The Determinants of Environmental, Social, and Governance Performance

Özet

Promoting a Transformational Leadership style in business can fundamentally impact Environmental, Social, Governance (ESG) performance. This study examines determinants of ESG and uses Transformational Leadership, Digital Adoption, Organizational Innovation, and Firm Competitiveness as independent variables to analyze changes in ESG activities. The study explores the mediation effect of organizational innovation among Transformational leadership and ESG, as well as digital adoption and ESG. The main aim of this research is to identify elements that can contribute to environmental, social, or governmental performances. The paper uses qualitative research for the study and utilizes 114 valid questionnaires to conduct a comprehensive and empirical analysis. The questionnaire was collected in Georgia Tbilisi, and the existing hypothesis was tested by conducting structural equation modeling with the collected questionnaire. After controlling for firm ownership and firm size the results of the study indicate that all independent variables have a positive effect on ESG performance and the mediation effect is not significant. The paper used artificial neural networks(ANN) analysis, and the results show that the most important variable affecting ESG performance is Transformational Leadership. This study adds an understanding of the relationship between TL and ESG and expands the literature that Transformational Leadership is significant to implement ESG performance.