Leadership Dimensions Influencing Sustainability Leadership in Sri Lanka: Mediating Effect of Managers' Ethical Behaviour and Organizational Change

Abstract

This study examines the mediation effect of managers' ethical behaviour and organizational change on the leadership dimensions that influence sustainability leadership among Sri Lankan managers. Manager's attitudes to organizational change and their ethical behaviour are identified as essential dimensions to achieve sustainable leadership in the business world. While much of the literature underlines the direct relationship between organizational leadership and either organizational change or manager's ethical behaviour, only a few studies focus on the mediating effect of the manager's ethical behaviour and organizational change leadership on perceptions of creating a sustainable organization. Sri Lanka is identified as a developing country with strong socio-cultural values that promote sustainability. Understanding what constitutes sustainability leadership in a developing country such as Sri Lanka is worth examining. The responses of 596 managers were analyzed using factor analysis and structural equation modeling. The findings confirm that stakeholder relations are the most influential dimension for creating sustainability leadership. Mediation analysis tests confirmed that the two mediators of managers' ethical behaviour and change leadership fully mediate the relationships between employee engagement and leaders' concern for social and environmental sustainability, which concern was identified as the weakest of the three leadership dimensions suggesting that long-term orientation has not much potential for creating sustainability leadership among Sri Lankan managers.

Full text

Journal of Management and Sustainability; Vol. 10, No. 1; 2020
ISSN 1925-4725 E-ISSN 1925-4733
Published by Canadian Center of Science and Education
113
Leadership Dimensions Influencing Sustainability Leadership in Sri
Lanka: Mediating Effect of Managers’ Ethical Behaviour and
Organizational Change
Ayoma Sumanasiri1
1 Department of Commerce, Faculty of Management Studies and Commerce, University of Sri Jayewardenepura,
Gangodawilla, Nugegoda, Sri Lanka
Correspondence: Ayoma Sumanasiri, Department of Commerce, Faculty of Management Studies and Commerce,
University of Sri Jayewardenepura, Gangodawilla, Nugegoda, Sri Lanka. E-mail: ayoma@sjp.ac.lk
Received: March 2, 2020 Accepted: April 2, 2020 Online Published: April 6, 2020
doi:10.5539/jms.v10n1p113 URL: https://doi.org/10.5539/jms.v10n1p113
Abstract
This study examines the mediation effect of managers’ ethical behaviour and organizational change on the
leadership dimensions that influence sustainability leadership among Sri Lankan managers. Manager’s attitudes
to organizational change and their ethical behaviour are identified as essential dimensions to achieve sustainable
leadership in the business world. While much of the literature underlines the direct relationship between
organizational leadership and either organizational change or manager’s ethical behaviour, only a few studies
focus on the mediating effect of the manager’s ethical behaviour and organizational change leadership on
perceptions of creating a sustainable organization. Sri Lanka is identified as a developing country with strong
socio-cultural values that promote sustainability. Understanding what constitutes sustainability leadership in a
developing country such as Sri Lanka is worth examining. The responses of 596 managers were analyzed using
factor analysis and structural equation modeling. The findings confirm that stakeholder relations are the most
influential dimension for creating sustainability leadership. Mediation analysis tests confirmed that the two
mediators of managers’ ethical behaviour and change leadership fully mediate the relationships between
employee engagement and leaders’ concern for social and environmental sustainability, which concern was
identified as the weakest of the three leadership dimensions suggesting that long-term orientation has not much
potential for creating sustainability leadership among Sri Lankan managers.
Keywords: sustainability leadership, leadership behaviours, cultural modeling, developing economies
1. Introduction
Sustainability issues are common to all countries regardless of their level of economic, social and environmental
development (UN, 2015). Unlike the developed world, developing countries are largely exposed to diverse,
complex and major issues of environmental pollution, poverty and gender discrimination, etc. The concept of
corporate sustainability has been explored in depth mainly in the developed world but is little known in the
developing countries (Kantabutra & Avery, 2012; Kantabutra & Saratun, 2013), suggesting that today
sustainability has become a key managerial task for ensuring organizational sustainability.
The literature defines a sustainable leader as one who aims to minimize the negative impact of managerial
decisions on the triple bottom line (i.e., the environment, economy and society). Managers need outstanding
leadership skills to address issues surrounding organizational sustainability so as to minimize the negative
impacts on the triple bottom line (Metcalf & Benn, 2013).
Researchers and practitioners such as Avery and Bergsteiner, (2010, 2011); Dunphy and Benn, (2013) and Parkin,
(2010) point out that strong leadership that perceives sustainability matters create sustainability in organizations.
Leadership scholars argue that leadership theories such as charismatic leadership, transformational leadership,
ethical leadership, spiritual leadership, responsible leadership, servant leadership and environmental leadership
contribute to organizational sustainability and even help organizations to gain competitive advantage in the
industry (Avery & Bergsteiner, 2010, 2011). Remarkably, those organizations that disregard sustainability have
faced corporate scandals and even bankruptcy.
Organizational transition towards sustainability often requires its leaders to be more innovative in managing

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planned organizational changes (D’Amato & Roome, 2009; Gilbert, 2019; Hargett & Williams, 2009; Strategic
Direction, 2011; Willard, 2009). Excellent leadership that prioritizes sustainability is considered an important
aspect when directing organizational change towards sustainability (Dunphy & Benn, 2013; Dunphy, Griffiths,
& Benn, 2014), which confirms the essentiality of change-oriented leadership skills to achieve organizational
sustainability (Akins, Bright, Brunson, & Wortham, 2013; Avery & Bergsteiner, 2011; Bossink, 2007; Gilbert,
2019; Millar, Hind, & Magala, 2012).
1.1 Research Problem
Although much of the literature underlines the direct relationship between organizational leadership and either
organizational change or ethical behaviour, only a few studies focus on the mediating effect of the manager’s
ethical behaviour and organizational change leadership on perceptions of creating a sustainable organization.
In order to explore this issue further the present study examines the mediating effect of the two identified
mediating variables (i.e., leader’s commitment to organizational change and ethical behaviour) on the
perceptions of sustainable leadership in Sri Lankan organizations. To achieve this research objective the
following research questions were developed:
(1) How does the leaders’ commitment to organizational change mediate the relationship between the three
leadership dimensions (EMP, LONG and STK) and sustainability leadership dimensions? and
(2) How does the leaders’ ethical behaviour mediate the relationship between the three leadership dimensions
(EMP, LONG and STK) and sustainability leadership dimensions?
To examine the managerial perceptions of sustainability leadership in Sri Lankan organizations it is important to
examine the context-specific factors that influence the leader’s attitudes, behaviours and perceptions. By doing
so, this study seeks to find perceptions of organizational leadership in the developing world from the
sustainability perspective.
Sustainability leadership in organizations has attracted attention in the developing world more than in the
developed world as the former faces more unique and diverse challenges (Khavul & Bruton, 2013; Selvarajah,
Meyer, Jayakody, & Sukunesan, 2020). Most organizations in the developing world aim to maximize short-term
profit compared with businesses in developed countries (Bin, 2020; Karande, Rao, & Singhapakdi, 2002). Hence,
understanding and incorporating context-specific values and beliefs help managers to include them in their
sustainability strategies (Edjossan-Sossou, Galvez, Deck, Al Heib, Verdel, Dupont, & Morel, 2020; Khavul &
Bruton, 2013).
2. Literature Review
Similar to the effective leadership behaviours developed by Yukl (2012), a group of East Asian researchers
(Selvarajah, Duignan, Suppiah, Lane, & Nuttman, 1995) has developed a similar leadership concept called
“excellence in leadership” to understand the perceptions of leadership behaviours in different cultural contexts.
This concept enables researchers to explain how organizational leaders in a particular culture perceive an
excellent leader within their organizations. To achieve this objective, Selvarajah et al. (1995) developed 94
leadership behavioural statements in the APEL questionnaire.
In order to examine Sri Lankan managers’ perceptions of sustainability leadership, this study first explored the
sustainability leadership literature pertaining to Sri Lanka and identified five excellent leadership dimensions
that influence sustainability leadership among Sri Lankan managers: concern for employees (EMP), stakeholder
relationships (STK), and long-term orientation (LONG), which were identified as variables with a direct impact
on sustainability leadership while leaders’ ethical behaviour (SUSTHINK) and change leadership CHNG) were
identified as mediating variables.
2.1 Context-Specific Nature of Sustainability Leadership
Traditionally, the leadership literature considers organizational leadership to be a universal phenomenon (Bass,
1990; Bass & Avolio, 1993; Fahr, Podsakoff, & Cbeng, 1987; Murdoch, 1967; Wakabayashi & Green, 1984).
Most of the previous leadership literature is biased towards America, which caused Wijewardena and Wimalasiri,
(1996) and Peterson and Hunt (1997) to criticize the inadequacy of Western-based leadership theories to explore
diverse organizational leadership characteristics of non-Western cultures. In a globalised market, awareness of
diverse cultural values helps leaders to make optimal decisions that match the local context (Javidan & House,
2001; Scanduraa & Dorfman, 2004; Triandis, 1995). The importance of local cultural values was deemed
important in some of the early studies such as Parson’s (1951). Those organizations that accept cultural diversity
are always able to outperform their counterparts (Avery & Bergsteiner, 2010, 2011). Hence, the leader’s

