sustainability

Article
Investigating the Serially Mediating Mechanisms of
Organizational Ambidexterity and the Circular Economy in the
Relationship between Ambidextrous Leadership and
Sustainability Performance
Anastasia A. Katou 1 , Dimitrios Kafetzopoulos 1, * and Anastasia Vayona 2,3

1 School of Business Administration, University of Macedonia, 546 36 Thessaloniki, Greece

2 Department of Life & Environmental Science, Bournemouth University, Poole BH12 5BB, UK
3 Circular Economy Foundation, 1040 Brussels, Belgium
* Correspondence: dimkafe@[Link]

Abstract: In this study, based on a resource-based view, we investigate the influence of ambidex-
trous leadership (reflected in transformational and transactional leadership styles) on sustainability
performance (reflected in economic, environmental, and social performance) through the serially
mediating mechanisms of organizational ambidexterity (reflected in explorer and exploiter attributes)
and the circular economy (reflected in fields of action). By applying structural equation modelling
analyses to survey data collected from private and public Greek organizations, which operate in
manufacturing, services, and trade sectors, under an externally dynamic environmental context,
we found that (a) organizational ambidexterity and the circular economy fields of action positively
mediate the relationship between ambidextrous leadership and sustainability performance and
(b) the mechanism originating from transformational leadership has a higher impact on sustainability
performance compared to the mechanism that originates from transactional leadership. Accordingly,
this study addresses the aspect of the special issue that refers to modern approaches to management
and leadership for sustainable business performance research and makes several theoretical and
Citation: Katou, A.A.; Kafetzopoulos,
practical implications.
D.; Vayona, A. Investigating the
Serially Mediating Mechanisms of
Keywords: ambidextrous leadership; organizational ambidexterity; the circular economy; sustainability
Organizational Ambidexterity and
the Circular Economy in the performance; environmental dynamism
Relationship between Ambidextrous
Leadership and Sustainability
Performance. Sustainability 2023, 15,
7937. [Link] 1. Introduction
su15107937 Over the last decade, there has been an intensive investigation in theory and re-
Academic Editor: Sooksan Kantabutra search on the adoption of circular economy practices by organizations in relation to their
sustainability performance [1]. Although there are many definitions of the circular econ-
Received: 24 February 2023 omy (CE) that have been proposed [2,3], the most prominent definition, according to
Revised: 25 April 2023
Geissdoerfer et al. [4], has been provided by the Ellen MacArthur Foundation [5] (p. 7) and
Accepted: 10 May 2023
reads as follows: “Circular economy is an industrial system that is restorative or regenera-
Published: 12 May 2023
tive by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts
towards the use of renewable energy, eliminates the use of toxic chemicals, which impair
reuse, and aims for the elimination of waste through the superior design of materials,
Copyright: © 2023 by the authors.
products, systems, and, within this, business models” [6] (p. 226). It is argued [7–11] that
Licensee MDPI, Basel, Switzerland. the circular economy, by involving the so-called 10 Rs for smarter product use and manufac-
This article is an open access article turing (by Refusing, Rethinking, and Reducing), extending the lifespan of products and their
distributed under the terms and parts (by Reusing, Repairing, Refurbishing, Remanufacturing, and Repurposing), and the
conditions of the Creative Commons useful application of materials (by Recycling and Recovering), will eventually alter the linear
Attribution (CC BY) license (https:// business model of taking, consuming, and disposing.
[Link]/licenses/by/ Although there is no clear and agreed definition of organizational sustainability perfor-
4.0/). mance in the literature, in this study, we state that an organization’s sustainability performance

Sustainability 2023, 15, 7937. [Link] [Link]

Sustainability 2023, 15, 7937 2 of 18

is reflected in the economic, environmental, and social aspects of performance [1,12,13].

