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Driving Sustainability Performance in Malaysia's Palm Oil Industry: How

Employee Engagement Makes the Difference

Article in International Journal of Academic Research in Business and Social Sciences · March 2025
DOI: 10.6007/IJARBSS/v15-i3/24834

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 Vol 15, Issue 3, (2025) E-ISSN: 2222-6990

Driving Sustainability Performance in Malaysia’s

Palm Oil Industry: How Employee Engagement
Makes the Difference

Amargit Singh Chand Singh, Shishi Kumar Piaralal, Nur

Amalina Zulkefli, Santhi Raghavan
Faculty of Business and Management, Open University Malaysia (OUM), Malaysia
Email: [email protected]

To Link this Article: http://dx.doi.org/10.6007/IJARBSS/v15-i3/24834 DOI:10.6007/IJARBSS/v15-i3/24834

Published Date: 05 March 2025

Abstract
Amid rising global scrutiny and environmental challenges, sustainability performance (SP) is
crucial to the Malaysian palm oil industry’s long-term survival, global competitiveness, and
ethical standing. This study examines the influence of transformational leadership (TL),
organizational culture (OC), and organizational commitment (OCM) on SP, with employee
engagement (EE) as a mediator. Despite increasing global sustainability demands, existing
research often analyses these factors in isolation, lacking an integrated perspective on their
combined impact. Furthermore, limited studies have investigated how EE translates
leadership vision, cultural values, and commitment into tangible sustainability outcomes,
particularly in the Malaysian palm oil industry. Grounded in the Resource-Based View (RBV)
and Social Exchange Theory (SET), this study bridges these gaps by exploring both strategic
and relational mechanisms that enhance sustainability performance. Employing a
quantitative research design, the study utilises Structural Equation Modeling (SEM) to analyse
the relationships among the variables. The findings provide valuable insights for industry
practitioners seeking to enhance corporate sustainability, policymakers formulating
sustainability regulations, and academics advancing organizational sustainability research. By
aligning leadership, culture, and commitment with employee engagement, organizations can
drive transformative ESG change, ensuring long-term resilience, ethical business practices,
and sustainable growth in an increasingly competitive and rapidly evolving global market.
Keywords: Sustainability Performance, Environmental, Social, and Governance (ESG),
Transformational Leadership, Organizational Culture; Organizational Commitment, Employee
Engagement.

Introduction
Sustainability has become a priority for businesses, policymakers, and societies as they face
escalating environmental, social, and governance (ESG) challenges. Companies are now

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evaluated not only by their financial performance but also by their sustainability and ESG
performance, which measures their ability to balance economic growth with environmental
responsibility and social equity (IPCC, 2023; United Nations Global Compact, 2025).
Sustainability performance is crucial for corporate reputation, investor confidence, and long-
term business resilience (Sachs et al., 2019; Islam & Winkel, 2017). However, achieving high
ESG performance requires more than regulatory compliance—it depends on how well
sustainability principles are integrated into an organization’s operations and workforce. One
of the key drivers of sustainability performance is employee engagement, which serves as a
mediator that translates corporate sustainability strategies into actionable outcomes (Afsar
et al., 2018; Pham & Kim, 2019). Engaged employees are more likely to adopt pro-
sustainability behaviours, contribute innovative ideas, and align their efforts with an
organization’s ESG goals. Therefore, understanding the role of employee engagement as a
bridge between organizational factors and sustainability outcomes is crucial for fostering
responsible business practices.

While external regulations and market demands push organizations toward

sustainability, internal organizational factors—such as transformational leadership (TL),
organizational culture (OC), and organizational commitment (OCM)—play a crucial role in
determining sustainability success (Robertson & Barling, 2017; Afsar et al., 2018).
Transformational leadership fosters a vision for sustainability by motivating employees,
driving innovation, and embedding ESG goals within the organization’s strategic direction
(Singh et al., 2021). Meanwhile, organizational culture provides the foundation for
sustainability-oriented behaviours, shaping employees’ attitudes, values, and ethical
decision-making (Naz et al., 2023). A strong sustainability-oriented culture promotes shared
responsibility and accountability in achieving ESG goals (Lo et al., 2018). Similarly,
organizational commitment enhances employee dedication to sustainability initiatives by
fostering emotional, normative, and continuance commitment to the organization’s
environmental and social objectives (Meyer & Allen, 1991; Rasheed et al., 2022). However,
despite the importance of these internal factors, industries with significant environmental
and social impact, such as palm oil production, continue to struggle with embedding
sustainability within their organizational structures (Chong & Loh, 2023; Hossain et al., 2022).