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knowledge of diverse cultural values in the local market will create excellent leadership that has a minimum
impact on the triple bottom line (Avery & Bergsteiner, 2011; Hargett & Williams, 2009; Khavul & Bruton, 2013;
Selvarajah et al., 2020).
This gave rise to the urgency to identify diverse leadership styles across cultures (Hofstede, 1986; Hofstede &
Bond, 1988; House et al., 1999; House & Javidan, 2004) and to re-examine the concepts surrounding leadership
and accept the influence of diverse cultural values, beliefs and behaviours. Following this line, researchers such
as Laurent (1986) began to examine the perception of leadership as a culture-specific concept in order to explore
leadership as a culture-specific concept. Moving further, Selvarajah, Meyer and Davuth (2012), Selvarajah,
Meyer and Donovan (2013) and Selvarajah et al. (2020) used the cognitive approach to explain the influence of
cultural values, norms, attitudes and beliefs on diverse leadership behaviours in different cultural contexts.
Following the cultural context perspective in examining leadership, Dunphy and Benn (2013); Hargett and
Williams (2009) and Selvarajah et al. (2020) explored context-specific factors that influence sustainability in a
particular culture. The model and the leadership behavioural statements used to develop this study were also
tested in different cultures (Selvarajah, Meyer, & Donovan, 2013; Selvarajah et al., 2020) and confirmed as
successful in examining managerial leadership in different contexts.
2.2 Context of the Study
The selection of a Sri Lankan managerial sample was theoretically important because most research on
leadership has focused on Western cultures (House & Aditya, 1997), and there is a growing demand for
leadership studies in non-Western and culturally diverse contexts (Bass, 1990; Hamlin & Patel, 2020). Sri Lanka
has often been described as a developing economy after recently emerging from 30 years of civil war—a nation
that is now poised to accelerate its economic development in a sustainable manner (Central Bank of Sri Lanka,
2018; Gunarathne, De Alwis, & Alahakoon, 2020). However, Sri Lanka still faces several diverse challenges
such as corruption, environmental pollution and regionally balanced economic development, in its way forward
to achieving sustainable economic performance (Geekiyanage & Vithanage, 2015; Gunarathne et al., 2020;
Ministry of Environment, 2012). Thus, developing a sustainability leadership model as done in this study has
significance for managers in a complex business environment such as Sri Lanka. Developing a sustainability
leadership model will allow researchers and practitioners to identify sustainable managerial skills, behaviours
and capacities to facilitate the development of sustainability leadership efforts in Sri Lanka’s industrialization
process. As the sustainability of business has now become an important aspect in the Sri Lankan organizational
context, Sri Lankan managers were considered suitable respondents for this study.
2.3 Independent Variables Measuring Leadership Dimensions
The following literature review explains how leadership dimensions relating to stakeholder relationships (STK),
long-term perspective (LONG) and concern for employees (EMP) can become an essential component in
achieving sustainability leadership.
2.3.1 Stakeholder Relationship
Society consists of complex and interrelated networks with diverse stakeholders where leadership is responsible
for ensuring unity and harmony within society (Salem, 2012; Ghassim & Foss, 2020). The stakeholder
perspective has often been identified as a core strategic leadership competency (Donaldson & Preston, 1995;
Polansky, 1995; Porter & Kramer, 2006; Post et al., 2002; Wondirad, Tolkach, & King, 2020). Strong
stakeholder relationships help managers to maximize the longevity of business success (Avery & Bergsteiner,
2011; Murphy, 2002; Post, Preston, & Sachs, 2002) and even improve innovation and marketing ability (Löfsten,
Klofsten, & Cadorin, 2020; Sohal, Gordon, Fuller, & Simon, 1999).
Historically, Sri Lankan society has been a patriarchal one (Hewage, Teicher, Alam, & VanGramberg, 2008;
Kamalika, 2008; Nanayakkara, 1999). Its patrimonial and feudal elements, a caste-based social structure, and
religious institutions have all played a role in the pre-colonial Sri Lankan social system (Hewage et al., 2008),
and its hierarchical structure with a high power distance (Liyanage, 1996b) confirms that Sri Lankan society is
still often characterized by inequality in the distribution of power and authority between the social classes and
even within the workplace (Chandrakumara & Sparrow, 2004). Sri Lankan corporate culture shows clear
disparity in the distribution of power between managers and non-managers (Hewage, 2011), where it is
commonly observed that managers dominate their subordinates, subordinates are afraid to disagree with their
managers, managerial decision-making is autocratic, and leadership behaviours are paternalistic (Nanayakkara,
1999). Some popular Japanese management practices that promote team work are also common in contemporary
Sri Lankan organizations (Hewage, 2011; Wickramasinghe, Hopper, & Rathnasiri, 2004).

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2.3.2 Long-Term Perspective
In Sri Lankan society, parents often expect their children to seek permission for even minor tasks in the belief
that their children’s wisdom and experience will develop under their supervision as they mature with age
(Liyanage, 1996a). This is also common in the Sri Lankan organizational context where subordinates expect
their managers’ support as they respect the authority and status of managers (Liyanage, 1996a). In addition, most
Asian managers respect rank, expect status recognition in social situations, treat managers as ritual personalities
and courtesies are consistently observed by most of the Asian management (Wijewardena & Wimalasiri, 1996).
Edirisinghe (2008) also found that most corporate-level bank managers are responsible for competitive, supplier,
economic and political analysis while marketing managers are mostly responsible for customer analysis, and
operational managers for technological analysis. Sri Lankan culture, which is identified as femininity-oriented
(Hewamanne, 2020), seems to be reflected through many Sri Lankan managers who demonstrate such femininity
values in their daily decision-making while their subordinates often establish a patriarchal relationship with their
supervisors (Liyanage 1996a).
2.3.3 Concern for Employees
Most Asian managers maintain close employee relationships and are more group-oriented than their Western
counterparts (Wijewardena & Wimalasiri, 1996). From pre-colonial Sri Lankan society, major decisions relating
to trade were based on common agreement between community leaders and villagers reflecting the collectivistic
values of Sri Lankan people which these values are still observable within the contemporary Sri Lankan working
class (Hewage et al., 2008). Often, Sri Lankan managers take care of their subordinates as if they were their
children, creating a relationship as of a father looking after his children (Liyanage, 1996a). This creates a
working family along different levels in the organizational hierarchy and strong group participation. The
manager’s relationship with employees also influences their performance appraisal (Jayawardana, O’Donnell, &
Jayakody, 2013). Sri Lankan managers often arrange annual staff trips, award ceremonies and other
socio-cultural events to motivate employees (Hewage, 2011). Therefore, Sri Lankan managers perceive
employee unions as a powerful force that can have a strong influence on their business decisions (Hewage,
2011).
2.4 Dependent Variables in Measuring Sustainability Leadership
There are three dimensions that explain the sustainability leadership of Sri Lankan managers, namely, leader’s
concern for “excellence in leadership” (EXL), “firm’s financial performance” (FIN) and “social and environment
performance” (ENV). EXL aims to identify the combination of excellent leadership behaviours that are desirable
for good leadership by surpassing others in a particular organization (Selvarajah & Meyer, 2008; Selvarajah et
al., 2020). The Asian perspectives of the leadership (APEL) model developed by Selvarajah, Dulgan, Suppiah,
Lane, and Nuttman (1995) have since been used on many occasions (for example, Selvarajah, 2008; Selvarajah
& Meyer, 2006, 2008; Selvarajah et al., 2012; Selvarajah et al., 2020) to examine the leadership perceptions of
managers across different industries, countries and societies. ENV aims to identify perceptions of excellent
leadership behaviours that are important for the welfare of society and the protection of natural resources. FIN
aims to identify the perceptions of excellent leadership behaviours important for the healthy financial
performance of the organization.
2.5 Mediating Variables and Hypotheses
2.5.1 Leader’s Commitment to Change
Organizational change has often been highlighted as an essential dimension of sustainability (Avery &
Bergsteiner, 2010; Dunphy & Benn, 2013; Dunphy et al., 2014; Gilbert, 2019). Organisations that respond through
change improve their comptitiveness and maximise stakeholder wealth (Dunphy et al., 2014). For this purpose,
organisations need change leaders rather than change managers to drive organisations towards success (Caldwell,
2003). The developing nations face enourmous challenges relating to sustainability (Ovadje, 2014). The lack of
change leadership skills in the developing countries impede organisational transformation into sustainability. In
Sri Lanka, most managers have few innovative skills, entrepreneurial attitutudes and readiness to accept risk,
resulting in negative attitudes to organisational change (Wickramasinghe et al., 2004). Also, in the Sri Lankan
context, changes in international management practices, rising oil prices and living costs, shrinking demand for
the country’s exports, heavy reliance on imports, and the lag in its economic development (Central Bank of Sri
Lanka, 2018) are influencing Sri Lankan managers to change their businesses as a usual means to compete
internationally. Hence, this study identifies leader’s commitment to change as a mediating variable to achieve
sustainable leadership.