Additionally, we argue that the circular economy constitutes a driving force for improving
organizational sustainability performance [1,14,15].
However, the circular economy, which in turn influences sustainability performance,
may depend on internal and external organization factors. We argue that ambidextrous
leadership and organizational ambidexterity are the two dominant internal factors that
serially affect the circular economy. In particular, organizational ambidexterity refers to
two processes at the same time: the ability of the organization to efficiently manage its
current demands, called exploitation, and the ability of the organization to be adaptive to its
future needs, called exploration [16]. Ambidextrous leadership usually refers to the balance of
transactional and transformational leadership styles [17–19]. Specifically, the transactional
leadership style refers to leaders who lead their followers in the direction of specific goals,
clarifying the roles and requirements of the job, and measure their performance according
to the organization’s system of rewards and penalties [20]. The transformational leadership
style refers to leaders who inspire their followers to overcome their own self-interest and
motivate them to develop and innovate for the organization’s future success [20].
With respect to the factors external to the organization, environmental dynamism
and environmental competitiveness are two factors that may influence leadership styles.
Environmental dynamism refers to the rate of change in environmental factors over time,
whilst environmental competitiveness refers to the type of competition among the market
players [21,22]. However, there are few studies that have investigated the influence of
external environmental factors on leadership styles [23–25].
In summary, assuming that environmental features constitute the initiating factor of
the phenomenon under study, the previous presentation indicates that the purpose of this
study is to investigate the serially mediating relationship between ambidextrous leadership,
organizational ambidexterity, the circular economy, and sustainability performance at the
organizational level [26]. Accordingly, the following research questions are attached to this
purpose of the study.
Research Question 1 (RQ1). How does ambidextrous leadership lead to higher sustainabil-
ity performance?
Research Question 2 (RQ2). What is the serially mediating role of organizational ambidex-
terity and the circular economy actions in the relationship between ambidextrous leadership and
sustainability performance?
Research Question 3 (RQ3). Is it possible to successfully extend the relationship between the
circular economy and sustainability performance at the organizational level?
Additionally, taking into consideration the need for examining this relationship in
different contexts [1,24], the data were obtained by an employee survey in the Greek public
and private sectors. Greece provides in effect an important context worthy to be studied in
this research, as it has been heavily affected by the COVID-19 pandemic, including facing
the 2008 economic and financial crisis.
Accordingly, our study extends the design of business models [27] and contributes
to the circular economy literature [2] by distinguishing the differential effects of transfor-
mational and transactional leadership styles on explorer and exploiter processes, which in
turn influence the circular economy fields of action, which ultimately have an impact on an
organization’s sustainability performance.

2. Theory and Hypotheses

2.1. Environmental Features and Leadership Styles
Environmental dynamism and competitiveness constitute two external factors that
influence the leadership styles to be adopted by organizations. Some researchers state that
transformational leadership is superior to transactional leadership in all environmental
circumstances [20]. Other researchers state that the type of leadership style depends on the
Sustainability 2023, 15, 7937 3 of 18

different environmental features that prevail at the time of choice [28]. In particular, it is
argued that transformational leadership has been associated more strongly with dynamic
external environments compared to transactional leadership, which has been connected
more strongly to stable external environments [29]. However, following the calls [17,28] for
more research on how environmental features influence leadership styles, in this study, we
try to contribute by investigating whether the environmental dynamism and competitive-
ness drive the balance between transformational and transactional leadership styles.
Specifically, Jansen et al. [22,29], argue that transformational leadership styles are asso-
ciated with unstable environments and that transactional leadership styles are associated
with stable environments. However, we argue that these associations between environmen-
tal factors and leadership styles are not mutually exclusive but, on the contrary, they may
occur concurrently. This is because riskiness and stability may simultaneously exist in an
external environment and feed each other [17]. Accordingly, we hypothesize the following:

Hypothesis 1 (H1). Environmental features are positively related to transformational leadership.

Hypothesis 2 (H2). Environmental features are positively related to transactional leadership.

2.2. Ambidextrous Leadership and Organizational Ambidexterity

It is usually argued that the transformational leadership style is needed for explo-
ration. The term exploration refers to the philosophy of the organization to focus on
flexibility and innovation by taking risks [24,30,31]. On the contrary, transactional leader-
ship style is needed for exploitation. The term exploitation refers to the philosophy of the
organization to focus on efficiency and effectiveness by sticking to production rules and
procedures [24,30,31]. However, the long-term survival and success of the organization
are achieved in cases where the organization exploits effectively and efficiently its current
resources and at the same time explores future opportunities [32].
In other words, ambidextrous leaders may succeed in achieving organizational goals,
both in the short-run and in the long-run, by appropriately balancing explorative and
exploitative activities [16]. However, it is argued that in developing this balancing, or in
developing organizational ambidexterity, the organization takes into consideration the
frontiers of its ambidextrous leadership by imposing an emphasis on the parallel relation-
ships between the transformational leadership style and exploration and the transactional
leadership style and exploitation [33]. Accordingly, we hypothesize the following:

Hypothesis 3 (H3). The transformational leadership style is positively related to explorer attributes.

Hypothesis 4 (H4). The transactional leadership style is positively related to exploiter attributes.

2.3. Organizational Ambidexterity and the Circular Economy

The concept of the circular economy, which has emerged as a new business paradigm,
comprises “four emerging components to achieve sustainability: (1) recirculation of re-
sources and energy; (2) the minimization of demand for resources, and the recovery of
value from waste (namely reuse, reduce, and recycle); (3) the need for a multi-level (mi-
cro, meso and macro) approach; and (4) its importance as a path to achieve sustainable
development ([34])” [1] (p. 2).
Review studies [2] revealed that in investigating the circular economy aspects, many
antecedents have been used, covering both internal and external contexts. However, we ar-
gue that in following this new business paradigm, an appropriate concrete business strategy
should be applied. This business strategy could depend on organizational ambidexterity,
under the guidance of ambidextrous leadership, since these concepts incorporate both
internal and external information. In particular, organizational ambidexterity focuses on
innovation (i.e., exploration) and efficiency (i.e., exploitation), which could be used for
Sustainability 2023, 15, 7937 4 of 18

successfully attaining the so-called the circular economy fields of action comprising design,
procurement, production, distribution, usage/consumption, and recovery [35].
We argue that in cases where the organization is facing current problems, it will
devote itself to the use of exploitation activities that are more compatible with the circular
economy fields of action, such as production and recovery. On the contrary, in cases where
the organization is facing future problems, it will devote itself to the use of exploration
activities that are more compatible with the circular economy fields of action, such as design
and distribution [36]. Accordingly, we hypothesize the following:

Hypothesis 5 (H5). Explorer attributes are positively related to the circular economy fields of actions.

