How Green Transformational Leaders Trigger Environmental Performance? Unleashing the Missing Links Through Green Self-Efficacy, Green Empowerment, and Green Training of Employees

Abstract

This study looks into how companies react to and adjust to shifting social and environmental factors. A comprehensive model is put forth and empirically tested using data from the pharmaceutical business, utilizing the dynamic capabilities theory perspective. An investigation is conducted into the factors that explain and influence the relationship between environmental performance (EP) and green transformational leaders (GTLs). Green empowerment and efficacy are suggested as potential explanators and green training is regarded as a prerequisite. A total of 247 managers employed by pharmaceutical companies provided data for the analysis of the suggested model. The analysis methods employed were PROCESS Macro and Structure Equation Modeling (SEM). The findings show that green transformational leaders have an insignificant direct influence on environmental performance but a significant indirect impact. This relationship is significantly mediated by green empowerment and self-efficacy and moderated by green training.

1. Introduction

Corporate Social Responsibility (CSR) encompasses environmental stewardship as a key component, with organizations increasingly recognizing their duty to address the environmental implications of their operations [1]. This environmental focus within CSR is driven by both strategic motives and institutional pressures, with strategic considerations often taking precedence [2]. Companies are integrating environmental concerns into their business practices voluntarily, aiming to contribute to sustainable development while maintaining profitability [3]. The implementation of CSR, including its environmental aspects, can enhance an organization’s competitiveness and public image [4]. As transparency in business practices increases, environmental CSR is becoming a necessity rather than an option for many companies [1]. Furthermore, research indicates that employees prefer working for socially responsible organizations, even potentially accepting lower pay if other conditions are met [4]. This trend underscores the growing importance of environmental responsibility within the broader CSR framework.

Organizations are expected to play a critical role in addressing environmental challenges as these ever-increasing environmental challenges have long-term implications for a sustainable future. Green transformational leaders can act as essential drivers of the environmental performance of organizations [5]. Green leaders influence and guide the organization toward environmentally sustainable practices and are vital in shaping organizational culture [6], decision-making processes [7], and promoting environmentally sustainable practices [8]. Environmental performance encompasses various activities and practices to minimize the negative environmental impact and promote sustainable development [9]. This includes reducing energy consumption, recycling, and implementing eco-friendly production processes. The connection between environmental performance and green leadership is nuanced though.

With their inspiring vision, green transformational leaders drive their followers to initiate and complete tasks that lead to protecting the environment [10]. Green transformational leaders’ contribution toward achieving environmental sustainability remains an under-examined area in healthcare and the pharmaceutical industry. The pharmaceutical industry has a significant role in creating a more sustainable future. Pharmaceutical firms can be at the forefront of this movement with exemplary leadership and practices in place. The pharmaceutical industry is not exempt from the challenges or advancements stemming from the current environmental emergency [11]. Data indicate that pharmaceutical manufacturing produces 52 million metric tons of CO₂ equivalent (MMt-CO2e). In contrast, the automotive manufacturing industry contributed less in the same year, amounting to 46.4 MMt-CO2e [12]. Although carbon dioxide (CO₂) emissions typically take the spotlight in assessing environmental impact, the pharmaceutical industry stands out due to the use of numerous toxic chemicals throughout its production processes, including volatile organic compounds (VOCs) [13], pesticides [14], and formaldehyde [15]. The reduction in solvent use is a primary focus in minimizing the industry’s environmental footprint. Solvents make up 80–90% of all materials used in manufacturing processes at the moment. Thus, there is a big reduction target for firms operating in this industry [16].

Similarly, the pharmaceutical industry in developing countries (the context of this study) has substantial potential for growth, mainly when guided by green transformational leaders that promote environmental sustainability [17]. The environmental performance of this sector can improve significantly when leaders champion green initiatives, encourage innovation, and push for resource efficiency [18,19,20]. This interplay between leadership and environmental performance is essential to ensure long-term sustainability and global competitiveness in the pharmaceutical industry. In recent years, the pharmaceutical industry has been exploring green chemistry and sustainable manufacturing processes, which minimize environmental impacts. Research shows that green transformational leaders play a key role in facilitating adopting of these practices in developing countries [19]. Countries like India, China, and Brazil have seen a significant rise in the implementation of green practices in their pharmaceutical sectors [21], driven by transformational leadership [22]. Leaders integrate environmental objectives into company goals, thus improving their environmental performance while remaining competitive globally.

Transformational leaders are the source of encouraging green creativity and can promote green mindfulness, self-efficacy, and environmental performance [7]. The personal commitment of the CEO and top executives toward environmental protection increases the environmental performance of their firms [23] and their employees [24]. When using effective environmental management systems (EMSs) in their organizations, these CEOs can encourage employees to participate in the organization’s green functioning. Research shows that organizations led by active green leaders are more likely to adopt and retain EMSs that foster environmental performance [25].

Green transformational leaders can directly impact environmental performance by establishing goals and objectives aligning with sustainability practices [7,26,27]. For example, a green transformational leader may set targets for reducing the organization’s carbon footprint or increasing the use of renewable energy sources, which results in improved environmental performance. Furthermore, green leaders indirectly influence environmental performance by promoting environmental awareness and engagement among stakeholders, especially the employees. Kusi et al. [28] found green transformational leaders to be crucial for developing employee motivation, inspiration, and gratitude. This can lead to environmentally responsible behaviors and practices within the organization and beyond, as green leaders advocate for sustainable policies and practices in their industry or community [29].

