International Journal of Management Science and Business Administration
Volume 11, Issue 1, June 2025, Pages 7-38
Sustainable Leadership for Green Innovation: Exploring the Link to Project Excellence
DOI: 10.18775/ijmsba.1849‑5664‑5419.2014.111.1007
URL: https://doi.org/10.18775/ijmsba.1849-5664-5419.2014.111.1007
1Saqib Altaf, 2Li Wenyuan, 3Nasira Altaf,4Hu Pengfei,5Muhammad Shahbaz,6Muhammad Kamran Siddiqui
1-2School of Management, Jiangsu University, Zhenjiang, P.R. China 3Department of Business Administration, Allama Iqbal Open University, Islamabad, Pakistan 4School of Materials Science & Engineering, Jiangsu University, Zhenjiang, P.R. China 5Department of Leadership &Management Studies, National Defence University, Islamabad, Pakistan 6 Business School, Faculty of Business, Law & Social Sciences, Birmingham City University, (UK)
Abstract
This study investigates the impact of green leadership styles Green Horizontal Leadership (GHL) and Green Vertical Leadership (GVL) on the performance of green projects within manufacturing firms in China. The research focuses on the mediating role of green innovation in achieving superior environmental, financial, and stakeholder satisfaction outcomesadvancing the natural resource-based view (NRBV) framework.A cross-sectional study was conducted with data collected from 511 respondents in the construction industries of Jiangsu Province, China.Results reveal that both leadership styles positively influence green project performance, with green innovation partially mediating these relationships. The findings underscore the importance of integrating collaborative and directive leadership styles with innovative strategies to achieve sustainable project outcomes. Organizations are encouraged to invest in leadership development and R&D for green innovations.
Keywords: Green Horizontal Leadership, Green Vertical Leadership, Green Innovation, Green Project Performance, Sustainability.
1. Introduction
The growing body of literature on sustainable project management emphasizes the urgent need to address global ecological challenges such as climate change, pollution, and the depletion of natural resources. These issues are closely linked to the environmental impacts of manufacturing projects, leading to increasing societal pressure on firms to reduce their ecological footprint(Aragón-Correa et al., 2008; Delmas & Pekovic, 2018). Projects within manufacturing firms, particularly those involving resource-intensive operations, are significant contributors to environmental degradation, raising concerns about their long-term consequences on the planet and its inhabitants (Bansal & Song, 2017). As a result, project managers in the manufacturing sector are under growing pressure to integrate sustainability into project planning, execution, and outcomes. However, researchers argue that achieving meaningful environmental progress requires a transformation in project management approaches, as traditional methods often fail to address the scale of these challenges (Newton & Harte, 1997).
Emerging research suggests that proactive environmental practices in project management strategies that embed sustainability into manufacturing projects—can lead to superior outcomes across environmental, financial, and operational dimensions(Newton & Harte, 1997; Stefan & Paul, 2008). Evidence shows that manufacturing projects adopting these practices achieve greater operational efficiency, enhanced stakeholder satisfaction, and improved financial performance (Danso et al., 2019). However, an important question remains: under what conditions do these practices deliver optimal results? While significant attention has been paid to the benefits of sustainability in manufacturing projects, the contextual factors—such as leadership styles and innovation processes—that mediate or moderate the relationship between proactive environmental practices and project performance are less understood.
This study addresses this gap by examining how ecological horizontal and vertical leadership influence the outcomes of green projects within manufacturing firms. Key outcomes include environmental performance, financial performance, and stakeholder satisfaction. Central to this model is the mediating role of green innovation, as sustainability-driven innovation is essential for enabling manufacturing projects to achieve both environmental and financial success. Ecological leadership, which involves steering project teams toward sustainable practices, is hypothesized to play a pivotal role in fostering green innovation. Horizontal leadership (team-oriented and collaborative) and vertical leadership (top-down and directive) are expected to have distinct but complementary roles in creating an environment conducive to innovation and achieving positive project outcomes.
Grounded in the natural resource-based view (NRBV) (Chan et al., 2016; Hart, 1995), this research posits that embedding environmental considerations into project management strategies enhances the ability of manufacturing firms to navigate operational uncertainties and environmental challenges. By integrating sustainability into the core of project decision-making, firms can develop competitive advantages and improve their capacity to innovate effectively, resulting in long-term success (Banerjee, 2001; Hart, 1995).
To test this framework, the study focuses on manufacturing projects construction enterprises in China, a rapidly industrializing economy where sustainability in manufacturing is both a challenge and an opportunity. This research makes several contributions to the literature. First, it deepens understanding of how leadership styles—horizontal and vertical—affect the implementation of green practices and innovation in manufacturing project management. Second, it highlights the mediating role of green innovation, demonstrating its significance in linking leadership with project performance. Third, it addresses the relatively underexplored intersection of green leadership, innovation, and project management in Manufacturing firms in developing economies, providing insights into how these firms can adopt sustainable practices under growing environmental pressures.
By investigating the impact of ecological leadership and green innovation on the performance of manufacturing projects, this study offers practical recommendations for project managers in manufacturing firms who aim to align sustainability goals with project outcomes. Additionally, it provides policy insights for governments and organizations in developing countries seeking to promote sustainable industrial development.
The remainder of this paper is structured as follows: first, the theoretical framework and hypotheses are outlined. Next, the research design and methodology, including data collection from Manufacturing firms in China, are presented. The findings and analysis follow, leading to a discussion of the theoretical and practical implications, as well as suggestions for future research. Through this study, we aim to expand the understanding of how leadership and innovation can drive the success of sustainable manufacturing projects, contributing to both environmental sustainability and firm performance in developing economies.
The growing body of studies on sustainable project management underscores the urgent need of addressing global environmental issues like pollution, climate change, and resource depletion. These issues closely link to the environmental consequences of industrial projects, which drives increasing public pressure on companies to reduce their environmental impact (Aragón-Correa et al., 2008; Delmas et al., 2018). Projects within manufacturing firms, particularly those involving resource-intensive operations, are significant contributors to environmental degradation, raising concerns about their long-term consequences on the planet and its inhabitants (Bansal et al., 2017). As a result, project managers in the manufacturing sector are under growing pressure to integrate sustainability into project planning, execution, and outcomes.