Hypothesis 6 (H6). Exploiter attributes are positively related to the circular economy fields of actions.

2.4. Circular Economy and Sustainable Performance

A resource-based view (RBV) of a firm [37] is the usual theory for explaining the
circular economy business paradigm. According to this theory, the sustained competi-
tive advantage of a firm is based on its valuable, rare, inimitable, and non-substitutable
resources. Attached to RBV is the so-called natural-resource-based-view (NRBV) of the
firm [38] and the knowledge-based view (KBV), which considers knowledge to be the most
important strategic resource of the firm [39]. These theories are considered to be the most
influential theories in sustainability literature, describing the connection between strategic
management and sustainability performance [40,41].
Based on these theories, previous studies [42,43] in various countries (e.g., China,
European Union) on the relationship between the circular economy fields of action and
sustainability performance found that there is a positive association between these two
concepts. In particular, Prieto-Sandoval et al. [44] argue that the firms that provide to
their customers greener products, by using circular economy processes, will eventually
achieve higher sustainability performance due to a better reputation. Similarly, other
scholars [45–49] argue that firms, by developing and practicing circular economy processes,
will eventually improve all dimensions of their sustainability performance. Accordingly,
we hypothesize the following:

Hypothesis 7 (H7). Circular economy fields of actions are positively related to sustainabil-
ity performance.

2.5. The Conceptual Model

By summarizing the previous presentation, Figure 1 reflects the conceptual model of
the study. In particular, this model refers to two components: The first is the serially mediat-
ing mechanisms between environmental features, ambidextrous leadership, organizational
ambidexterity, the circular economy fields of action, and sustainability performance. The
second is the operationalization of the concept of ambidexterity. Bearing in mind that
there may be no clear-cut between transformational and transactional leadership style
constructs and between explorer and exploiter attribute constructs, we allowed them to
correlate [50]. Thus, we did not follow the interaction approach for expressing ambidexter-
ity, but we followed the correlation approach for expressing combined ambidexterity (for
more, see [21,36,51–53]). Additionally, in our conceptual model, we included both organi-
zational and individual controls since these controls may influence most of the constructs
in our model [54].
Sustainability 2023, 15, 7937 5 of 18

Figure 1. The conceptual model.

3. Data and Methods

3.1. Participants and Procedures
Data for this research were collected in November–December 2022 with the help of
students from a business school. The 80 students that took part in the study followed a
lecture about the meaning of the study and the specific questionnaire that they should
administer, as well as a lecture about sampling with a focus on convenience sampling and
how to implement it. Each student was advised to reach two public or private organizations
among the manufacturing, services or trade sectors. Further, following [55] they were also
advised to focus, if possible, on at least two senior managers (e.g., heads of departments),
two middle managers (e.g., line managers), and four employees (e.g., not supervising other
employees) from each research organization for increasing the reliability of the measures.
Overall, although 160 organizations and 1280 individuals should have been approached,
complete questionnaires were gathered from 875 employees working in 112 organizations.
This means that the response rate with respect to organizations was 70.0 percent and with
respect to employees, 68.4 percent. The demographics of the sample organizations and the
respondents are presented in Table 1.

Table 1. Sample Demographics.

Characteristics of the Sample Organizations (N = 112) Frequency Percentage

Sector
Manufacturing 22 16.6
Services 61 54.5
Trade 69 25.9
Ownership
Public 13 11.6
Private 99 88.4
Size (in employees)
−50 56 50.0
51–200 24 21.4
201–500 22 19.6
501+ 10 8.9
Sustainability 2023, 15, 7937 6 of 18

Table 1. Cont.

Characteristics of the Sample Organizations (N = 112) Frequency Percentage

Characteristics of the sample respondents (N = 875)
Gender
Male 440 50.3
Female 435 49.7
Age
−25 158 18.1
26–35 189 21.6
36–45 201 23.0
46–55 243 27.8
56+ 84 9.6
Education
Basic 13 1.5
High school/Lyceum 259 29.8
College/University 603 68.9
Type of Employment
Full time 758 86.6
Part time 117 13.4
Seniority (experience in years of work)
−10 431 49.3
11–20 288 32.9
21–30 117 13.4
31+ 29 4.5
Hierarchical Position
Senior manager 226 25.8
Middle manager/Line manager 227 25.9
Other employee 442 48.2

3.2. Measures
All items used in the survey were developed using a five-point Likert scale, ranging
from 1 = strongly disagree to 5 = strongly agree. The complete questionnaire used in the
survey is presented at the Appendix A.