Transformational leaders have been widely recognized as a key factor in promoting organizational change, particularly in the context of sustainability [30]. Green transformational leaders inspire employees to go beyond compliance with regulations and actively seek out innovative ways to minimize environmental harm [19,20]. According to Chen et al. [31], green transformational leaders foster an organizational culture that prioritizes sustainability by aligning environmental goals with the company’s long-term strategic objectives. Leaders set the tone for environmental responsibility, motivating teams to adopt greener processes and technologies. In the pharmaceutical industry, where traditional production methods can be resource-intensive and environmentally harmful, such leadership can play an essential role for driving the transition toward greener practices. Many recent investigations on green transformational leadership have invited researchers to study this factor in the pharmaceutical industry e.g., [19]. Similarly, studies of green transformational leadership and environmental performance, such as the study by Manzoor et al. [22], have recommended that future investigations should focus on the mediating and moderating mechanisms. Jia et al. [17] have also recommended to see the role of the green efficacy of employees in green transformational leaders and environmental performance. Chen et al. [31] examined the relationship between green transformational leaders and environmental performance and suggested a deep examination of this relationship by incorporating other variables and factors, as well as considering different industrial settings. They suggested employees’ green mindfulness and green self-efficacy as possible explanatory factors. Similarly, Ahuja et al. [32] call for an investigation of how pro-environmental behavior can change due to organizational and individual factors.

Dynamic capabilities theory [33] provides an important perspective on how green transformational leaders can trigger environmental performance. Dynamic capabilities theory, initially introduced by Teece et al. [33], urges an organization’s capacity and competencies to be enhanced and renewed so it can easily adapt to the changes in the external environment. At micro-foundation levels, green transformational leaders can cultivate and exploit organizational competencies that can enhance environmental performance. A leader’s role in shaping and driving employees’ environmental performance is not only critical but also incremental in shaping dynamic capabilities. However, there is limited literature available in this area. Strauss et al. [34] emphasized the significance of examining the micro-foundations of sustainability-related dynamic capabilities and contextual factors to better understand employee behaviors that impact organizational sustainability. Kevill et al. [35] found that perceived self-efficacy can impact the implementation of dynamic capabilities in various complex ways. In some cases, it may even serve as a fundamental aspect of these capabilities, without which they might not be viable.

Three significant additions to the body of literature are made by this study. In the context of small and medium-sized pharmaceutical companies, it first investigates the relationship between green transformational leaders and environmental performance. Second, a comprehensive theoretical model is proposed based on the dynamic capabilities theory perspective, with green training serving as a boundary condition and green empowerment and self-efficacy as potential explanatory variables. The impact of green transformational leaders on employees’ superior environmental performance is considered to be mediated by green self-efficacy and empowerment, with green training serving as a second-stage moderator. Lastly, data from Pakistan, a developing country, will add to our understanding and aid in generalizing the ideas and theories created and put to the test in established and Western economies.

2. Theoretical Framework and Hypothesis Development

2.1. Dynamic Capabilities Theory (DCT)

Building on the resource-based view (RBV), dynamic capabilities theory suggests that companies need specific capabilities to thrive and adapt to the ever-changing environment. This is achieved by developing, integrating, and reconfiguring their resource base [36,37,38]. Employees, as an important resource of an organization, can respond to change, learn quickly, and innovate within their roles by developing personal adaptive, absorptive, and transformative capabilities. This individual-level application allows employees to assess situations, acquire relevant knowledge, and modify their actions to better align with evolving organizational needs. By cultivating these capabilities, employees enhance their resilience and flexibility, contributing more effectively to organizational agility and competitiveness, especially in environments characterized by rapid change and uncertainty. This individual approach fosters both personal growth and collective organizational strength. Moreover, recent investigations have also used this theory at the individual level [35,39,40].

Dynamic capabilities for environmental sustainability are driven by a firm’s internal motivation and external forces, enabling the integration of sustainability into product development [41]. Although DCT primarily focuses on organizational-level processes, recent research has begun to explore the role of individuals and leaders in shaping dynamic capabilities [40], particularly in influencing organizational agility, innovation, and environmental adaptation. Leadership, primarily transformational leadership, focuses on key actors who help organizations build, enhance, and reconfigure their capabilities to respond to external environmental challenges [40]. Similarly, at the micro-enterprise level, owner–manager perceived self-efficacy plays a significant role as a micro-foundation of dynamic capabilities, influencing their enactment in multifaceted ways [35]. Kevill et al.’s [35] findings suggest that perceived self-efficacy can influence dynamic capability enactment in multifaceted ways. In certain situations, it may even be an essential element of dynamic capabilities, without which they might not exist. Similarly, Strauss et al. [34] also highlighted the importance of the micro-foundations of sustainability dynamic capabilities and context in investigating employee behavior that can affect sustainability at the organizational level.

Dynamic capabilities theory focuses on an organization’s ability to adapt and respond effectively to changing external environments [33]. The main assumption of the theory is that an organization’s basic competencies should be used to help create a short-term competitive position that can be developed into a long-term competitive advantage. Green transformational leadership is a leadership style that emphasizes environmental sustainability and inspires employees to engage in environmentally responsible practices. Prior research has acknowledged the role of leaders in developing organizational dynamic capabilities in general [42] and green dynamic capabilities in specific [43]. Green transformational leaders go beyond short-term gains and focus on sustainable practices and strategies that lead to improved environmental performance over time.

Dynamic capabilities theory [33] suggests that organizations must be able to adapt to changes in their external environment. Green transformational leaders align with this by encouraging organizations to adapt to environmental changes by implementing sustainable practices and green initiatives. Dynamic capabilities theory also emphasizes the importance of continuous learning and innovation. Green transformational leaders foster innovation in sustainability efforts and encourages employees to continuously learn and improve their green practices through empowerment, leading to more effective environmental performance. Green transformational leaders empower their employees to take ownership of sustainability efforts. Dynamic capabilities theory supports this empowerment, as it enables employees to contribute to the organization’s adaptability and resource allocation for environmental performance.

Green transformational leaders can foster high levels of employee self-efficacy by providing support, encouragement, and positive role modeling. Employees with strong self-efficacy are more likely to believe in [35]. Green transformational leaders can stimulate innovation and continuous improvement in green practices. When employees believe in their ability to make a difference (self-efficacy), and leaders encourage them to take ownership of green initiatives, the organization becomes better equipped to adapt and excel in environmental performance. Dynamic capabilities theory suggests that organizations should reallocate resources to seize new opportunities. With the support of employee self-efficacy, green transformational leaders can make the case for reallocating resources to support sustainability efforts, as employees’ confidence in their ability to drive green initiatives is high.

