Leadership for creating Sustainability within the organization : An Empirical study.

Anwesha Mukherjee | Assistant Professor, DAITM
Dinabandhu Andrews Institute of Technology & Management | Contact Author 

Date Written: March 23, 2020

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ABSTRACT

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Effective leadership is a predominant necessity for every organization to sustain in the global market.  The increasing rate of change we face today triggers the importance of nurturing a new skill of leadership with a wide vision and practicality. This all new concept of leadership gives rise to a new phase in the world of leadership i.e “sustainable leadership”. Sustainable practices are becoming compulsory day by day for every organization, which encourages the managers to start thinking widely and become a sustainable leader. Sustainability education plays a significant role in changing the leadership concept & being a new and expanded understanding of the role of the leaders to deal with the sustainable challenges by creating an inclusive, collaborative and reflective leadership process leading towards sustainable competitive environment. Today’s organizations not only focus on their profit but also maintains the sustainable competitive advantage by taking into consideration of the organizations  internal resources along with  economic, environmental & societal factors. It is viewed as a comprehensive set of policies and programs that are integrated into business operations, supply chains and decision-making processes throughout the company that provides a superior and long term position over their competitors. This paper focuses on the empirical explanations on the literature of leadership, its effectiveness in creating a sustainable culture within an organization  by encouraging sustainable leadership practices and how it fosters a change within in and around Kolkata based Indian IT organizations to gain concept of sustainable competitive advantage.

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Keywords: Leadership, Sustainable leadership, sustainable competitive advantage, organizations, innovation, change

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Introduction

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In the globalization and liberalization era every organization be it producing a small pin or big airplanes is facing a stiff competition for its existence and building their image where sustainable practices plays a very vital role. Basically, sustainability is a concept where the organization takes the responsibility of providing something good back to the society in any form of development which brings the culture of creating “power to be good”. It involves the impact of their activities for the betterment of the customers, community and environment in all aspects of their operations. It is an inevitable concept of the contemporary organization and a vital responsibility undertaken by them. This concept is considered to be a global trend in today’s business world.  Companies may define it in a different way – some focus only on the environmental impact, others incorporates it with numerous economic, societal and personal implications. It is a recent approach and the organizations are struggling to find out their sustainable roles as it became mandatory now a days. Sometimes it is considered as philanthropy whereas sometimes as an ethical duty of the business. Sustainable leadership is the concept where the leaders not only focus on the profit maximization rather on managing the human resources with environment , society and long term sustainable development goals as a primary objective. 

It is the concept of effective leadership that increases the rise in demand of sustainable practices requires new attitudes, innovation and creating value to the stakeholders. Diminishing in the natural resources, increase in the environmental pollution, societal inequality are the major concern of most of the countries which indicates that the activities should be  more effective towards achieving the social expectations . In the globalized business arena the organizations are focusing on maintaining the ecological balance of the environment which gives rise to the concept of sustainability by paying the greater attention of maintaining eco friendly culture not only within the organization but also outside its premises. The concept of sustainable leadership differs from traditional leadership in a way where the sustainable leaders expanded the concept of leadership beyond the traditional boundary of only motivating and leading the people to achieve the profit maximization to take up the power and engage themselves in cultivating and embedding the sustainable values within its employees to acknowledge and value the ecological and cultural diversity of the natural resources.

To achieve the sustainable competitive advantage today organizations concentrates on continuous focus on identifying the different product strategies, developing the core competencies, acquiring unique technologies, encouraging innovation which can be all harnessed to construct the organization successful in a highly competitive market place. It focuses on making the resources valuable, rare, immobile across the firms. The concept of sustainability creates a value within the organization by enhancing the ability to attract, retain and motivate the employees and encouraging greater employee productivity. Organizations today are struggling to create a sustainable culture by focusing on three aspects – understanding what sustainability is , how it can be incorporated within the organization by creating efficient and effective  leaders and the most importantly executing it in a proper manner through measuring, tracking and reporting sustainability efforts.  It focuses on meeting the needs of the present without compromising the needs of the future generations to meet their own needs. In scientific literature, this concept can be interpreted in different ways, but in its core it is an approach that balances the different and competing needs against an awareness of economical, environmental and social limitations faces from the society.  Living within one’s own environmental limit is the central principle of this concept. But practically it’s a much broader concept which includes environment, society, meeting the diverse needs of the people in existing and future communities, promoting personal well being, social cohesion and inclusion, and creating equal opportunity.

In order to find solutions to the complex problems that we face as a global society, we need active citizen leaders who can collaboratively restore our sense of community and actively engage in transforming our current social, political, economic and ecological realities Cress, 2005; Colby & Sullivan, 2009; Hepburn, 1997; Saltmarsh, 1996; Shulman, 2007. Sustainability concept is itself a complex process dealing with a bundle of issues that involves stakeholders conflict, uncertainty, and various interrelated areas which points towards the need for effective leadership. To deal with the various complex problems of sustainability organizations requires new values, skills, structures, which ultimately frames a new concept of leadership. Forbes, 2014 observes, “leadership is a complex socially constructed phenomenon”, that requires leaders who can work within a global context that involves interdependent, ambiguous and a constant change agent.