3.2.1. External Environment

This construct comprised two sub-scales based on [22]—environmental dynamism and
competition dynamics. Example items included “Environmental changes in our local market
are intense” and “Our organizational unit has relatively strong competitors”, respectively.

3.2.2. Transformational Leadership

This construct comprised five sub-scales based on [56]—idealized influential behavior,
attributed idealized behavior, inspirational motivation, intellectual stimulation, and individual
consideration. Example items included “Our managers consider the moral and ethical conse-
quences of decisions”, “Our managers are proud about their employees”, “Our managers
talk enthusiastically about the future”, “Our managers reexamine critical assumptions to
question whether they are appropriate”, and “Our managers help employees to develop
their abilities”.

3.2.3. Transactional Leadership

This construct comprised two sub-scales also based on [56]—contingent reward and
active management by exception. Example items included “Our managers make clear what
they except to receive from employees” and “Our managers keep track of all employee
mistakes”, respectively.
Sustainability 2023, 15, 7937 7 of 18

3.2.4. Explorer Attributes

This construct comprised two sub-scales based on [57]—knowledge practices and inno-
vative practices. Example items included “Our organization generates new ideas” and “Our
organization focuses on completely new products or process”, respectively.

3.2.5. Exploiter Attributes

This construct comprised four sub-scales also based on [57]—competition, strategic
orientation, efficiency, and partnership. Example items included “Our organization faces
the appearance of new competitors (new arrivals)”, “Our organization has a strategic
view focused on the present”, “Our organization creates detailed routines”, and “Our
organization has local relationships with outside partners, respectively.
Table 2 presents the consistency, reliability and aggregation properties of all the first-
order constructs included in the study.

Table 2. Properties of first-order constructs.

Consistency and Reliability Properties Aggregation Properties

Construct Sub-Construct (Dimensions) Items Cronbach’s
Loading TVE% ICC rwg (j)
Alpha (α)
F1: External F1.1: Dynamism 5 0.853 53.3 0.777 0.410 0.923
Environment F1.2: Competitiveness 4 0.853 70.5 0.858 0.601 0.864
F2.1: Idealized influential behavior 4 0.841 68.1 0.843 0.573 0.883
F2.2: Attributed idealized behavior 4 0.896 76.4 0.897 0.684 0.851
F2: Transformational
F2.3: Inspirational motivation 4 0.858 73.7 0.881 0.649 0.863
Leadership
F2.4: Intellectual stimulation 4 0.881 75.1 0.889 0.667 0.854
F2.5: Individual consideration 4 0.896 79.7 0.914 0.728 0.822
F3: Transactional F3.1: Contingent reward 4 0.831 78.2 0.743 0.279 0.909
Leadership F3.2: Active management by exception 4 0.831 63.5 0.679 0.509 0.816
F4.1: Knowledge practices 10 0.901 59.9 0.886 0.438 0.967
F4: Explorer Attributes
F4.2: Innovative practices 10 0.901 65.9 0.942 0.619 0.940
F5.1: Competition 8 0.782 56.4 0.886 0.494 0.947
F5.2: Strategic orientation 2 0.622 76.2 0.688 0.527 0.729
F5: Exploiter Attributes
F5.3: Efficiency 7 0.846 48.8 0.818 0.391 0.959
F5.4: Partnership 8 0.688 55.1 0.881 0.480 0.941
F6.1: Design 4 0.818 60.1 0.776 0.464 0.851
F6.2: Procurement 3 0.783 68.3 0.765 0.521 0.805
F6: Circular Economy F6.3: Production 4 0.806 51.2 0.745 0.422 0.873
Fields of Action F6.4: Distribution 2 0.543 75.7 0.679 0.514 0.544
F6.5: Usage/Consumption 3 0.749 60.5 0.666 0.358 0.736
F6.6: Recover 2 0.693 78.3 0.723 0.566 0.361
F7.1: Economic performance 3 0.862 73.9 0.819 0.601 0.855
F7: Sustainable F7.2: Environmental performance 3 0.833 81.1 0.879 0.708 0.737
Performance F7.3: Social performance 3 0.845 83.9 0.904 0.758 0.795

Table 3 presents the descriptive statistics, the normality tests, and the properties
of all constructs used in the estimation. In particular, the Cronbach’s alpha values for
each construct were greater than 0.70 [58], except those of the “external environment”
(0.662) and “transactional leadership” (0.640). However, in utilizing their information, we
kept these constructs in the estimation because their Cronbach’s alpha values were not
very different from 0.70. The Total Variance Extracted (TVE) of all constructs were not
lower than 0.50, supporting acceptable survey instrument construct validity. The values
of the Composite Reliability (CR) were higher than 0.80, indicating acceptable construct
composite reliability [59].
Sustainability 2023, 15, 7937 8 of 18

Table 3. Descriptive statistics, normality tests, and properties of all constructs used in the estimation.

