The Sustainable Development Practices Role and Transformational Leadership: Interaction and Impact on the Financial Performance
DOI:
https://doi.org/10.6000/1929-7092.2019.08.51Keywords:
Sustainable development, Financial performance, Transformational leadership, Construction industry, Jordan.Abstract
The purpose of this study is to explore the direct relationship between sustainable development practices and financial performance. It also examines the moderating effect of transformational leadership approach on this relationship. Using primary data sources, this study presents a case study of the Jordanian construction industry. A survey of 290 managing directors or his appointed representative for 1113 construction companies in Jordan. Data were collected from October 2017 until April 2018. The multiple regression analysis and hierarchical multiple regression analysis are used to verify the hypotheses of this study. Analyzed data reveals a positive relationship among sustainability development factors (i.e. environmental, economic, social aspects) and financial performance. Furthermore, the result of hierarchical multiple regression has shown that the moderating effect of transformational leadership is significant only on the relationship between Environmental aspects and financial performance. Also, the transformational leadership does not moderate the impact of “Economic aspects and Social aspects†on the financial performance. This work strengthens the previous findings in the available literature as to how sustainability practices enhance the construction firms' performance. Moreover, this study involves the moderating role of transformational leadership on the main relation which also proves and supports the existing knowledge on performance measurement and performance of organisations. This study also contributes to practical aspects, by providing contractors with insights into implementing sustainability practices and tools to measure the sustainable construction firms' performance.References
A?an, Y., Kuzey, C., Acar, M. F., & Aç?kgöz, A. (2016). The relationships between corporate social responsibility, environmental supplier development, and firm performance. Journal of Cleaner Production, 112, 1872-1881.
https://doi.org/10.1016/j.jclepro.2014.08.090
Al Sawalqa, F. A. H. (2011). The changing role of management accounting: assessment of the impact of financial and non-financial performance measures usage on organizational performance in Jordan. Murdoch University.
Alkilani, S. Z., Jupp, J., & Sawhney, A. (2013). Issues of construction health and safety in developing countries: a case of Jordan. Construction Economics and Building, 13(3), 141-156.
https://doi.org/10.5130/AJCEB.v13i3.3301
Alsubeh, M. A. (2013). A strategic framework for sustainable construction in Jordan. Civil and Environmental Research, 3(2), 102-107.
Antonakis, J., Avolio, B. J., & Sivasubramaniam, N. (2003). Context and leadership: An examination of the nine-factor full-range leadership theory using the Multifactor Leadership Questionnaire. The Leadership Quarterly, 14(3), 261-295.
https://doi.org/10.1016/S1048-9843(03)00030-4
Arab Bank. (2014). Sustainability Report (2014). Retrieved from https://www.arabbank.com/docs/default-source/sustainability-reports/sustainability-report-2014
Avolio, B. J., & Yammarino, F. J. (2013). Introduction to, and overview of, transformational and charismatic leadership Transformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition (pp. xxvii-xxxiii): Emerald Group Publishing Limited.
https://doi.org/10.1108/S1479-357120130000005005
Bass, B. M. (1985). Leadership and performance: New York: free press.
Bass, B. M. (1999). Two decades of research and development in transformational leadership. European journal of work and organizational psychology, 8(1), 9-32.
https://doi.org/10.1080/135943299398410
Bass, B. M., & Riggio, R. E. (2006). Transformational leadership: Psychology Press.
https://doi.org/10.4324/9781410617095
Bassioni, H. A., Price, A. D., & Hassan, T. M. (2005). Building a conceptual framework for measuring business performance in construction: an empirical evaluation. Construction management and economics, 23(5), 495-507.
https://doi.org/10.1080/0144619042000301401
Beatham, S. (2003). Development of an integrated business improvement system for construction. © Simon Beatham.
Bodhanwala, S., & Bodhanwala, R. (2018). Does corporate sustainability impact firm profitability? Evidence from India. Management decision.
https://doi.org/10.1108/MD-04-2017-0381
Carmines, E. G., & Zeller, R. A. (1979). Reliability and validity assessment (Vol. 17): Sage publications.
https://doi.org/10.4135/9781412985642
Endrikat, J., Guenther, E., & Hoppe, H. (2014). Making sense of conflicting empirical findings: A meta-analytic review of the relationship between corporate environmental and financial performance. European Management Journal, 32(5), 735-751.
https://doi.org/10.1016/j.emj.2013.12.004
Engelen, A., Gupta, V., Strenger, L., & Brettel, M. (2015). Entrepreneurial orientation, firm performance, and the moderating role of transformational leadership behaviors. Journal of management, 41(4), 1069-1097.
https://doi.org/10.1177/0149206312455244
Gazali, H. A. (2012). The Impact of Transformational Leadership on Decision Taking Process Effectiveness in the Jordanian Insurance Companies, . MEU, Jordan.