The global palm oil industry has long been associated with deforestation, biodiversity
loss, greenhouse gas emissions, and exploitative labour conditions (Meijaard et al., 2020;
Rahman et al., 2019). As international markets impose stricter sustainability requirements,
palm oil producers are under increasing pressure to demonstrate ethical sourcing and
responsible production practices (European Commission, 2021; U.S. Department of Labor,
2020). While sustainability certification schemes such as the Roundtable on Sustainable Palm
Oil (RSPO) and corporate social responsibility (CSR) initiatives have been introduced, these
efforts often emphasise regulatory compliance rather than fostering an internal culture of
sustainability (Chong & Loh, 2023). Many organizations continue to struggle with weak
leadership commitment, resistance to change, and disengaged employees, which hinder the
successful implementation of sustainability strategies (Hossain et al., 2022). Addressing these
gaps requires a deeper examination of how TL, OC, OCM and EE can collectively drive
meaningful ESG performance.

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As one of the world’s largest palm oil producers, Malaysia faces increasing scrutiny
from international markets and regulatory bodies. The European Union and the United States
have imposed stringent import regulations, requiring palm oil to be ethically sourced and
deforestation-free (European Commission, 2021; U.S. Department of Labor, 2020). In
response, Malaysia has introduced sustainability frameworks such as the Malaysian
Sustainable Palm Oil (MSPO) certification and has promoted adherence to RSPO standards
(Chin et al., 2019; Nelson et al., 2020). However, despite these regulatory efforts, challenges
persist in ensuring full compliance, particularly in addressing systemic issues such as weak
corporate commitment, inconsistent enforcement, and lack of employee engagement (Chin
et al., 2019; Nelson et al., 2020; Hossain et al., 2022). The palm oil industry’s sustainability
efforts often focus on meeting external demands rather than fostering internal engagement
among employees and leadership (Choo & Ng, 2021). Without effective leadership, a strong
organizational culture, and committed employees, sustainability initiatives remain
fragmented and fail to achieve long-term impact (Afsar et al., 2018; Rasheed et al., 2022).
Understanding how internal organizational dynamics—particularly TL, OC, OCM, and EE—
affect sustainability performance is crucial for strengthening Malaysia’s position in the global
palm oil market.

Despite growing research on sustainability performance, existing studies often

examine transformational leadership, organizational culture, and organizational commitment
in isolation, overlooking their interconnected impact on sustainability (Robertson & Barling,
2017; Afsar et al., 2018). Furthermore, while employee engagement has been recognized as
a key driver of organizational success (Naz et al., 2023; Saks, 2019), its mediating role in the
TL–OC–OCM–sustainability performance relationship remains underexplored. Prior research
primarily focuses on regulatory compliance and external pressures in driving sustainability
(Chin et al., 2019; Nelson et al., 2020), neglecting how internal organizational factors cultivate
a sustainability-oriented workforce. This study bridges these gaps by integrating the
Resource-Based View and Social Exchange Theory to provide a holistic understanding of how
leadership, culture, and commitment shape sustainability performance through employee
engagement. By empirically validating these relationships within the Malaysian palm oil
sector, this study advances theoretical discourse and contributes to the broader discourse on
corporate sustainability and responsible governance. The findings offer valuable insights for
industry leaders to implement more effective ESG strategies, policymakers to strengthen
regulatory frameworks promoting transparency and ethical business practices, and
employees and local communities to benefit from improved labour conditions, responsible
sourcing, and enhanced CSR initiatives.

Literature Review
Theoretical Foundation
This study focuses on the interrelationships between transformational leadership,
organizational culture, organizational commitment, employee engagement, and
sustainability performance within the Malaysian palm oil industry. Given the intricate nature
of these relationships, a dual theoretical approach is adopted, integrating the Resource-Based
View (RBV) and Social Exchange Theory (SET). The RBV provides a strategic lens to understand
how firms leverage internal resources for sustainable competitive advantage, while SET offers
a relational perspective, explaining how social exchanges foster engagement and
commitment to sustainability initiatives. Integrating these two theories enables a

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comprehensive analysis of how organizations can enhance sustainability performance

through both strategic resource management and relational mechanisms.