Means (Standard Skewness Cronbach’s

Construct p of KS TVE% CR
Deviations) (Kurtosis) Alpha (α)
3.829 −0.666
F1: External Environment 0.022 72.8 0.842 0.662
(0.703) (0.592)
3.818 −0.687
F2: Transformational Leadership 0.001 76.5 0.942 0.923
(0.785) (0.430)
3.235 0.167
F3: Transactional Leadership 0.005 69.1 0.818 0.640
(0.722) (−0.148)
3.572 −0.300
F4: Explorer Attributes 0.155 81.1 0.896 0.756
(0.719) (−0.036)
3.550 −0.365
F5: Exploiter Attributes 0.188 54.8 0.826 0.703
(0.587) (1.398)
3.269 −0.176
F6: Circular Economy Fields of Action 0.546 54.5 0.876 0.817
(0.736) (−0.030)
3.863 −0.586
F7: Sustainable Performance 0.000 71.7 0.884 0.797
(0.782) (0.360)

Considering that the skewness statistics of all constructs were between −1 and +1
and their kurtosis statistics were between −3 and +3, we accepted that non-normality
was not a problem [59,60]. However, to be on the safe side, we also applied the very
sensitive Kolmogorov–Smirnov (KS) test for normality, which indicated that the constructs
of explorer attributes, exploiter attributes, and the circular economy fields of action followed
a normal distribution.

3.3. Common Method Bias

For reducing possible common method bias in the survey, we followed [61] by recruit-
ing multiple respondents from different actors in the organization such as senior managers,
middle managers, and other employees. Additionally, we applied Harman’s single-factor
test [62] to examine the likelihood of a common method bias threat. This test revealed four
factors instead of one, with the first factor covering 39.284 percent of the total variance
explained. Accordingly, we accepted that that the common method bias in the data was
rather limited.
Further, using the information presented in Table 4, we examined the discriminant
validity of the constructs used in the estimation. Considering that the correlation coefficients
between pairs of constructs were significantly much lower than one and they were also
smaller than the square root of each construct’s Average Variance Explained (AVE), the
constructs used in the estimation were considered separate [63].

Table 4. Correlation coefficients of all constructs used in the estimation.

Constructs F1 F2 F3 F4 F5 F6 F7
F1: External Environment [0.853] a
F2: Transformational Leadership 0.348 b [0.875]
F3: Transactional Leadership 0.271 0.326 [0.835]
F4: Explorer Attributes 0.436 0.698 0.409 [0.949]
F5: Exploiter Attributes 0.467 0.458 0.437 0.631 [0.740]
F6: Circular Economy Fields of Action 0.314 0.373 0.286 0.553 0.502 [0.738]
F7: Sustainable Performance 0.363 0.617 0.281 0.653 0.487 0.623 [0.847]
a Square root of the average variance explained. b All correlation coefficients were significant at the 0.01 level
(2-tailed).
Sustainability 2023, 15, 7937 9 of 18

4. Results
For estimating the model presented in Figure 1, we applied Structural Equation
Modelling (SEM) [59,64] at a significance level equal to 0.05. This is because all constructs
of the conceptual model are measured with multiple dimensions and they are formed under
serially mediated mechanisms [65]. Taking into consideration that some of the constructs
did not follow the normality assumption, we used the MLR estimation technique, via Mplus,
because this technique makes all necessary adjustments to the calculated fit indices [66].

4.1. The Measurement Model

The conceptual model of the study presented in Figure 1 consisted of seven con-
structs. By applying Confirmatory Factor Analysis (CFA) to this hypothesized model, the
following fit indices were derived: Chi-square = 1499.918, df = 231, p = 0.000, Normed
Chi-square = 6.49, RMSEA = 0.079, CFI = 0.870, TLI = 0.845, SRMR = 0.062. These indices
supported an acceptable fit according to [67], who recommends that a model be sufficient
in one fit index but insufficient in many others. We note here that the critical values of these
indices, which assessed the acceptability of complex models, were as follows: Normed Chi-
square < 5.0, RMSEA < 0.080, CFI > 0.80, TLI > 0.80, SRMR < 0.080. By applying CFA using
the same constructs but formed as a Harman’s single factor model, the derived fit indices
were the following: Chi-square = 3488.681, df = 252, p = 0.000, Normed Chi-square = 13.84,
RMSEA = 0.121, CFI = 0.669, TLI = 0.637, SRMR = 0.096. The values of these indices are
very poor compared to the hypothesized model. This comparison indicates that respondent
bias is limited, and the constructs of the hypothesized model are separate [68].

4.2. The Structural Model

In applying SEM to the conceptual model presented in Figure 1, the following fit
indices were derived: Chi-square = 1898.647, df = 311, p = 0.000, Normed Chi-square = 6.105,
RMSEA = 0.076, CFI = 0.844, TLI = 0.826, SRMR = 0.072. The values of these indices were
acceptable, except that of the Normed Chi-square, possibly due to the complexity of the
model [69]. However, considering that this is a serially and fully mediating model, we made
attempts to estimate various serially but partially mediating models. In these attempts, the
extra direct links were not significant. Therefore, we concluded that the fully mediated
model was preferable and as such, Figure 2 presents the estimated significant results in
standardized units.