GCEP. (2007). (The General Corporation for the Environment Protection), Ministry of Environment: A strategic overview. Jordan. Retrieved from https://gcep.stanford.edu/news/ articles2007.html
Green, A. E., Miller, E. A., & Aarons, G. A. (2013). Transformational leadership moderates the relationship between emotional exhaustion and turnover intention among community mental health providers. Community mental health journal, 49(4), 373-379.
https://doi.org/10.1007/s10597-011-9463-0
Horváthová, E. (2010). Does environmental performance affect financial performance? A meta-analysis. Ecological Economics, 70(1), 52-59.
https://doi.org/10.1016/j.ecolecon.2010.04.004
Horváthová, E. (2012). The impact of environmental performance on firm performance: Short-term costs and long-term benefits? Ecological Economics, 84, 91-97.
https://doi.org/10.1016/j.ecolecon.2012.10.001
Ittner, C. D., Larcker, D. F., & Randall, T. (2003). Performance Implications of Strategic Performance Measurement in Financial Services Firms. SSRN Journal SSRN Electronic Journal.
https://doi.org/10.2139/ssrn.395824
Iwata, H., & Okada, K. (2011). How does environmental performance affect financial performance? Evidence from Japanese manufacturing firms. Ecological Economics, 70(9), 1691-1700.
https://doi.org/10.1016/j.ecolecon.2011.05.010
JCCA. (2014). (Jordan Construction Contractors Association). Annual Report 2014, Amman, Jordan. Retrieved from (http://jcca.org.jo)
JCCA. (2017). (Jordan Construction Contractors Association). Annual Report 2017, Amman, Jordan. Retrieved from (http://jcca.org.jo)
Jessica, J. F., MCSM. D. C, & Bausman. (2008). “Customer Satisfaction Survey, Best Practices”.
Kagioglou, M., Cooper, R., & Aouad, G. (2001). Performance management in construction: a conceptual framework. Construction management and economics, 19, 85-95.
https://doi.org/10.1080/01446190010003425
Lucas, M. T., & Noordewier, T. G. (2016). Environmental management practices and firm financial performance: The moderating effect of industry pollution-related factors. International Journal of Production Economics, 175, 24-34.
https://doi.org/10.1016/j.ijpe.2016.02.003
Luu, T. V., Kim, S. Y., Cao, H. L., & Park, Y. M. (2008). Performance measurement of construction firms in developing countries. Construction management and economics, 26(4), 373-386.
https://doi.org/10.1080/01446190801918706
Mansouri, N. (2016). Moderating role of the transformational leadership in the relationship between HRM practices and performance: a study of ICT companies of Malaysia. Asian Social Science, 12(7), 1.
https://doi.org/10.5539/ass.v12n7p1
Martínez?Ferrero, J., & Frías?Aceituno, J. V. (2015). Relationship between sustainable development and financial performance: international empirical research. Business Strategy and the Environment, 24(1), 20-39.
https://doi.org/10.1002/bse.1803
McCormick, B. W., Guay, R. P., Colbert, A. E., & Stewart, G. L. (2018). Proactive personality and proactive behaviour: Perspectives on person–situation interactions. Journal of occupational and organizational psychology.
https://doi.org/10.1111/joop.12234
MOP. (2015). Jordan’s Way to Sustainable Development. Retrieved from http://www.mop.gov.jo
Muhammad, N., Scrimgeour, F., Reddy, K., & Abidin, S. (2015). The relationship between environmental performance and financial performance in periods of growth and contraction: evidence from Australian publicly listed companies. Journal of Cleaner Production, 102, 324-332.
https://doi.org/10.1016/j.jclepro.2015.04.039
Nunnally, J. C., & Bernstein, I. (1994). Psychometric Theory (McGraw-Hill Series in Psychology) (Vol. 3): McGraw-Hill New York.
Nyachanchu, T. O., Chepkwony, J., & Bonuke, R. (2017). Role of Dynamic Capabilities in the Performance of Manufacturing Firms in Nairobi County, Kenya. European Scientific Journal, ESJ, 13(31).
https://doi.org/10.19044/esj.2017.v13n31p438
Rashideh, W. (2010). The development of assessment framework for construction firm’s sustainability. University Sains Malaysia.
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students: Pearson education.
Sekaran, U., & Bougie, R. J. (2016). Research Methods For Business: A Skill Building Approach Seventh Edition: John Wiley & Sons.