2.2. Theoretical Framework

Green empowerment and self-efficacy are selected as mediators because these variables enhance employees’ motivation and belief in their ability to adopt green practices. Green empowerment, as a result of green transformational leadership, fosters a sense of influence over environmental goals, encouraging commitment to sustainable practices, while green self-efficacy strengthens the confidence needed to take eco-friendly actions. Further, green training is used as a moderator since it provides employees with the knowledge and skills necessary to implement green practices effectively, amplifying the impact of empowerment and self-efficacy on green behaviors. The proposed theoretical framework is presented in Figure 1.

Empowerment in organizational settings involves giving employees the authority, resources, and encouragement to take actions that support organizational goals. In the context of green leadership, leaders who promote environmental goals and encourage sustainable practices empower employees to act in ways that enhance environmental performance. This aligns with Psychological Empowerment Theory [44], which asserts that when employees feel empowered, they are more likely to take initiative in areas emphasized by leadership (such as sustainability). Empirical studies have shown that empowerment positively mediates the relationship between supportive leadership and task performance e.g., [45].

Self-efficacy refers to an individual’s belief in their ability to perform specific tasks successfully [46]. Leaders who demonstrate commitment to green initiatives can enhance employees’ green self-efficacy, fostering confidence in their ability to engage in pro-environmental behaviors. Social Cognitive Theory suggests that higher self-efficacy increases motivation and persistence, which is supported by research linking self-efficacy to pro-environmental behavior [47,48]. When green leadership enhances employees’ belief in their capacity to make environmental contributions, self-efficacy mediates the link between leadership and performance by motivating consistent and effective environmental actions.

This study’s approach to modeling green empowerment and green self-efficacy as mediators and green training as a moderator offers a nuanced view of how green leadership influences environmental performance. This model contributes to the field by expanding the understanding of psychological mechanisms and highlighting green empowerment and self-efficacy as mechanisms that provide insight into the psychological pathways by which green leadership can foster environmental responsibility among employees.

Green training equips employees with specific competencies for sustainable practices, such as waste management, energy conservation, and resource efficiency [49]. In alignment with Social Learning Theory [50], green training also provides observational learning opportunities that reinforce green self-efficacy and empower employees to act. Training can thus enhance the effects of green empowerment and self-efficacy by ensuring that employees not only feel motivated but also capable of performing environmentally friendly behaviors. Similarly, by positioning green training as a moderator, the study underscores the importance of structured programs that motivate employees and give them the practical tools and knowledge needed to engage in sustainable practices. By integrating leadership and environmental performance research, the model synthesizes findings from the organizational behavior and environmental management literature, offering a comprehensive framework for how organizations can leverage leadership to achieve sustainability goals.

2.3. Green Transformational Leaders and Environmental Performance (GTL-EP)

Leadership is a process by which individuals at various levels within an organization influence others to achieve organizational goals and foster a shared vision [51]. Leaders define and articulate a direction aligning with external and internal contingencies to accomplish the specified tasks [51]. Direction setting and operational management represent the two fundamental means by which leaders at all organizational levels add value to their organization. Both leaders at the top of the organization (e.g., senior executives) and those in leadership roles at various levels throughout the organization (e.g., managers, supervisors, team leads) play significant, though different, roles in driving organizational change and influencing environmental performance.

Top-level leaders often shape the strategic direction and set the overarching vision for sustainability initiatives. In contrast, managers and supervisors play critical roles in operationalizing these strategies, ensuring implementation, and motivating their teams to align with green goals on a day-to-day basis [52]. Managers typically have broader responsibilities for coordinating resources and aligning teams with corporate goals. At the same time, supervisors work more closely with frontline employees, directly influencing behavior and adherence [52] to environmental practices.

Chen and Chang [47] defined green transformational leadership as a process through which leaders promote environmental innovation and behavior by fostering green values and motivating employees to adopt sustainable practices. Transformational leadership has a significant positive impact on organizational performance across various contexts. Studies have shown that this leadership style enhances financial performance, new product development, and overall business outcomes [53,54]. Transformational leaders inspire and motivate employees to strive for higher performance levels, leading to increased organizational effectiveness [55]. This leadership approach facilitates organizational innovation, which mediates the relationship between transformational leadership and performance [53]. Transformational leadership is particularly crucial in today’s complex business environment, characterized by rapid technological advancements and social changes [56]. However, research indicates that leaders in some regions, such as Bosnia and Herzegovina, tend to focus more on tasks than people, suggesting a need for greater emphasis on long-term vision and employee development [54]. Overall, the literature provides strong empirical evidence supporting the positive effects of transformational leadership on organizational performance [56].

Transformational leaders have the ability to develop an inspiring vision that motivates their followers to take initiative in accomplishing their tasks and meeting their goals [7,26,27]. Moreover, they can foster innovative ideas within their organizations as role models for promoting creative solutions to problems. Transformational leadership is important for cultivating an innovation culture [57,58]. Green transformational leaders (GTLs) can promote new routines and pave the path for new dimensions of success within an organization [59]. Moreover, they can modify the organizational structure by introducing new practices [60]. Green transformational leaders can foster green innovation by adopting new routines and tasks and focusing on dynamic capabilities [31]. When confronted with an expeditiously changing environment that threatens the survival of their organizations, these leaders demonstrate agility by swiftly formulating strategic decisions and mobilizing resources to improve dynamic capabilities [61,62]. Green transformational leaders center on the ongoing advancement of environmentally friendly dynamic capabilities, allowing them to adjust to external shifts and adeptly seize new opportunities, especially in the domain of green product and process innovations [7]. Leaders adopting a green transformational mindset view environmental concerns as paramount, and their pro-environmental stance shapes their choices and actions, propelling the integration, development, and restructuring of green capabilities.