Resource-Based View (RBV)

The Resource-Based View (RBV) is a strategic management theory that emphasises the role
of internal resources in achieving and sustaining competitive advantage. Initially introduced
by Wernerfelt (1984) and later expanded by Barney (1991), RBV argues that firms can
outperform competitors by developing and leveraging valuable, rare, inimitable, and non-
substitutable (VRIN) resources. These resources can include tangible assets like technology
and infrastructure, as well as intangible factors such as leadership, organizational culture, and
employee commitment. In the context of sustainability, RBV highlights how firms can
integrate ESG principles into their core operations by capitalising on these internal strengths.
Companies with a strong sustainability-oriented culture and leadership can embed ESG
practices into their long-term strategies, enhancing both corporate reputation and regulatory
compliance (Barney, 1991; Wernerfelt, 1984).

RBV is particularly relevant in industries facing sustainability challenges, such as the

Malaysian palm oil sector, where firms must balance economic growth with environmental
responsibility. By developing sustainability-focused resources—such as transformational
leadership, employee engagement, and ethical corporate governance—organizations can
gain a competitive edge while meeting ESG standards. The Natural Resource-Based View
(NRBV), an extension of RBV, further emphasises the importance of integrating sustainability
into business strategies through pollution prevention, product stewardship, and sustainable
development (Hart, 1995). By leveraging these internal resources effectively, firms can drive
long-term sustainability performance, mitigate regulatory risks, and enhance market
differentiation, ensuring their viability in an increasingly sustainability-conscious global
economy (Dubey et al., 2020; Hart & Dowell, 2018)

Social Exchange Theory (SET)

Social Exchange Theory (SET) is a fundamental theory in organizational behaviour that
explains how relationships are formed and maintained through reciprocal exchanges of
benefits, trust, and commitment. Initially conceptualised by Homans (1961) and later
expanded by Blau (1964), SET posits that individuals engage in social interactions based on
perceived rewards and costs, leading to mutual obligations over time. Employees are more
likely to exhibit higher engagement, commitment, and discretionary effort in the workplace
when they perceive fair treatment, organizational support, and recognition (Cropanzano &
Mitchell, 2005). Within the context of sustainability, SET suggests that when organizations
invest in sustainability-driven policies and recognise employees’ contributions to ESG
initiatives, employees reciprocate by actively participating in sustainability programs and
aligning their behaviours with corporate sustainability goals (Naz et al., 2023).

SET is particularly relevant in industries like the Malaysian palm oil sector, where
sustainability performance depends on workforce engagement and ethical business practices.
Employees who trust that their organization is genuinely committed to sustainability are more
likely to engage in eco-friendly behaviours and compliance with sustainability standards
(Wang et al., 2022). Transformational leadership plays a crucial role in fostering these positive
exchanges, as leaders who demonstrate ethical behaviour and promote sustainability

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initiatives enhance employee motivation and trust (Yu et al., 2021). By integrating SET with
sustainability strategies, organizations can build a culture of reciprocity, ensuring long-term
employee engagement in ESG initiatives and strengthening corporate reputation in a globally
scrutinised industry (Blau, 1964; Cropanzano & Mitchell, 2005)

Sustainability Performance
Sustainability performance (SP) refers to an organization's ability to integrate ESG
considerations into its operations to ensure long-term business viability while minimizing
negative externalities. It encompasses an organization's success in balancing economic
growth with environmental responsibility and social well-being (Epstein & Buhovac, 2014). SP
is typically measured through environmental indicators (e.g., carbon emissions, resource
efficiency), social factors (e.g., labour rights, community engagement), and governance
metrics (e.g., corporate transparency and ethical leadership) (Chew et al., 2021).
Organizations that excel in SP not only meet regulatory requirements but also gain
competitive advantages such as improved brand reputation, stakeholder trust, and investor
confidence (Abdullah et al., 2022).

Several sustainability reporting frameworks, such as the Global Reporting Initiative

(GRI) and Bursa Malaysia's Sustainability Reporting Guidelines, provide standardized
mechanisms for evaluating corporate sustainability efforts (Bursa Malaysia, 2022). These
frameworks help organizations track progress, ensure compliance with international
sustainability standards, and enhance transparency for stakeholders. In resource-intensive
industries such as the Malaysian palm oil sector, SP is crucial for maintaining market access,
especially in regions with stringent environmental regulations (Wu et al., 2018). Companies
that actively integrate sustainability into their business strategies—such as through
sustainable agricultural practices and ethical supply chain management—are better
positioned to enhance long-term profitability while mitigating social and environmental risks
(Singh et al., 2021).

