Sustainable management

The role of the leader has evolved in organizations, with new styles being adopted, among them that of sustainability, in order to make the organization more efficient and competitive. Sustainable management is the business initiative that entails adopting decisions and practices concerning environmental care, and the wellbeing of employees and their families, all the while having a positive impact on the financial performance of an organization (^{Contreras & Rozo, 2015}). Other authors indicate that sustainable management is the incentive for organizations to work with corporate social responsibility (CSR) and shared value, and that seeks to establish objectives compatible with social development, by preserving environmental and cultural resources for future generations, respecting diversity, and promoting the reduction of social inequalities (^{Sarmiento, 2010}).

Sustainable management is capable of achieving results that provide competitiveness to the organization, seeking economic sustainability in these results-understood as the capability to grow and profitably develop an economic activity in the long term. Environmental sustainability refers to the effective protection of the physical environment, from which resources are generated that enable a company to be economically sustainable and create raw materials to produce its goods or services. Social sustainability aims to give back to society everything that has allowed it to achieve its growth (^{Díaz, 2013}). Organizations and governments must recognize that there is a need to establish processes and strategies that allow for a balanced use of the available natural resources to ensure current and future development. Therefore, it is urgent to make strategic management a daily work practice, understanding it as the process that makes it possible to base and stimulate decisions to successfully develop and implement strategies that will provide a company with sustainable economic added value, focused on a constantly innovating value proposal and an economic value distributed equitably to each of its stakeholders (^{Cabana, Cortéz, Vega, & Cortés, 2016}).

Components of sustainable management

Ferdig creates a relational model with eight principles on which leadership for sustainable management is based. These principles indicate that organizations must consider sustainability within their organizational factors; that is, sustainability must be immersed in the strategic framework, values, and policies of the company. Additionally, organizations must understand the dynamics of social change, learn, adjust, and expand awareness considering environmental factors that affect company sustainability, thus achieving an organizational commitment to sustainability (^{Ferdig, 2009}).

The following are the main economic benefits that establishing sustainable management causes in any company: increased income, reduced expenditure on inputs, reduced strategic and operational risks, significant decrease in the percentage of fixed costs of the company, better income from products and services sold, improved work environment, and increased productivity (^{Ibarra, Soto, & Delgado, 2015}). These benefits are key aspects of transactional leadership with a philosophy of sustainability.

In order to make an organization sustainable, a leader must have systemic interdisciplinary knowledge; emotional intelligence and a caring attitude; a value orientation that shapes the organizational culture; a strong vision to make a difference; an inclusive style that generates trust; and willingness to innovate and be radical (^{Nelson, 2011}). In other words, they must have the characteristics of transformational leadership.

For a company, being sustainable means increasing its competitiveness, which is achieved through the sustainable management of its operations and relationships. Otherwise, it runs increasingly tangible risks of reducing or losing positions in some markets and being excluded from others (^{Sánchez, 2011}).

Organizational factors

Organizational factors enhance and transform sustainable management from a strategic obligation to a conviction and a commitment of the organization to sustainability, these factors being the mission, vision, values, and business policies.

The mission of an organization is the statement of its purpose as a system of human activity, defining the current scope of the business and the expected changes in the future; it functions as a compass that guides the organization (^{Hernández, Ortega, & Garzón, 2011}).

The strategic vision defines the aspirations of the managers for the company through an overview of “where we are going” and compelling reasons why it makes good business sense (^{Thompson, Peteraf, & Strickland, 2012}).

The values establish the ethical-social framework within which the company carries out its actions, forming part of the organizational culture, and establishing the limits within which the behavior of the individuals who belong to it must be framed, both organizationally and personally (^{Vidal & Sánchez, 2016}).

The policies are the philosophy of the management and strategic thinking, which reflect the impact of the organization on society; additionally, these policies must articulate the strategy to follow (^{Fred, 2017}).

The factors of organizational culture, such as mission, vision, values, and policies, have a significant impact on the organizational commitment to sustainability (^{Carro, Sarmiento, & Rosano, 2017}).

Hypothesis 1: Organizational factors directly and positively impact on the organizational commitment to sustainability.

Environmental factors

There are three important environmental factors to consider in any organization when generating an organizational commitment to sustainability.