Although a leader’s role in achieving environmental sustainability is of great importance, this area of research has received relatively less attention on a global scale. A study conducted in Taiwan’s electronics industry [31] found green transformational leaders’ significant support for improved mindfulness, self-efficacy, and performance. Similarly, a study in India revealed a significantly positive association between GTL and green creativity [63], and in Pakistan, Zafar et al. [10] recognized GTL as a significant predictor of green performance. Another investigation by Begum et al. [19] in China emphasized that GTL is a substantial predictor of green innovation.

Milfont and Sibley [64] see green leaders having concern for the environment as a personality trait, exerting significant influence on an organization’s adoption of environmentally sustainable practices. Studies in this domain have demonstrated that green leaders shape organizational culture [6], affect decision-making [7], and encourage the implementation of ecologically responsible practices [8]. Based on the above findings and discussion, the following hypothesis is proposed.

Hypothesis 1. 

GTLs positively impact environmental performance.

2.4. Green Empowerment (GE) as a Mediator

When directed towards environmentally responsible tasks, empowerment can be referred to as “green employee empowerment” [47]. The active participation of employees is essential for organizations’ corporate social responsibility initiatives, which, in turn, leads to employee dedication and commitment [65,66]. According to Chen and Chang [47], green empowerment plays a vital role in green transformational leadership, where leaders who empower their employees create an organizational culture that encourages innovation and pro-environmental behaviors. The study highlights that empowered employees are more likely to engage in environmentally responsible actions when they feel supported by leadership and are given the autonomy to act.

Prior literature on organizational environmental issues has emphasized that enabling employees to have greater control can serve as a potential explanatory factor for superior environmental performance [66]. This performance is a result of employees being empowered and subsequently motivated [65,66,67]. Empowerment plays a pivotal role in improving an organization’s outcomes and enhances employee effectiveness and efficiency while boosting employee motivation levels [68].

Green empowerment equips individuals and organizations with the skills, knowledge, and resources necessary to protect the environment. The employees can be empowered through training in sustainable practices, access to financing for clean energy projects, and support for community-based conservation initiatives. Individuals can take eco-friendly actions when well-versed in the organizational policy about protecting the environment. Moreover, the leaders must provide adequate resources to promote green empowerment in the organization. Empowerment requires acknowledgment and recognition and, as a result, increases employee motivation [66,69].

In the context of green employee empowerment, the commitment of leadership stands as the cornerstone for implementing environmentally friendly initiatives [70]. Ultimately, upper management determines the essential eco-procedures, such as training, empowerment, and assigning responsibilities to employees. Effective steps towards environmental enhancement can only be put into action when leaders are willing to empower their employees [66,70,71]. Furthermore, the literature has also pointed out that employees are more enthusiastically involved in environmental programs when top management and leadership actively participate in these programs [70,72].

Green empowerment can mediate the relationship between GTLs and EP by enabling employees to act on environmental issues and supporting these actions [66]. By giving staff members the knowledge and tools to address environmental issues, green leaders may empower them and foster a culture of environmental sustainability [73]. This, in turn, leads to more effective actions to improve environmental performance. The empowered employees will be autonomous in making green decisions and using the resources as and when required. By creating a culture of sustainability, green empowerment helps employees to make meaningful contributions to improve environmental performance. Hence, the following hypothesis is proposed.

Hypothesis 2. 

Green empowerment mediates between the GTL and EP relationship.

2.5. Green Self-Efficacy (GSE) as a Mediator

Green self-efficacy is an individual’s belief in their ability to take effective and environmentally responsible actions. Chen et al. [31] define green self-efficacy as an individual’s belief in their capability to perform environmentally sustainable tasks, emphasizing its role in enhancing organizational environmental performance. The study indicates that green self-efficacy can foster more proactive and engaged behavior in employees toward sustainability goals.

The literature shows that green self-efficacy tends to explain the GTL-EP relationship. Using data from Taiwan’s electronics industry, Chen et al. [31] found that the connection between GTLs and EP is partially mediated by the GSE of employees. Zafar et al. [10] found the influence of GTLs on the EP of firms in Pakistan’s manufacturing sector is exerted both directly and indirectly through its impact on GSE. Faraz et al. [74] found that green self-efficacy collaboratively interacts with green servant leadership to influence the formation of pro-environmental behavior. Similarly, Ahuja et al. [32] used data from the Indian steel industry and found GSE positively related to employees’ pro-environmental behaviors, as well as an explanatory factor between environmental leadership and pro-environmental behavior.

Highly efficacious managers get engaged in performing environmentally friendly behaviors, such as reducing energy and water usage and promoting recycling programs, leading to superior environmental performance [75]. When self-efficacy is established due to a leader’s efforts, it is linked with the trust and commitment of followers to the leader and the organization [76]. Leaders can have an impact on the self-efficacy of subordinates [7,65,77]. They can boost their self-worth and efficacy [7,32,65]. The literature suggests that green self-efficacy can be key in promoting environmentally responsible actions and performance, particularly in organizations with strong green leadership Ahuja et al. [32] The above discussion leads to the following hypothesis.

Hypothesis 3. 

GSE mediates between the GTL and EP relationship.

2.6. Green Training (GT) as Moderator

Green training refers to organizational programs designed to equip employees with the knowledge, skills, and attitudes necessary to perform tasks in an environmentally sustainable manner [78]. It focuses on educating employees about environmental issues, sustainable practices, and how they can contribute to the organization’s environmental goals. Green training is crucial for building an organizational culture that prioritizes sustainability and environmental performance. According to Zoogah [78], green training plays a critical role in enhancing an organization’s green management practices by fostering the development of employees’ environmental knowledge and skills. The study highlights that green training increases employees’ awareness and motivation to engage in environmentally friendly behaviors, which, in turn, improves organizational environmental performance.