Figure 2. Estimation results of the conceptual model.

Sustainability 2023, 15, 7937 10 of 18

4.3. Testing the Hypotheses

From the results in Figure 2, we can see that environmental feature, with environ-
mental competitiveness being the dominant factor (β = 0.715), positively predicted both
the transformational leadership style (F1→F2: β = 0.452) and transactional leadership
style (F1→F3: β = 0.693), supporting hypotheses H1 and H2, respectively. Additionally,
the transformational leadership style, with individual consideration being the dominant
factor (β = 0.885), positively predicted explorer attributes (F2→F4: β = 0.879), and the
transactional leadership style, with contingent reward being the dominant factor (β = 0.685),
positively predicted the exploiter attributes (F3→F5: β = 0.836), supporting hypotheses H3
and H4, respectively. Further, both explorer attributes, with knowledge practices being the
dominant factor (β = 0.880), and exploiter attributes, with efficiency being the dominant
factor (β = 0.794), positively predicted the circular economy fields of action, with production
being the dominant factor (β = 0.836), supporting hypotheses H5 (F4→F6: β = 0.447) and
H6 (F5→F6: β = 0.344), respectively. Finally, the circular economy fields of action positively
predicted sustainability performance, with environmental performance being the dominating
factor (β = 0.823), supporting hypothesis H7 (F6→F7: β = 0.899).
By investigating the two serially mediating mechanisms from F2 to F7 and from F3 to
F7, we found that the transformation leadership style had a higher impact on sustainability
performance (0.353, with lower bound = 0.265 and upper bound 0.442) compared to the
impact of the transactional leadership style on sustainability performance (0.259, with
lower bound = 0.175 and upper bound 0.342).
In terms of the controls, higher level employees followed more transformational lead-
ership styles (β = −0.162) than transactional leadership styles (β = −0.114), sustainability
performance was higher in private than in public organizations (β = 0.062), and sustainabil-
ity performance was lower in organizations operating in the trade sector (β = −0.078).

4.4. Comparing Results with Those from Other Studies

Dey et al. [1] developed and estimated a structural model referring to the relationship
between the circular economy and sustainability performance for Greece, Spain, France,
and the UK (p. 7). Considering the Mediterranean countries of Greece and Spain, their
estimated standardized results are presented in Table 5. In the same table we also present
the corresponding results of the current study of Greece, produced by multiplying the
structural coefficient (0.899) of the link between the circular economy construct and the
sustainability performance construct with the coefficients of the three dimensions of the
sustainability performance, 0.708, 0.823, and 0.710, as shown in Figure 2. By comparing
these results, we see that in the study of Dey et al. [1], for both Greece and Spain, the
standardized coefficients in descending order followed the series of environmental perfor-
mance, economic performance, and social performance. The same exact series followed the
results of the current study, verifying their robustness.

Table 5. Comparison of the estimation results between different countries.

Sustainability Performance Dey et al. [1] Current Study

Constructs Link
Sub-Constructs Greece Spain Greece
Circular economy → Economic performance 0.450 0.446 0.636
Circular economy → Environmental performance 0.805 0.622 0.740
Circular economy → Social performance 0.334 0.255 0.466

Table 6 presents the results referring to the organizational ambidexterity of Greece

between the study of Katou et al. [24] and the current study. Comparing these results,
we see that for both studies, the standardized coefficients in descending order for ex-
plorer attributes was the same (i.e., Knowledge practices, Innovative practices), and for
exploiter attributes, was also the same (i.e., Efficiency, Competition, Partnership, Strategic
orientation). We argue that this finding verifies the robustness of the results in both studies.
Sustainability 2023, 15, 7937 11 of 18

Table 6. Comparison of the estimation results between different studies in Greece.

Constructs (Dimensions) Katou et al. [24] Current Study

Explorer attributes
• Knowledge practices 0.773 0.880
• Innovative practices 0.656 0.715
Exploiter attributes
• Competition 0.670 0.730
• Strategic orientation 0.502 0.413
• Efficiency 0.682 0.794
• Partnership 0.589 0.527

5. Discussion
The scope of this study was to investigate the impact of ambidextrous leadership on
sustainability performance through the serially mediating mechanisms of organizational
ambidexterity and the circular economy fields of action. The results suggest that the im-
pact of the transformational leadership style on sustainability performance was higher
compared to the impact of the transactional leadership style. In general, it is stated that
combining individual consideration with contingent rewards (i.e., ambidextrous leadership)
and knowledge practices with efficiency (i.e., organizational ambidexterity) will improve
environmental performance through the circular economy fields of action. Further, the level
of employees, the ownership of organizations, and the sector where organizations are acti-
vated have an impact on sustainability performance. Accordingly, we state that all research
questions of the study have been adequately investigated at the organizational level [26].

