Sustainable leadership and organizational performance: the mediating role of green dynamic capability in Ethiopian private banks
摘要
This study examines how sustainable transformational and democratic leadership styles influence sustainable organizational performance, with green dynamic capability serving as a mediating mechanism in Ethiopian private banks. Drawing on the Resource‑Based View (RBV), Dynamic Capabilities Theory, and Contingency Theory, the research develops a comprehensive framework linking leadership, capability, and performance. Using a quantitative approach with descriptive and explanatory designs, data were collected from 291 employees across 25 private banks in Hawassa City through a structured questionnaire. Measurement reliability and validity were confirmed (KMO = 0.850, CR > 0.7, AVE > 0.5), and model fit indices (CMIN/DF = 1.870, RMSEA = 0.050, CFI = 0.979, TLI = 0.953) indicated strong adequacy. Results show that sustainable transformational leadership (β = 0.755, p < 0.001) and sustainable democratic leadership (β = 0.224, p < 0.05) significantly enhance organizational performance, both directly and indirectly through green dynamic capability (β = 0.516, p < 0.001). Mediation analysis reveals partial mediation, with total effects of 0.70 and 0.50 for transformational and democratic leadership, respectively, underscoring the importance of capability integration. The originality of this study lies in its empirical demonstration of how sustainable leadership styles, when combined with green dynamic capability, drive organizational sustainability in the underexplored Ethiopian banking sector. By validating the mediating role of capability, the study contributes to theory by integrating multiple perspectives (RBV, Contingency, and Dynamic Capabilities) and to practice by offering managerial and policy insights for embedding sustainability into leadership and organizational systems in emerging economies.