To promote the concept of sustainability a new area of leadership needs to be emerged which foster change within the organizations by spreading the importance of maintaining the ecological balance and social responsibility. This paper articulates how effective leadership helps in creating a culture of sustainable competitive advantage within the organizations. 

 

Literature Review

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According to Stogdill 1974, “there are almost as many definitions of leadership as there are persons who have attempted to define the concept.” Technically, the concept of leadership is vast and it doesn’t have any particular parameters as every individual are different so there leadership styles are also different. 

Management guru Tom Peters 1989, suggests leadership is about “discovering the passion, persistence and imagination to get results, to be able to find the Wow factor and to be able to think the weird thoughts necessary to learn and thrive in a disruptive age”. Leadership is the art of crafting a vision by inspiring the followers to make it happen by boosting the positive energy within them.

De Vries 2001, explains that the root of the words lead, leader and leadership is lead, which means path or road. The verb means to travel. Thus a leader is the one who shows his or her fellow travelers the way by walking ahead. He also suggests that leadership – which focuses on the effectiveness of strategy – is different to management – which deals with the efficiency of 

operations. John Kotler of Harvard Business School argues that leadership & management are often confused and management is about copying with the complexity whereas leadership is about coping with contrast.

Becker, J., Ayman, R., & Korabik, K.2002, focused on how a leader influences, the organizational context (in-role vs. out-of-role), and self-monitoring ability related to discrepancies between the leader’s self-perceptions and group members’ perceptions of the leader’s consideration and influencing the structure behaviors. 

Ian Cheshire 2010, CEO of Kingfisher, says “leadership is about getting people to go where they wouldn’t have gone on their own”. It involves showing the right direction by forecasting the goal towards which the people will walk to achieve. 

 

The concept of leadership is not only restricted within the organizations only but at the same time it exists in various areas of operations. Leadership is the ability to influence people, guide, and instruct them towards the achievement of a goal or a vision. The source of influence may be formal i.e. a leader of the managerial rank or grade. It can be also informal like anyone from within a group. In the organizational context the leadership qualities are necessary for a manager in order to get work done by others collectively. Leadership is required in every field. 

In the recent times the growing concern for environmental and climatic change, along with the issues of degradation of natural resources have placed the concept of sustainable development under the spotlight. Corporate, academicians, practitioners everyone today are paying attention in maintaining the sustainable culture within their own domain areas.

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According Ferdig, 2007, leadership for sustainability is an emerging concept which involves, “a radically expanded understanding of leadership that includes an enlarged base of everyday leaders in all walks of life who take up power and engage in actions with others to make a sustainable difference in organizations and communities”. Rather applying only the new phenomenon it is more essential to do the root cause analysis of the reason of unsustainbility, which requires a clear understanding of social, cultural, economic and ecological impacts of their work along with the cultural diversity of the natural system. Leadership for sustainability goes beyond the traditional, transformational leadership concept and requires a new dynamic framework.  A sustainability leader is basically someone who inspires the human resources and supports actions towards a better world.  

According to Gray 2010, “whereas everyone seems to agree on the importance of sustainable development, its very nature and meaning is rarely discussed and analyzed in an explicit way”. So, determining the actual implementation becomes very difficult for the organizations as for an organization, sustainable development means the application of skilled business strategies and activities that presently meet the needs of an organization which if implemented in a wrong direction can bring disaster. 

Sandy Ogg 2010, chief Human Resource Officer of Unilever, pointed out that strategically there is no difference between the leadership approaches to be a sustainable leader. It mainly focuses on whether they are leading for sustainability or whether they are leading for profit – which ultimately being framed as leading with empathy in a multi stakeholders environment.

The Sustainability Leadership Institute’s 2011, suggest that sustainable leaders are those  “individuals who are compelled to make a difference by deepening their awareness of themselves in relation to the world around them. In doing so, they adopt new ways of seeing, thinking and interacting that result in innovative, sustainable solutions.” The concept of sustainable leadership is not basically a separate school of leadership but is an amalgamation of leadership traits and characteristics applied with a definitive context which brings a change within the organizations by incorporating the culture of sustainable competitive advantage.Barney 1991, emphasized that “a strategic resource meets certain criteria – it is valuable, such that it reduces costs or increases value to customers.” Sustainable practices ensure a competitive advantage so that the competitors cannot use the same resource to compete away the value.

Teece and Pisano 1997, explains that organizations gain and sustain the competitive advantage due to the ability to renew, integrate and expand their existing competences and continuously to develop new capabilities. In order to sustain its position in a cut throat competitive environment every organizations focuses on their own strength and competencies in way which becomes difficult for the competitors to imitate.