Community empowerment involves an intentional and continuous process through which individuals, organizations, and communities without equitable sharing of valued resources gain greater access and control over those resources (^{Ramos & Maya, 2014}).

Government and public policies, on the other hand, are intentionally coherent decisions and actions adopted by the state to address a politically defined problem as a collective within a specific institutional framework. This set of decisions and actions gives rise to formal acts, with a variable degree of compulsion, aimed at modifying the behavior of social groups that, it is presumed, originate the collective problem to be solved (^{Castelao, 2016}).

At the same time, globalization trends refer to the inclination of the market to generate new production processes, and sales methods, among others, given technological advances. The main influence for these advances is excessive population growth and environmental deterioration, as well as the need for organizations to generate competitive advantages that meet the needs of increasingly demanding customers (^{Soto & Matus, 2013}).

From the external point of view, organizations are open systems that cannot escape the turbulence of the environment and must respond adequately to pressures since most of the forces generating change come from the external environment. In this sense, the culture of organizational commitment to sustainability tends to be increasingly generated as a result of environmental trends (^{Febles & Oreja, 2008}). For organizations, it is necessary to study their environmental factors since it allows them to prepare and have a strategy to fight the changes in the industry. In this way, it is possible to generate greater commitment, so as to obtain the established objectives, to respond to the challenges of the environment (^{Ávila, 2017}).

Organizations committed to sustainability concern themselves with considering and managing environmental factors because estimating future scenarios can help organizational learning in strategic planning. In this scenario, the commitment to sustainability is prioritized, an achievement aligned with the strategy, knowledge of the external environment, and the speed of change, thus leading to the making of decisions with lower risk (^{Corrêa, 2011}).

Hypothesis 2: Environmental factors directly and positively impact on organizational commitment to sustainability.

Organizational commitment to sustainability

This is the voluntary commitment of companies to the development of society and the preservation of the environment, from their social composition, and responsible behavior towards the people and social groups with whom they interact (^{Gallardo, 2006}).

Organizational commitment is an attitude that expresses a psychological union between the individual and their organization. In other words, it is the degree of involvement with and loyalty of the workers to their company, demonstrated through the identification of employees with the sustainable objectives and environmental values of the organization, their contribution to the fulfillment of its goals and objectives, and their desire to be part of it (^{Aranque, Estepa, & Uribe, 2017}). Commitment is the human, technical, and emotional ability of individuals and groups to interact and influence through values, in order to achieve goals and obtain sustainable results that benefit and safeguard present and future generations. Commitment to sustainability goes beyond temporary achievements, such as obtaining good scores to create lasting and significant educational improvements. It instead transforms the organization, giving it a real commitment to the aspects concerning sustainability (^{Hargreaves & Fink, 2007}).

Currently, there is not only greater awareness in society but also a set of national and international standards whose mandatory or voluntary commitment brings obvious advantages and benefits for all. For this reason, companies select management that seeks to commit to sustainability in order to obtain these benefits (^{Matteo, 2014}).

There is a relationship between business sustainability and organizational commitment, and it is important to reinforce the idea that sustainability practices in organizations respond to the operational context of the company, and to the particular case of reinforcing organizational commitment (^{Peláez, Solarte, & Rodríguez, 2014}).

Additionally, it is important to note that there is a relationship between commitment to the organization and transactional leadership, thus achieving the fulfillment of goals and objectives more efficiently (^{Mendoza, García, & Xochitototl, 2014}; ^{Chen, Lee, & Lee, 2015}).

Complementarily, transformational leadership directly relates to organizational commitment, since transformational leaders communicate a clear vision, inspire organizational commitment with that vision, and achieve trust and motivation (^{Hermosilla, Amutio, de la Costa, & Páez, 2016}).

Hypothesis 3: Organizational commitment to sustainability directly and positively influences transactional leadership.

Hypothesis 4: Organizational commitment to sustainability directly and positively influences transformational leadership.

Hypothesis 5: Organizational commitment to sustainability directly and positively influences sustainable management.