Nonetheless, experts contend that because conventional techniques usually fail to solve the scope of these problems, significant environmental progress calls for a change in project management strategies (Newton et al., 1997).
According to emerging studies, proactive environmental practices included into project management plans including sustainability into manufacturing projects could result in better results in operational, financial, and environmental aspects (Newton & Harte, 1997; Stefan et al., 2008). Danso et al. (2019) assert that manufacturing projects using these methodologies often exhibit superior financial performance, increased stakeholder satisfaction, and improved operational efficiency. The conditions under which these strategies provide optimal results remain a topic of debate. Although there is much discourse on the potential benefits of sustainability in manufacturing initiatives, there is a lack of understanding of the aspects such as leadership styles and innovation processes that govern or mediate the relationship between environmentally aware practices and effective results.
This paper fills in this need by looking at how ecological horizontal and vertical leadership affect the results of green initiatives within industrial companies. Important results consist of environmental performance, financial performance, and stakeholder satisfaction. Fundamentally, this strategy is based on the mediating function of green innovation as industrial ventures cannot reach both financial and environmental success without sustainability driven innovation
Green innovation is posited to be significantly augmented by ecological leadership, which involves directing project teams towards sustainable practices. Vertical leadership (top-down and directive) and horizontal leadership (team-oriented and cooperative) are seen as having distinct but complementary functions in fostering an environment conducive to creativity and achieving positive project outcomes.
Grounded in the natural resource-based view (NRBV) (Chan et al., 2016; Hart, 1995), this research posits that embedding environmental considerations into project management strategies enhances the ability of manufacturing firms to navigate operational uncertainties and environmental challenges. By integrating sustainability into the core of project decision-making, firms can develop competitive advantages and improve their capacity to innovate effectively, resulting in long-term success (Banerjee, 2001; Hart, 1995).
In a rapidly industrializing economy where sustainability in manufacturing poses both problems and possibilities, this study analyzes Chinese manufacturing project construction enterprises to assess the framework. Numerous contributions to the current body of knowledge are provided by this research. As a result, we have a better grasp of how vertical and horizontal leadership styles affect the implementation of innovative and sustainable practices in manufacturing project management. The second point is that it shows how green innovation acts as a mediator between leadership and project performance. Third, in light of the growing environmental concerns, it delves into the relatively uncharted territory of green leadership, innovation, and project management inside industrial firms in developing countries, providing light on how these businesses may adopt sustainable practices.
With the goal of helping project managers in manufacturing businesses incorporate sustainability goals into project outcomes, this study delves into the impact of ecological leadership and green innovation on project success rates. Organizations and governments in developing countries may use the policy insights to promote sustainable industrial development.
The study is structured as follows for the parts that follow: Theoretical assumptions and a framework are laid forth first. Data collection from Chinese manufacturing businesses is part of the study's methodology, which is detailed in the section that follows. After presenting the data and analysis, the report concludes with a discussion of the implications (both theoretical and practical) and suggestions for further research. This study aims to further our understanding of how effective leadership and innovative thinking can drive sustainable manufacturing ventures to success. By doing so, we can help developing nations achieve their environmental sustainability goals while also improving corporate performance.
Literature Review
Green horizontal leadership specifically refers to peer-based, collaborative leadership within an organization or team, focused on achieving sustainable environmental goals(Muhammed & Zaim, 2020). Unlike traditional vertical leadership, horizontal leadership encourages participation, empowerment, and mutual influence among team members at the same level. In the context of green initiatives, this form of leadership is especially relevant because environmental challenges often require collective problem-solving, open communication, and shared responsibility(Jayashree et al., 2022; Sidhu, 2024).Key characteristics of green horizontal leadership includeCollaboration and Empowerment, Inclusive Decision-Making, Environmental Vision, Peer Support, and Influence(Jayashree et al., 2022).
Several empirical studies have shown the positive relationship between green horizontal leadership and green project performance Pilkienė et al. (2018) found that green leadership, particularly in a collaborative, horizontal form, positively influences green innovation outcomes. Their study demonstrated that organizations with high levels of horizontal leadership in sustainability efforts tended to achieve higher environmental performance through more effective and innovative practices.Müller et al. (2018)conducted a study on green project teams and concluded that horizontal leadership leads to better project performance by enhancing team collaboration, knowledge sharing, and mutual accountability. Teams with strong horizontal leadership showed higher rates of successful completion of sustainability goals.Afzal and Tumpa (2025) examined the role of leadership in green project implementation and identified that peer-based leadership improved decision-making, facilitated innovation, and fostered a sense of responsibility, leading to higher project performance in environmental sustainability efforts.
Green horizontal leadership is a peer-oriented, cooperative leadership style within a team or company focused on reaching sustainable environmental targets (Muhammed et al., 2020). Unlike traditional vertical leadership, horizontal leadership promotes team members at the same hierarchical level engagement, empowerment, and reciprocal impact. In green initiatives specifically, this leadership approach is particularly pertinent as environmental issues call for open communication, group problem-solving, and joint responsibility (Jayashree et al., 2022; Sidhu, 2024). Cooperation and empowerment characterize green horizontal leadership; inclusive decision-making defines it; an environmental vision defines it; peer support defines it; influence defines it;
Several empirical studies show that the effectiveness of green projects is favorably correlated with green horizontal leadership. Pilkienė et al. (2018) discovered that green leadership may substantially influence the outcomes of green innovation, particularly in collaborative contexts. Muller et al. (2018) assert that superior project outcomes stem from horizontal leadership's facilitation of responsibility, communication, and collaboration. Afzal et al. (2025) examined the impact of leadership on the execution of green projects, demonstrating that peer-based leadership improved decision-making, fostered innovation, and nurtured a sense of responsibility, ultimately leading to enhanced project performance in environmental sustainability initiatives.
H1: Green Horizontal Leadership is positively related to Green Project Performance.
GVL plays a crucial role in motivating and guiding organizations toward achieving their green objectives. In many cases, it is the leadership that drives organizational transformation towards sustainability, influencing both organizational culture and strategic goals(Islam et al., 2021). A study by Avery and Bergsteiner (2011)emphasized that leadership that integrates environmental values tends to yield better environmental performance. Additionally transformational leadership, with a focus on sustainability, can lead to enhanced organizational commitment to environmental goals(Waldman et al., 2006).