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2.5.2 Manager’s Ethical Behaviour
Manager’s ethical thinking for maintaining trustworthy and responsible relations would create sustainability
leadership (Doppelt, 2012). In Sri Lanka rewards and recognition for lower-performing managers are often
inadequate; so, subordinates tend to maintain an economic relationship (transactional leadership) rather than
social engagement (transformational leadership) with their senior management (Jayawardana, O’Donnell, &
Jayakody, 2013). Sri Lankan managers care for their employees and think of their employees’ work-life balance
and welfare facilities (Abeysekera, 2007). The present managers of Sri Lankan organizations reflect both
colonial Western business practices such as profit maximization, productivity, efficiency, competition, and risk
management and Asian values such as loyalty, trust, cooperation, compassion, tolerance, morality and empathy
thus creating a new breed of Asian managers (Wijewardena & Wimalasiri, 1996). The 30-year war between the
LTTE and the Sri Lankan Government has meant that many Sri Lankan youths of that war-torn period grew up
being suspicious, fearful and mistrustful of each other (UNDP, 2019). Most Sri Lankan employees expect their
managers to be exemplary in character and to follow good practices even in their personal lives resulting in most
Asian managers maintaining good personal relations with their subordinates (Wijewardena & Wimalasiri, 1996).
They would like to offer long-term training opportunities and promotions and other career opportunities to their
employees to advance up the organization’s career ladder compared to managers in Western societies
(Wijewardena & Wimalasiri, 1996). These attitudes have made Asian managers reluctant to lay off employees,
preferring to maintain a moderately high level of job security compared with Western organizations
(Wijewardena & Wimalasiri, 1996). Most young Sri Lankans believe that traditional social values such as
ethnocentrism, power distance between different levels in the hierarchy, and the male-dominant cultural values
of Sri Lankan society are inappropriate and are barriers to social harmony (UNDP, 2019). Supporting this, both
the traditional and Western education systems in Sri Lanka have promoted environmental protection attitudes
among new generations to come (United Nations Educational Scientific and Cultural Organization, 2018).
Based on the above literature in total there were 18 hypotheses (Appendices 1 and 2) developed to test the
relationship between the three independent variables and the three dependent variables and the two mediating
variables.
3. Research Methodology
Sustainability leadership has been mainly examined in qualitative research studies done in Western cultures or
economically developed nations paving the way for this study to use a deductive-quantitative approach
supported by prior logical reasoning based on previous qualitative research. In developing the model, the
existing sustainability leadership models were explored and modified to suit the sustainability dimensions of the
social, political, economic and cultural contexts of Sri Lanka.
The respondents in this study are practicing full-time managers across different demographic profiles in Sri
Lanka. As many as 1632 questionnaires were distributed, of which 821 were returned and of which 596
questionnaires were used for further analysis.
The final sample consisted of 88.4% Sinhalese, 8.1% Tamils, and 3.5% Burghers and other ethnic groups. The
majority of the sample (80%) were Buddhists, 10% Christians, 6% Hindu, 3.2% were Islamic and 0.8% of other
religions. Males formed 69% of the sample 31% and females 31%. Of the respondents 60% were below 35 years
with the majority of the respondents, 48%, having less than five years of managerial experience. 72% of the
respondents were employed in the private sector while 28% worked in the public sector.
3.1 Measures of Leadership Behavior
The data were gathered using a questionnaire developed in English, and a Likert-type scale was used to measure
leadership behavioural aspects. As a basis, 94 leadership behavioural items (Selvarajah et al., 1995) were used to
measure eight variables in the model while nine items in the ENV variable were self-developed with the support
of literature such as Kalshoven, Den Hartog and De Hoogh (2011) and three items in the FIN were
self-developed using the support of the Global Reporting Initiative (2016). Statistical tests, namely, exploratory
factor analysis (EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM) techniques
based on SPSS and AMOS software (Hinkin, 1998) were used to analyze the data.
4. Results
The sample was split into two independent samples using the random split sample option in SPSS (Joreskog,
1993; Hinkin, 1998). The first sample consisted of 120 responses (calibration sample) and was used for EFA.
The second independent sample (validation sample) consisted of 476 responses and was used for CFA.

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4.1 EFA Results
Appendices 3 and 4 give the results of the exploratory factor analysis. Principal axis factoring (PAF) (Schmitt,
2011) and Direct Oblimin with Kaiser Normalization (Costello & Osborne, 2005) were chosen to perform the
EFA. The ten items measuring EXL confirmed a one-factor solution with a KMO value of 0.875, Cronbach’s
alpha of 0.892 and confirmed 51.2% of the variance of EXL was explained by these ten statements. The second
dependent variable of ENV confirmed a one-factor solution. KMO value was 0.883, Cronbach’s alpha 0.910
confirmed the 11 statements used in the questionnaire to measure ENV and was reliable where 53.57% of
variance of ENV was explained by these 11 statements. EFA confirmed the four items included in the third
dependent variable of FIN as a one-factor solution with a Cronbach’s alpha of 0.874, and a KMO value of 0.788
confirming a 73.62% explanation of variance in FIN by these four items.
The EFA test examined the 22 items measuring the CHNG and suggested removing CHNG1, CHNG2, CHNG4,
CHNG5, CHNG7, CHNG8, CHNG10, CHNG11, CHNG17, CHNG18, CHNG21 and CHNG22. After removing
the 12 items, the Cronbach alpha was 0.885, and 50% of the variance was explained by the remaining 10 items.
The second mediating variable measuring SUSTHINK consisted of 19 statements. The EFA suggested removing
SUS3, SUS6, SUS7, SUS10, SUS11, SUS17 and SUS18. KMO value of 0.876, Cronbach’s alpha of 0.886 and
53.92% of the variable was explained by the remaining 12 items.
Eleven behavioural statements were identified to measure STK. The KMO value was 0.878 and Cronbach’s
alpha was 0.875. It confirmed that the remaining seven statements explained 57.34% of the variance of STK
construct. LONG construct had 17 behavioural statements. Low factor loading on eight items confirmed the
removal of LONG3, LONG7, LONG8, LONG9, LONG10, LONG11, LONG12 and LONG13. The Cronbach’s
alpha of LONG is 0.873 and confirmed 50% of the variance in LONG measured by the remaining 9 items. EMP
was measured by 11 leadership statements though low factor loading confirmed removing four items, namely,
EMP3, EMP4, EMP5 and EMP11. Once the remaining seven items were removed it confirmed measuring 55.14%
of the variance of LONG with a Cronbach’s alpha value of 0.862 and KMO value of 0.869.
4.2 CFA Results
A CFA was carried out using AMOS Version 23. Appendix E shows that the descriptive model fits the statistics
obtained from each CFA. ML estimation via the bootstrap method (Kline, 2005; Ullman, 2006) was used as the
sample data showed a deviation from the normal distribution. All the model fit statistics were confirmed as good
model fit (Appendix E). For prior testing of the hypotheses three measurement models were developed and
tested for construct validity and reliability (Bagozzi, Yi, & Phillips, 1991). Three measurement models
(Appendix F) were developed to test construct validity and reliability. The first measurement model consists of
three dependent variables (EXL, ENV and FIN) and confirmed as a good fit for the data (bootstrap p-value
insignificant at p > 0.05, CFI, GFI, AGFI values were above 0.9, TLI > 0.95, RMR < 0.10 and the SRMR and
RMSEA < 0.05). The second measurement model consisted of two mediating variables (CHNG and
SUSTHINK). To improve the model fit CHNG6, SUS9, SUS13 and SUS15 were removed from the
measurement model. The third measurement model for the three independent variables suggested removing
LONG1, LONG5, LONG6, LONG14, STK9 and STK10. The final measurement model confirmed a good model
fit with a Chi-square value of 60.154 (sig), insignificant P-value, CFI, GFI, AGFI and TLI values above 0.9 and
the SRMR and RMSEA values less than 0.5.
Each of the three measurement models was tested individually for discriminant validity, reliability and
multicollinearity (Appendix F). Discriminant validity was tested using the method suggested by Fornell and
Larcker (1981). All the three measurement models confirmed its convergent validity of the constructs as
suggested by Hair and Anderson (2010). All the correlations in each of the three models confirmed significant
p-values (p < 0.001). All the three measurement models confirmed that their correlation values were less than 0.9
confirming that there was no multicolleniearity between the constructs as recommended by Tabachnick and
Fidell (2001).
4.3 Common Method Bias
As the data used in this study was highly exposed to common method bias, some procedural remedy was applied.
To eliminate the common method bias the questionnaire of this study ensured the anonymity of the respondents
and their organization, and included a brief description of each construct at the beginning of each section of the
questionnaire (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Several statistical remedies were used to
understand the common method bias as recommended by Podsakoff et al. (2003). These statistical methods
helped to prove that the inter-item correlation was not purely influenced by the common method variance
(Korsgaard & Roberson, 1995). First, Harman’s single factor model was used to examine common method bias

