Green manufacturing practices and SMEs' sustainable performance: a moderated mediation mechanisms of green innovation and managerial discretion

PurposeDrawing on the resource-based view, ecological modernization theory and upper-echelon theory, this study aims to explore how green manufacturing practices (GMGP) affect the sustainable performance of small and medium enterprises (SMEs).Design/methodology/approachIt also examines the mediating role of green innovation (GIN) and the moderating role of managerial discretion (MD). To test the hypothesized model, the data was collected from 394 manufacturing SMEs though survey and analyzed using SPSS and AMOS (SEM).FindingsThe results provide evidence for the positive relationship between GMGP and corporate sustainable performance (CSPR), mediated by GIN. Furthermore, the presence of MD enhances the positive effect of GMGP on CSPR through GIN. Thus, this study enhances the understanding of the relationship between GMGP and CSPR, including its underlying mechanism and conditional effects.Research limitations/implicationsThis study collected sample from SMEs located in Punjab province of Pakistan which represents majority of the SMEs; however, future research can take data from other province and with large sample size.Practical implicationsThe findings highlight the significance of GMGP and GIN in the manufacturing sector for attaining CSPR goals. GMGP guides business leaders to be more inclined toward the energy and resource consumption as well as waste generation within their organizations which lead to improved CSPR outcomes.Originality/valueThe findings of this study make significant contributions to the existing literature, shedding light on the dynamics between GMGP and CSPR. Moreover, the study offers managerial implications for organizations aiming to enhance their sustainable performance by implementing effective GMGP.