GVL not only influences the culture of sustainability within an organization but also directly impacts the alignment of project goals with environmental objectives. Leaders with a strong environmental vision can ensure that projects are designed and executed with sustainability at the coreAvery and Bergsteiner (2011).Effective GVL encourages employees to participate in green initiatives, which can positively affect the success of green projects. Employees who perceive their leaders as committed to environmental goals are more likely to contribute to sustainable project outcomes. This alignment of employee and organizational values is often crucial for the success of green projects.Leaders engaged in GVL are more likely to allocate resources to sustainable technologies and processes, which can lead to improved project performance(Robertson & Barling, 2013; Yu et al., 2021). Leaders who prioritize sustainability tend to invest in green technologies and allocate resources effectively to achieve better environmental performance(Khan et al., 2023).GVL fosters a green-oriented organizational culture that positively influences project teams. Teams led by environmentally conscious leaders are more likely to adopt green practices, improving the overall performance of green projects(Srivastava et al., 2020).Stern et al. (2014) argued that transformational leadership, which is often associated with GVL, has a significant impact on the performance of green projects. By inspiring and motivating employees, transformational leaders can enhance team commitment to sustainability, thereby improving project outcomes(Srivastava et al., 2020).
GVL is crucial in inspiring and directing organizations to attain their environmental goals. Leadership often propels organizational transition towards sustainability, impacting both organizational culture and strategic objectives (Islam et al., 2021). Avery et al. (2011) highlighted that leadership including environmental ideals often results in superior environmental performance. Furthermore, corporations were more dedicated to environmental goals when their CEOs gave sustainability top priority (2006).
GVL promotes both the internal sustainability culture and the match of project objectives with environmental ones. Strong environmental objectives for executives may help to make sustainability a pillar of project design and implementation. In 2011, Avery and Bergsteiner published. An increase in the efficiency of green projects may be possible as a result of increased staff participation in GVL-supported environmental efforts. Sustainable project results are more likely to have the support of employees when they perceive that their superiors are also devoted to environmental aims. Many times, the degree to which corporate and personal values coincide defines the effectiveness of environmentally friendly initiatives. Research by Robertson et al. (2013) and Yu et al. (2021) show that GVL practitioners are more inclined to invest in environmentally friendly technology and practices, therefore improving the project efficiency. Khan et al. (2023) define sustainable leaders as those that promote green technologies and optimize resource utilization to improve environmental performance. Project teams benefit from GVL's efforts to promote an environmentally responsible workplace culture. According to Srivastava et al. (2020), green initiatives benefit from having environmentally conscious leaders at front stage as their teams are more inclined to implement sustainable practices. Commonly associated with GVL, transformational leadership, according to Stern et al. (2014), greatly affects the degree of success of environmental projects. Transformational leaders may clearly impact and inspire staff members, according to Srivastava et al. (2020), therefore possibly improving project results and supporting environmental projects.
H2: Green Vertical Leadership is positively related to Green Project Performance
Green innovation refers to developing new or improved products, processes, or business models contributing to environmental sustainability. This could involve: Eco-efficient products, environmentally friendly technologies, and green business models(Trapp & Kanbach, 2021). Studies have shown that employee participation in environmental initiatives leads to higher commitment to sustainability goals and, consequently, more active involvement in generating green innovations (Bocken et al., 2014). When team members from diverse backgrounds collaborate, the organization is more likely to develop novel, environmentally friendly innovations. For instance, research by Sroufe (2003) highlighted that horizontal collaboration among employees led to more innovative solutions in eco-design and green product development. As Elkington and Rowlands (1999) argued in their work on the "Triple Bottom Line," sustainability must be integrated into all areas of business operations for green innovation to thrive.Organizations with a strong sustainability culture, driven by leadership that encourages horizontal collaboration, are more likely to innovate in green technologies(Jackson, 2014).Horizontal leadership, particularly in sustainable organizations, significantly increased the likelihood of green innovation, particularly in product and process development(Singh et al., 2020). Organizations with a more collaborative, participatory leadership style were more effective in adopting eco-friendly innovations and achieving sustainability goals(Singh et al., 2020). Bansal and Roth (2000) argued that companies with strong internal leadership that fosters employee empowerment and cross-functional teamwork were more likely to develop and implement green innovations.
"Green innovation" refers to the development of new or improved products, services, or business models with an eye on minimizing negative impacts on the environment. Some examples of this are eco-friendly products, eco-friendly technologies, and eco-conscious business strategies (Trapp et al., 2021). Research indicates that employees engaged in environmental projects exhibit a greater commitment to sustainability objectives, thereby motivating them to contribute to the development of green technology (Bocken et al., 2014). Organizations are more inclined to devise innovative, sustainable solutions when individuals from diverse backgrounds collaborate. Research by Sroufe (2003) indicates that enhanced creative eco-design and green product development solutions emerged when staff collaborated horizontally. Elkington et al. (1999) assert that for green innovation to succeed, sustainability must be incorporated into all aspects of a company's operations. Green technology development is more likely to occur in companies with strong sustainability cultures, driven by leadership that encourages horizontal collaboration (Jackson, 2014). Green innovation was more likely to occur in sustainable firms with horizontal leadership, particularly in the areas of product and process development (Singh et al., 2020). In the study conducted by Singh et al. in 2020, it was found that organizations that had leaders that were collaborative and participative were more successful in attaining their sustainability goals and using environmentally friendly technology. According to Bansal et al. (2000), strong internal leadership encourages employee empowerment and cross-functional cooperation, which in turn raises the possibility that a firm would generate and implement environmentally friendly ideas.
H3: Green Horizontal Leadership is positively associated with green innovation.
Green Vertical Leadership specifically can create an organizational climate where green innovation thrives. These leaders possess the authority and responsibility to define organizational priorities and influence strategic decisions. By prioritizing green initiatives, such leaders can allocate resources to innovation projects focused on sustainability, set specific green innovation goals, and monitor progress toward environmental objectives (Anderson et al., 2014).
Several studies have found empirical evidence supporting the idea that Green Vertical Leadership is positively related to green innovation. Leaders who emphasize environmental sustainability in their leadership approach can drive organizational changes that promote green innovation. For example, a study by El-Kassar and Singh (2019) found that top managers’ commitment to sustainability led to greater adoption of green technologies and practices within the organization. Similarly, leaders with a strong commitment to green initiatives are often able to create an environment where employees feel motivated to innovate with environmental concerns in mind (Gupta & Palsule-Desai, 2011).