Prior research has identified several factors influencing SP, including leadership,
organizational culture, employee engagement, and regulatory compliance. Studies show that
transformational leadership plays a significant role in driving sustainability initiatives, as
leaders who emphasize ethical decision-making and long-term environmental goals inspire
employees to adopt sustainable practices (Bass & Riggio, 2006; Dwivedi et al., 2021).
Additionally, research highlights the importance of a strong sustainability-oriented
organizational culture, which fosters shared values and behaviours that align with ESG
objectives (Cameron & Quinn, 2011). Organizations that cultivate a culture of sustainability
are more likely to successfully implement long-term environmental and social strategies,
leading to enhanced ESG performance and corporate resilience (Naz et al., 2023).

Empirical studies have also demonstrated that EE is a critical mediator between

leadership and SP. Engaged employees are more likely to actively participate in corporate
sustainability programs, contributing to resource conservation, waste reduction, and social
responsibility initiatives (Saks, 2019). Furthermore, firms that align their sustainability efforts
with international standards, such as the Roundtable on Sustainable Palm Oil (RSPO), tend to
perform better in terms of sustainability outcomes and regulatory compliance (Gimenez et
al., 2018). However, research also indicates that achieving SP requires a holistic approach,

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integrating strategic resource management with relational mechanisms to ensure long-term

organizational success (Chew et al., 2021; Singh et al., 2021).

Transformational Leadership
Transformational leadership (TL) is a leadership style that inspires and motivates employees
to exceed expectations by fostering a culture of trust, vision, innovation, and personalised
development (Bass, 1985). This leadership approach is characterised by four core dimensions:
idealised influence, inspirational motivation, intellectual stimulation, and individualised
consideration. Idealised influence refers to the leader’s ability to act as a role model by
demonstrating ethical behaviour, accountability, and commitment to shared values (Afsar et
al., 2020; Sun & Wang, 2020). Inspirational motivation involves articulating a compelling
vision that aligns with individual and organizational goals, fostering employee commitment
to long-term sustainability objectives (Qi & Liu, 2020; Li et al., 2022). Intellectual stimulation
encourages employees to think creatively and challenge conventional practices, leading to
innovative solutions to operational and sustainability challenges (Mittal & Dhar, 2019). Lastly,
individualised consideration ensures that leaders provide mentorship and personal support
to employees, fostering engagement and organizational commitment (Choi et al., 2019).

Empirical studies highlight that TL significantly enhances sustainability efforts by

fostering a culture of innovation, ethical decision-making, and long-term strategic alignment
(García-Morales et al., 2012). Research indicates that transformational leaders play a crucial
role in embedding sustainability into organizational practices by ensuring alignment with
international sustainability frameworks such as the Global Reporting Initiative (GRI) and
Roundtable on Sustainable Palm Oil (RSPO) (Nguyen et al., 2020). Additionally, TL has been
found to positively influence employee engagement, innovation, and resilience in industries
facing sustainability challenges (Bass & Riggio, 2006). Studies suggest that firms with
transformational leaders are more likely to adopt advanced sustainability practices such as
circular economy principles, renewable energy integration, and ethical supply chain
management (He et al., 2021).

TL plays a crucial role in enhancing sustainability performance by influencing ESG

dimensions. Leaders who integrate sustainability principles into the organizational vision
encourage employees to adopt eco-friendly practices such as waste management, carbon
footprint reduction, and sustainable sourcing (Fernando et al., 2019; Mubarak et al., 2021).
Moreover, transformational leaders foster social sustainability by promoting ethical labour
practices, workplace diversity, and community engagement, ensuring that firms adhere to fair
labour policies and corporate social responsibility (Hassan et al., 2020). In terms of
governance, TL strengthens transparency, accountability, and ethical decision-making,
minimising compliance risks and reinforcing corporate sustainability commitments (Shakeel
et al., 2020; Nawaz & Pongpirul, 2020). Research further emphasises that TL fosters high-
quality leader-follower relationships through trust and reciprocity, motivating employees to
contribute to ESG initiatives actively and thereby reinforcing sustainability as a core business
objective (Wang et al., 2022). Based on these insights, it can be hypothesised that:
H1a. Transformational leadership has a positive effect on sustainability performance.
H1b. Transformational leadership has a positive effect on employee engagement.

