The Green Advantage: Leveraging Leadership and Employee Ownership for Sustainable Business Strategy in Emerging Markets

ABSTRACT This research investigates how Green Transformational Leadership (GTL) influences Employee green behavior (GEB), with Green Psychological Ownership (GPO) as a mediator and Green Identity (GI) as a moderator, thereby aligning the study with the United Nations Sustainable Development Goals (SDGs), particularly SDG 12 and SDG 13. Using a quantitative, cross‐sectional design, data were collected from 347 employees and managers of Small and Medium Enterprises (SMEs) in India via structured questionnaires and analyzed through PLS‐SEM. Results revealed that GTL significantly predicts EGB. while GI strengthens this relationship. GPO partially mediated the GTL‐EGB link while GI strengthens the GPO‐EGB relationship. This study highlights how green transformational leadership fosters employee green behavior through psychological ownership, offering managers a roadmap to design eco‐focused leadership and participative practices. By nurturing employees' green identity, organizations can ensure consistent pro‐environmental actions, thereby enhancing performance, reducing resource waste, and embedding sustainability into daily operations.