root of AVE values of all continuous variables in this study are greater than their inter-construct correlation values. Therefore, all constructs have acceptable discriminant validity. As a criterion, the heterotrait–monotrait (HTMT) ratio confirms the discriminant validity provided its HTMT value is lower than 0.85 [91,92]. In this study, we found that the highest HTMT value is 0.841, which is less than 0.85. Therefore, the HTMT ratio also confirms the discriminant validity.

4.4. Structural Model Analysis

The path analysis of the proposed model revealed that GTL significantly influences OCB towards the environment ( β = 0.477 ,   ρ < 0.05 ) . Therefore, hypothesis H1 is supported in this study. Moreover, current empirical evidence also supported the significant positive impact of organizational citizenship behavior towards the environment on the environmental performance ( β = 0.290 ,   ρ < 0.05 ) , economic performance ( β = 0.371 ,   ρ < 0.05 ) , and social performance ( β = 0.314 ,   ρ < 0.05 ) (see Table 4). Therefore, hypotheses H2, H3, and H4 are also supported here.
The present study also proposes that GTL significantly influences environmental performance, economic performance, and social performance through OCB towards the environment. The indirect effect of GTL on environmental performance through OCB towards the environment, which is a product of the path coefficient from GTL to OCB towards the environment ( β = 0.477 ) and that of from OCB towards the environment to environmental performance ( β = 0.290 ) , is significant and positive ( β = 0.138 ,   ρ < 0.05 ) (see Table 4). Thus, hypothesis H5 is supported. Moreover, the indirect effect of GTL on social performance and economic performance through OCB towards the environment is also significant and positive ( β = 0.177 ,   ρ < 0.05 ) . Hence, it is confirmed that OCB towards the environment significantly mediates the relationship of GTL with economic and social performance ( β = 0.150 ,   ρ < 0.05 ) (see Table 4). Therefore, hypotheses H6 and H7 are also supported in this study.
In the present study, we have also estimated the interactive effect of GTL with organizational identification on employee OCB towards the environment. In this study, hypothesis H8 proposes that interaction term (organizational identification and green transformational leadership) significantly affects employee OCB towards the environment. Yet, the current empirical evidence suggests that their interaction term does not significantly affect employee OCB towards the environment ( β = 0.024 ,   ρ = 0.586 > 0.05 ) . This means that organizational identification does not significantly moderate the relationship of GTL with employee OCB towards the environment. Hence, moderating hypothesis H8 is rejected in this study.

5. Discussion

This current study allows us to better understand the GTL–sustainable performance relationship. In addition, this study identifies the mediating role of OCBE in the relationship between GTL and sustainable performance. In addition, this study discusses the moderating role of organizational identification between GTL and OCBE. Considering the objectives of mediating and moderating mechanisms, this study formulates propositions about the relationships of the variables. The current study also contributes to the literature on SET and SIT by developing a conceptual model which could be empirically examined. The present empirical findings are elaborated below.
The current empirical evidence of hypothesis H1 is consistent with the findings offered by Pattnaik et al., (2021), Manoppo et al. (2020), Kim et al. (2019), and Hackett et al. (2018) [93,94,95,96]. Past studies have shown a significant positive impact of transformational leadership on employee OCB in the business sector of India [93] and Monado public hospitals [94]. Transformational leaders also indirectly influence OCB through organizational learning in the South Korean manufacturing industry [95] and leader–member exchange in Taiwan [96]. Furthermore, Kim et al. (2020) have also found a significant indirect effect of ethical leadership on OCB through team moral efficacy [97].
The present study also posits the significant positive effect of OCBE on social, economic, and environmental performance. Regarding hypotheses H2, H3, and H4, the current empirical findings support the positive impact of OCBE on social, economic, and environmental performance. This study has shown a significant positive effect of employee OCBE on firm environmental performance, which is consistent with similar findings in past studies [27,98,99]. Extant literature confirms the positive impact of employee OCBE on firm environmental performance in the US fashion retail industry [98] and higher education institutions [27]. Alt et al., (2016) have found that a firm’s employee involvement capability translates into environmental performance through the manifestation of unit-level OCBEs [99]. Three OCBE key dimensions, i.e., eco-helping, eco-civic initiatives, and eco-initiatives are positively related to the triple-bottom-line performance among Malaysian manufacturing firms [10]. Subordinates’ OCB significantly influences a firm’s sustainable performance [100]. Contrary to the H4 findings in this study, Yaniv et al. (2011) have provided evidence about the conditional role of perceived social performance on the relationship of organizational identification with OCB [101]. Moreover, perceived corporate social performance has been also found to mediate the high-performance work system (HPWS)–OCB relationship among Chinese employees.
In this study, we hypothesized the mediating effect of OCBE on the relationship of GTL with economic, social, and environmental performance. Regarding hypotheses H5, H6, and H7, current empirical findings have offered sufficient evidence to support the significant indirect effect of GTL on social, economic, and environmental performance through OCBE. Similar to current findings, extant literature claims that various mechanisms act on the leadership–performance relationship. It was found that corporate social responsibility mediates the impact of GTL on green performance among SMEs in Cyprus [102]. An innovative climate significantly mediates the relationship of all dimensions of transformational leadership with organizational performance [103]. In Korean private firms, Park et al. (2021) have found an indirect effect of transformational leadership on job performance through employee engagement [104]. Moreover, an experimental study unraveled the mediating effect of chronic regulatory focus on the leadership–creative performance relationship.
The present study also posited the positive moderating effect of organizational identification on the relationship of transformational leadership with OCBE, which is hypothesis H8. The current findings have supported the moderating hypothesis in this study. Similarly, allocentrism [105], group size among Israeli healthcare employees [106], green dedication [86,87,88,89,90,91,92,93,94,95,96,97,98,99,100,101,103,104,105,106], individualism, masculinity, and power distance have been also found to have a conditional impact on the transformational leadership–OCB relationship. Contrary to present findings, Schuh et al. (2011) have found that leader organizational identification significantly influences employee organizational identification through leader behavior [102]. Moreover, Souza et al. (2022) have found a conditional effect of transformational leadership on the emotional intelligence–OCB relationship [107].

