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Greening your business: nexus of green dynamic capabilities, green innovation and sustainable performance

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Abstract

This study aims to examine the effect of green dynamic capabilities and green practices on the sustainable performance of SMEs by concentrating on the crucial role of green value co-creation and green innovation. For this purpose, a random sample of 245 respondents was selected working in SMEs in Pakistan, and PLS-SEM was used for data analysis. The findings of the study showed that green dynamic capabilities and green practices are positively related to green value co-creation and green innovation, respectively. Moreover, it was also found that green innovation is a significant contributor to improve the sustainable performance of SMEs. Results also divulged that green value co-creation significantly mediates the relationship of green dynamic capabilities and green practices with green innovation. Lastly, it was found that technology turbulence is a crucial factor to strengthen the association between green innovation and sustainable performance. This study provides insightful understanding for practitioners of SMEs to realize the importance of incorporating green innovation and green value co-creation in their business strategies to boost the sustainable performance.

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Data availability

The datasets generated during and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Author information

Authors and Affiliations

  1. Faculty of Business and Management Sciences, The Superior University Lahore, Lahore, Pakistan

    Ayesha Mubeen & Waqar Ahmad

  2. School of Media and Communication, Faculty of Social Sciences and Leisure Management, Taylor’s University, Subang Jaya, Malaysia

    Qasim Ali Nisar

  3. Faculty of Hospitality, Tourism and Wellness, Universiti Malaysia Kelantan, Kota Bharu, Malaysia

    Ataul Karim Patwary

  4. The Superior University, Lahore, Pakistan

    Sumaira Rehman

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  1. Ayesha Mubeen
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  2. Qasim Ali Nisar
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  3. Ataul Karim Patwary
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  4. Sumaira Rehman
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  5. Waqar Ahmad
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Correspondence to Ayesha Mubeen.

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Appendix: Scales for all constructs

Appendix: Scales for all constructs

Constructs

Items

Source

Green practices

 

Gonzalez-Benito and Gonzalez-Benito (2006)

 

Our organization prefers green products when purchasing

 
 

Our organization has specific environmental criteria for supplier selection

 
 

Our organization has consolidated shipments

 
 

Our organization has cleaner transportation methods

 
 

Our organization uses recyclable packaging in logistics

 
 

Our organization uses ecological material for primary packaging

 
 

Our organization has recuperation and recycling systems

 
 

Our organization is responsible in waste disposal and residues

 

Green dynamic capabilities

 

Chen and Chang (2013)

 

Our organization has the ability that can fast monitor the environment to identify new green opportunities

 
 

Our organization has effective routines to identify and develop new green knowledge

 
 

Our organization has the ability to develop green technology

 
 

Our organization has the ability to assimilate, learn, generate, combine, share, transform and apply new green knowledge

 
 

Our organization has the ability to successfully integrate and manage specialized green knowledge within our organization

 
 

Our organization has the ability to successfully coordinate employees to develop green technology

 
 

Our organization has the ability to successfully allocate resources to develop green innovation

 

Green value co-creation

 

Albinsson et al. (2016)

 

Our organization facilitates to customer decide how he/she wants to receive the service/product offering

 
 

The customer has many options to choose how he/she experiences the service/ product offering

 
 

It is easy for the customer to receive the service/product offering when, where and how he/she wants it

 

Green innovation

 

Song and Yu (2018)

 

Our organization chooses the materials of the product that produce the least amount of pollution for conducting the product development or design

 
 

Our organization uses the least amount of materials to comprise the product for conducting the product development or design

 
 

Our organization would circumspectly deliberate whether the product is easy to recycle, reuse and decompose for conducting the product development or design

 
 

The manufacturing process of the organization reduces the consumption of water, electricity, coal or oil

 
 

The manufacturing process of the organization effectively reduces the emission of hazardous substances or waste

 
 

The manufacturing process of the organization reduces the use of raw material

 

Technology turbulence

 

Jaworski and Kohli (1993)

 

Technology in our organization is changing rapidly

 
 

Technological changes provide big opportunities in our organization

 
 

It is very difficult to forecast technology developments in our organization

 
 

A large number of new product ideas have been made possible through technological breakthroughs in our organization

 
 

Technologically, our organization has a very complex environment

 

Environmental performance

 

Chiou et al. (2011), Ramanathan (2018), Wang (2019)

 

Our organization has achieved important environment-related certifications

 
 

On average, overall environmental performance of our organization has improved over the past five years

 
 

The resource consumption, e.g., water, electricity and gas, has decreased during the last 3 years

 
 

Our organization has significant improvement to compliance with environment regulation

 
 

Our organization is complying with environmental regulations (i.e., emissions and waste disposal)

 

Economic performance

 

Li (2014), Zhu et al. (2008)

 

Decrease of cost for energy consumption

 
 

Improved capacity utilization

 
 

Decrease of fee for waste treatment

 
 

Decrease of penalty costs for environmental accident

 

Social performance

 

Cheah et al. (2019), Maletic et al. (2015)

 

The customers’ satisfaction has increased during the last 3 years

 
 

The customers’ motivation has increased during the last 3 years

 
 

Our organization is serving to more beneficiaries (disadvantaged people) and solving social issues

 
 

Our organization provides more social services to the community

 

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Mubeen, A., Nisar, Q.A., Patwary, A.K. et al. Greening your business: nexus of green dynamic capabilities, green innovation and sustainable performance. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-03574-6

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