Transactional leadership

Transactional leadership consists of the exchange of relationships between the leader and the followers, based on a series of transactions that have a connotation of cost reduction and risk-increase of benefit for the organization and its collaborators. According to Bass and Avolio, transactional leaders approach their followers to negotiate what is expected of them and what they will receive in return (^{Silva, Olsen, Pezzi, & Sanjurjo, 2016}).

This style of leadership is based on the definition of the role of the subordinate and the positive or negative consequences of fulfilling or not the objectives and goals. It fits rigidly into the organizational goals and ensures that the workgroups under its responsibility concern themselves with carrying out the relevant actions to achieve said goals (^{Varela, 2012}).

Transactional leadership relates to management since it brings employee satisfaction by obtaining a benefit for the fulfillment of its objectives. Transactional leadership can be a competitive advantage for organizations, so a manager needs to understand how some factors in the organizational environment can have an impact on employee satisfaction. On that basis, a manager will be able to take actions to modify employee behavior, improve the quality and productivity of the work, encourage interpersonal relationships, and achieve job satisfaction, which results in organizational efficiency (^{Mendoza, García, & Xochitototl, 2014}).

Hypothesis 6: Transactional leadership directly and positively influences sustainable management.

Transformational leadership

Transformational leadership is a social process established between the leaders and their followers. Transformational leaders are characterized by being charismatic and oriented toward getting to know each member of their team to provide them with challenges and opportunities for growth (^{Duran & Castañeda, 2015}). They aim to strengthen the desire of their followers to succeed and improve, increasing their confidence and self-improvement, committing the workers to achieve the objectives through the values that govern the organization, promoting the wellbeing of the group and the development of the different organizations. The aim is to achieve both personal and institutional objectives through idealized influence (^{Silva, Olsen, Pezzi, & Sanjurjo, 2016}). Additionally, transformational leaders encourage their collaborators to do their corresponding work, although not simply for a reward at the end of the road, or a salary at the end of the month, but rather focusing on having employees making the mission, vision, and organizational goals their own, generating a strategic alignment between the individual and organizational needs. In this sense, the desire to accomplish personal achievements such as growth, development, and happiness can be achieved through tasks developed within the organization and can contribute on two fronts at once (^{Varela, 2012}).

The actions that characterize the transformational leadership style promote a more sustainable management style for organizations (^{Duran & Castañeda, 2015}). In the phase of creating knowledge through transformational style leadership, it significantly and positively influences the generation of new ideas and their socialization, to deliver greater sustainability to the organization (^{Delgado, Pedraja, & Rodríguez, 2010}).

Hypothesis 7: Transformational leadership directly and positively influences sustainable management.

Competitiveness

Competitiveness is the set of three large categories related to economic, human, and physical aspects in the micro, meso, and macro-environment that determine the level of productivity sustained at the level of geographic regions (^{García, Lara, & de la Parra, 2017}).

Adding sustainability to organizations generates greater brand value, among other benefits for the company, directly impacting organizational competitiveness with factors such as generating greater customer loyalty by increasing the value offer; making the company less vulnerable to the commercial actions of competitors and market crises; reducing the elasticity of demand in the face of price increases as a result of the higher price that a consumer is willing to pay for a brand that offers greater value; helping generate trust and support from distribution channels since they are stimulated by working with higher value brands; and improving the communication of the company with the community (^{Vera, 2008}). It also creates greater differentiation. The differentiation strategy assumes an orientation toward sustainability, through which it aims to increase the competitiveness of the organization since the company seeks to obtain high levels of results by creating products perceived to be “unique” and “different” by competitors. Product or process innovation can also differentiate a company from its competitors, generating greater competitiveness by obtaining green seals for cleaner production processes (^{Ortega, Villaverde, Moreno, & Raquena, 2008}).

By improving the brand value and the differentiation of goods and services, sustainable management helps manage the profit margin, becoming a key aspect that makes it possible to define the criteria to increase productivity, efficacy, and efficiency, which are essential for organizational competitiveness. Likewise, the dynamics of the financial subsystem affect the competitive reality of the organization (^{Botero, Acevedo, & Gómez, 2013}).