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Organizational Culture
Organizational culture (OC) refers to the shared values, beliefs, and norms that influence
employee behaviour, decision-making, and corporate performance (Schein, 1992; Denison et
al., 2019). It serves as a "social glue" that binds employees together through common
expectations and behaviours, shaping how they interact with one another and external
stakeholders. A sustainability-oriented OC embeds ESG values into business operations,
ensuring that sustainability is not merely a compliance obligation but an integral part of
corporate identity (Nguyen & Tu, 2020). Key components of OC include values and beliefs,
norms and practices, artefacts (such as sustainability certifications and policies), and
leadership behaviour, all of which shape sustainability initiatives within firms (Cameron &
Quinn, 2019; Giorgi et al., 2020).

Prior studies emphasise the critical role of OC in driving sustainability performance.

Research suggests that companies with strong sustainability-oriented cultures exhibit higher
ESG performance as sustainability values become ingrained in employee mindsets and
operational practices (Hartmann et al., 2022). Schein's Model of Organizational Culture (1985,
1992) explains how sustainability principles evolve from visible structures (such as
sustainability policies and reports) to deeply embedded organizational beliefs. Additionally,
studies highlight that organizations with robust cultural foundations experience improved
regulatory compliance, enhanced stakeholder trust, and long-term sustainability success
(Chew et al., 2021). Firms that cultivate a sustainability-driven culture tend to outperform
those that treat sustainability as a secondary priority, as their employees and leaders are
more aligned with ESG goals (Sharma et al., 2021).

A sustainability-oriented culture significantly influences sustainability performance by

embedding ESG considerations into corporate decision-making and employee behaviour.
Organizations with strong sustainability cultures demonstrate improved environmental
performance through responsible resource management, carbon footprint reduction, and
ethical sourcing practices (Hartmann et al., 2022). Social sustainability is also enhanced as
firms prioritise fair labour practices, workplace diversity, and community engagement.
Additionally, ethical governance structures are strengthened through cultural norms
emphasising transparency, accountability, and stakeholder inclusivity (Abdullah et al., 2021).
The RBV suggests that a sustainability-driven culture serves as a unique, inimitable resource
that provides a competitive advantage, while SET explains how sustainability culture fosters
trust and reciprocity, encouraging employees to participate in ESG initiatives actively (Dubey
et al., 2020; Hartnell et al., 2019). Therefore, the following hypotheses were formulated:
H2a. Organizational culture has a positive effect on sustainability performance.
H2b. Organizational culture has a positive effect on employee engagement.

Organizational Commitment
Organizational commitment (OCM) refers to employees' psychological attachment and
dedication toward their organization, influencing their engagement, loyalty, and decision-
making behaviours (Meyer & Allen, 1991). The Three-Component Model of Commitment,
developed by Meyer and Allen, categorises commitment into affective, continuance, and
normative commitment. Affective commitment reflects an emotional connection with the
organization, leading employees to stay because they genuinely identify with its goals and
values. Continuance commitment arises from employees' perception of the costs associated

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with leaving the organization, such as financial instability or career setbacks. Normative
commitment is based on a sense of moral obligation, where employees remain because they
feel a duty to do so (Ng & Feldman, 2011). These dimensions collectively shape an employee's
motivation to contribute to organizational success, making commitment a key factor in
fostering sustainable business practices.

Previous studies highlight the significant role of OCM in enhancing employee

engagement, retention, and performance. Research suggests that high levels of affective
commitment drive employees to go beyond their formal job responsibilities, actively
participating in corporate social responsibility (CSR) initiatives and sustainability programs
(Naz et al., 2023). Employees with strong normative commitment uphold ethical standards,
contributing to transparency, social equity, and regulatory compliance. Although driven by
external factors such as job security, continuous commitment ensures workforce stability,
which is crucial for long-term sustainability strategies (Chew et al., 2021). Empirical studies
have demonstrated that companies with committed employees report better financial
performance, lower turnover rates, and improved corporate reputation, particularly in
industries with substantial sustainability requirements (Rasheed et al., 2022).