6. Conclusions

Based on the data collected from manufacturing firms in the northeastern region of China, this study aimed to examine the effect of GTL on sustainable performance through OCBE. This study also intended to investigate the moderating role of organizational justice in the relationship between GTL and OCBE. The current empirical findings confirm that GTL significantly influences the three dimensions of sustainable performance (i.e., environmental performance, economic performance, and social performance) through OCBE. However, the findings do not support the moderating effect of organizational justice on the relationship of GTL with OCBE.

6.1. Theoretical Implication

Some researchers, e.g., the author of [36], have proved that GTL has a positive impact on sustainable performance. However, in most previous studies, environmental performance, economic performance, and social performance (i.e., the three dimensions of sustainable performance) have not been studied separately (e.g., [35,36,44]). This study contributes to the literature about sustainable performance by developing a connection between GTL, OCBE, and the three dimensions of sustainable performance. In addition, organizational identification as a moderator between GTL and OCBE has not been studied before. This study also contributes to the literature about SIT by investigating the moderating role of organizational identification between GTL and OCBE.

6.2. Practical Implication

Practically, this study will help organizations understand the importance of GTL and OCBE to improve sustainable performance. It will serve as a basis for organizations to improve their sustainable performance, which is important in this era in which sustainability has been given much attention by stakeholders. Meanwhile, this study will help policy makers and practitioners in organizations redesign their strategies to hire or cultivate leaders with green transformational leadership traits to create OCBE of employees.

6.3. Limitations and Directions for Future Studies

Despite its theoretical implication and practical implication, this study has some limitations. Firstly, this study investigated 201 manufacturing firms in the northeast of China. Therefore, it is necessary to expand the sample size, industries, and geographical areas to resolve the generalization issue in future research. Secondly, this study is cross-sectional, i.e., data are collected at one point in time. However, it takes a long time for GTL to change behaviors, so a longitudinal approach can be used in future research. Thirdly, GTL was studied as a unidimensional variable in the current study. In order to better understand the effect of GTL on sustainable performance, future research can also investigate the different dimensions of GTL. Finally, only one mediator was investigated in this study; in future research, other mediating roles and moderating roles between GTL and sustainable performance can be explored.

Author Contributions

Conceptualization, M.L.; writing—original draft preparation, M.L.; writing—review and editing, A.A.E. and Q.I.; supervision, A.A.E. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

The data presented in this study are available on request from the corresponding author.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

Green Transformational Leadership
  • The leader of the green innovation project inspires the project members with the environmental plans.
  • The leader of the green innovation project provides a clear environmental vision for the project members to follow.
  • The leader of the green innovation project gets the project members to work together for the same environmental goals.
  • The leader of the green innovation project encourages the project members to achieve the environmental goals.
  • The leader of the green innovation project acts while considering environmental beliefs of the project members.
  • The leader of the green innovation project stimulates the project members to think about green ideas.
Organizational Citizenship Behavior towards the Environment
  • In my work, I weigh the consequences of my actions before doing something that could affect the environment (e.g., turning off lights when leaving the office, putting recycle material in proper bins).
  • I voluntarily carry out environmental actions and initiatives in my daily activities at work.
  • I make suggestions to my colleagues about ways to protect the environment more effectively, even when it is not my direct responsibility.
  • I spontaneously give my time to help my colleagues take the environment into account in everything they do at work.
  • I encourage my colleagues to adopt more environmentally conscious behavior.
  • I encourage my colleagues to express their ideas and opinions on environmental issues.
  • I actively participate in environmental events organized by my organization.
  • I stay informed about my organization’s environmental initiatives.
  • I undertake environmental actions that contribute positively to my organization’s image.
  • I volunteer for projects, endeavors, or events that address environmental issues at my organization.
Sustainable Performance
Social performance
  • Your organization meets the basic needs of your family.
  • Your organization enhances your social recognition in society.
  • Your organization improves your empowerment in society.
  • Your organization provides freedom and control over the course of your own lifestyle.
  • Your organization is concerned about child labor use.
Environmental performance
  • Your organization uses utilities (e.g., energy and water) in an environmentally friendly manner.
  • Your organization produces few wastes and emissions.
  • Your organization is concerned about waste management.
  • Your organization uses small spaces to set up and operate the business.
  • Your organization is concerned about hygienic factors.
Economic performance
  • Economic performance of your organization is at an acceptable level in terms of sales growth.
  • Economic performance of your organization is at an acceptable level in terms of income stability.
  • Economic performance of your organization is at an acceptable level in terms of return on investment.
  • Economic performance of your organization is at an acceptable level in terms of profitability.
  • Your organization is providing employment opportunities to you and others.
Organizational identification
  • When someone criticizes this organization, it feels like a personal insult.
  • I am very interested in what others think about this organization.
  • When I talk about this organization, I usually say “we” rather than “they”.
  • This organization’s successes are my successes.
  • When someone praises this organization, it feels like a personal compliment.
  • If a story in the media criticized this organization, I would feel embarrassed.