Additionally, Green Vertical Leadership enhances organizational resources and capabilities for green innovation. When leaders make sustainability a core priority, they are more likely to invest in green research and development, encourage cross-functional collaboration, and promote the implementation of new, environmentally friendly technologies (Kuckertz, 2019). Furthermore, Green Vertical Leadership is positively correlated with improved organizational reputation, which can, in turn, lead to increased support for green innovation efforts from both internal and external stakeholders (Hart & Dowell, 2011).
In particular, green vertical leadership has the potential to establish an organizational environment that is conducive to the growth of green innovation. These leaders have the power and obligation to establish the priorities of the company and to influence the choices that are made about strategic matters. Such leaders are able to dedicate resources to innovation projects that are focused on sustainability, define explicit targets for green innovation, and assess progress toward environmental objectives when they prioritize green efforts (Anderson et al., 2014).
In a number of studies, researchers have discovered empirical data that lends credence to the notion that green vertical leadership has a favorable relationship with green innovation. Changes in corporate culture that encourage environmentally responsible innovation may be driven by leaders that place an emphasis on environmental sustainability in their leadership style. In a study conducted by El-Kassar et al. (2019), for instance, the researchers discovered that the dedication of senior managers to sustainability resulted in a stronger adoption of environmentally friendly technology and practices inside the firm. To a similar extent, executives who have a strong commitment to green efforts are often able to create an atmosphere in which workers feel encouraged to develop with environmental considerations in mind (Gupta et al., 2011).
Additionally, Green Vertical Leadership serves to improve the resources and skills of a business in order to facilitate green innovation. It is more probable that leaders will invest in environmentally friendly research and development, foster cross-functional cooperation, and support the application of innovative technologies that are favorable to the environment when they make sustainability a key goal (Kuckertz, 2019). Green Vertical Leadership is also positively connected with enhanced corporate reputation, which may, in turn, lead to higher support for green innovation initiatives from both internal and external stakeholders (Hart et al., 2011). This is what makes Green Vertical Leadership so important.
H4: Green Vertical Leadership is positively related to Green Innovation
According to several studies, green innovation is conceptualized as the introduction of new ideas, products, technologies, or processes that reduce environmental impacts while promoting resource efficiency(Horbach, 2019; Rennings, 2000). Green innovations can include renewable energy technologies, energy-efficient production processes, waste reduction systems, or sustainable materials. These innovations are not only technologically driven but are also influenced by regulatory pressures, market demand for eco-friendly products, and organizational sustainability goals (Chen et al., 2011).
A study by Xie et al. (2019) found that green innovation, specifically the development of environmentally friendly products, positively influenced the financial and environmental performance of projects in the manufacturing industry. Companies that introduced green products reported higher market share and customer satisfaction, leading to better overall project performance.In the context of construction and infrastructure projects, research by (Almusaed et al., 2024) showed that incorporating energy-efficient technologies and sustainable building materials led to higher green project performance, as measured by energy savings and environmental impact reduction. These innovations resulted in cost savings and improved project outcomes, further validating the positive relationship between green innovation and project performance(Delmas & Toffel, 2004). Research on corporate sustainability initiatives, such as those companies that invested in green innovation consistently reported better environmental and financial performance in their green projects. These firms experienced improved resource efficiency, lower production costs, and greater compliance with sustainability standards, leading to enhanced project success(Delmas & Toffel, 2004).
Green innovation has been described in a number of studies as the introduction of new ideas, products, and technology with the objective of decreasing negative impacts on the environment and making better use of existing resources (Horbach, 2019; Rennings, 2000). This definition was developed by researchers using the term "green innovation." Sustainable materials, manufacturing methods that are efficient with energy, waste-reduction systems, and technology that utilizes renewable energy sources are all examples of what might be termed green innovations. According to Chen et al. (2011), the desire for environmentally friendly products in the market, the limits imposed by the law, and the sustainability goals expressed by corporations are all factors that contribute to the development of these innovations.
According to Xie et al. (2019), initiatives in the manufacturing sector managed to enhance their financial and environmental performance via the implementation of green innovation policies. This invention sought to make products that were favorable to the environment. The overall success of the project was enhanced as a result of the fact that businesses who sold environmentally friendly products saw an increase in both the satisfaction of their customers and their market share. Almusaed et al. (2024) conducted a research in which they investigated the influence that environmentally responsible building methods have on construction projects and infrastructure. They discovered that the use of environmentally friendly materials and technologies that are effective in terms of energy consumption led to an improvement in the performance of green projects, which in turn led to a reduction in the amount of energy consumed and the impact on the environment. (Delmas et al., 2004) These innovations, which significantly improved project outcomes while also reducing costs, provided evidence that the positive link between environmentally conscious innovation and project performance is really genuine. Numerous studies have shown that corporate sustainability initiatives, and more specifically investments in green innovation, are able to provide improved financial and environmental outcomes for the businesses that participate in them. According to Delmas and Toffel (2004), the improved project performance of these organizations may be attributed to a number of factors, including decreased manufacturing costs, increased resource efficiency, and a more stringent adherence to sustainability requirements.
H5: Green Innovation is positively related to Green Project Performance
Mediation Effect of Green Innovation
Green horizontal leadership encourages a shared vision and collective responsibility among team members. As a result, it creates an environment conducive to green innovation. Leaders who adopt green horizontal leadership behaviors are more likely to inspire collaboration, engage employees, and promote innovative thinking, which leads to the development of green innovations that enhance organizational sustainability (Cheema et al., 2020).Green innovation has a direct impact on project performance by introducing environmentally sustainable practices and technologies that improve the efficiency and effectiveness of green projects. This innovation can take the form of energy-efficient designs, sustainable supply chain practices, or eco-friendly product development. Projects that implement these innovations are more likely to achieve high performance in terms of environmental and economic outcomes (Chen et al., 2011).
GHL facilitates the development and implementation of green innovations that, in turn, positively affect green project performance(Singh et al., 2020). By creating a culture of shared leadership and environmental responsibility, GHL encourages the flow of innovative ideas that are critical for achieving sustainability goals in projects. Green innovation serves as a pathway through which GHL can influence project outcomes(Verma & Kumar, 2022).