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c
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from SUST
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Vol. 10, No. 1;
e
results confi
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aths

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from LONG to three dependent variables were insignificant. The only direct path was from EMP to EXL but it
was weak (significant at P < 0.05).
The mediating variables and their effects were tested separately (Tables 1 and 2 below). Due to objections to
using the Baron and Kenney (1986) approach for mediation testing in complex models, the study used two other
methods, namely, the bootstrapping approach of Baron and Kenney (1986) with a 99% significance level and the
Chi-square difference test statistics.
Table 1. Mediation influence of CHNG on the relationship between independent variables and the dependent
variables
Hypotheses Path Direct
without
mediator
Bootstrapping 99.9% a and 95% b CI, 1000
samples
Chi-square
difference test
∆χ2 (1)
Significance
99 %
Decision
based on
Mathieu and
Taylor
(2006)
Support
Direct with
mediator
Indirect effect Total effect
H1 STK →
EXL
0.622 *** a/b 0.612 (ns)a
0.612 **b
0.007(ns) a/b 0.62 (ns) a
0.62 ** b
64.588 *** Direct No
H2 STK →
ENV
0.392 *** a/b 0.325***a/b 0.027(ns) a/b 0.353 *** a/b 16.213 *** Direct No
H3 STK →
FIN
0.270 *** a/b 0.226(ns) a
0.226 * b
0.012(ns) a/b 0.237(ns) a
0.237 * b
7.072 ** Direct No
H4 LONG →
EXL
0.117 (ns) a/b 0.094(ns) a/b 0.014(ns) a/b 0.108(ns) a/b 1.249 (ns) No
mediation
No
H5 LONG →
ENV
0.072 (ns) a/b -0.019(ns) a/b 0.063(ns) a
0.063 * b
0.044(ns) a/b 0.044 (ns) Indirect No
H6 LONG →
FIN
0.174 (ns) a/b 0.123(ns) a/b 0.027(ns) a/b 0.150(ns) a/b 1.577 (ns) No
mediation
No
H7 EMP →
EXL
0.173 (ns) a
0.173 **b
0.114(ns) a/b 0.02(ns) a/b 0.133(ns) a/b 2.912 (ns) Direct No
H8 EMP →
ENV
0.213 (ns) a
0.213 **b
0.024(ns) a/b 0.08(ns) a
0.08 * b
0.104(ns) a/b 0.120 (ns) Full Yes
H9 EMP →
FIN
0.260 *** a/b 0.114(ns) a/b 0.04(ns) a/b 0.184(ns) a/b 2.70 (ns) Direct No
Note. a = 99.9 % significance level (according to Bonferroni method)
P < 0.0018 = ***
ns = not significant
b = 95% significance level
P < 0.001 = ***
P < 0.01 = **
P < 0.05 = *

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Table 2. Mediation influence of manager’s ethical behaviour on the relationship between independent and
dependent variables
Hypotheses Path Direct
without
mediator
Bootstrapping 99.9% a and 95% b CI, 1000
samples
Chi-square
difference test
∆χ2 (1)
Significance
99 %
Decision
based on
Mathieu and
Taylor (2006)
Support
Direct with
mediator
Indirect
effect
Total effect
H10 STK →
EXL
0.622 *** a/b 0.632(ns) a
0.632 ** b
-0.021(ns) a/b 0.610 (ns) a
0.610 ** b
66.858 *** Direct No
H11 STK →
ENV
0.392 *** a/b 0.312 *** a/b 0.048(ns) a
0.048 * b
0.360 *** a/b 13.948 *** Partial Yes
H12 STK →
FIN
0.270 *** a/b 0.221(ns) a
0.221 * b
0.03(ns) a/b 0.250 (ns) a
0.250 * b
6.554 * Direct No
H13 LONG →
EXL
0.117 (ns) a/b 0.088(ns) a/b -0.008(ns) a/b 0.080 (ns) a/b 1.011 (ns) No mediation No
H14 LONG→
ENV
0.072 (ns) a/b -0.015(ns) a/b 0.014(ns) a/b 0.000(ns) a/b 0.026 (ns) No mediation No
H15 LONG →
FIN
0.174 (ns) a/b 0.119(ns) a/b 0.009(ns) a/b 0.127(ns) a/b 1.445 (ns) No mediation No
H16 EMP →
EXL
0.173 (ns) a
0.173 **b
0.162(ns) a
0.162 * b
-0.049(ns) a/b 0.113(ns) a/b 4.685 * Direct No
H17 EMP →
ENV
0.213 (ns) a
0.213 **b
0.009(ns) a/b 0.094(ns) a
0.094 * b
0.103(ns) a/b 0.012 (ns) Full Yes
H18 EMP →
FIN
0.260 *** a/b 0.133(ns) a/b 0.070(ns) a/b 0.203(ns) a
0.203 * b
1.827 (ns) Direct No
Note. a = 99.9 % significance level (according to Bonferroni method)
P < 0.0018 = *** and ns = not significant
b = 95% significance level
P < 0.001 = ***
P < 0.01 = **
P < 0.05 = *
ns = not significant
5. Discussion
5.1 Excellence in Leadership
The insignificant results of this study on the relationship between change leadership and excellent leadership
confirmed that change activities have no positive impact on excellent leadership in Sri Lankan organisations (see
Table 1 above). That is, Sri Lankan managers who participated in this study do not believe that being committed
to organizational change activities will help them to become excellent leaders in their organizations. Although at
the international level, change orientation is considered as essential to succeed in management (Armenakis,
Harris, & Mossholder, 1993), in the Sri Lankan context managers have negative attitudes toward change as they
are fear of trade unions action (Wickramasinghe et al., 2004).
Sri Lankan managers’ weak preference for long-term orientation in decision making as a means of achieving
sustainability leadership is also identified in this study. It was found that managerial perceptions of long-term
orientation were the least important leadership dimension in predicting Sri Lankan managerial perceptions of
sustainable leadership.
The insignificant results of this study could not confirm the positive influence of traditional long-term oriented
cultural and social values on Sri Lankan managerial perceptions. Therefore, this raises the question of whether in
more recent times long-term orientation has become a secondary leadership skill among Sri Lankan managers.
The results confirm that Sri Lankan managers believe that long-term orientation in their decision-making will
positively influence their decisions that encourage organizational change. Hence, being careful and thinking of
the long-term impact of change-related decisions are quite useful for sustainability in the Sri Lankan context.
Especially, the long-term impact on the employees through a possible organizational change decision would
protect the managers’ dignity as well as limit any possible losses such as employee strikes that damage the
business.
The insignificant results in this study relating to manager’s ethical behaviour and excellent leadership confirm

