Sustainable Leadership in Frontier Asia Region: Managerial Discretion and Environmental Innovation

Climate change brings severe impact to frontier Asia in the shape of its significant negative effect on workability and livability. Drawing on the upper echelon theory (UET), this study aims to investigate the mechanism and conditional factors of a sustainable leadership–environmental performance relationship. Employing cluster sampling, this study has collected data from small and medium enterprises in frontier Asian countries—Pakistan, India, and Bangladesh. In this study, the authors have collected 245 valid responses with a response rate of 41%. The authors have employed Structural Equation Modelling (SEM) analysis to test the proposed hypothesis. The present empirical findings confirm the significant effect of sustainable leadership on environmental innovation and the significant effect of environmental innovation on environmental performance. The current study confirms that sustainable leaders indirectly influence environmental performance through environmental innovation. Nevertheless, its effect on environmental innovations does not amplify in the presence of managerial discretion. To the best of our knowledge, this study is the first in its nature that has explored the integrated role of sustainable leadership, environmental innovation, managerial discretion, and environmental performance. Limitations and implications have been listed at the end of the study.