Ethical Leadership and Corporate Sustainability Performance: Mediating Effects of Organizational Culture
DOI:
https://doi.org/10.31004/joecy.v6i2.13660Keywords:
Ethical leadership, Corporate sustainability performance, Organizational culture, PLS-SEM, SustainabilityAbstract
The study purpose was to examine the effect of ethical leadership on corporate sustainability performance and to investigate the mediating role of organizational culture in this relationship. The study also aimed to explain how ethical leadership fosters a supportive organizational culture that enhances firms' economic, social, and environmental sustainability performance.
Materials and methods. This study employed a quantitative research approach using survey data collected from managers and employees of companies implementing sustainability initiatives. Data were analyzed using Structural Equation Modeling (SEM) with Partial Least Squares (PLS-SEM). Ethical leadership was measured as the independent variable, organizational culture as the mediating variable, and corporate sustainability performance as the dependent variable. The measurement model was assessed for validity and reliability before testing the structural relationships among the variables.
Results. The findings indicate that ethical leadership has a positive and significant effect on corporate sustainability performance. Ethical leadership also positively influences organizational culture, which, in turn, significantly enhances sustainability performance. Furthermore, organizational culture partially mediates the relationship between ethical leadership and corporate sustainability performance, suggesting that a strong ethical culture reinforces the effectiveness of leadership in achieving sustainability objectives.
Conclusions. Ethical leadership is a critical driver of corporate sustainability performance both directly and indirectly through organizational culture. Organizations should strengthen ethical leadership practices and cultivate a supportive organizational culture to improve long-term sustainability outcomes and create sustainable value for stakeholders.
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