The Impact of Ethical Leadership on Financial Performance: The Mediating Role of Environmentally Proactive Strategy and the Moderating Role of Institutional Pressure

Abstract

For the sustainable development of agriculture, few investigations have explored how to achieve the sustainable development of agritech companies through management mechanisms. Therefore, this study proposes a novel model that describes the impact of the ethical leadership of the chief executive officer on financial performance through environmentally proactive strategy adoption, which is moderated by institutional pressures to deal with the problem of the literature gap. In fact, past research on financial performance has nearly always examined profitability or earnings per share, but few studies have explored the relationship between organizational leadership and environmentally proactive strategy adoption to improve firm performance. To fill this research gap mentioned above, this study employs the methodology of structural equation modeling to analyze the theoretical model. Empirical data were collected by 75 chief executive officers and their upper management teams in the agritech firms, and the analysis result confirmed all hypotheses. That said, the impact of the ethical leadership of the chief executive officer significantly influences the financial performance through the environmentally proactive strategy adoption, which is significantly moderated by institutional pressures Therefore, this study can provide a new milestone in the sustainable agricultural literature and provides agritech firms with specific recommendations for performance improvements to achieve sustainability.