Song, H., Zhao, C., & Zeng, J. (2017). Can environmental management improve financial performance: An empirical study of A-shares listed companies in China. Journal of Cleaner Production, 141, 1051-1056.
https://doi.org/10.1016/j.jclepro.2016.09.105
Tan, Y., Shen, L., & Yao, H. (2011). Sustainable construction practice and contractors' competitiveness: A preliminary study. Habitat Int. Habitat International, 35(2), 225-230.
https://doi.org/10.1016/j.habitatint.2010.09.008
https://doi.org/10.1016/j.jclepro.2014.08.090
Al Sawalqa, F. A. H. (2011). The changing role of management accounting: assessment of the impact of financial and non-financial performance measures usage on organizational performance in Jordan. Murdoch University.
Alkilani, S. Z., Jupp, J., & Sawhney, A. (2013). Issues of construction health and safety in developing countries: a case of Jordan. Construction Economics and Building, 13(3), 141-156.
https://doi.org/10.5130/AJCEB.v13i3.3301
Alsubeh, M. A. (2013). A strategic framework for sustainable construction in Jordan. Civil and Environmental Research, 3(2), 102-107.
Antonakis, J., Avolio, B. J., & Sivasubramaniam, N. (2003). Context and leadership: An examination of the nine-factor full-range leadership theory using the Multifactor Leadership Questionnaire. The Leadership Quarterly, 14(3), 261-295.
https://doi.org/10.1016/S1048-9843(03)00030-4
Arab Bank. (2014). Sustainability Report (2014). Retrieved from https://www.arabbank.com/docs/default-source/sustainability-reports/sustainability-report-2014
Avolio, B. J., & Yammarino, F. J. (2013). Introduction to, and overview of, transformational and charismatic leadership Transformational and Charismatic Leadership: The Road Ahead 10th Anniversary Edition (pp. xxvii-xxxiii): Emerald Group Publishing Limited.
https://doi.org/10.1108/S1479-357120130000005005
Bass, B. M. (1985). Leadership and performance: New York: free press.
Bass, B. M. (1999). Two decades of research and development in transformational leadership. European journal of work and organizational psychology, 8(1), 9-32.
https://doi.org/10.1080/135943299398410
Bass, B. M., & Riggio, R. E. (2006). Transformational leadership: Psychology Press.
https://doi.org/10.4324/9781410617095
Bassioni, H. A., Price, A. D., & Hassan, T. M. (2005). Building a conceptual framework for measuring business performance in construction: an empirical evaluation. Construction management and economics, 23(5), 495-507.
https://doi.org/10.1080/0144619042000301401
Beatham, S. (2003). Development of an integrated business improvement system for construction. © Simon Beatham.
Bodhanwala, S., & Bodhanwala, R. (2018). Does corporate sustainability impact firm profitability? Evidence from India. Management decision.
https://doi.org/10.1108/MD-04-2017-0381
Carmines, E. G., & Zeller, R. A. (1979). Reliability and validity assessment (Vol. 17): Sage publications.
https://doi.org/10.4135/9781412985642
Endrikat, J., Guenther, E., & Hoppe, H. (2014). Making sense of conflicting empirical findings: A meta-analytic review of the relationship between corporate environmental and financial performance. European Management Journal, 32(5), 735-751.
https://doi.org/10.1016/j.emj.2013.12.004
Engelen, A., Gupta, V., Strenger, L., & Brettel, M. (2015). Entrepreneurial orientation, firm performance, and the moderating role of transformational leadership behaviors. Journal of management, 41(4), 1069-1097.
https://doi.org/10.1177/0149206312455244
Gazali, H. A. (2012). The Impact of Transformational Leadership on Decision Taking Process Effectiveness in the Jordanian Insurance Companies, . MEU, Jordan.
GCEP. (2007). (The General Corporation for the Environment Protection), Ministry of Environment: A strategic overview. Jordan. Retrieved from https://gcep.stanford.edu/news/ articles2007.html
Green, A. E., Miller, E. A., & Aarons, G. A. (2013). Transformational leadership moderates the relationship between emotional exhaustion and turnover intention among community mental health providers. Community mental health journal, 49(4), 373-379.
https://doi.org/10.1007/s10597-011-9463-0
Horváthová, E. (2010). Does environmental performance affect financial performance? A meta-analysis. Ecological Economics, 70(1), 52-59.
https://doi.org/10.1016/j.ecolecon.2010.04.004
Horváthová, E. (2012). The impact of environmental performance on firm performance: Short-term costs and long-term benefits? Ecological Economics, 84, 91-97.