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Sustainability 14 15568 g001 550
Figure 1. Research framework.
Figure 1. Research framework.
Sustainability 14 15568 g001
Table
Table 1. Descriptive statistics and normality of data.
Table 1. Descriptive statistics and normality of data.
ConstructMeanStd. DeviationSkewnessKurtosis
StatisticStatisticStatisticStd. ErrorStatisticStd. Error
Transformational Leadership3.67110.43493−0.4020.1730.6530.345
OCB towards the Environment3.46800.76026−0.6920.1730.7170.345
Organizational Identification3.56290.69993−0.1110.173−0.8490.345
Economic Performance3.49641.04131−0.3770.173−1.2590.345
Social Performance3.80000.83324−1.0800.1730.4070.345
Environmental Performance3.51371.22544−0.7820.173−0.7270.345
Sustainable Performance3.60340.74105−0.7300.173−0.0510.345
Mardia’s multivariate skewness and kurtosis β zp-value
Skewness5.638183.2460.000
Kurtosis50.5341.8060.000
Table
Table 2. Loadings, reliability, and average variance extracted values.
Table 2. Loadings, reliability, and average variance extracted values.
ConstructItemsLoadingsCronbach’s AlphaCRAVE
Transformational Leadership (TL)TL60.6970.8970.8660.521
TL50.803
TL40.597
TL30.796
TL20.635
TL10.777
Organizational Identification (OI)OI10.8320.8830.8670.524
OI20.661
OI30.860
OI40.672
O50.669
O60.613
OCB towards the Environment (OCBE)OCBE10.7700.8850.9160.551
OCBE20.627
OCBE30.756
OCBE40.689
OCBE50.741
OCBE60.755
OCBE70.768
OCBE80.768
OCBE90.797
Social Performance (SP)SP10.6400.8720.9080.668
SP20.907
SP30.812
SP40.882
SP50.818
Economic Performance (EcP)ECP10.7330.8960.8730.583
ECP20.848
ECP30.854
ECP40.734
ECP50.625
Environmental Performance (EP)EP10.9370.9330.9050.659
EP20.650
EP30.845
EP40.753
EP50.844
Table
Table 3. Fornell–Larcker criterion.
Table 3. Fornell–Larcker criterion.
Constructs123456
Economic Performance0.763
Environmental Performance0.0860.811
OCB towards the Environment0.3710.2900.742
Organizational Identification0.3140.3760.7060.723
Social Performance0.6790.0380.3140.2960.817
Transformational Leadership0.4050.2890.7230.590.3230.722
Table
Table 4. Hypothesis testing results.
Table 4. Hypothesis testing results.
HypothesesΒS.D.T Statisticsp-ValuesLLCIULCI
GTL → OCBE0.4770.0746.4640.0000.3290.609
OCBE → EcP0.3710.0635.9090.0000.2320.482
OCBE → EP0.2900.0614.7410.0000.1620.399
OCBE → SP0.3140.0714.4030.0000.1730.455
GTL → OCBE → EcP0.1770.0473.7270.0000.0910.273
GTL → OCBE → EP0.1380.0383.6270.0000.0730.218
GTL → OCBE → SP0.1500.0453.3020.0010.0690.237
GTL × OI → OCBE0.0240.0430.5450.586−0.1040.072
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Lin, M.; Effendi, A.A.; Iqbal, Q. The Mechanism Underlying the Sustainable Performance of Transformational Leadership: Organizational Identification as Moderator. Sustainability 2022, 14, 15568. https://doi.org/10.3390/su142315568

AMA Style

Lin M, Effendi AA, Iqbal Q. The Mechanism Underlying the Sustainable Performance of Transformational Leadership: Organizational Identification as Moderator. Sustainability. 2022; 14(23):15568. https://doi.org/10.3390/su142315568

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Lin, Mou, Azura Abdullah Effendi, and Qaisar Iqbal. 2022. "The Mechanism Underlying the Sustainable Performance of Transformational Leadership: Organizational Identification as Moderator" Sustainability 14, no. 23: 15568. https://doi.org/10.3390/su142315568

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