WHEN LEADERSHIP FAILS BUT CSR WORKS: INSIGHTS INTO SUSTAINABLE BUSINESS INNOVATION IN THE HOSPITALITY INDUSTRY

The rapid expansion of hotel construction in the Special Region of Yogyakarta, one of Indonesia’s leading tourist destinations, has contributed to environmental degradation, including declining air and water quality, depletion of natural resources, land-use change, and poor environmental management. These issues collectively increase disaster risks and threaten community well-being. Grounded in Resource-Based View theory, this study examines how strategic organisational resources influence sustainability outcomes. Specifically, it analyses the effects of Transformational Leadership and Corporate Social Responsibility on Sustainable Business Innovation, with Green Human Resource Management as a moderating variable. Data were collected from 380 hotel employees using non-probability purposive sampling and quota sampling based on the Slovin formula from a population of 5,445. The data were analysed using Structural Equation Modelling, Partial Least Squares to evaluate the measurement model (validity, reliability, Heterotrait-Monotrait Ratio) and structural model (fit and hypothesis testing). The results show that Transformational Leadership has no significant effect on Sustainable Business Innovation, while Corporate Social Responsibility has a positive and significant influence. Green Human Resource Management does not moderate the relationship between either Transformational Leadership or Corporate Social Responsibility and Sustainable Business Innovation. Theoretically, the study strengthens Resource-Based View by emphasising the strategic value of human resources as valuable, rare, inimitable, and non-substitutable assets. Practically, it highlights the importance of talent retention, fair reward systems, and authentic employee engagement in sustainability programmes. Overall, this research enriches the limited empirical evidence linking Resource-Based View, leadership, Corporate Social Responsibility, and human resource management practices within sustainable hospitality management.