https://doi.org/10.1016/j.ecolecon.2012.10.001
Ittner, C. D., Larcker, D. F., & Randall, T. (2003). Performance Implications of Strategic Performance Measurement in Financial Services Firms. SSRN Journal SSRN Electronic Journal.
https://doi.org/10.2139/ssrn.395824
Iwata, H., & Okada, K. (2011). How does environmental performance affect financial performance? Evidence from Japanese manufacturing firms. Ecological Economics, 70(9), 1691-1700.
https://doi.org/10.1016/j.ecolecon.2011.05.010
JCCA. (2014). (Jordan Construction Contractors Association). Annual Report 2014, Amman, Jordan. Retrieved from (http://jcca.org.jo)
JCCA. (2017). (Jordan Construction Contractors Association). Annual Report 2017, Amman, Jordan. Retrieved from (http://jcca.org.jo)
Jessica, J. F., MCSM. D. C, & Bausman. (2008). “Customer Satisfaction Survey, Best Practices”.
Kagioglou, M., Cooper, R., & Aouad, G. (2001). Performance management in construction: a conceptual framework. Construction management and economics, 19, 85-95.
https://doi.org/10.1080/01446190010003425
Lucas, M. T., & Noordewier, T. G. (2016). Environmental management practices and firm financial performance: The moderating effect of industry pollution-related factors. International Journal of Production Economics, 175, 24-34.
https://doi.org/10.1016/j.ijpe.2016.02.003
Luu, T. V., Kim, S. Y., Cao, H. L., & Park, Y. M. (2008). Performance measurement of construction firms in developing countries. Construction management and economics, 26(4), 373-386.
https://doi.org/10.1080/01446190801918706
Mansouri, N. (2016). Moderating role of the transformational leadership in the relationship between HRM practices and performance: a study of ICT companies of Malaysia. Asian Social Science, 12(7), 1.
https://doi.org/10.5539/ass.v12n7p1
Martínez?Ferrero, J., & Frías?Aceituno, J. V. (2015). Relationship between sustainable development and financial performance: international empirical research. Business Strategy and the Environment, 24(1), 20-39.
https://doi.org/10.1002/bse.1803
McCormick, B. W., Guay, R. P., Colbert, A. E., & Stewart, G. L. (2018). Proactive personality and proactive behaviour: Perspectives on person–situation interactions. Journal of occupational and organizational psychology.
https://doi.org/10.1111/joop.12234
MOP. (2015). Jordan’s Way to Sustainable Development. Retrieved from http://www.mop.gov.jo
Muhammad, N., Scrimgeour, F., Reddy, K., & Abidin, S. (2015). The relationship between environmental performance and financial performance in periods of growth and contraction: evidence from Australian publicly listed companies. Journal of Cleaner Production, 102, 324-332.
https://doi.org/10.1016/j.jclepro.2015.04.039
Nunnally, J. C., & Bernstein, I. (1994). Psychometric Theory (McGraw-Hill Series in Psychology) (Vol. 3): McGraw-Hill New York.
Nyachanchu, T. O., Chepkwony, J., & Bonuke, R. (2017). Role of Dynamic Capabilities in the Performance of Manufacturing Firms in Nairobi County, Kenya. European Scientific Journal, ESJ, 13(31).
https://doi.org/10.19044/esj.2017.v13n31p438
Rashideh, W. (2010). The development of assessment framework for construction firm’s sustainability. University Sains Malaysia.
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students: Pearson education.
Sekaran, U., & Bougie, R. J. (2016). Research Methods For Business: A Skill Building Approach Seventh Edition: John Wiley & Sons.
Song, H., Zhao, C., & Zeng, J. (2017). Can environmental management improve financial performance: An empirical study of A-shares listed companies in China. Journal of Cleaner Production, 141, 1051-1056.
https://doi.org/10.1016/j.jclepro.2016.09.105
Tan, Y., Shen, L., & Yao, H. (2011). Sustainable construction practice and contractors' competitiveness: A preliminary study. Habitat Int. Habitat International, 35(2), 225-230.
https://doi.org/10.1016/j.habitatint.2010.09.008
Downloads
Published
2019-09-05
How to Cite
Jundi, K., Ghazalat, A., & Yahya, S. (2019). The Sustainable Development Practices Role and Transformational Leadership: Interaction and Impact on the Financial Performance. Journal of Reviews on Global Economics, 8, 591–603. https://doi.org/10.6000/1929-7092.2019.08.51
Issue
Section
Articles
License
Policy for Journals/Articles with Open Access
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work
Policy for Journals / Manuscript with Paid Access
Authors who publish with this journal agree to the following terms:
- Publisher retain copyright .
- Authors are permitted and encouraged to post links to their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work .