Incorporating sustainability into organizations confers companies with characteristics that promote transparency and accountability with their stakeholders, compliance with established agreements, and conflict resolution, attributes that make the organization more competitive (^{Arredondo, de la Garza, & Parra, 2014}). Sustainable management, more than a simple concept, is a generator of change that represents the proactivity, dynamism, increase in competitiveness, and growth of the company, making it sustainable and long-lasting. Sustainable management is not limited to the legal aspect, nor to creating value for the shareholder; rather, it seeks to generate sustainability, integral growth, and development in all aspects, thereby creating greater competitiveness for the organization (^{Díaz, 2013}).

Hypothesis 8: Sustainable management directly and positively influences competitiveness.

Considering the stated hypothesis, the causal model seeks to represent the values that influence sustainable management and its impact on the competitiveness of retail companies in the region of Coquimbo, Chile (Figure 1).

Source: own elaboration

Figure 1 Causal model of sustainable management 

Individual indicator reliability analysis

In order to determine the individual reliability of the indicators it was necessary to calculate the factorial loads, which is executable since the Kaiser-Meyer-Olkin (KMO) index was above 0.6 for each of the constructs, and Bartlett’s test of sphericity was also significant (p<0.05) (^{Espinoza, Sanhueza, Ramírez, & Sáez, 2015}) (Table 4).

This study accepted factorial loads with values above 0.6 (^{Moriano, Topa, Valero, & Lévy, 2009}). This analysis eliminated the indicators FO9, LTF2, LTF7, LTF8, C1, and C12, considering the rest of the factors to be acceptable and significant to 95%.

Reliability analysis of the construct

In order to evaluate the reliability of the construct, it is necessary to consider internal consistency, which demands a Cronbach alpha greater than 0.7 (^{Forcael, Vargas, Opazo, & Medina, 2013}). Additionally, the composite reliability index (IFC) is calculated, which considers the interrelations of the constructs, and has a minimum value of 0.7 (^{Vila, Küster, & Aldás, 2010}). The results indicate that there is an internal consistency for each of the items that comprise the constructs (Table 5).

Convergent and discriminant validity

It is also necessary to evaluate the scales used (convergent validity), which is done by analyzing the average variance extracted (AVE). The recommended value is above 0.5, which establishes that more than 50% of the construct variance is due to its indicators (^{Forcael, Vargas, Opazo, & Medina, 2013}). The fact that the constructs provide an AVE above 0.5 means that they have convergent validity (Table 5).

Finally, discriminant validity indicates to what degree a construct is different from others that comprise the model. In order to prove this validation criterion, it is necessary to demonstrate that the correlations between constructs are lower than the square root of the average variance extracted (AVE) (^{Forcael, Vargas, Opazo, & Medina, 2013}). Table 6 illustrates how all the values fulfill discriminant validity.

Methodology for the structural equations model

Following the exploratory and confirmatory factorial analysis of the proposed model, the structural equations are used through the Partial Least Squares (PLS) method.

Causal relationship analysis and hypotheses contrast

The results presented in Table 7 indicate the existence of significant causal relationships provided by the standardized coefficient and the critical ratio (t-value) of the constructs with values above 1.96, thus verifying all eight established hypotheses. Figure 2 illustrates a graph of the results of this analysis.

Source: own elaboration

Figure 2 Structural model of sustainable management 

Validation of the structural model and goodness of fit of the model

The evaluation of the causal relationships proposed in the model uses two basic indices: the explained variance of the dependent variables (R²), which must be greater than 0.33 to be moderate (^{Johnson, Hermann, & Huber, 2006}); and the Stone-Geisser (Q²) test, which determines the prediction quality of the structural model. The test serves as a criterion to measure the predictive relevance of the dependent constructs, and it is calculated using the Blindfolding technique. In the case of Q²>0, it indicates that the model has predictive relevance, otherwise it does not have it (^{Chin, 1998}). Table 8 illustrates how all the constructs fulfill this criterion.

Additionally, the global goodness of fit (GOF) index is the most appropriate when using the PLS method (^{Esposito, Chin, Henseler, & Wang, 2010}). The GOF of the analysis model is of 0.768 (Table 9), which demonstrates that it has a good fit in the structural model, thus meeting the empirical criterion that the goodness of fit must be between 0 and 1, with a higher value indicating a better index (^{Tenenhaus, 2008}).