Leading Responsibly, Performing Better: How Transformational and Ethical Leadership Shape CSR and Financial Performance in Indonesia
Abstract
Grounded in Resource Based View (RBV), this study aims to analyze the effect of Transformational Leadership (TLe), Organizational Culture (OC), and Ethical Leadership (EL) on Corporate Social Responsibility (CSR), as well as the effect of CSR on Financial Performance (FP) of companies in Indonesia, an emerging market where CSR-related leadership remained less explored at the level of employees. A quantitative approach was used with a survey method was utilized to collect data. Online questionnaire distributed through various social media platform had collected 362 data from employees of various company sectors in Indonesia. Sample was drawn using purposive sampling method with criterion employee that has worked for at least one year with education beyond high school. Data analysis was conducted using descriptive statistics and the SEM-PLS method. The results show that the transformational leadership, ethical leadership and organizational cultures have a positive and significant effect on CSR. CSR is also proven to positively affect the company's financial performance. This study is limited to a small sample size and is dominated by staff-level respondents, thus under-representing the managerial perspective. Future studies are recommended to use mixed methods and a more diverse range of respondents. This study presents an integrated model that connects Transformational Leadership, Ethical Leadership, Organizational Culture, CSR, and Financial Performance in one framework.
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