How Transformational Supply Chain Leadership Affects Financial and Environmental Performance: The Mediating Role of Firm Resilience to Supply Disruption

Abstract

ABSTRACT Existing literature indicates that transformational leadership in supply chains is critical to sustainability; however, little is known about how this leadership influences sustainability. The empirical literature has provided minimal focused analysis of transformational supply chain leadership and its effects on sustainability performance dimensions, including financial and environmental performance. This study investigates how buyer firms' transformational supply chain leadership affects their financial and environmental performance. The study applies social exchange and dynamic capabilities theories to develop a conceptual model linking transformational supply chain leadership to financial and environmental performance. Data from a survey of 258 pharmaceutical and healthcare firms were utilized. The conceptual model was analyzed using SmartPLS. The results indicate that transformational supply chain leadership is positively associated with both financial and environmental performance. Also, the results indicate that supply resilience partially mediates the relationship between transformational supply chain leadership and financial performance, but does not mediate between transformational supply chain leadership and environmental performance. The study advances theory by empirically validating the contribution of transformational supply chain leadership to specific dimensions of sustainability performance, namely, financial and environmental performance. Also, the study contributes to theory by broadening the specification and validation of the mechanisms through which transformational supply chain leadership drives sustainable performance dimensions.