Environmental sustainability in practice: Role of generative leadership and greenwashing in improving environmental performance.

This research investigates the relationship between environmental sustainability mindset, greenwashing practices, transformational leadership styles, and the subsequent impact on environmental performance within the context of Iranian small and medium-sized enterprises (SMEs). The study is motivated by the growing awareness of the crucial role SMEs play in overall environmental sustainability, coupled with the increasing pressure on these businesses to adopt environmentally responsible practices. While larger corporations often have dedicated sustainability departments and resources, SMEs frequently lack the capacity and expertise to effectively integrate environmental considerations into their operations. This research seeks to understand how internal factors, specifically leadership styles and organizational mindsets, can influence environmental outcomes in these resource-constrained settings. The study addresses a significant gap in the existing literature by focusing specifically on the Iranian SME sector, a rapidly evolving and economically important segment often overlooked in broader sustainability research. The unique socio-economic and regulatory context of Iran presents a valuable case study, offering insights that may be transferable to other developing economies facing similar challenges.
A key objective of this research is to explore the mediating role of transformational leadership in the relationship between environmental sustainability mindset and environmental performance. It is hypothesized that a strong organizational commitment to environmental sustainability, manifested in a pervasive environmental mindset, positively influences the adoption of transformational leadership practices. Transformational leaders are expected to foster a culture of innovation, collaboration, and environmental stewardship, thereby driving improvements in environmental performance. However, the research also recognizes the potential for greenwashing – the practice of misleadingly promoting environmentally friendly initiatives without genuine commitment – to distort this relationship. The study investigates whether greenwashing moderates the relationship between environmental sustainability mindset and environmental performance, potentially undermining the positive effects of a strong environmental mindset.
The research employed a quantitative methodology, utilizing a survey instrument administered to a sample of Iranian SMEs. The questionnaire was designed to measure the key variables of interest: environmental sustainability mindset, greenwashing practices, transformational leadership behaviors, and environmental performance. The instrument incorporated validated scales adapted from existing literature, ensuring reliable and consistent measurement across the variables. To enhance the validity and reliability of the data, rigorous steps were taken to ensure the questionnaire's clarity, consistency and to pre-test it with a pilot sample to identify and rectify any ambiguities. The final sample consisted of SMEs, carefully selected to represent a diverse range of industries and sizes within the Iranian SME landscape, whilst ensuring that the sampling adhered to the definition of an SME used within this study which stipulated a maximum workforce of 250 employees. This size limitation was consciously imposed to enhance the feasibility of data collection whilst ensuring the integrity of the collected data. Descriptive statistics were used to characterize the sample, providing a baseline understanding of the SMEs involved. The data obtained using the questionnaires were then quantitatively analysed using sophisticated statistical techniques such as Structural Equation Modelling (SEM) to test the proposed hypotheses and examine the relationships between the variables. This approach allowed for a robust investigation of the direct and indirect effects, providing insights into the complex interplay between organizational mindset, leadership, and environmental outcomes.
The findings of this study revealed several significant relationships between the key variables. The results strongly supported the hypothesis that a robust environmental sustainability mindset within an SME is positively and significantly associated with the adoption and enactment of transformational leadership styles. This suggests that a deep-seated commitment to environmental sustainability at the organizational level creates a fertile ground for the emergence of transformational leadership. Transformational leaders, in turn, were found to be strongly associated with improved environmental performance among the SMEs surveyed, confirming the crucial role of effective leadership in driving environmentally responsible practices. This finding underscores the importance of cultivating a leadership style that prioritizes employee empowerment, collaborative decision-making, and a shared vision for environmental sustainability. It is through this that the desired improvements in environmental performance may be successfully achieved. Conversely, the hypothesis that greenwashing moderates the relationship between environmental sustainability mindset and environmental performance was not supported by the empirical evidence. This result suggests that, within the specific context of the Iranian SMEs surveyed, the practice of greenwashing does not significantly influence or mitigate the positive effects of a well-established environmental sustainability mindset on environmental performance.
Further analysis revealed a significant mediating effect of transformational leadership in the relationship between environmental sustainability mindset and environmental performance. This confirms that the positive effect of a strong environmental mindset on environmental performance is, at least partially, channeled through the adoption and implementation of transformational leadership styles. It is argued that transformational leaders act as a crucial conduit, translating the organizational commitment to environmental sustainability into concrete actions and improved environmental outcomes. The findings provide strong support for the contention that nurturing an environmentally conscious organizational culture and promoting effective transformational leadership are essential ingredients for improving environmental performance in SMEs.
The limitations of the study should be acknowledged. The focus on manufacturing SMEs in Iran, and the specific definition of SME size employed (fewer than 250 employees), limits the generalizability of the findings to other sectors and contexts. Future research should explore the applicability of the model to a broader range of industries, sizes and geographical locations, considering the diverse economic and regulatory environments in which SMEs operate. Furthermore, future studies could expand the scope of the study by including non-manufacturing SMEs. While the study controlled for [Insert Control Variables], further research could incorporate other potentially relevant variables, such as the influence of external stakeholders and regulatory pressures, to gain a more comprehensive understanding of the factors influencing environmental performance in SMEs. Finally, this research predominantly employed a quantitative methodology. A mixed-methods approach, integrating qualitative data collection techniques such as in-depth interviews or case studies, could provide valuable insights into the nuances of organizational behavior and leadership practices, which could enhance the understanding derived from the quantitative analysis alone. Nevertheless, this research makes a valuable contribution to the existing body of knowledge by providing empirical evidence on the relationships between environmental sustainability mindset, transformational leadership, and environmental performance in the context of the Iranian SME sector. The findings offer significant implications for policymakers, business leaders, and researchers involved in promoting environmental sustainability in developing economies.