ORIGINAL RESEARCH article
Front. Sustain.
Sec. Circular Economy
Volume 6 - 2025 | doi: 10.3389/frsus.2025.1684185
Green transformational leadership and financial performance in micro and small enterprises: The interplay of circular economy practices and environmental uncertainty
Provisionally accepted
- 1Universitas Pancasila, Jakarta, Indonesia
- 2STIEM Bongaya, Makassar, Indonesia
- 3Sekolah Tinggi Ilmu Ekonomi Indonesia, Central Jakarta, Indonesia
- 4BINUS University, West Jakarta, Indonesia
- 5Universitas YARSI, Central Jakarta, Indonesia
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Circular economy (CE) practices have become a central issue in management and entrepreneurship research, particularly in emerging economies where micro and small enterprises (MSEs) dominate the business landscape. This study explores how green transformational leadership impacts financial performance through the mediation of corporate entrepreneurship practices, while also examining the moderating role of environmental uncertainty. Data was collected using a two-phase, time-lagged survey design involving 353 Indonesian MSEs. Partial least squares structural equation modeling (PLS-SEM) was employed to test the model. The analysis reveals that GTL has a significant positive effect on CE practices (β = 0.37, p < 0.01) and CE practices strongly enhance financial performance (β = 0.44, p < 0.01). The findings also confirm that CE practices mediate the relationship between green transformational leadership and financial performance (β = 0.16, p < 0.01). Moreover, environmental uncertainty was found to significantly weaken the positive relationship between GTL and CE practices (β = -0.21, p < 0.01). However, it did not have a significant moderating effect on the CE practices-financial performance relationship. This study offers valuable insights for MSE owners and policymakers in emerging Asian economies on leveraging leadership strategies to balance sustainability and financial goals.
Keywords: Green transformational leadership, circular economy practices, Financial performance, Environmental uncertainty, Micro and small enterprises, Indonesia, Emerging markets
Received: 12 Aug 2025; Accepted: 13 Oct 2025.
Copyright: © 2025 Oktrivina, Sumail, Hendryadi, Effendi and Budiantoro. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Amelia Oktrivina, ameliaoktrivina@univpancasila.ac.id
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