A moderated-mediation analysis of psychological empowerment: Sustainable leadership and sustainable performance

Business cannot escape the impact of climate change that is deteriorating day by day. Many organizations are becoming motivated more than ever to introduce new business models, modern technologies, and supportive policies with an effort to cope with critical issues connected to climate change. The present study has investigated the mediating effect of psychological safety on the relationship between sustainable leadership and sustainable performance as well as evaluating the moderation impact of psychological empowerment on that relationship. To date, the present research is the first attempt wherein the incorporation of psychological empowerment and psychological safety has redefined the association between sustainable leadership and sustainable performance. Using cluster sampling approach, the data for this research was collected from 405 SMEs from Kuala Lumpur (Malaysia), Jakarta (Indonesia), and Bandar Seri Begawan (Brunei Darussalam). Using structural equation modelling (variance-based), this study has analyzed proposed hypothesis. Hierarchical regression analysis (PROCESS Macro) in SPSS was employed to analyze the moderated-mediation impact of psychological empowerment. The empirical results confirm that sustainable leadership has a substantial impact on psychological safety. This study confirms that sustainable leadership has positive indirect effect on sustainable performance through psychological safety which amplifies in the presence of psychological empowerment. Establishment of a psychologically safe environment that encourages knowledge sharing and openness to speaking will improve sustainable performance in the presence of sustainable leadership. Therefore, the development of practices that promote psychological empowerment among employees is essential. This study broadens our understanding of sustainable performance toward sustainable leaders, its underlying mechanism and conditional effect, making contribution to the psychology of honeybee leadership.