NRBV suggests that organizations that develop capabilities to effectively manage environmental resources (e.g., energy efficiency, waste reduction, and pollution control) can achieve sustainable competitive advantages. From the NRBV perspective, the firm’s environmental practices are not just regulatory responses but integral to creating unique resources that contribute to long-term success. Green innovation, in this context, is seen as a key capability that can leverage natural resources to enhance the environmental and financial performance of the firm. In essence, GHL does not directly lead to green project performance but does so indirectly through green innovation(Hart & Dowell, 2011). This mediating role of green innovation aligns with the NRBV, which emphasizes that competitive advantage in a sustainable context is achieved by developing unique resources, like green innovations, that improve overall performance (Hart, 1995).
Green horizontal leadership cultivates a collective vision and shared responsibility among team members. Thus, it cultivates an environment conducive to green innovation. Leaders that use green horizontal leadership behaviors are more likely to promote collaboration, involve individuals, and encourage innovative thinking, leading to the development of green solutions that enhance organizational sustainability (Cheema et al., 2020).The implementation of sustainable practices and technology significantly enhances project performance by increasing the effectiveness and success of environmentally friendly initiatives. This innovation has led to the development of environmentally friendly products, energy-efficient designs, and sustainable supply chains. Projects using these technology are more likely to have positive financial and environmental outcomes, claims Chen et al. (2011).
GHL promotes the advancement and execution of sustainable technologies that subsequently enhance the performance of green projects (Singh et al., 2020).GHL promotes environmental stewardship and cooperative leadership, therefore enabling the flow of fresh ideas necessary to reach sustainability goals in projects. Green innovation offers a means via which GHL could influence project results (Verma et al., 2022).
The NRBV advises businesses that acquire skills to properly manage environmental resources—such as waste reduction, energy efficiency, and pollution mitigating—may get continuous competitive benefits. From the NRBV point of view, the company's environmental policies are not just regulatory compliance but also necessary for creating unique resources supporting long-term development. In this perspective, green innovation is seen as a crucial capacity that may use natural resources to improve the firm's environmental and financial performance. Essentially, GHL does not directly influence green project performance but does so indirectly via green innovation (Hart & Dowell, 2011). The mediating function of green innovation corresponds with the NRBV, which asserts that competitive advantage in a sustainable framework is attained via the development of distinctive resources, such as green innovations, that enhance overall performance (Hart, 1995).
H6: Green Innovation has a mediating effect on the relationship between Green Horizontal Leadership and Green Project Performance
The mediation model suggests that green innovation serves as a conduit through which Green Vertical Leadership impacts Green Project Performance. GVL influences organizational culture, resources, and the strategic direction of sustainability initiatives, all of which are essential for fostering green innovation (Bos‐Brouwers, 2010). Leaders who promote green values and create an environment that supports innovation can stimulate the development of new products or processes that align with sustainability goals.By supporting green innovation, organizations are more likely to achieve higher GPP because these innovations directly enhance project outcomes. Green innovations can reduce operational costs, improve efficiency, and ensure better environmental outcomes—elements critical to the success of sustainability-oriented projects (Martinez-Conesa et al., 2017).For instance, in the construction industry, a GVL that encourages the adoption of green building technologies or energy-efficient processes could lead to more sustainable project outcomes, such as reduced energy consumption, lower carbon emissions, and better long-term cost-effectiveness (Heidari et al., 2024). In this way, green innovation becomes a key mediator that transforms leadership intentions into tangible, measurable project outcomes.
Several empirical studies have explored the relationship between leadership, innovation, and performance within the green context. A study by Singh et al. (2020) demonstrated that green leadership positively influenced green innovation, which in turn led to improved environmental performance. Similarly, findings fromZada et al. (2024) showed that green leadership in organizations facilitated innovation and enhanced project outcomes, particularly in environmental sustainability projects.Moreover, green innovation mediated the relationship between green leadership and project performance in the renewable energy sector(Singh et al., 2020). The study concluded that leaders who actively promoted green initiatives created a conducive environment for innovation, which subsequently resulted in improved project performance metrics, such as reduced carbon footprint and increased efficiency.
Incorporating the NRBV into the current discussion, green innovation can be viewed as an organizational capability that aligns with these strategies. By fostering green innovation, organizations can enhance their resource efficiency, reduce environmental harm, and create environmentally friendly products that resonate with stakeholders. Leaders who exhibit Green Vertical Leadership can stimulate these innovations by emphasizing sustainability, thus creating the conditions for improved Green Project Performance(AlNuaimi et al., 2021; Mishra & Yadav, 2021).
Furthermore, NRBV suggests that the interplay between leadership, innovation, and sustainability can result in sustained competitive advantages(Andersen, 2021; Hart, 1995). Green Vertical Leadership, by encouraging innovation, can drive the firm’s capability to develop new green technologies and processes, which directly contributes to higher GPP.
According to the mediation model, green innovation functions as a channel by which green vertical leadership affects green project performance. Essential for promoting green innovation, GVL shapes corporate culture, resources, and the strategic orientation of sustainability projects (Bos‐Brouwers, 2010). Leaders that embrace green principles and foster innovation in their surroundings might help to generate fresh ideas or products that complement environmental objectives. Supporting green innovation helps companies to get better GPP as these developments immediately improve project results. Important components of the success of sustainability-oriented initiatives, green innovations may lower running costs, increase efficiency, and guarantee better environmental consequences (Martinez-Conesa et al., 2017). In the building sector, for example, a GVL pushing the acceptance of green building technologies or energy-efficient methods could result in more sustainable project outcomes including lower carbon emissions, less energy consumption, and better long-term cost-effectiveness (Heidari et al., 2024). Green innovation therefore becomes a major mediator turning leadership aspirations into concrete, quantifiable project results.
Within the green setting, many empirical investigations have looked at the interaction of leadership, creativity, and performance. Green innovation was favorably impacted by green leadership, according to a 2020 Singh et al. research, which in turn helped to increase environmental performance. Comparably, results of Zada et al. (2024) revealed that, especially in environmental sustainability initiatives, green leadership in companies promoted creativity and improved project results. Furthermore, green innovation influenced the interaction in the renewable energy industry between green leadership and project performance (Singh et al., 2020). The research came to the conclusion that leaders who actively supported green projects generated an atmosphere fit for innovation, which later produced better project performance indicators like lower carbon footprint and higher efficiency.