OCM plays a vital role in sustainability performance by ensuring consistent employee

participation in ESG initiatives. Employees with high affective commitment voluntarily engage
in sustainability projects, such as resource conservation, renewable energy adoption, and
waste reduction programs, due to their intrinsic motivation (Singh et al., 2021). Normative
commitment fosters a culture of responsibility, encouraging employees to promote fair
labour practices, ethical sourcing, and corporate accountability (Ramus & Vaccaro, 2017).
Continuance commitment contributes to long-term stability, ensuring that organizations
retain experienced personnel essential for implementing sustainability policies and achieving
certification standards such as RSPO (Chew et al., 2021). Grounded in SET, OCM strengthens
reciprocity and trust between employers and employees, reinforcing sustainability as an
enduring corporate value. Thus, the following hypotheses are proposed:
H3a. Organizational commitment has a positive effect on sustainability performance.
H3b. Organizational commitment has a positive effect on employee engagement.

The Mediating Role of Employee Engagement

Employee engagement (EE) is defined as the psychological connection employees have with
their work and organization, influencing their level of enthusiasm, dedication, and absorption
in their job roles (Kahn, 1990). It is a multidimensional construct that includes physical,
emotional, and cognitive engagement, where employees exert effort, form an emotional
connection with the company’s mission, and actively think about improving organizational
outcomes (Schaufeli et al., 2002). Unlike job satisfaction, which focuses on how employees
feel about their work, engagement emphasises proactive and sustained participation in
achieving organizational objectives. A highly engaged workforce is essential for achieving
long-term corporate success, particularly in sustainability-driven industries where employee
participation is crucial for meeting ESG goals.

Existing studies highlight the significance of EE in driving organizational performance

and sustainability outcomes. Research suggests that engaged employees exhibit higher
productivity, creativity, and job retention, contributing to the overall resilience of

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organizations (Bakker & Demerouti, 2008). Studies in sustainability-driven industries indicate

that engaged employees are more likely to participate in corporate social responsibility (CSR)
initiatives, environmental conservation programs, and ethical decision-making (Naz et al.,
2023). Additionally, organizations that foster a culture of engagement through supportive
leadership, clear communication, and employee recognition report better sustainability
outcomes, as engaged employees actively contribute to ESG efforts (Chew et al., 2021).

EE serves as a mediating variable that links organizational resources—such as

transformational leadership, organizational culture, and commitment—to sustainability
performance. Studies suggest that while leadership and culture create an enabling
environment for sustainability, engagement is the mechanism that translates these efforts
into actionable behaviours (Liao et al., 2020; Afsar et al., 2020). For example, transformational
leaders who inspire a sustainability vision rely on engaged employees to implement and drive
ESG initiatives. Similarly, a strong sustainability-oriented culture provides a normative
framework, but engagement ensures that employees internalise and act on these values in
their daily tasks (Nguyen & Tu, 2020; Hartmann et al., 2022). Without active engagement,
sustainability efforts may remain aspirational rather than producing tangible results, making
engagement a critical factor in achieving sustainability success. Therefore, the following
hypotheses are formulated:
H4. Employee engagement has a positive effect on sustainability performance.
H5a. Employee engagement mediates the effect of transformational leadership on
sustainability performance.
H5b. Employee engagement mediates the effect of organizational culture on sustainability
performance.
H5c. Employee engagement mediates the effect of organizational commitment on
sustainability performance.

Conceptual Framework
This study's conceptual framework examines the influence of transformational leadership,
organizational culture, and organizational commitment on sustainability performance in the
Malaysian palm oil industry, emphasising the mediating role of employee engagement.
Grounded in relevant theories and hypotheses development, the framework illustrates how
these organizational factors (transformational leadership, organizational culture, and
organizational commitment) contribute to sustainability outcomes, with employee
engagement acting as a crucial mechanism linking leadership, culture, and commitment to
sustainability performance, as presented in Figure 1.

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Transforma onal
eadership

rganiza onal Employee Sustainability

ulture Engagement erformance

rganiza onal
ommitment

Figure 1. Conceptual Framework

Research Methodology
Research methodology is the framework that guides the process of data collection, analysis,
and interpretation in scholarly investigations (Creswell & Poth, 2018). This study employs a
quantitative methodology to examine how transformational leadership, organizational
culture, and commitment affect sustainability performance in the Malaysian palm oil industry,
focusing on the mediating role of employee engagement and moderating effects of
demographic and structural variables. By providing empirical evidence, the methodology
offers a rigorous and generalisable approach to understanding the complex relationships
within this context, contributing to both theoretical knowledge and practical applications
(Tashakkori & Teddlie, 2010).