Through training and development initiatives, employees can develop an awareness of the significance of environmentally friendly workplace behaviors [79]. It can also deepen their understanding regarding the actions required to support green initiatives [80]. These initiatives can also be linked to the motivation of employees to participate in environmentally responsible practices [81]. Training is essential for instilling and fostering an environmentally conscious culture within an organization [82]. Furthermore, training has significantly impacted employees’ attitudes and involvement in eco-friendly practices [83].

Green empowerment involves giving employees the authority and resources to participate actively in sustainability efforts [84]. This can align with dynamic capabilities theory’s focus on developing adaptive capabilities to address environmental challenges. Dynamic capabilities theory also emphasizes managing organizational change effectively [33]. DCT emphasizes an organization’s ability to adapt, integrate, and reconfigure internal and external competencies to address rapidly changing environments. In the context of the pharmaceutical industry, this becomes particularly important due to the sector’s unique challenges, such as regulatory changes, technological advancements, evolving consumer demands, and environmental pressures. Managing organizational change effectively is critical for pharmaceutical firms to sustain their competitive advantage, innovate, and comply with shifting industry norms. Hence, green empowerment, combined with training programs, can inspire employees to generate creative and sustainable ideas and continuously improve green practices. Green empowerment, guided by training, ensures that employees are well prepared to use the resources efficiently to pursue environmental goals. Employee training and development can help ensure that employees remain committed to sustainable practices over the long run. In light of the preceding conversation, we posit the following hypothesis.

Hypothesis 4. 

GT enhances the positive impact of GE and EP.

Green self-efficacy plays a crucial role in motivating individuals to adopt sustainable practices [32]. Training programs can enhance individuals’ knowledge and skills, thus increasing their confidence and self-efficacy in performing green actions. Individuals with high green self-efficacy are more likely to contribute to developing innovative green practices. Training programs provide individuals with the necessary knowledge and skills to contribute to adaptive capabilities. Training programs can help reinforce this commitment by providing ongoing education and skill-building opportunities and acts as significant moderator for the green self-efficacy and environmental performance relationship [32]. Hence, we posit the following hypothesis.

Hypothesis 5. 

Green training enhances the positive impact of green self-efficacy and environmental performance.

3. Methodology

3.1. Study Context

The pharmaceutical sector plays a substantial role in the national and global economy, making the progress and growth of this industry crucial for enhancing people’s health, well-being, and overall quality of life [11] In the Asia–Pacific region, Pakistan holds the 10th position in the pharmaceutical sector, boasting an estimated market size of approximately USD 13.1 million as of 2021 [11] The Pakistani pharmaceutical market is home to around 650 companies, with fewer than 30 multinational enterprises. The pharmaceutical industry makes up about 1% of Pakistan’s GDP annually [85].

3.2. Sampling Procedures

Data were collected from male and female employees working in the pharmaceutical firms operating in the Sundar industrial zone of Lahore, Pakistan. There are around 100 small and medium-sized pharmaceutical firms operating in Sundar Industrial Estate, Lahore, Pakistan. The authors used their references to collect data from these firms. Hence, a purposive sampling technique was used for identification of respondents. A self-administered questionnaire was used, and a purposive sampling technique was employed to ensure a representative sample. An online questionnaire using Google Forms was distributed by visiting different pharmaceutical firms. The respondents were briefed about the purpose of the study, that their responses would be anonymous, and that they could leave the survey anytime. In a 4-month time period (from March 23 till July 2023), 257 employees from 29 firms completed the survey. After removing the unusable responses, 247 valid responses were used for analysis.

3.3. Questionnaire

Study variables were measured with the help of a self-report questionnaire on a five-point Likert scale, where “1” was “strongly disagree”, and “5” was “strongly agree”. A 6-item scale for green transformational leaders was adopted from Chen and Chang [47]. The sample items are “The leadership inspires the organizational members with environmental plans” and “The leadership provides a clear environmental vision for the organization’s members”.

The environmental performance was measured with the help of 7 items adopted from Kim et al. [86]. The sample item is “Environmental management within our organization has Reduced purchases of nonrenewable materials, chemicals, and components”. The 6-item scale adopted from Chen et al. [31] was used to measure green self-efficacy. The sample items are “We feel we can succeed in accomplishing environmental ideas” and “We can achieve most of the environmental goals”. Five items were derived from Roscoe et al. [87] for the measurement of green empowerment. The sample items are “I clearly know how green operations fit with my daily job” and “I feel a shared sense of responsibility for the work I do”. Five items adopted from Daily et al. [88] were used to measure green training of employees. The sample item is “Everybody in this facility can get a chance to be trained on environmental issues”. The results of the demographic analysis are presented in

Table 1. Descriptive statistics of sample.

	Category	No. of Respondents	Percentage
Gender	Male	147	59.5
	Female	100	40.5
Age	26–35 years	53	21.5
	36–45 years	107	43.3
	46–55 years	87	35.2
Experience	1–5 years	58	23.5
	6–10 years	99	40.1
	Above 11 years	90	36.4
Education	Bachelors	96	38.9
	Masters	129	52.2
	MS/Phd	22	8.9

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3.4. Common Method Variance

Common method bias problems may arise from data collected at a single moment in time. In order to solve this, potential issues related to common method bias were found using Harman’s single-factor test. Only 38.0% of the variation was explained by the findings of an unrotated solution of Harman’s single-factor test, indicating a lack of common method variance problems [89].

4. Data Analysis and Results

The mediated moderation model and the proposed hypotheses were tested using Hayes’ [90] PROCESS Macro and structural equation modeling (SEM) as analytical methods. The structural model is analyzed once the measurement model has been fitted to the data using the incremental technique for analysis. Finally, the completely mediated moderation model that was suggested was tested using PROCESS Model 14.