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that the leader’s ethical and responsible behaviours have no positive impact on managerial perceptions of
excellent leadership in Sri Lankan organizations. Hence, Sri Lankan managers do not perceive that being
trustworthy, honest, ethical and responsible in their leadership thinking is essential for excellent leadership in
their organizations. This challenges the findings of Wickramasinghe et al. (2004), and Wijewardena and
Wimalasiri (1996), who claimed that ethical and responsible leadership were essential for leadership success in
Sri Lankan organizations.
There is no mediation effect of CHNG on the relationship between STK and EXL, where there is only a direct
relationship between STK and EXL. The leadership statements show that team work, trustworthiness, and
personal relationships are important for a manager to be stakeholder-orientated in the Sri Lankan organizational
context. The literature relating to Sri Lankan managers emphasizes the strong desire of Sri Lankan managers to
be collectivistic, team-oriented and to arrange social gatherings that develop strong relationships with its
stakeholders (Hewege, 2011; Hewege et al., 2008; Ranugge, 2000; Wijewardena, 1992; Wijewardena &
Wimalasiri, 1996). Sri Lankan cultural values that prioritize strong mutual relationships, trustworthiness, honesty,
compassion, obedience and care for others have probably influenced Sri Lankan managers to perceive
themselves as responsible for developing a strong relationship with stakeholders in order to become sustainable
leaders. Also, Sri Lankan managers give more priority to solving crucial employee matters, showing empathy
towards employees, and being ready to sacrifice their time as they believe this enables them to transform their
organization and to excel in organizational leadership. This suggests that Sri Lankan managers should
demonstrate affection, caring and other paternalistic behaviours towards stakeholders including employees to
achieve excellent management success in the Sri Lankan organizational context.
5.2 Sri Lankan Manager’s Concern for Social and Environmental Sustainability
The difference in the Chi-square test to examine the mediation of CHNG on STK and ENV confirmed that there
was no mediation effect of CHNG on the relationship between STK and ENV, but only a direct relationship
between the variables. This confirmed that Sri Lankan manager’s strong team work and public relationship
management directly enabled them to ensure environmental and social sustainability. Sri Lankan Buddhist
values and the rituals and respect towards the Bodhi tree also influence Sri Lankan attitudes to collectively
protect the environment (Kariyawasam, 1996). This finding is in line with that of Avery and Bergsteiner (2011);
Caldwell (2003); Hargett and Williams (2009); Parkin (2010) and Salem (2012) whose research suggested that
managers’ positive attitudes towards stakeholder relationships improve social and environmental sustainability.
The findings are in line with Fernando and Almeida (2012) suggestions that Sri Lankan managers believe that
they can ensure sustainability through encouraging collaboration, networking, public relationships and team work
with diverse stakeholders.
This finding contradicts the findings of Crawford and Nahmias (2010), who suggested that stakeholder
relationships are essential to change organizations. High influential power and authority (Chandrakumara &
Sparrow, 2004), social mistrust especially due to ethnic conflicts (Somasundaram & Sivayokan, 2013), high
power distance between social classes, influence of imperialism (Wijewardena & Wimalasiri, 1996) have
impacted on Sri Lankan leaders to perceive that stakeholder relationships are not important for changing their
organization.
Partial mediation indicates that Sri Lankan managers’ stakeholder orientation enhances their decisions for ethical
behaviour, which, in turn, enables them to achieve environmental and social sustainability. Although the
literature suggests having strong stakeholder relationships helps mangers to achieve successful organizational
transformation, the findings of this study indicate that Sri Lankan managers’ perceptions of stakeholder
orientation do not support this concept. Cultural values such as resistance to change and strong employee union
power seem to have influenced Sri Lankan managers to perceive stakeholder relationships as insignificant for
successful change implementation. However, managers’ ignorance of the participation of stakeholders in change
implementation is also identified in the literature as the main reasons for common disputes between Sri Lankan
managers and labour unions (Wickramasinghe et al., 2004).
This study’s insignificant results regarding the direct relationship between long-term orientation and social and
environmental sustainability confirm that Sri Lankan managers perceive long-term orientation as having no
significant effect on protecting the social and natural environment. This suggests instances where Sri Lankan
employees prefer quick solutions from their managers for their grievances (Wickramasinghe et al., 2004); thus,
spending too much time or deep analysis of the problem would probably be perceived as threatening social and
environmental harmony. These experiences might influence managers to perceive being long-term oriented in
decision making as a disadvantage in protecting society and environment.

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This study’s insignificant results regarding the direct relationship between employee orientation and social and
environmental sustainability confirm that Sri Lankan managers do not believe that being employee-oriented will
positively impact on their perceptions of social and environmental sustainability. That is, Sri Lankan managers
do not believe transformational leadership behaviours such as delegation, sharing authority and autonomy, and
encouraging leader-member communication and employee decision-making have a direct influence on social and
environmental sustainability.
The findings confirm that Sri Lankan managers perceive organizational-change-related activities as essential for
achieving social and environmental sustainability. For example, the Sri Lankan garment industry has changed its
traditional practices to face international competition through introducing more socially and environmentally
responsible production methods (Perry, 2013).
The significant results confirm that Sri Lankan managerial perceptions relating to manager’s ethical behaviour
positively influence their perceptions of social and environmental sustainability. Sri Lankan cultural values have
influenced Sri Lankan managers to believe their attitudes towards social harmony, safety, caring and
self-discipline, which, in turn, help to protect their immediate environment and social sustainability. Even,
leaders with of exemplary character that conduct ethical practices even in their personal lives were respected by
employees (Wijewardena & Wimalasiri, 1996) so managers fear breaching ethical standards may harm their
personal image and could prevent them from achieving paternalistic leadership relations with their subordinates
(Wickramasinghe & Hopper, 2005). Such cultural values have no doubt influenced Sri Lankan managers to
perceive their ethical behaviour as an important leadership dimension for enabling social and environmental
harmony. The young generations of Sri Lanka consider traditional values of ethnocentrism, power distance
between different levels in the hierarchy, and the male-dominant cultural values as barriers to social harmony
(UNDP, 2019). It seems values are promoting organizational leaders to think more ethically to achieve social
and environmental protection (United Nations Educational Scientific and Cultural Organization, 2018).
This study’s bootstrap mediation results confirm that employee engagement and social and environmental
sustainability are fully mediated through the two mediators of change leadership and ethical behaviour. Cultural
diversity, ethnic conflict, dependence on export and import markets, risks associated with natural disasters, and
financial and economic dependence on developed countries may have previously influenced Sri Lankan
managers to believe that employee engagement is not enough to ensure environmental, social and economic
sustainability. The cultural, political and economic transformation of Sri Lanka has instead influenced its
managers to believe they can enhance environmental, social and economic sustainability by changing their
organizations, as well as through encouraging manager’s ethical behaviour.
In conclusion, these results have confirmed that Sri Lankan managers perceive that they can achieve
environmental and social sustainability via engagement with stakeholders and employees, but not by being
long-term-oriented.
5.3 Firms’ Concern for Financial Sustainability
Achieving financial targets and focusing on maximizing productivity are the two measures of this construct, the
second item being the most important leadership behaviour in this construct. This study’s significant results
regarding the relationship between stakeholder relationships and the firm’s financial performance confirm that
Sri Lankan managers believe that stakeholder relationships improve their firm’s future prosperity. This might be
due to a weak national economy, rising costs of manufacturing, an exports-driven economy that demands cheap
manufacturing costs, the impact of international financial crises, and shrinking of the world’s consumption
(Central Bank of Sri Lanka, 2018) seem to have influenced Sri Lankan managers to be concerned about
collaborating with diverse parties as a means of strengthening firms’ financial performances. Sri Lankan managers
believe that increasing stakeholder value rather than shareholder value would enhance financial performance of the
organization (Fernando & Almeida, 2012).
Bootstrap mediation test results confirmed that the two mediators have no significant influence on the
relationship between the stakeholder relationships and the firm’s financial performance. The insignificant results
confirm that Sri Lankan managers do not believe they can achieve greater organizational financial performance
outcomes by promoting manager’s ethical behaviour in their decisions. This might be a reason why Sri Lankan
managers perceive that being ethical and responsible will build their personal image as most respected managers
rather than increasing the financial performance of their organization. The insignificant result of this study
regarding the relationship between change leadership and financial performance, contradicts the suggestion made
by Ferguson and Reio (2010) that management’s change efforts should positively influence the firm’s
performance. Cultural values that resist change and the cost associated with it might have influenced Sri Lankan