Rumelt and Lippman 1982, posit that “competitive advantage can only be sustained if the capabilities creating the advantage are supported by resources that are not easily replicated by competitors.” Corporate who are dealing with the concept of sustainability are concentrating in managing and creating their own values by innovative and efficient leadership skills in a way that the other firms cannot anticipate.

According to Prahalad and Hamel 1990, “to get to the future fast, top managers must either see opportunities, by virtue of pre-emptive and consistent capability – building that other companies cannot copy.” Organizations thus laying importance in nurturing the concept of core competencies in order to transform the resources into competitive advantage. 

The sustainable leadership in practical sense brings out a profound change within the organizations whether economic, political, business policies, practices, strategies in order to build up a social contract with the stakeholders and the society in broader sense.

 Research Gaps:

Till date plentiful of research have been done separately on Leadership, its effectiveness and on corporate sustainability, which encourages the interest in research regarding how effective leadership can pave the way towards maintaining a sustainable culture within the organization. Scanty of literature is available on integrative aspect of linking between the sustainable leadership and corporate sustainability. This paper is framed to minimize these gaps. 

  Research Objectives:

1. Effective Leadership creates a culture of Sustainability within the organizations.

2. How Sustainable leadership influences Sustainable competitive advantage by fostering the core competencies within the effective leaders.

A proposed model focusing on the factors that influences leadership which if maintains effectively develops a sustainable competitive advantage within the organization is being framed.

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PROPOSED HYPOTHESIS

H1 – Sustainable leadership leads to core competencies 

H2-  Core competencies leads to sustainable competitive advantage

H3-  Sustainable leadership leads to sustainable competitive analysis

 

RESEARCH METHODOLOGY

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This part of the study involves three major constructs of the proposed model i.e. Sustainable leadership, sustainable competitive advantage & core competency are unobservable variables in nature , primary data was collected for this purpose through field survey method, though  some of the data was  collected via online mode. Sample size was 150.  The questionnaire had two major section. First section was constructed to collect demographic information which involves the age of the respondents between 35 years to 50 years  including both male and female where the respondents were majorly decision makers of different major & mid tier IT firms in & around Kolkata. Personal interview was collected from 10th April,2018 to 10th May,2018.

Whereas the second section tries to measure the influence of three constructs. Ten questions were developed in 5 point Likert scale (where lowest as 1 & highest as 5) & the respondents were asked to give their preferences accordingly.

For the reliability measurement Cornbach’s Alfa was calculated which was found to be 0.7 which is well within the recommended level. Exploratory factor analysis (EFA) was performed to measure the validity of the scale. Out of these 10 statements 9 found to have a factor of 0.5 & above , so those 9 factors were taken for further analysis. Validity of the scale was further measured by Confirmatory Factor Analysis(CFA).

After testing the reliability and validity of the scale, SEM (through AMOS 5.0) was performed to establish the relationship. For this purpose at first the measurement model was developed & validity was measured through CFA. Major fitness parameters such as CMN, (CHI SQR/DF), GFI, AGF,RMSEA, were well within the recommended level.

DATA ANALYSIS

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After confirming the measurement model, path model was developed & all the parameters of that model was judged accordingly. 

 

CFA MODEL

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Model fit summary:

CMIN- 2.937

GFI- .920

AGFI-.830

RMSEA-.120

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Path Model

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Model fit summary:

CMIN- 3.574

GFI- .918

AGFI-.826

RMSEA-.127

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REGRESSION WEIGHT TABLE:

 

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Since, P is less than .005 in case of H1 & H2, so it may be assumed that those two relationship hypothesis can be accepted. Whereas P in case of H3 is .131 i.e. more than .005 it can’t be accepted.

At the same time with reference to Barren and Kenny (1978) Mediation, the sustainable leadership acting as a casual variable is correlated with the outcome i.e. sustainable competitive advantage by utilizing the core competencies as a mediator.    

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CONCLUSION

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It can be thus concluded that the sustainable leadership when backed by the core competencies can create the sustainable competitive advantages within the organizations effectively and efficiently. The concept of sustainability in the world of leadership depends on the observation and awareness pattern of the organization. It is the sustainable leadership that brings out a huge change within the organizations in terms of economic, political, business policies, practices, strategies so that a social contract  can be established with the stakeholders and the society in broader sense.

MANAGERIAL IMPLICATIONS

As the competitive landscape shifts and global challenges evolve, companies that were lauded in the past as sustainability leaders may be discredited in the present. Similarly, today’s targeted villains may end up being tomorrow’s sustainability heroes and vice versa. The ultimate goal of the sustainable leaders is for survival. In the managerial context sustainable leadership becomes a must and priority nowadays. In the words of Paul Polman, at Ogg (2010) says “. This is not some inspirational dream to help us to try to recruit the best people in the world. At the end of the day this is a survival issue. We will not get the right to grow, and even worse, will not have the right to be in business, if we create a big environmental disaster. The world won’t put up with it. There’s too much awareness and amplification. You think about the impact a blogger can have when they choose to amplify their message”. By nurturing the core competencies of sustainability’s of the leaders an organization can generate its sustainable competitive advantage.

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