5.1. Theoretical Implications

Over the last few decades, the relationship between the circular economy and sustain-
ability performance has become an important topic in management literature. However,
there are few theoretical and empirical studies that investigate the antecedent’s structure
of the circular economy–sustainability performance relationship [2,70]. Accordingly, in
our study, the proposed conceptual framework that is now empirically supported has a
number of theoretical and research contributions.
First, considering that the drivers of the circular economy business models are still
unclear [71], it advances both theoretically and empirically that organizational ambidexter-
ity constitutes an antecedent structure of the circular economy–sustainability performance
relationship. Accordingly, it is indicated that mainly balancing knowledge practices with
efficiency facilitates the circular economy production processes, which in turn improve
sustainability performance.
Second, based on ambidextrous leadership styles [33], it advances both theoretically
and empirically that ambidextrous leadership constitutes an antecedent structure of or-
ganizational ambidexterity. Accordingly, it is indicated that mainly balancing individual
employee consideration with contingent rewards develops organizational ambidexter-
ity that in turn facilitates the circular economy, which ultimately improves sustainabil-
ity performance.
Third, based on environmental features [29,72], it advances both theoretically and
empirically that external dynamic environments constitute the initiating factors that are
responsible for developing ambidextrous leadership styles in the organization. Indeed, we
argue that this ambidextrous leadership strategy it is applied under the resource-based
view (RBV) of the firm [37].
Finally, the robustness of the findings that were verified by comparing results of
studies dealing individually with ambidexterity and the circular economy brings new
paths in developing theoretical and empirical frameworks in the sustainability literature.
Sustainability 2023, 15, 7937 12 of 18

5.2. Practical Implications

In terms of being able to apply the circular economy fields of action, leaders should be
able to manage the following:
Become ambidextrous leaders: This could be achieved by learning how to inspire and
motivate people and at the same time how to educate people in the direction of specific
goals. To successfully apply these two processes, leaders must start by self-evaluating
their knowledge and then examine whether this knowledge can be facilitated within their
behavioral leadership style [53].
Balance exploration and exploitation: Organizations must develop ambidextrous leaders
since our study verified that transformational leaders have a high and positive influence
on exploration, and similarly, transactional leaders have also a high and positive influence
on exploitation. This process should be applied especially to public organizations [73], as
our study found that sustainability performance of public organizations is lower compared
to the sustainability performance of private organizations. Additionally, exploitation
leaders could transfer duties to their deputies in order to have more time to put emphasis
on exploration [33].
Promoting exploration and exploitation: Exploitation could be promoted through training
and performance management for improving effectiveness and efficiency. Exploration
could be promoted through knowledge and innovation management for capturing the best
future processes through experimentation [33].
Applying the circular economy processes: This could be achieved by synchronizing organi-
zational ambidexterity processes with the circular economy fields of action in order to assess
their impact on sustainability performance [1]. Further, an ambidextrous organizational
culture that involves organizational diversity and shared vision should be developed [74].

5.3. Limitations and Future Research

First, the data were collected in November–December 2022 using a static question-
naire. As a result, the data do not allow for dynamic causal inferences. For that reason,
future research using longitudinal responses may further add to the understanding of the
phenomenon under study.
Second, single respondent bias is probable because both dependent and independent
variables were self-reported. However, despite that the ex-post test was used to assess the
level of common bias, future research using responses from different sources may relax the
possible level of biased results.
Third, given the cross-sectional character of our study, the explanation of results with
respect to the hypotheses indicates associations rather than influences or impacts.
Fourth, although the respondent sample size (n = 875) was large, and the organiza-
tional sample size (N = 112) was rather small for estimating such a complex model, and
future research should try to collect data from more organizations.
Fifth, the phenomenon under study refers to Greece, which is a member of the Euro-
pean Union. Future research should include more countries for improving the acceptability
of the results. However, in spite of these limitations, we believe that we still make the
above-claimed useful contributions.

Author Contributions: Writing—original draft, A.A.K.; conceptualization, A.A.K., D.K. and A.V.;
methodology, A.A.K. and D.K.; investigation, D.K. and A.V.; validation, A.A.K., D.K. and A.V.;
editing, D.K. and A.V. All authors have read and agreed to the published version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The datasets generated during and/or analyzed during the current
study are available from the corresponding author on reasonable request.
Sustainability 2023, 15, 7937 13 of 18

Acknowledgments: The authors thank their students for helping in the survey.
Conicts of Interest: The authors declare no conflict of interest.