Research Design
The research design of this study follows a positivist paradigm, emphasising empirical
measurement, objectivity, and hypothesis testing through quantitative research methods. A
deductive approach is employed, ensuring that hypotheses derived from established theories
are validated. The study utilises a deductive approach, beginning with theoretical frameworks
from the Resource-Based View (RBV) and Social Exchange Theory (SET) to examine the
relationships between transformational leadership, organizational culture, organizational
commitment, employee engagement, and sustainability performance. A survey strategy is
implemented to collect large-scale, standardised data from employees in the Malaysian palm
oil sector.

Survey Method
This study adopts a survey strategy, a widely used research method for collecting quantitative
data through questionnaires (Fowler, 2014). The survey method is chosen for its ability to
gather data from a large and geographically dispersed sample, making it well-suited for the

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Malaysian palm oil industry, which consists of numerous plantations, mills, and corporate
offices (De Vaus, 2014). Surveys provide a standardized approach, minimizing variability and
enhancing comparability across participants, which is crucial for measuring constructs like
leadership, culture, engagement, and sustainability performance (Bryman, 2016).
Additionally, surveys are cost-effective and time-efficient, allowing for large-scale data
collection within a feasible timeframe (Saunders et al., 2019). By employing structured
questionnaires with validated measurement scales, this method ensures statistical rigour and
empirical validity, making it the most suitable approach for investigating the influence of
organizational factors on sustainability performance in the Malaysian palm oil industry (Collis
& Hussey, 2014).

Population
This study's population consists of employees working under the control of Malaysian palm
oil organizations certified under the Malaysian Sustainable Palm Oil (MSPO) and Roundtable
on Sustainable Palm Oil (RSPO) certification schemes. These participants are directly involved
in sustainability-related initiatives within their respective organizations, ensuring that the
study captures insights from individuals engaged in implementing and monitoring
sustainability practices.

Unit Analysis and Sampling Frame

The unit of analysis in this study is individual employees rather than entire organizations.
Specifically, the study targets employees who are directly involved in sustainability initiatives,
including those in environmental management, corporate social responsibility (CSR), supply
chain sustainability, compliance, and governance. This ensures that responses come from
individuals with direct knowledge and experience in implementing sustainability-related
policies and practices. Employees in non-relevant roles, such as administrative staff, general
labourers, or those without involvement in sustainability efforts, will be excluded from the
study to maintain data relevance and accuracy. By focusing on this specific subset of
employees, the study aims to capture informed perspectives on how organizational factors
influence sustainability performance in the Malaysian palm oil industry.

Sampling Design
The sampling design adopted in this study is purposive sampling, a non-probability sampling
technique. This approach ensures that only key personnel who are actively involved in
sustainability initiatives within MSPO- or RSPO-certified organizations are selected. Purposive
sampling enhances the study’s validity by ensuring respondents have relevant industry-
specific knowledge that aligns with the research objectives.

Sample Size
This study's sample size is 200–250 participants, aligning with Structural Equation Modeling
(SEM) guidelines, which recommend a minimum of 200 respondents for robust analysis (Kline,
2016; Hair et al., 2019). A target sample size of 250 participants has been set to account for
potential non-responses, ensuring adequate statistical power (0.80) to detect medium effect
sizes (f² = 0.15) at a 0.05 significance level (Cohen, 1988).

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Measurement Instrument
This study utilises well-established measurement instruments to assess key constructs.
Transformational leadership (TL) is measured using the Multifactor Leadership Questionnaire
(MLQ), which evaluates leadership behaviours across four dimensions: idealised influence,
inspirational motivation, intellectual stimulation, and individualised consideration (Bass &
Avolio, 1995). Organizational culture (OC) is assessed using the Organizational Culture
Assessment Instrument (OCAI), based on the Competing Values Framework, which
categorises culture into clan, adhocracy, market, and hierarchy (Cameron & Quinn, 2011).
Organizational commitment (OCM) is measured using the Three-Component Model (TCM) of
the Commitment Survey, evaluating affective, continuance, and normative commitment
(Meyer & Allen, 1991). Employee engagement (EE) is assessed using the Utrecht Work
Engagement Scale (UWES-9), covering vigour, dedication, and absorption (Schaufeli et al.,
2006). Lastly, sustainability performance (SP) is measured using an adapted scale based on
the Triple Bottom Line (TBL) framework, incorporating environmental, social, and economic
performance indicators (Elkington, 1997).