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managers to perceive that a possible organizational change would mean greater cost than income for the
organization.
6. Conclusion
This study aimed to examine the mediation effect of managers’ change-related attitudes and ethical behaviour on
creating sustainability leadership in Sri Lankan organizations. Three leadership dimensions (EMP, LONG and
STK) were identified as influencing managerial perceptions of sustainability leadership in Sri Lanka.
The results of this study results suggest that long-term orientation is the least important leadership dimension in
achieving sustainability leadership in Sri Lankan organizations while stakeholder relationship is the most
important leadership dimension.
The literature emphasizes the importance of organizational change as novel and important leadership dimensions
that ensure sustainability leadership. However, the standardized regression weights and the results of the
mediation analysis of this study show that the perceptions of the manager’s commitment to organizational
change only influence establishing environment and social sustainability, and do not influence either the
perceptions of excellent leadership or concern for financial performance. Hence, the results show that change
leadership attitudes are essential for establishing social and environmental sustainability in the Sri Lankan
context. Resistance to change that is common among many Sri Lankan managers suggests that they can enhance
their change attitudes via formal management training programs. Therefore, HR units and departments of Sri
Lankan organizations should design management training programs to enhance these change managerial skills.
The mediation test results confirm that the relationship between the manager’s perception of employee
engagement and concern for social and environmental sustainability is fully mediated by the managers
commitment to organizational change and their ethical behaviour. That is, Sri Lankan managers believe they can
only enhance social and environmental sustainability by encouraging organizational change and by promoting
manager’s ethical behaviour in their decision making.
6.1 Recommendations
6.1.1 For Managers
Improving leadership skills such as team management skills and public relations management skills is important
for sustainability leadership in Sri Lanka. Managers should also identify and categorize diverse stakeholders
such as employees, customers, trade unions, industry associations and supply chain partners based on their
potential importance for the organization and managing these stakeholders to enhance sustainability in Sri
Lankan organizations.
Since the results confirm the power of stakeholder relationship and employee engagement Sri Lankan
organizations should prioritize customer satisfaction and seek more ways of gathering employee feedback to
enhance organizational sustainability. Surveys and face-to-face communications could also be used to identify
employee satisfaction, especially with their immediate managers. Expatriates and foreign managers of MNCs
understanding the ‘soft side’ of Sri Lankan cultural values would help to achieve sustainability leadership in the
Sri Lankan organizational context.
It will also be useful for HR managers, management trainers and consultants to acknowledge and support
sustainability as a main learning objective of management training and employee development programs at all
levels in the organizational hierarchy. These programs should aim to develop sustainability management skills
especially in developing trust and confidence among their subordinates and to be more employee-oriented in
their decision-making towards creating sustainable leadership. Managers can organize local and international
management forums to share stories of excellent sustainable organizations which would probably benefit
managers.
6.1.2 For Policy Makers
This study highlights the importance of management training and development programs conducted by
educational institutes through workshops, seminars and conferences involving the corporate sector for sharing
practical ways of achieving social, environmental and economic sustainability.
Proactive coordination between the private and public sector should be encouraged to fulfill real community
needs rather than corporations trying to invest in ad hoc CSR projects that do not solve the true problems of
society.
Policymakers should encourage local authorities such as the environmental and accounting authorities (e.g., Sri
Lanka Accounting Standards, International Accounting Standards) and quality standard bodies such as the

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International Organization for Standards to update their standards and disclosure requirements at the
international level. These new changes should be effectively communicated and implemented by the corporate
sector to ensure the sustainability of Sri Lankan organizations.
6.2 Future Research
This study was limited to the Sri Lankan organizational context and hence future researchers could extend this to
other countries to develop a sustainability leadership model that is useful for describing more diverse managerial
perceptions of sustainability. Future researchers could conduct invariance testing and cross-cultural comparative
studies to analyze managerial perceptions of sustainability leadership characterized as multicultural and
multi-ethnic.
This study confirms the importance of managers’ ethical behaviour to achieve sustainable leadership. Future
scholars could explore the influence of Buddhist philosophy in shaping managerial behaviours via invariance
testing that concentrates on a larger sample of Buddhist managers especially focusing on the tradition of
spiritualism, which has been largely ignored by management scholars.
Further, they could identify how manager’s ethical behaviour emerges within oneself, and how these moral
attitudes gradually extend to one’s immediate family, and then to society in the Sri Lankan cultural context.
Hence, future researchers could investigate diverse philosophical and cultural factors that influence management
perceptions relating to manager’s ethical behaviour that would enhance the social, environmental and financial
sustainability of the firm.
It was identified here that Sri Lankan managers’ negative attitudes to change hinder their achievement of
excellence in leadership. Thus, future researchers could explore how change-oriented leadership skills can
improve the leadership attitudes of Sri Lankan managers, too. Future researchers could also examine the
aggregate influence of national cultural values on managerial perceptions via a much larger representative
sample using a longitudinal design such as the multi-wave method. Managers’ preference for short-term oriented
decision making could be further explored with a much larger and representative managerial sample using either
quantitative or qualitative methodology. The methodology, questionnaire and the research approach used in this
study could be used to explore sustainability leadership in other regions, countries and industries. Comparative
studies could also be conducted using larger samples across multiple industries, countries and regions.
7. Acknowledgement
The author wishes to thank Prof. Christopher Selvarajah and Dr. Aron Perenyi from Swinburne University of
Technology, Melbourne, Australia for the enormous support, guidance and encouragement given to complete
this project.
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Appendix A
Hypotheses development to test manager’s ethical behaviour mediates the relationship between leadership
excellence and sustainability leadership dimensions
H1: The leader’s ethical behaviour mediates the relationship between concern for stakeholder relationship and excellent leadership in the
Sri Lankan organisational context.
H2: The leader’s ethical behaviour mediates the relationship between concern for stakeholder relationship and concern for social and
environmental sustainability in the Sri Lankan organisational context.
H3: The leader’s ethical behaviour mediates the relationship between concern for stakeholder relationship and concern for financial
performance in the Sri Lankan organisational context.
H4: The leader’s ethical behaviour mediates the relationship between long-term decision making and excellent leadership in the Sri
Lankan organisational context.
H5: The leader’s ethical behaviour mediates the relationship between long-term decision making and concern for social and environmental
sustainability in the Sri Lankan organisational context.
H6: The leader’s ethical behaviour mediates the relationship between long-term decision making and concern for financial performance in
the Sri Lankan organisational context.
H7: The leader’s ethical behaviour mediates the relationship between employee engagement and excellent leadership in the Sri Lankan
organisational context.
H8: The leader’s ethical behaviour mediates the relationship between employee engagement and concern for social and environmental
sustainability in the Sri Lankan organisational context
H9: The leader’s ethical behaviour mediates the relationship between employee engagement and concern for financial performance in the
Sri Lankan organisational context.

