A STUDY OF LOCAL WISDOM, SOCIAL INTEREST, AND PRO-ENVIRONMENTAL BEHAVIOR IN IMPROVING ENVIRONMENTAL LEADERSHIP PERFORMANCE

Abstract

The purpose of this study is to develop a model of environmental leadership in profit-oriented companies. The theoretical basis is strategic thinking which includes cognitive psychology, systems thinking, and games theory to realize the triple bottom line-oriented environmental leadership performance. The study used quantitative methods in all 25 Rural Banks in Semarang City from April to May 2021, which involved 339 respondents consisting of commissioners, directors, managers, supervisors, and executives. The empirical data was analyzed using SEM-AMOS. The models consist of SEM 1: ELP = 0.256 LW + 0.288 SI + 0.138 PEB + e1 (R2 = 0.295); PEB = 0.446 LW + 0.094 SI + e2 (R2 = 0.247). The paper is novel because it seeks to contribute to the current debate in the literature about what factors affect the performance of environmental leadership. The other novelty of this research is a comprehensive model consisting of local wisdom, social interest, and pro-environmental behavior to improve environmental leadership performance. Based on this model, there is empirical evidence that environmental leadership performance (ELP) can be improved by increasing the combination of local wisdom (LW), social interest (SI), and pro-environmental behavior (PEB). The study also provides novelty that PEB mediates significantly positive the effect of LW on ELP, but PEB only mediates the effect of SI on ELP positively but not significantly. This study offers practical and theoretical implications, providing recommendations for Rural Banks to implement the environmental leadership models that include local wisdom and social interest, and an empirical confirmation of the environmental leadership model by combining strategic thinking and the triple bottom line for the development of literature and psychological assessment materials. Similarly, this study also provides policy implications. It is useful to evaluate and improve several regulations and leadership standards in Rural Bank to realize sustainable finance and evaluate psychological requirements based on the environmental leadership models.