Coding Scale
The study employs a five-point Likert scale for all measurement instruments, ranging from 1
(Strongly Disagree) to 5 (Strongly Agree), ensuring clarity, ease of response, and statistical
comparability (DeVellis, 2016). This scale allows for standardized data collection, minimizing
response variability and enhancing reliability. The Likert scale facilitates quantitative analysis,
including SEM, correlation, and regression, ensuring robust hypothesis testing and empirical
validity (Hair et al., 2019).

Pilot Test
A pilot test will be conducted to evaluate the survey instrument's reliability, validity, and
clarity before full-scale data collection. It will involve 30 employees from the target
population, ensuring representation across different organizational levels and geographical
regions (Julious, 2005). The survey will be administered in English and Bahasa Malaysia to
assess comprehension and clarity. Participants will provide structured feedback through
follow-up interviews and written comments to identify ambiguities, survey length concerns,
and comprehension issues. Based on the feedback, necessary adjustments will be made to
enhance respondent engagement, such as rewording ambiguous items, improving
formatting, and optimizing survey length to maintain an estimated completion time of 25–30
minutes. Additionally, cultural sensitivity modifications will be incorporated to ensure
alignment with local norms (Sekaran & Bougie, 2016).

Data Collection
The data collection for this study will follow a structured process to ensure efficiency and data
integrity. The survey questionnaire will be finalised based on pilot test feedback, and ethical
approval will be obtained before distribution. The survey will be administered through two
primary methods: (1) online distribution via platforms like SurveyMonkey, enabling broad and
time-efficient participation, and (2) face-to-face distribution for participants with limited
internet access, ensuring inclusivity (Regmi et al., 2016). The survey will remain open for four
weeks, with reminder emails and follow-ups to maximise response rates and minimise non-
response bias (Baruch & Holtom, 2008). All responses will be securely stored using password-

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encrypted digital platforms and locked physical storage to uphold confidentiality and data
integrity.

Data Analysis
The data analysis will follow a rigorous, multi-step approach. Data preparation will involve
cleaning, coding, and handling missing values, with missing data analysed using ittle’s M AR
test and imputed if necessary (Enders, 2017). Descriptive statistics will summarise respondent
demographics and key variables, while inferential techniques such as correlation and multiple
regression analysis will assess relationships between variables (Dancey & Reidy, 2017). The
study will employ Structural Equation Modeling (SEM) using SmartPLS to test direct and
mediating effects, validating the measurement model through Confirmatory Factor Analysis
(CFA) (Byrne, 2016). Goodness-of-fit indices such as SRMR (<0.08), RMSEA (<0.08), and CFI
(>0.90) will ensure model adequacy (Hu & Bentler, 1999). These statistical techniques will
provide robust insights into how transformational leadership, organizational culture,
commitment, and employee engagement influence sustainability performance.

Conclusion
This study aims to investigate how transformational leadership (TL), organizational culture
(OC), and organizational commitment (OCM) influence sustainability performance (SP) in the
Malaysian palm oil industry, with employee engagement (EE) as a mediating factor. Through
quantitative analysis using Structural Equation Modeling (SEM), the study is expected to
reveal significant relationships between these organizational factors and sustainability
outcomes, emphasising the critical role of leadership, culture, commitment, and employee
engagement in driving sustainable practices. The findings will provide theoretical
contributions by expanding the understanding of employee-driven sustainability and offer
practical insights for organizations to enhance sustainability strategies. The implications of
this study benefit multiple stakeholders: (1) Industry practitioners can use the insights to
develop leadership training programs, foster a sustainability-oriented culture, and enhance
employee commitment to sustainability initiatives; (2) Policymakers can design better
regulatory frameworks supporting corporate sustainability efforts; and (3) Investors and
consumers can make informed decisions based on sustainability performance indicators. For
future research, this study suggests exploring longitudinal approaches to examine the
evolving impact of leadership, culture, and commitment on sustainability over time, as well
as incorporating qualitative methods to gain deeper insights into employee perceptions and
challenges in implementing sustainability initiatives.

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