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Appendix B
Hypotheses development to test the organisational change mediates the relationship between leadership
excellence and sustainability leadership dimensions
H10: The leader’s commitment to organisational change (CHNG) mediates the relationship between concern for stakeholder relationship
(STK) and excellent leadership (EXL) in the Sri Lankan organisational context.
H11: The leader’s commitment to organisational change (CHNG) mediates the relationship between concern for stakeholder relationship
(STK) and concern for social and environmental sustainability (ENV) in the Sri Lankan organisational context.
H12: The leader’s commitment to organisational change (CHNG) mediates the relationship between concern for stakeholder relationships
(STK) and concern for financial performance (FIN) in the Sri Lankan organisational context.
H13: The leader’s commitment to organisational change (CHNG) mediates the relationship between long-term decision making (LONG)
and excellent leadership (EXL) in the Sri Lankan organisational context.
H14: The leader’s commitment to organisational change (CHNG) mediates the relationship between long-term decision making (LONG)
and concern for social and environmental sustainability (ENV) in the Sri Lankan organisational context.
H15: The leader’s commitment to organisational change (CHNG) mediates the relationship between long-term decision making (LONG)
and concern for financial performance (FIN) in the Sri Lankan organisational context.
H16: The leader’s commitment to organisational change (CHNG) mediates the relationship between employee engagement (EMP) and
excellent leadership (EXL) in the Sri Lankan organisational context.
H17: The leader’s commitment to organisational change (CHNG) mediates the relationship between employee engagement (EMP) and
concern for social and environmental sustainability (ENV) in the Sri Lankan organisational context.
H18: The leader’s commitment to organisational change (CHNG) mediates the relationship between employee engagement (EMP) and
concern for financial performance (FIN) in the Sri Lankan organisational context.
Appendix C
1) Exploratory factor analysis solutions for excellent leader (EXL)
Item label Statement Factor loading Cronbach’s alpha % variance
EXL07 Motivate employees 0.774 0.892 51.2%
EXL08 Organise work time effectively 0.770
EXL05 Have confidence in dealing with work and with people 0.762
EXL06 Listen when employees want to say something 0.730
EXL02 Create a sense of purpose and enthusiasm in the workplace 0.695
EXL10 Have a strategic vision for the organisation 0.638
EXL01 Continue to learn how to improve performance 0.632
EXL04 Give recognition for good work 0.607
EXL03 Develop strategies to gain a competitive edge in the industry 0.588
EXL09 Be honest 0.542
2) Exploratory factor analysis solutions for concern for social and environmental sustainability (ENV)
Item label Statement Factor loading Cronbach’s alpha % variance
ENV7 Show concern for sustainability issues 0.811 0.910 53.57%
ENV6 Engage in work that makes your community a better place 0.796
ENV8 Be environmentally responsible 0.778
ENV10 Identify the impact of your actions on the natural environment 0.764
ENV3 Promote staff welfare and development 0.741
ENV2 Be socially responsible 0.710
ENV11 Continuously learn how to protect the environment 0.691
ENV4 Establish a friendly working environment 0.668
ENV9 Encourage recycling of items and materials in your department 0.629
ENV5 Work as a volunteer in your community 0.554
ENV1 Be sensitive to people of different backgrounds 0.505
3) Exploratory factor analysis solutions for concern for financial performance of the firm (FIN)
Item label Statement Factor loading Cronbach’s alpha % variance
FIN4 Ensure maximum returns to investors 0.901 0.874 73.62%
FIN2 Achieve financial targets 0.858
FIN3 Focus on maximising productivity 0.789
FIN1 Understand potential financial impacts of every decision 0.673

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4) Exploratory factor analysis solutions for leaders’ commitment to change (CHNG)
Item label Statement Factor loading Cronbach’s alpha % variance
CHNG19 Think frequently about the practice of management 0.778 0.885 50%
CHNG20 Try different approaches to management 0.755
CHNG15 Keep up-to-date on management literature 0.717
CHNG16 Look for and use the positive aspects of other cultures 0.715
CHNG14 Have formal management training 0.665
CHNG13 Have a multicultural orientation and approach 0.649
CHNG12 Foster an international perspective in the organisation 0.635
CHNG9 Be skilled in work-related technology 0.603
CHNG6 Be knowledgeable about work of the industry 0.552
CHNG3 Be competitive 0.528
5) Exploratory factor analysis solutions for manager’s ethical behaviour (SUSTHINK)
Item label Statement Factor loadings Cronbach’s alpha % variance
SUS14 Speak clearly and concisely 0.750 0.886 53.92%
SUS5 Cope with pressures of work 0.710
SUS12 Select work wisely to avoid overload 0.662
SUS2 Accept responsibility for mistakes 0.659
SUS13 Share power 0.654
SUS4 Choose management ethics before self or the organization 0.638
SUS15 Think about the specific details of any particular problem 0.630
SUS1 Be dependent and trustworthy 0.607
SUS9 Have a sense of humour 0.585
SUS16 Treat most people as if they were trustworthy and honest 0.584
SUS19 Write clearly and concisely 0.577
SUS8 Follow what is morally right – not what is right for self or the
organisation
0.508
6) Exploratory factor analysis solutions for stakeholder relationships (STK)
Item label Statement Factor loading Cronbach’s alpha % variance
STK9 Respect the self-esteem of others 0.789 0.875 57.34%
STK2 Act as a member of a team 0.760
STK4 Be skilled in public relations 0.749
STK8 Negotiate with various professionals and interest groups 0.728
STK10 Respond to expectations of consumers 0.719
STK3 Be consistent in dealing with people 0.616
STK7 Listen to the advice of others 0.590
7) Exploratory factor analysis solutions for long-term-oriented decision-making (LONG)
Item label Statement Factor loading Cronbach’s alpha % variance
LONG16 Understand and analyse complex problems 0.819 0.873 50%
LONG15 Think about what may happen in the future 0.727
LONG14 Think about the general implications of any problem 0.711
LONG2 Be logical in solving problems 0.662
LONG17 Use economic indicators for planning purposes 0.623
LONG1 Be consistent in making decisions 0.617
LONG4 Be prepared to compromise on important work issues 0.613
LONG6 Focus on the task-in-hand 0.593
LONG5 Deal with work problems openly and honestly 0.566
8) Exploratory factor analysis solutions for employee engagement (EMP)
Item label Statement Factor loading Cronbach’s alpha % variance
EMP9 Support decisions made jointly by others 0.768 0.862 55.14%
EMP7 Delegate 0.709
EMP2 Allow subordinates authority and autonomy 0.705
EMP10 Trust those to whom work is delegated 0.691
EMP6 Consider suggestions made by employees 0.679
EMP1 Allow other people time to do things 0.668
EMP8 Make allowances for emotional pressure on staff at work 0.608

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Appendix D
Summary of the exploratory factor analysis (EFA) results
EFA
number
Construct Original
statements
Statements
removed
Statements retained
after EFA
Cronbach’s
alpha value
% variance
explained
Dependent variables (sustainability leadership)
1 Excellent leader
(EXL)
EXL 1-10 None EXL 1 to 10 0.892 51.2%
2 Concern for social and
environmental
sustainability (ENV)
ENV 1-11 None ENV 1 to 11 0.910 53.57%
3 Concern for financial
performance of the
firm (FIN)
FIN 1-4 None FIN 1 to 4 0.874 73.62%
Mediating variables
4 Leader’s commitment
to change (CHNG)
CHNG 1-22 CHNG 1, 2, 4, 5, 7,
8, 10, 11, 17, 18,
21, 22
CHNG 3, 6, 9, 12,
13, 14, 15, 16, 19, 20
0.885 50.00%
5 Manager’s ethical
behaviour
(SUSTHINK)
SUS 1-19 SUS 3, 6, 7, 10, 11,
17, 18
SUS 1, 2, 4, 5, 8, 9,
12, 13, 14, 15, 16, 19
0.886 53.92%
Independent variables (leadership dimensions)
6 Stakeholder
relationships (STK)
STK 1-11 STK 1, 5, 6, 11 STK 2, 3, 4, 7, 8, 9,
10
0.875 57.34%
7 Long-term
decision-making
(LONG)
LONG 1-17 LONG 3, 7, 8, 9,
10, 11, 12, 13
1, 2, 4, 5, 6, 14, 15,
16, 17
0.873 50.00%
8 Employee engagement
(EMP)
EMP 1-11 EMP 3, 4, 5, 11 EMP 1, 2, 6, 7, 8, 9,
10
0.862 55.14%
Tot a l 105 35 70
Appendix E
Summary of the model fit statistics for confirmatory factor analysis (CFA)
CFA number and
construct name
Chi-square
(df)
Boot-strap
p-value
CMIN/df CFI GFI AGFI TLI RMSEA RMR SRMR
Dependent variable(s)
CFA1 (EXL) 38.219 (14) 0.075 (ns) 2.73 0.980 0.976 0.953 0.971 0.06 0.016 0.029
CFA2 (ENV) 2.835 (5) 1.000 (ns) 0.567 1.000 0.998 0.993 1.000 0.000 0.005 0.0074
CFA3 (FIN) 1.962 (1) 1.000(ns) 1.962 0.998 0.997 0.984 0.994 0.045 0.013 0.000
Mediating variable(s)
CFA4 (CHNG) 14.910 (5) 0.109 (ns) 2.982 0.985 0.988 0.964 0.970 0.065 0.016 0.023
CFA5
(ETHICS-SUSTHINK)
25.083 (9) 0.088 (ns) 2.787 0.975 0.983 0.960 0.958 0.061 0.022 0.0315
Independent variable(s)
CFA6 (STK) 17.466 (5) 0.078 (ns) 3.493 0.981 0.985 0.955 0.963 0.072 0.015 0.028
CFA7 (LONG) 36.45 (14) 0.06 (ns) 2.604 0.978 0.978 0.956 0.967 0.058 0.018 0.0304
CFA8 (EMP) 7.447 (5) 0.784 (ns) 1.489 0.996 0.994 0.982 0.992 0.032 0.011 0.0173