Including the NRBV into the present conversation, one might see green innovation as an organizational capacity compatible with these approaches. Encouragement of green innovation helps companies to improve resource efficiency, reduce environmental damage, and provide environmentally friendly goods that appeal to their customers. By stressing sustainability, leaders who practice Green Vertical Leadership may inspire these innovations and hence foster the circumstances for better Green Project Performance (AlNuaimi et al., 2021; Mishra et al., 2021).
Moreover, NRBV advises that the interaction of sustainability, innovation, and leadership may contribute to long-lasting competitive advantages (Andersen, 2021; Hart, 1995). Encouragement of innovation by green vertical leadership will help the company to become more capable in developing new green technologies and methods, therefore immediately contributing to increased GPP.
H7: Green Innovation has a mediating effect on the relationship between Green Vertical Leadership and Green Project Performance
Conceptual Model
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Methods
4.1 Sampling Size and Technique
The present study was cross-sectional and focused on the construction industries of Jiangsu province, located in China. To represent the population, we have chosen 64 major construction industries; to represent the sample, we have chosen 714 employees. To collect data, a simple random sampling technique was utilized. Using a questionnaire and conducting the survey online, we collected the necessary information. We used professional translators to translate the questionnaires into two languages, English and Chinese, to reduce the amount of bias that was present. After everything was said and done, we received 511 questionnaires from employees who had been appropriately marked. However, some of the questionnaires were put away because the data had been filed incorrectly or incompletely.
4.2 Measures
The study developed a comprehensive questionnaire by following the guidelines outlined in prior literature and leveraging insights from various researchers' published work. The primary objective of this study was to examine the relationships among specific variables within the context of green leadership and innovation. Specifically, two independent variables were considered: Green Horizontal Leadership and Green Vertical Leadership. Additionally, the study incorporated Green Innovation as a mediator variable and Green Project Performance as the dependent variable.
To gather data, the questionnaire employed a five-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). This scale enabled participants to express the extent of their agreement or disagreement with the statements provided, ensuring a nuanced collection of responses to better understand the dynamics between the variables under investigation.
The study developed a comprehensive questionnaire by following the guidelines outlined in prior literature and leveraging insights from various researchers' published work. The primary objective of this study was to examine the relationships among specific variables within the context of green leadership and innovation. Two key elements we looked at closely were green vertical and horizontal leadership. Green Innovation served as a mediator in this study between the dependent variable—Green Innovation—and the independent variable—Green Project Performance. Using a Likert scale, the survey results show 5 for great agreement and 1 for extreme dissent. This scale gathered the participants' degrees of agreement or disagreement with every statement, thereby allowing one to make conclusions about the interactions among the elements.
| Variables | Methods of measurement | Source |
| Green Horizontal Leadership (GHL) | (i)Social Structures | (Zhu et al., 2019) |
| Team members are expecting someone who knows how to fix the problem to take the lead. | ||
| I (as Project Manager)/ My Project manager (Vertical Leader) delegated mine/ his power to a Senior/ Qualified member for a “special mission” [being a horizontal leader]. | ||
| I (as Project Manager)/ My project manager sat down with me/Team Leader (horizontal leader) and taught him how to deal with the functional departments. | ||
| I (as Project Manager)/ My project manager always encouraged me/Team Leader (horizontal leader) to take on extra responsibilities and take the lead in areas that we are good at. | ||
| I (as Project Manager)/ My project manager said he would back me/Team Leader (horizontal leader) up and that he could always turn to him for help. | ||
| I (as Project Manager) /My Project manager sometimes give extra incentives to me/Team Leader (horizontal leader). | ||
| (ii) Individual dynamics | ||
| Being the lead for the team certainly gave me/Team Leader (horizontal leader) a sense of achievement. Carrying the entire team forward just feels great! | ||
| The role of horizontal leader/team Leader gave me more exposure in the company. I/ he knew this could be an opportunity. | ||
| Leading teams is my/ team Leader (horizontal leader) strength. I/ S/he have strong communication and coordination skills. I/ he wasn't surprised that I/ he did a good job. | ||
| (iii) Context | ||
| In the project, different functional departments needed to be coordinated. This was extremely demanding for having a team Leader (horizontal leader) especially when we kept running into different problems. | ||
| I/ He has been working in this business for a long time, I/ He has seen different strange things. Experience in fact helps me/ him to lead the team. | ||
| Green Vertical Leadership (GVL) | I (as Project Manager) /My Project manager is clear and explicit about how he or she wants the team to operate. | (Guinan et al., 1998) |
| I (as Project Manager) /My Project manager keeps a watchful eye on how each project is progressing and alerts the team when he or she notices things that could be done to improve the team performance. | ||
| I (as Project Manager) /My Project manager goes out of his or her way to consult with other team members and to seek their ideas and advice. | ||
| I (as Project Manager) /My Project manager’s behaviour shows that he or she cares a great deal about our being a good design team | ||
| Green Innovation (GI) | 1. The company chooses the materials of the product that produce the least amount of pollution for conducting the product development or design. | (Chen et al., 2016). |
| 2. The company chooses the materials of their products that consume the least amount of energy and resources for conducting the product development or design. | ||
| 3. The company uses the fewest number of materials to comprise their products for conducting the product development or design. | ||
| 4. The company would circumspectly evaluate whether their products are easy to recycle, reuse, and decompose for conducting the product development or design. | ||
| 5. The manufacturing process of the company effectively reduces the emission of hazardous substances or wastes. | ||
| 6. The manufacturing process of the company effectively recycles wastes and emission that can be treated and re-used. | ||