4.1. Assessment of the Measurement Model

Initially, the reliability and validity of data was assessed [91], where composite reliability, Cronbach’s alpha, average variance extracted (AVE), and discriminant validity were assessed with the help of the output of the measurement model. The measurement model produced an acceptable fit (χ2 = 956.55; d.f. = 362; AGFI = 0.76; CFI = 0.88; GFI = 0.80; RMSEA = 0.08). The results are presented in

Table 2. Results of confirmatory factor analysis (CFA).

Construct/Variable	Standardized Coefficient	Average Variance Extracted	Cronbach’s Alpha	Composite Reliability
Green Transformational Leader (GTL)		0.564	0.880	0.885
GTL1	0.686
GTL 2	0.762
GTL 3	0.774
GTL 4	0.764
GTL 5	0.849
GTL 6	0.653
Environmental Performance (EP)		0.521	0.890	0.883
EP1	0.801
EP 2	0.827
EP 3	0.810
EP 4	0.641
EP 5	0.638
EP 6	0.697
EP 7	0.601
Green Training (GT)		0.651	0.894	0.903
GT 1	0.877
GT 2	0.840
GT 3	0.780
GT 4	0.738
GT 5	0.791
Green Empowerment (GE)		0.644	0.885	0.900
GE1	0.831
GE2	0.724
GE3	0.887
GE4	0.770
GE5	0.738
Green Self-Efficacy (GSE)		0.645	0.915	0.916
GSE1	0.810
GSE2	0.767
GSE3	0.842
GSE4	0.798
GSE5	0.791
GSE6	0.808

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The standards specified in Hair et al.’s [91] assessment of the measurement model were adhered to in the reliability and validity evaluation. Reliability, as measured by Cronbach’s alpha values, for every variable exceeded the recommended cutoff point of 0.7 [92]. In order to evaluate convergent validity, factor loadings and average variance extracted (AVE) measurements were examined. Factor loadings were higher than 0.6, and AVE values were higher than the suggested cutoff of 0.5 [91]. The Fornell and Larcker [93] criterion was utilized to assess the discriminant validity of the constructs, revealing that shared variances among all study variables were lower than the AVE values, confirming the achievement of discriminant validity. Detailed results are available in

Table 3. Correlation coefficient, shared variance, and AVE.

	Factor	No of Items	Mean	s.d.	GTL	GE	GSF	GTD	EP
1	GTL	6	3.81	0.77	0.56
2	GE	5	3.72	0.91	0.634 * (0.408)	0.52
3	GSF	6	3.85	0.79	0.403 * (0.162)	0.502 * (0.252)	0.65
4	GT	5	2.96	1.09	0.367 * (0.135)	0.475 * (0.225)	0.294 * (0.086)	0.64
5	EP	7	4.95	1.06	0.335 * (0.112)	0.404 * (0.163)	0.444 * (0.197)	0.375 * (0.140)	0.65

GTL: Green Transformational Leader; GE: Green Empowerment; GSE: Green Self-Efficacy; GT: Green Training: EP: Environmental Performance. * correlation significant at 0.01; shared variances are in parenthesis. AVE is on the diagonal.

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4.2. The Structural Model

After the measurement model was fitted, SEM analysis with AMOS 23 was used to investigate the structural model. The maximum-likelihood approach was used, which takes into account both latent and observable factors. Then, without the moderator (GTD), the structural model was built, incorporating two mediators (GE and GSE). A good fit was shown by the structural model (χ2 = 696; χ2/d.f. = 2.84; TLI = 0.87; CFI = 0.88; GFI = 0.82; RMSEA = 0.08).

Table 4. Structural equation model: using the maximum-likelihood method.

Path	Coefficient	Standard Error	t-Value	p-Value
GTL→EP	0.125	0.20	1.197	0.231
GTL→GSE	0.477	0.06	6.349	0.000
GTL→GE	0.718	0.08	8.928	0.000
GSE→EP	0.387	0.06	5.138	0.000
GE→EP	0.166	0.08	1.740	0.082
Standardized Effects using 2000 Bootstrap 95% CI
Effect	Coefficient	Standard Error	95% CI Lower Bound	95% CI Upper Bound
Total	0.429 *	0.08	0.264	0.563
Direct	0.125	0.12	−0.108	0.394
Indirect	0.304 *	0.10	0.124	0.521

GTL: Green Transformational Leaders; GE: Green Empowerment; GSE: Green Self Efficacy; GT: Green Training: EP: Environmental Performance. * p < 0.01.

demonstrates that the direct impact of GTLs on workers’ EP is negligible (β = 0.125, p > 0.10). On the other hand, it was discovered that green transformational leaders significantly and favorably affected both green empowerment (β = 0.718, p < 0.00) and green self-efficacy (β = 0.477, p < 0.00). Concurrently, green self-efficacy (β = 0.387, p < 0.00) and green empowerment (β = 0.166, p < 0.10) have a positive and significant effect on EP. The direct effect of GTLs on EP was insignificant, while the indirect effect of GTLs on EP through GSE and GE was positive and significant. The results support the full mediation model where GSE and GE explain how GTL impacts EP. The results are provided in Table 4.

After testing the parallel mediation model, the proposed mediated moderation model was analyzed using PROCESS Model 14. Results for the GSE and GT interaction are presented in

Table 5. PROCESS Model 14: conditional direct and conditional indirect effects.

Effects Using 5000 Bootstrap 95% CI
Path	Coefficient	Standard Error	95% CI Lower Bound	95% CI Upper Bound
GTL→EP	0.126	0.08	−0.031	0.284
GSE→EP	0.251 *	0.08	0.091	0.411
GT→EP	−0.208 *	0.05	−0.315	−0.101
GSE-X-GT→EP	0.408 *	0.06	0.284	0.532
Conditional Effects of GT Using 5000 Bootstrap 95% CI
Green Training as Moderator	Coefficient	Standard Error	95% CI Lower Bound	95% CI Upper Bound
−1.089 (low)	−0.193	0.12	−0.437	0.051
0.000 (moderate)	0.251 *	0.08	0.091	0.411
1.089 (high)	0.695 *	0.08	0.527	0.862

* p < 0.01.

