Empowering ESG practices and eco-innovation due to responsible leadership and organizational culture

What the paper says

Purpose As global environmental and social challenges intensify, manufacturing firms face increasing pressure to integrate sustainable practices and drive responsible innovation. This study aims to assess the relationship between responsible leadership; organizational culture; Environment, Social and Governance (ESG) practices; and eco-innovation within manufacturing organizations. It seeks to understand how they adapt to these challenges by integrating ESG practices and promoting eco-innovation by undertaking responsible leadership and applying mechanisms of organizational culture. Design/methodology/approach Data were collected via a structured questionnaire completed by 188 manufacturing firms in Santa Catarina, Brazil. This study used partial least squares structural equation modeling for hypothesis testing. Findings Results highlight that ESG practices have a significant impact on eco-innovation. Organizational culture plays a pivotal role in enabling ESG practices, while responsible leadership influences organizational culture but does not directly impact ESG practices. This indicates a reactive and incremental leadership style in most firms; one that focuses on meeting market demands rather than driving proactive changes. Research limitations/implications This study advances theoretical understanding by showing that the impact of responsible leadership on ESG adoption is conditional and mediated by organizational culture. It also addresses research gaps by empirically examining these dynamics in the context of an emerging economy, and thus is a response to calls in the literature for more studies on responsible leadership, ESG and eco-innovation. Practical implications Findings emphasize the importance of aligning organizational culture and leadership with ESG objectives and organizational strategies to promote sustainable innovation. Companies can leverage strong cultural frameworks to enhance ESG adoption and foster eco-innovation, thereby improving resilience and competitiveness in the face of environmental and social challenges. Social implications This study underscores the importance of active stakeholder engagement and corporate initiatives aligned with Sustainable Development Goals. Originality/value This study contributes to the literature on sustainability by examining the interrelated roles of leadership, culture and ESG practices in fostering eco-innovation. By linking these dynamics to Stakeholder Theory, it emphasizes the need for integrative leadership styles and stakeholder engagement to drive transformational change aligned with the global goals of sustainability.