From awareness to outcomes: how sustainability-oriented leadership shapes the adoption of sustainable strategies and firm-level performance and reputation

Purpose This study examines how organizational informants working in Romanian companies perceive the relationships between awareness of sustainable development (ADSD), regulatory requirements (RR), leadership orientation toward sustainability (LOS), the adoption of sustainable strategies (ASS), organizational performance (OP) and organizational reputation (OR). Design/methodology/approach A confirmatory econometric model derived from a previous qualitative phase was tested with partial least squares structural equation modelling (PLS-SEM) in SmartPLS 4. Data were gathered through a Likert-type questionnaire administered to 117 key informants working in Romanian firms, ranging from operational to top management. ADSD and ASS were specified as reflective–reflective higher-order constructs and assessed through a two-stage disjoint procedure. Reliability, convergent validity, discriminant validity (Fornell–Larcker, HTMT) and structural significance (5,000 bootstrap subsamples) were evaluated against current methodological guidelines. Findings Leadership orientation toward sustainability emerged as the dominant antecedent of the adoption of sustainable strategies (β = 0.615, p < 0.001), whereas awareness of sustainable development and perceived regulatory requirements did not exhibit statistically significant direct effects after leadership orientation was included in the model. The adoption of sustainable strategies, in turn, was strongly associated with organizational performance (β = 0.762, p < 0.001) and moderately but significantly associated with organizational reputation (β = 0.337, p = 0.002). Performance was also positively associated with reputation (β = 0.435, p < 0.001). The model explained 55.7% of the variance in ASS, 58.1% in OP and 52.7% in OR. Research limitations/implications The study offers one of the first integrated, leader-centred PLS-SEM tests of sustainability strategy adoption in a Central and Eastern European emerging economy, and challenges the assumption that awareness or compliance pressure alone are enough to move firms beyond declarative sustainability (the other approach being that the gap between declarative intent and genuine sustainability strategy adoption in Central and Eastern European emerging economies stems from a complex mix of institutional, financial, and cultural barriers). Practical implications Companies seeking to translate sustainability awareness and regulatory requirements into strategic adoption should complement compliance initiatives with sustainability-leadership training, internal sustainability champions, measurable managerial KPIs and incentive systems linked to sustainability objectives. For SMEs, these mechanisms can be implemented proportionately through a quarterly sustainability dashboard, a designated sustainability champion and a limited set of material targets. Social implications The findings suggest that strengthening managerial capabilities around sustainability could accelerate the alignment of Romanian businesses with EU climate, social and governance objectives. Originality/value The study contributes to the literature by integrating awareness of sustainable development, perceived regulatory requirements, sustainability-oriented leadership, sustainable strategy adoption, organizational performance and organizational reputation within a single PLS-SEM model tested in an underexplored Central and Eastern European context. More importantly, the findings indicate that leadership orientation toward sustainability is the only significant direct antecedent of sustainable strategy adoption when awareness and perceived regulatory requirements are considered simultaneously. The study therefore suggests that the transition from declarative sustainability intentions to strategy adoption depends primarily on leaders' capacity to translate sustainability principles into organizational priorities, resource allocation and managerial action.