Effect of Green Transformational Leadership Practices on Firm Economic Performance The Case of Medium Scale Enterprises in Addis Ababa

Abstract

This study empirically examines the influence of green transformational leadership practices on firm economic performance in Addis Ababa, revealing robust positive correlations. Specifically, green product innovation emerges as the strongest predictor of economic performance (r = 0.379, P < 0.001), followed by green process innovation (r = 0.299, P < 0.001). In contrast, the correlation with overall green innovation is comparatively weaker (r = 0.177, P = 0.003). The model exhibits an R² value of 0.787, indicating that 78.7% of the variance in economic performance is explained by these innovations, supported by significant F-test results (F(3, 246) = 17.756, P < 0.001). Hypothesis testing confirms the individual significance of green product innovation (β = 0.285, P < 0.001) and green process innovation (β = 0.153, P = 0.003), while the effect of overall green innovation is negligible (β = 0.036, P = 0.000). These findings underscore the strategic imperative for enterprises to prioritize product and process innovations to optimize economic outcomes, thereby contributing to the discourse on sustainable business practices.