TRANSFORMATIONAL LEADERSHIP AND CORPORATE SUSTAINABILITY: THE MODERATING ROLE OF ORGANIZATIONAL LEARNING IN SMALL AND MEDIUM ENTERPRISES OF SINDH, PAKISTAN

Abstract

This research empirically investigates the influence of transformational leadership (TL) on corporate sustainability (CS) within the small- and medium-sized enterprise (SME) sector of Sindh, Pakistan, with a specific focus on the moderating function of organizational learning (OL). Grounded in contemporary extensions of the transformational leadership theory and the dynamic capabilities view, the study proposes that transformational leaders are instrumental in cultivating a shared vision, driving green innovation, and fostering a profound stakeholder orientation, which collectively enhance triple bottom line performance. Data were collected from 287 mid-level managers and supervisors via a cross-sectional survey. Analysis using structural equation modeling (SEM) via WarpPLS 8.0 confirmed that TL exerts a significant positive impact on CS (β = 0.489, p < 0.001). Furthermore, the findings reveal that OL acts as a critical positive moderator, significantly strengthening the relationship between leadership and sustainability outcomes (β = 0.136, p < 0.01). A follow-up analysis also indicated a significant partial mediation of OL. To fill in this gap, we offer an integrated leadership and organizational learning perspective that may explain the dynamic relationship between sustainability adoption at not well studied Pakistani SMEs. It provides practitioners with practical takeaways, highlighting strategically the need to co-create transformational leaders, incubate learning systems in tight resource environments and pursuing a long-term strategy for sustainability.