Micro-foundations for sustainable development: leadership and employee performance

Abstract

PurposeThe purpose of this paper is to take a micro-foundational perspective to identify the effective leadership style and employee work behavior in achieving the goals of sustainability. It also aims to identify the mechanism through which leaders influence employees’ performance.Design/methodology/approachThe study draws on existing literature for model creation and proposition development to understand the leadership style and employee behavior that would be effective in achieving sustainability goals.FindingsIn achieving the multifaceted goals of sustainability, servant leadership style is effective in mobilizing the resources and implementing the sustainability strategies among stakeholders. By enhancing interpersonal trust and psychological empowerment, servant leaders positively influence the work role behavior of the employees. Furthermore, the work performance of employees helps in achieving sustainable development.Research limitations/implicationsThis study draws on the theory of micro-foundations to establish how individual-level factors help in realizing the macro goal of sustainability. It throws light on the growing need to cultivate micro-level leadership skills and employee behaviors to have effective organizational sustainability performance. It is imperative for the organizations to be socially responsible along with achieving the business goals.Originality/valueThis study responds to the call of studying micro-level actions in the context of sustainable development. It extends the current knowledge by developing a causal model linking leadership and employee performance through interpersonal trust and psychological empowerment. Moreover, it presents testable propositions linking interpersonal trust and psychological empowerment.