. GT acts as a significant moderator for the GSE and EP relationship, where at low values of GT, the impact of GSE is insignificant (β = −0.193; p-value > 0.10), and zero lies between LL 95% CI and UL 95% CI, while at high values of GT, the impact of GSE is significant (β = 0.695; p-value < 0.001). The index of moderated mediation and R² are significant (Index = 0.169; p-value < 0.001; LL: 0.004; UL: 0.064; R² = 0.107 p-value > 0.10). The interaction plot of GSE and GT is presented in Figure 2.

Similarly, results for the GE and GTD interaction are presented in

Table 6. PROCESS Model 14: conditional direct and conditional indirect effects.

Effects Using 5000 Bootstrap 95% CI
Path	Coefficient	Standard Error	95% CI Lower Bound	95% CI Upper Bound
GTL→EP	0.068	0.10	−0.129	0.265
GE→EP	0.160 ***	0.09	−0.020	0.340
GTD→EP	−0.236 *	0.06	−0.358	−0.115
GE-X-GT→EP	0.292 *	0.06	0.164	0.420
Conditional Effects of GT Using 5000 Bootstrap 95% CI
Green Training as Moderator	Coefficient	Standard Error	95% CI Lower Bound	95% CI Upper Bound
−1.089 (low)	−0.158	0.13	−0.414	0.098
0.000 (moderate)	0.160 ***	0.09	−0.020	0.340
1.089 (high)	0.478 *	0.10	0.281	0.675

* p < 0.01; *** p < 0.10.

. GT acts as a significant moderator for the GE and EP relationship, where at low values of GT, the impact of GE is insignificant (β = −0.158; p-value > 0.10), and at high values of GT, the impact of GE is significant (β = 0.478; p-value < 0.001). The index of moderated mediation and R² are significant (Index = 00.218; p-value < 0.001; LL: 0.108; UL: 0.317; R² = 0.06 p-value > 0.10). The interaction plot of GE and GT is presented in Figure 3.

5. Discussion

The current investigation examined the association between environmentally focused transformational leadership and ecological performance within the pharmaceutical sector. Using the dynamic theory perspective [33], green self-efficacy and green empowerment were proposed as explanatory variables, and green training as second stage boundary condition. This study is significant because environmental deterioration poses a substantial risk to both the sustainability of society and organizations. The most important finding is related to the insignificant direct impact and significant indirect impact of GTL through GSE and GE. Results supported that green self-efficacy and empowerment are significant mediators for the proposed GTL and EP relationship. The results supported a full-mediation model where the direct impact of GTLs is insignificant and indirect effects through GSE and GE are significant. Prior research findings have also reported green self-efficacy as an explanatory factor. Chen et al. [31] found green self-efficacy a significant mediator for GTLs and performance relationship. Similarly, Zafar et al. [10] found GSE as a partial mediator for GTL and performance relationship. Nurul Alam et al. [94] also found the interaction effects of green training and self-efficacy as significant for employee pro-environmental behavior that leads to superior environmental performance by the organization. Prior findings also support results with reference to green empowerment. Paille and Francoeur [95] found employee empowerment to be an important contributor to green task performance.

The second important finding is related to the significance of green training as a moderator for the green self-efficacy and environmental performance and the green empowerment and environmental performance relationships. It was also found that conditional indirect effects of GTLs on EP were significant when green training was high and insignificant when green training was low. These findings support the idea that training programs can help reinforce the commitment of employees, providing ongoing education and skill-building opportunities [32]. Green training initiatives can help develop an awareness of the significance of environmentally friendly workplace behaviors [79] and motivate employees to participate in environmentally friendly practices [80,81]. Green training is essential for instilling and fostering an environmentally conscious culture [82]. It significantly affects employees’ attitudes and involvement in eco-friendly practices [83], which is linked with superior environmental performance.

Pharmaceutical firms can save the environment using numerous strategies in the presence of green transformational leaders. By prioritizing eco-friendly practices and integrating them into their decision-making processes, managers can reduce the impact of operations on the environment and can help in decarbonization [96,97]. These leaders can mitigate the healthcare sector’s negative environmental impact and establish a more sustainable ecosystem. Green leaders advocate for sustainable practices by employing environmentally friendly incentives, such as offering green training and empowerment. They achieve this by actively involving employees in sustainability decision-making processes and providing training focused on environmental practices.

5.1. Theoretical Implications

Dynamic capabilities theory, as developed by Teece et al. [33], posits that organizations must continuously renew their resources, skills, and routines to respond to shifting environments. Green leaders who advocate for sustainability practices can instill in employees the motivation and skills to contribute to environmental goals, creating a culture that supports adaptive and responsive behaviors aligned with environmental performance. Green leaders are crucial in building organizational capabilities to respond to environmental challenges. They encourage pro-environmental behaviors and foster a culture that supports sustainability. By aligning with DCT, green leadership can be seen as fostering capabilities that enable the organization to sense and seize environmental opportunities while reconfiguring internal resources to reduce ecological impacts [38,98]. Leaders who prioritize environmental sustainability align resources and skills to enhance green practices, thus building an organization’s capacity to adapt to environmental demands. Research indicates that leadership focused on environmental goals can catalyze a shift in employee behavior toward sustainable practices [47].

Empowerment, defined as giving employees authority and resources to act on green initiatives, aligns with DCT’s emphasis on reconfiguring organizational capabilities. Empowered employees feel more ownership over environmental goals, and this autonomy enables the organization to adapt more flexibly to sustainability demands [99]. Empowered employees can serve as catalysts for change, amplifying the organization’s dynamic capabilities by proactively addressing environmental issues.

Self-efficacy, or confidence in one’s ability to perform tasks effectively, is essential for employees to enact green behaviors. When leaders enhance green self-efficacy, they strengthen the organization’s adaptive capacity. Research by Kevill et al. [35] highlights that self-efficacy can be fundamental to dynamic capabilities, as employees with high self-efficacy are more likely to act on sustainability initiatives. This alignment with DCT suggests that self-efficacy fosters the confidence needed to respond to environmental challenges, a core aspect of dynamic capabilities.

