Green transformational leadership and its impact on employee environmental performance through internal environmental orientation and green rewards and incentives

Abstract

The increasing urgency of global sustainability challenges underscores the need to understand how leadership can foster pro-environmental behaviors at the organizational level. Aligned with this direction, this study explores how green transformational leadership (GTL) influences employees’ environmental performance (EEP). It also examines how this relationship is strengthened by two mediating factors: internal environmental orientation (IEO) and green rewards and incentives (GRI). Drawing on social learning theory and reinforcement theory, a conceptual model was developed. The base model assessed the direct and indirect relationships among GTL, IEO, GRI, and EEP, while robust tests confirmed the reliability of the measurement model. The research population consisted of 315 managers working in various industrial sectors. Structural Equation Modelling (SEM) was used as a statistical method for testing the hypotheses. The results demonstrated that there is an insignificant direct effect between GTL and EEP. The results show a significant direct impact between GTL and IEO, a significant direct effect between GTL and GRI, and a significant direct impact between IEO and EEP. Furthermore, when IEO acts as a mediator, the influence of GTL on EEP is positively improved. GRI has no direct influence on EEP In addition, when this variable works as a mediator between GTL and EEP, it has no indirect influence. This research indicates that firms should develop IEO & GRI strategies and lay the foundation for EEP enhancement, because GTL has a significant, indirect effect on EEP. Research on how GTL influences EEP remains scarce, particularly in emerging economies like Saudi Arabia, where environmental frameworks and awareness are still evolving. Despite this, GTL shows promise in driving pro-environmental behaviors by promoting green values and culture. This research addresses past challenges in environmental programs by proposing a comprehensive model to improve their effectiveness and explores a range of noteworthy theoretical and practical implications. Organizations in emerging economies should embed sustainability into culture, training, and decision-making to strengthen the link between leadership and performance. In addition, reward systems must complement internalized green values rather than replace them, as overdependence on transactional incentives may weaken intrinsic motivation. This research also outlines the study’s limitations and suggests directions for future research.