| 7. The manufacturing process of the company effectively reduces the consumption of water, electricity, coal, or oil. | ||
| 8. The manufacturing process of the company effectively reduces the use of raw materials | ||
| Green Project Performance
(GPP)
|
(i)Financial Performance (FP) | (Jiang et al., 2018) |
| 1. Green construction increases sales growth of Project | ||
| 2. Green construction increases the profit growth of Project | ||
| 3. Green construction increases return on assets of the Project | ||
| 4. Green construction increases the Return on investment of the Project | ||
| 5. Green construction increases market share growth of Project | ||
| 6. Green construction improves the overall efficiency of operations of the Project | ||
| (ii)Environmental Performance (EP) | ||
| 1. In green construction return on sales is high | ||
| 2. Green construction reduces pollution | ||
| 3. Green construction reduces energy and materials consumption | ||
| 4. Green construction reduces the consumption of hazardous/harmful/toxic materials | ||
| 5. Green construction reduced the frequency for environmental accidents | ||
| (iii)Stakeholders Satisfaction (SS) | (Mazur & Pisarski, 2015) | |
| 1. I am satisfied with the benefits I receive from my relationships with those I work with. | ||
| 2. My feelings toward those I work with are positive. | ||
| 3. I feel enthusiastic about my relationships with the people I work with. | ||
| 4. All in all, I am satisfied with my relationships with the people I work with. | ||
| 5. I am satisfied with the benefits I receive from my stakeholder relationships. | ||
| 6. I am committed to my stakeholders. | ||
| 7. My feelings toward my stakeholders are positive. | ||
| 8. I feel enthusiastic about my stakeholder relationships. | ||
| 9. All in all, I am satisfied with my stakeholder relationships |
4.3 Reliability and Validity Test
Table 1. EFA Factor Loading
| Constructs | Measurement | Factor Loading | Cronbach’s Alpha | CR | AVE | VIF |
| Green Horizontal Leadership (GHL) | GHL 1 | 0.831 | 0.881 | 0.945 | 0.617 | 2.49 |
| GHL 2 | 0.778 | |||||
| GHL 3 | 0.801 | |||||
| GHL 4 | 0.893 | |||||
| GHL 5 | 0.899 | |||||
| GHL 6 | 0.874 | |||||
| GHL 7 | 0.832 | |||||
| GHL 8 | 0.799 | |||||
| GHL 9 | 0.775 | |||||
| GHL 10 | 0.863 | |||||
| GHL 11 | 0.853 | |||||
| Green Vertical Leadership (GVL) | GPC 1 | 0.912 | 0.877 | 0.889 | 0.534 | 1.98 |
| GPC 2 | 0.722 | |||||
| GPC 3 | 0.863 | |||||
| GPC 4 | 0.736 | |||||
| Green Innovation (GI) | GI 1 | 0.786 | 0.879 | 0.898 | 0.531 | 2.09 |
| GI 2 | 0.851 | |||||
| GI 3 | 0.799 | |||||
| GI 4 | 0.901 | |||||
| GI 5 | 0.863 | |||||
| GI 6 | 0.872 | |||||
| GI 7 | 0.775 | |||||
| GI 9 | 0.900 | |||||
| Green Project Performance (GPP) | 0.809 | 0.873 | 0.574 | 1.88 | ||
| (i)Environmental Performance | EP 1 | 0.821 | ||||
| EP 2 | 0.800 | |||||
| EP 3 | 0.721 | |||||
| EP 4 | 0.889 | |||||
| (ii)Financial Performance | FP 1 | 0.799 | ||||
| FP 2 | 0.805 | |||||
| FP 3 | 0.901 | |||||
| FP 3 | 0.899 | |||||
| FP 4 | 0.863 | |||||
| FP 6 | 0.898 | |||||
| FP 7 | 0.821 | |||||
| (iii)Stakeholders Satisfaction | SS 1 | 0.863 | ||||
| SS 2 | 0.842 | |||||
| SS 3 | 0.854 | |||||
| SS 4 | 0.783 | |||||
| SS 5 | 0.732 | |||||
| SS 6 | 0.731 | |||||
| SS 7 | 0.843 | |||||
| SS 8 | 0.789 | |||||
| SS 9 | 0.900 |
Table 2. Discriminant Validity
| GHL | GVL | GI | GPP | |
| GHL | 0.801 | |||
| GVL | 0.798 | 0.745 | ||
| GI | 0.304 | 0.271 | 0.826 | |
| GPP | 0.758 | 0.710 | 0.249 | 0.833 |
-
Results and Data Analysis
The structural equation modeling SEM method was used to test the hypotheses. This method was used to check the causal effect between indicators. This technique was widely used in management science research to measure the relationship.
4.1 Test of Hypotheses
Direct Effects
Table 3. Direct Effects
| Hypotheses | Relationship | β | T | p | Supported/Not Supported |
| H1 | GHL and GPP | 0.319 | 3.832 | 0.000 | Supported |
| H2 | GVL and GPP | 0.209 | 2.612 | 0.000 | Supported |
| H3 | GI and GPP | 0.271 | 2.221 | 0.000 | Supported |
| H4 | GHL and GI | 0.357 | 2.736 | 0.000 | Supported |
| H5 | GVL and GI | 0.291 | 3.71 | 0.000 | Supported |
Table 4. Indirect Effects
| Hypotheses | Relationship | β | T | p | Supported/Not Supported |
| H6 | GHL, GI and GPP | 0.137 | 2.823 | 0.000 | Supported |
| H7 | GVL, GI and GPP | 0.109 | 2.575 | 0.000 | Supported |
Table 5. Mediation through Bootstrapping
| IVs | Standardized Indirect Effect | Lower | Upper | Standardized Direct Effect | Total Effect | Results |
| GHL-GI- GPP | 0.175 | 0.137 | 0.705 | 0.512 | 0.621 | Partial mediation |
| GVL-GI-GPP | 0.089 | 0.041 | 0.725 | 0.372 | 0.461 | Partial mediation |
Results and Discussion
The results of hypothesis H1 reveal a significant positive relationship between Green Horizontal Leadership and Green Project Performance (β = 0.319, T = 3.832, p = 0.000). This indicates that collaborative and inclusive leadership practices, which characterize Green Horizontal Leadership, enhance project performance by fostering teamwork and mutual accountability. Such leadership aligns employees' efforts toward sustainable goals and encourages shared responsibility for environmental performance.Hypothesis H2 demonstrates a positive and significant influence of Green Vertical Leadership on Green Project Performance (β = 0.209, T = 2.612, p = 0.000). This finding highlights the critical role of top-down leadership in driving sustainability. Leaders at higher levels of the hierarchy provide clear directives, set green objectives, and establish accountability structures that ensure project teams meet environmental performance standards.Hypothesis H3 results show a significant positive impact of Green Innovation on Green Project Performance (β = 0.271, T = 2.221, p = 0.000). This underscores the importance of adopting innovative green practices in achieving superior project outcomes. Green Innovation introduces novel, eco-friendly solutions that optimize resources, enhance sustainability, and ensure compliance with environmental standards.The findings of H4 indicate that Green Horizontal Leadership significantly and positively influences Green Innovation (β = 0.357, T = 2.736, p = 0.000). This suggests that horizontal leadership styles, which emphasize collaboration and participatory decision-making, create an environment conducive to innovation. By empowering employees to contribute ideas and solutions, horizontal leadership fosters creativity and sustainability-focused innovations.Hypothesis H5 demonstrates a strong positive relationship between Green Vertical Leadership and Green Innovation (β = 0.291, T = 3.710, p = 0.000). Vertical leadership ensures alignment of innovation efforts with organizational goals by providing strategic direction and allocating resources to support green initiatives. This top-down guidance is essential for institutionalizing innovation as part of the organization’s sustainability strategy.The results show that Green Innovation partially mediates the relationship between Green Horizontal Leadership and Green Project Performance (standardized indirect effect β = 0.137, T = 2.823, p = 0.000). This highlights the critical role of innovation as a bridge that enhances the impact of collaborative leadership on project performance. Leaders who promote inclusive and participatory practices enable innovative solutions that align with sustainability objectives, ultimately driving better project outcomes.Similarly, Green Innovation partially mediates the relationship between Green Vertical Leadership and Green Project Performance (standardized indirect effect β = 0.109, T = 2.575, p = 0.000). This indicates that vertical leadership styles indirectly influence project performance through innovation. By providing strategic oversight and resource allocation, vertical leadership fosters an environment where innovation thrives, contributing to project success.The bootstrapping analysis confirms the mediating role of Green Innovation in the following relationships. Green Innovation partially mediates this relationship, with a standardized indirect effect of 0.175 (Lower = 0.137, Upper = 0.705), a direct effect of 0.512, and a total effect of 0.621. This finding demonstrates that the inclusive and collaborative nature of Green Horizontal Leadership significantly drives innovation, which enhances project performance.The mediation effect was also partial, with a standardized indirect effect of 0.089 (Lower = 0.041, Upper = 0.725), a direct effect of 0.372, and a total effect of 0.461. This indicates that while Green Vertical Leadership directly impacts project performance, its influence is enhanced through its role in fostering green innovation.
Practical and Theoretical Implications
Practical Implications
The study emphasizes the distinct yet complementary roles of Green Horizontal Leadership (GHL) and Green Vertical Leadership (GVL) in driving green project performance. Managers should invest in leadership development programs that enhance both collaborative and directive leadership skills. Horizontal leadership fosters teamwork and innovation, while vertical leadership provides strategic oversight and ensures accountability, creating a balanced approach to sustainability. Green Innovation plays a pivotal mediating role in achieving superior project outcomes. Organizations should establish dedicated innovation teams, invest in R&D for eco-friendly technologies, and encourage cross-functional collaboration to develop sustainable solutions. Policies that reward innovation can further incentivize employees to contribute creative ideas toward green initiatives. Firms should align leadership practices with innovation strategies to maximize the impact of green initiatives. Horizontal leaders can empower employees to explore innovative solutions, while vertical leaders ensure that these efforts align with organizational goals. Combining these leadership styles ensures a cohesive approach to sustainability. The findings provide actionable insights for Manufacturing firms, particularly in developing economies like China, to integrate sustainability into their operations. Manufacturing firms should leverage horizontal leadership to engage employees and stakeholders and utilize vertical leadership to navigate regulatory challenges and market pressures effectively.
Policymakers and industry leaders should promote frameworks that encourage firms to adopt green leadership and innovation practices. Incentives such as tax breaks, grants, and recognition programs for sustainable practices can motivate organizations to align their operations with environmental goals.
Theoretical Implications
This study extends the NRBV framework by demonstrating how ecological leadership (GHL and GVL) and green innovation interact to influence project performance. It highlights that embedding environmental considerations into strategic decision-making enhances an organization’s ability to navigate operational uncertainties and achieve sustainability-driven competitive advantages.
The findings confirm the critical mediating role of green innovation in linking leadership styles to project performance. This contributes to the growing body of literature emphasizing the importance of innovation as a mechanism through which leadership impacts organizational outcomes. Future research could explore additional mediators, such as organizational culture or technological capabilities, to provide a more comprehensive view. By distinguishing between horizontal and vertical leadership, the study provides a nuanced understanding of how these styles influence green innovation and project performance. Horizontal leadership fosters inclusivity and creativity, while vertical leadership ensures alignment and accountability. This differentiation adds depth to leadership theories and their application to sustainability. The research sheds light on the underexplored area of sustainability practices in Manufacturing firms, particularly in developing economies like China. The findings highlight the unique challenges and opportunities faced by Manufacturing firms, contributing to the literature on green leadership and innovation in resource-constrained settings. The study provides a theoretical framework that integrates leadership styles and green innovation to enhance project performance. This framework serves as a foundation for future research to explore similar dynamics in other industries and geographic regions.
Limitations and Future Directions
This study provides valuable insights into the relationships between ecological leadership, green innovation, and project performance. However, certain limitations warrant consideration.
First, the research is based on cross-sectional data, which limits the ability to establish causal relationships between the variables. Future studies could adopt longitudinal designs to capture the dynamic nature of leadership and innovation practices over time.
Second, the study focuses on Manufacturing firms in China, which, while offering valuable insights into developing economies, may restrict the generalizability of the findings. Expanding the research to other industries and geographic regions could enhance the applicability of the proposed framework and uncover potential contextual differences.
Third, while green innovation is examined as a mediator, other factors such as organizational culture, regulatory pressures, or technological capabilities may also influence the relationship between leadership and project performance. Future research could explore these additional mediators and moderators to provide a more comprehensive understanding of the mechanisms driving sustainability outcomes.
Fourth, the study primarily relies on self-reported data, which may introduce biases. Employing multi-source data collection methods or objective performance metrics in future research could improve the robustness of the findings.
Finally, the study emphasizes leadership styles but does not deeply examine the interaction between horizontal and vertical leadership. Future studies could investigate how these styles interplay to influence green innovation and performance.
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