According to DCT, training supports the deployment of dynamic capabilities by building the skills necessary for adaptation and continuous improvement [100]. In the context of green initiatives, green training ensures that employees understand environmental practices and are equipped to carry them out effectively, thus enhancing the impact of green leadership [101]. Training can transform motivation and empowerment into practical actions that directly improve environmental outcomes. Green training is also essential in reinforcing green empowerment and self-efficacy, providing the knowledge and competencies employees need to feel confident in their ability to contribute to environmental goals. This aligns with DCT’s notion of capability renewal: as employees acquire skills and knowledge through green training, the organization’s overall capacity to respond to environmental challenges is strengthened. Studies have shown that training enhances the impact of self-efficacy on behavioral performance, suggesting that green training can effectively amplify the contributions of empowered and self-efficacious employees toward environmental objectives [49].

In summary, using dynamic capabilities theory to model the impact of green leadership on environmental performance through green empowerment and green self-efficacy, as well as moderation by green training, offers several theoretical contributions. Firstly, this model expands DCT by applying it to sustainability contexts, showing that organizational adaptation and capability-building can focus on environmental performance, not just competitive advantage. Secondly, by examining green empowerment and green self-efficacy as mechanisms, this model clarifies how green leadership develops capabilities necessary for environmental responsiveness. This contribution enhances our understanding of how internal psychological states (e.g., empowerment, self-efficacy) function as micro-foundations of dynamic capabilities [34]. Lastly, green training’s role as a moderator offers insight into how capability development is strengthened, emphasizing that training is critical in translating green leadership into practical environmental outcomes.

5.2. Practical Implications

Pharmaceutical firms can have numerous negative impacts on the environment, including water contamination, air pollution, hazardous waste generation, and contribution to antibiotic resistance [102]. The industry’s reliance on non-renewable resources, coupled with its contribution to greenhouse gas emissions and microplastic pollution, highlights the need for more sustainable practices in pharmaceutical manufacturing and waste management. These impacts emphasize the importance of green leaders, environmental regulations, and the adoption of eco-friendly technologies within the industry to mitigate harm to the environment. Pharmaceutical companies can minimize their impact on the environment by embracing sustainable practices and making environmentally conscious decisions. Achieving this goal requires more than just the efforts of leaders; it involves actively engaging and aligning the entire staff for improved environmental outcomes.

The role of green transformational leaders becomes crucial in attaining sustainability. Pharmaceutical firms can adopt dynamic capabilities such as eco-friendly practices to respond to evolving environmental regulations. Green transformational leaders play a pivotal role in fostering innovation in sustainability initiatives and motivating employees to enhance their environmentally friendly practices continually. Leaders encourage a learning culture through green empowerment, leading to more effective environmental performance. By educating employees, fostering innovation, encouraging open communication, and empowering green decision-making, leaders create a learning culture and an environment where sustainability becomes a shared goal and responsibility [103]. This not only boosts employee engagement in green practices but also leads to continuous improvements in environmental outcomes, positioning the organization as a leader in sustainability.

Green transformational leaders empower employees to take responsibility for sustainability efforts. This empowerment enables employees to contribute to the organization’s adaptability and resource allocation for environmental performance. In this process, green leaders are instrumental in promoting environmentally responsible behavior among employees. This is achieved by focusing on their green self-efficacy, empowering them, and involving them in decision-making processes related to environmentalism. Green transformational leaders can establish a sustainability culture by cultivating green self-efficacy, providing green empowerment, and implementing green training and development.

Green transformational leaders can promote environmental sustainability and reduce the undesirable impact of an organization on their environment. Green transformational leaders encourage environmental stewardship by implementing sustainable practices and promoting sustainable products and services, which requires the involvement of employees at all levels. Green transformational leaders work to create a culture within their organization where employees understand the importance of protecting the environment and take steps to reduce the company’s environmental impact. They create a culture of green innovation and creativity and actively seek out and implement sustainable practices within their organizations, such as using renewable energy sources, implementing recycling programs, and reducing waste. They focus on developing and offering products and services that are environmentally friendly and promote sustainability. Organizations that demonstrate green transformational leadership are better equipped to take a proactive stance in addressing environmental concerns. Preventative environmental management practices such as pollution prevention, green chemistry, energy efficiency, and sustainable supply-chain management are crucial for reducing industrial impacts on the environment. These proactive measures help industries, including pharmaceuticals, minimize waste and emissions, use resources more efficiently, and improve overall sustainability. Implementing these practices can lead to regulatory compliance, cost savings, and enhanced corporate reputation. Hence, adoption of such practices can help organizations anticipate and manage environmental challenges before they escalate into significant issues.

5.3. Limitations and Future Directions

This study contains some limitations, just like any other. The cross-sectional structure of the data may have introduced biases and ignored temporal fluctuations. Information derived from a specific sector presents difficulties in generalizing findings to larger healthcare settings. Although there is potential for studying the relationship between GTLs and EP using dynamic capabilities theory, other theoretical vantage points, such as stakeholder or institutional theory, could give a more thorough insight into the relationship and improve the insights of future research.

Important insights into how GTLs in pharmaceutical companies can affect organizational results are provided by the study’s focus on green self-efficacy, empowerment, and training as mediators and boundary conditions of the relationship between GTLs and EP. This could be further explored in future research by looking at additional mediators like employee engagement or corporate culture. The current analysis emphasizes how crucial green transformational leaders are to improving pharmaceutical companies’ environmental performance. Future research could build on these findings and generalize the results by exploring the impact of different types of leadership on environmental sustainability across various industries and sectors. Lastly, the current investigation only focused on one single dimension of green HRM (green training), and future investigations can also explore the impact of other dimensions of green HRM, including green rewards, green performance management, and green recruitment and selection.