Appendix A
QUESTIONNAIRE ITEMS
Environmental Features (based on [22])
Environmental Dynamism
Environmental changes in our local market are intense
Our clients regularly ask for new products and services
In our local market, changes are taking place continuously
In a year, many things changed in our market
In our market, the volumes of products and services to be delivered change fast and often
Environmental Competitiveness
Competition in our local market is intense
Our organizational unit has relatively strong competitors
Competition in our local market is extremely high
Price competition is a hallmark of our local market
Leadership Styles (based on [56])
Transformational Leadership Style
Idealized influence behaviour
Our managers consider the moral and ethical consequences of decisions
Our managers make clear the importance of having a strong sense of duty
Our managers emphasize how important it is to respect colleagues and work together as
a team
Our managers enlighten employees about the importance of having moral values
Attributed idealized influence
Our managers are proud about their employees
Our managers go beyond self-interest for the good of their employees
Our managers act in a way that earns employee respect
Our managers demonstrate a great sense of confidence
Inspirational motivation
Our managers talk enthusiastically about the future
Our managers speak passionately about the goals to be achieved
Our managers present a vision of the future that motivates employees
Our managers transfer confidence to employees that the organizational goals and objectives
will be achieved
Intellectual stimulation
Our managers re-examine critical assumptions to question whether they are appropriate
Our managers suggest new ways to employees for completing their tasks
Our managers look problems from different perspectives
Our managers present different angles for solving a problem
Individualized consideration
Our managers help employees to develop their abilities
Our managers encourage employees to improve their work-related skills
Our managers dedicate their time to individual attention to employees
Our managers coach employees for helping them to improve their on-the-job performance
Transactional Leadership Style
Contingent reward
Our managers make clear what they except to receive from employees
Our managers support employees when they do their tasks and activities well
Our managers continually remind employees that our reward will depend on us meeting
the objectives
Our managers Highlight only the employees who perform the tasks correctly
Active management by exception
Sustainability 2023, 15, 7937 14 of 18

Our managers keep track of all employee mistakes

Our managers remind employees of all their failures
Our managers focus their attention on employee non-compliance with the rules
Our managers focus on employee failures in performing tasks
Organizational Ambidexterity (based on [57])
Explorer Attributes
Knowledge practices
Our organization generates new ideas
Our organization uses new sources of knowledge drawn from partners
Our organization uses existing knowledge in databases
Our organization uses of knowledge already in place in the company
Our organization shares in-house knowledge
Our organization follows individual learning processes
Our organization follows collective learning processes
Our organization builds up team capacities
Our organization develops personnel intensively
Our organization appreciates individual knowledge
Innovative Practices
Our organization focuses on completely new products or process
Our organization engages in prototype development
Our organization increases product innovation rate
Our organization applies marketing innovation techniques
Our organization opens new distribution channels
Our organization focuses on radical product innovations
Our organization focuses on radical technology innovation
Our organization enforces ceaseless quest for new markets
Our organization develops new products and services
Our organization follows aggressive participation in technology-based alliances
Exploiter attributes
Competition
Our organization faces the appearance of new competitors (new arrivals)
Our organization faces the existence of substitute products or processes
Our organization faces competition on the local (Greek) market
Our organization faces price-base competition on the local (Greek) market
Our organization faces a fierce competition in company industry
Our organization faces the existence of promotion war in company industry
Our organization competition covers company offers easily
Our organization price-based competition is the high point of the company industry
Strategic Orientation
Our organization has a strategic view focused on the present
Our organization follows policies focused on the short term
Efficiency
Our organization creates detailed routines
Our organization considers the importance of efficiency
Our organization focuses on performing activities
Our organization has concerns with gains of scale
Our organization applies organizational control mechanisms
Our organization focuses on costs
Our organization has a tendency to focus towards production
Partnership
Our organization has local relationships with outside partners
Our organization depends on outside partners
Our organization uses contracts in relationships with outside partners
Our organization is transparent in joint efforts with partners
Sustainability 2023, 15, 7937 15 of 18

Our organization keeps duration of outside partnerships

Our organization shares knowledge with partners
Our organization shows concern with establishing outside partnerships
Our organization establishes a high number of outside partners for the company
Cyclical Economy Fields of Action (based on [1])
Design
Our organization designs aiming at extending product life
Our organization selects materials carefully
Our organization designs products for reuse, recycle and remanufacture
Our organization designs products following ecological standards
Procurement
Our organization applies environmental and social criteria in the selection of suppliers
Our organization prefers local sourcing to mitigate risks
Our organization supports supply chain collaboration
Production
Our organization follows lean practices
Our organization focus on energy efficiency
Our organization use of renewable energy
Our organization supports wellbeing and equality
Distribution
Our organization prefers outbound storage
Our organization prefers outbound transportation
Usage/Consumption
Our organization provides sourcing information
Our organization provides repair information
Our organization buys back used products from customers
Recover
Our organization remanufactures and refurbishes
Our organization reuses and recycles
Sustainable Performance (based on [1]
Economic performance
Our organization increases revenue
Our organization improves business growth
Our organization contributes to local economy
Environmental performance
Our organization increases energy efficiency
Our organization improves resource efficiency
Our organization contributes to waste reduction
Social performance
Our organization increases employee wellbeing
Our organization improves health and safety
Our organization contributes to social wellbeing

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