Ethical leadership and sustainable performance in emerging-economy industrial SMEs: ethical climate, green innovation performance and perceived organizational support

Purpose This study aims to examine how ethical leadership is associated with sustainable performance through ethical climate and green innovation performance (GIP) and whether perceived organizational support (POS) strengthens the ethical leadership-GIP relationship. Design/methodology/approach A two-wave survey yielded 212 matched responses from Vietnamese manufacturing and construction SMEs. The proposed model was tested using PLS-SEM, a disjoint two-stage approach for higher-order constructs and bootstrapping. Findings Ethical leadership was positively related to ethical climate, GIP and sustainable performance. Ethical climate was positively associated with GIP, which was in turn related to sustainable performance. The results supported both the indirect effect of ethical leadership on GIP through ethical climate and the sequential indirect effect on sustainable performance through ethical climate and GIP. POS also had a positive association with GIP and modestly strengthened the ethical leadership-GIP relationship. Research limitations/implications The use of non-probability sampling, a single key informant and a relatively short time lag limits causal and population-level inference. Practical implications Industrial SMEs should embed ethical criteria in product and process decisions while providing resources and support for responsible experimentation and green improvement initiatives. Originality/value The study shows that ethical leadership is connected to sustainable performance through the institutionalization of ethical expectations and their operational conversion into GIP. It also identifies POS as a meaningful but modest implementation condition in emerging-economy industrial SMEs.