Green Management and Sustainable Performance of Small and Medium Industrial Businesses: The Mediating Role of Green Innovation

The aim of this research, according to institutional and stakeholder’s theories and natural resources-based perspectives, is to examine the relationship between green management and sustainable performance and the mediating role of green innovation. The current research is descriptive and correlational in terms of its applied purpose and data collection method. The study utilized the correlation method and employed structural equation modeling (SEM) and partial least squares (PLS) to analyze the data. Several criteria were used to evaluate the measurement model, including standardized factor loading, composite reliability (CR), average variance extracted (AVE), and divergent validity. T-values and R squares were used to evaluate the structural model, while the GOF criterion was employed for model fit assessment. Bootstrapping and variance accounted for (VAF) tests were utilized to determine the type of mediating role. Additionally, the cross-validated predictive ability test (CVPAT) index was applied to assess the model’s predictive capabilities. Results show that there is a meaningful and positive relationship between green management and sustainable performance and green innovation, and green innovation plays a (partial) mediating role between green management and sustainable performance. Based on the findings, it can be concluded that green management and green innovation can facilitate the improvement of organizational sustainability. Additionally, green innovation plays a significant mediating role in the relationship between green management and sustainable performance. These results indicate that implementing green strategies and innovation in organizations can help improve sustainable performance and environmental management.