The Impact of Environmental Sustainability and Financial Resources Utilization on Firm Financial Performance: The Mediating Role of Leadership Styles

Abstract

The paper aims to explore the impact of environmental sustainability and financial resources utilization on a firm’s financial performance through the mediation of leadership style in the manufacturing sector of Pakistan. First, a conceptual framework is devised among the relationship of exogenous and endogenous variables and the hypotheses are examined conferring to the relationships in the conceptual framework. Data is collected using a questionnaire from a sample of 47 registered manufacturing firms (Chemical, Pharmaceuticals). Then, the study is supported by neoclassical theory, resource-based theory, and financial slaked theory, multiple regression analyses are implemented with the data analyzed by the partial least square equation. The research results indicate that the utilization of financial resources has a positive relationship with firm financial performance. In the short run, the adoption of environmental sustainability is negatively related to the firm financial performance with a transactional leadership style, but in the long run, it will give positive impacts on the firm financial performance with transformational leadership. The comparative analysis of Leadership styles showed that transactional leadership style mediates better results than transformational leadership for the manufacturing sector of Pakistan. The study affords the modern ways, provides new insights to organizations, top management, and policymakers for the implementation of environmental sustainability and leadership skills for enhancing firm performance.