Transformational leadership, ESG performance, corporate reputation and competitive advantage: a serial mediation model

Purpose Given the competitiveness of the business environment globally, environmental, social and governance (ESG), which represents a sustainable development framework that integrates environmental, social and corporate governance factors, has become an increasingly recognized concept in emerging markets. In the case of Ghana, its implementation is influenced by several factors, including leadership. Design/methodology/approach Drawing on the resource-based view theory, higher-order theory and stakeholder theory, we developed and evaluated a serial mediation model to explain how ESG performance and corporate reputation can connect transformational leadership to enhance competitive advantage. Utilizing the Process Macro model 6 in SPSS, data were collected from 340 senior managers/executives and middle-level managers from European multinational firms operating in Ghana. Findings The results indicate that transformational leadership positively affects ESG performance. Enhanced ESG performance, in turn, leads to improved corporate reputation, which subsequently results in a stronger competitive advantage. Research limitations/implications This study is limited to European multinational firms operating in Ghana, which may restrict the generalizability of the findings to other contexts or regions. Practical implications The findings suggest that organizations aiming to strengthen their competitive advantage should prioritize transformational leadership practices that foster ESG initiatives, as these are critical drivers of corporate reputation and market positioning. Originality/value This study provides new insights into the interwovenness between ESG performance and leadership in enhancing corporate reputation and competitive advantage within the context of emerging markets.