jms.ccsene
t
Appendi
x
1) Final
m
Note. Chi-sq
u
GFI=0.958,
A
Validit
y
,
variables
)
Note. All co
r
Diago
n
Summar
y
Construct
EXL
ENV
FIN
t
.org
x
F
m
easurement
m
uare=156.371(df
=
A
GFI=0.942, TLI
reliabilit
y
an
)
Const
r
EXL
ENV
FIN
r
relations are sign
i
n
al values represe
n
y
of measure
m
Statement
Create a sense
o
Give recogniti
o
Have confiden
c
Motivate empl
o
Organise work
t
Be honest (EX
L
Have a strategi
c
Work as a volu
n
Be environmen
t
Encourage rec
y
Identify the im
p
Continuously l
e
Achieve financ
i
Focus on maxi
m
Ensure maxim
u
J
m
odel for sus
=
87), p-value (b
o
= 0.974, RMSEA
d correlatio
n
r
uct Cro
n
0.86
0.86
0.81
i
ficant at p < 0.00
n
t the AVE value
s
m
ent model fo
o
f purpose and en
t
o
n for good work
(
c
e in dealing with
o
yees (EXL7)
t
ime effectively (
E
L
9)
c
vision for the or
g
n
teer in your com
m
t
ally responsible
(
y
cling of items an
d
p
act of your actio
n
e
arn how to prote
c
i
al targets (FIN 2
)
m
ising productivi
t
u
m returns to inve
s
J
ournal of Man
a
tainabilit
y
le
a
o
otstrap p-value 9
= 0.041, RMR=
0
n
of the meas
n
bach’s alpha
3
8
3
1
s of the individua
l
r sustainabili
t
t
husiasm in the w
o
(
EXL4)
work and with pe
E
XL8)
g
anisation (EXL1
m
unity (ENV 5)
(
ENV 8)
d
materials in you
r
n
s on the natural
e
c
t the environmen
t
)
t
y (FIN 3)
s
tors (FIN 4)
a
gement and Su
s
134
a
dership (dep
5% CT with 1,0
0
0
.021, SRMR=0.0
3
urement mo
d
EXL
0.476
0.303
0.282
l
variable.
ty
leadership
o
rk place (EXL2)
ople (EXL5)
0)
r
department (EN
V
e
nvironment (EN
V
t
(ENV 11)
s
tainability
endent varia
b
0
0 samples) =0.0
0
3
6
d
el for sustai
n
ENV
0.590
0.326
(dependent
v
Factor
l
0.626
0.716
0.641
0.743
0.775
0.669
0.647
0.522
0.775
V
9) 0.827
V
10) 0.868
0.800
0.724
0.816
0.770
b
les)
0
0 (0.077), CMIN
n
abilit
y
lead
e
FIN
0.594
v
ariables)
l
oading Cron
0.863
0.868
0.813
Vol. 10, No. 1;
N
/DF=1.797, CFI
=
e
rship (depe
n
bach’s alpha
A
0
0
0
2020
0.979,
n
dent
A
VE
0
.476
0
.590
0
.594

jms.ccsene
t
2) Final
m
n.b. The
A
the variab
l
3) Final
m
Construc
t
CHNG
ETHICS
(SUSTHI
N
t
.org
m
easurement
m
A
VE value bet
w
l
es (i.e., 0.397
)
m
easurement
m
t
State
m
Foster
organi
s
Have
a
appro
a
Have
f
(CHN
G
Look
f
other
c
N
K)
Accep
t
Choos
organi
s
Cope
w
J
m
odel for me
d
w
een the two
)
, which confi
r
m
odel for lea
d
m
ent
an international
p
s
ation (CHNG12
)
a
multicultural ori
a
ch (CHNG 13)
f
ormal manageme
G
14)
f
or and use the po
s
c
ultures (CHNG1
6
t
responsibility fo
e management et
h
s
ation (SUS4)
w
ith pressures of
w
J
ournal of Man
a
d
iatin
g
varia
b
constructs (i.
e
r
med discrimi
n
d
ership excel
l
p
erspective in the
)
entation and
nt training
s
itive aspects of
6
)
r mistakes (SUS2
h
ics before self or
w
or
k
(SUS5)
a
gement and Su
s
135
b
les
e
., 0.468) was
n
ant validity
a
l
ence dimensi
Factor lo
a
.714
.814
.560
.708
) .632
the .619
.732
s
tainability
greater than
t
a
s recommend
e
ons (indepen
d
a
ding Cronb
0.795
0.693
t
he squared c
o
e
d by Fornell
a
d
ent variable
s
ach’s alpha
Vol. 10, No. 1;
o
rrelations bet
w
a
nd Larcker (1
s
)
Variance extrac
t
0.497
0.439
2020
w
een
981)
t
ed

jms.ccsenet.org Journal of Management and Sustainability Vol. 10, No. 1; 2020
136
Summary of measurement model for independent variables
Construct Statement Factor loading Cronbach’s alpha AVE
STK Act as a member of a team (STK2) 0.722 0.752 0.504
Be consistent in dealing with people (STK3) 0.736
Be skilled in public relations (STK4) 0.671
LONG Be logical in solving problems (LTO2) 0.704 0.769 0.526
Be objective when dealing with work conflicts (LTO3) 0.770
Be prepared to compromise on important work issues (LTO4) 0.699
EMP Allow subordinates authority and autonomy (EMP2) 0.670 0.803 0.452
Delegate (EMP7) 0.693
Make allowance for emotional pressure on staff at work (EMP8) 0.654
Support decisions made jointly by others (EMP9) 0.699
Trust those to whom work is delegated (EMP10) 0.644
Validity, reliability and correlation of the measurement model for independent variables
Cronbach’s alpha LONG EMP STK
LONG 0.769 0.526
EMP 0.803 0.434 0.452
STK 0.752 0.482 0.329 0.504
Note. All the correlation values are significant at p < 0.001. Diagonal values represent the AVE values of the individual variable.
Appendix G
Total standardized effect of excellence leadership dimensions on sustainability leadership
Path Standardised total effects
LONG → EXL 0.118 (ns)a/b
LONG → ENV 0.071 (ns) a/b
LONG → FIN 0.172 (ns) a/b
EMP → EXL 0.173 (ns)a
0.173 **b
EMP → ENV 0.221 (ns) a
0.221 ** b
EMP → FIN 0.267 *** a/b
STK → EXL 0.621 (ns) a
0.621 ** b
STK → ENV 0.391 *** a/b
STK → FIN 0.270 (ns) a
0.270 ** b
Note. a = 99.9 % significance level (according to Bonferroni method)
P < 0.0018 = *** and ns = not significant
b = 95% significance level
P < 0.0018 = ***
P < 0.01 = **
P < 0.05 = * and ns = not significant.

jms.ccsenet.org Journal of Management and Sustainability Vol. 10, No. 1; 2020
137
Appendix H
Sustainability leadership structural model with only significant paths
Note. Only significant paths shown with bootstrap p-values, p < 0.05 = *, p < 0.01 = ** and p < 0.001 = ***.
Copyrights
Copyright for this article is retained by the author, with first publication rights granted to the journal.
This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution
license (http://creativecommons.org/licenses/by/4.0/).
**
*
*
***
**
***
**
***
***
***
LONG
EMP
STK
ETHICS
(SUSTHINK)
CHNG
FIN
ENV
EXL
Leadership
excellence
Sustainability
leadership
***