GREEN INCLUSIVE LEADERSHIP AND SUSTAINABLE PERFORMANCE IN MANUFACTURING SMES: THE SERIAL MEDIATING AND THE MODERATING ROLE OF GREEN ORGANIZATIONAL CULTURE

Abstract

Manufacturing small and medium-sized enterprises (SMEs) are under growing pressure to improve their economic, environmental and social performance, yet little is known about how leadership is converted into these outcomes. Drawing on the Natural Resource-Based View and Social Learning Theory, this study examines whether green inclusive leadership (GIL) improves sustainable performance through green knowledge sharing (GKS) and green product and process innovation capabilities, and whether green organizational culture (GOC) strengthens the effect of GIL on GKS. Two-wave survey data were collected from 292 employees and managers of 33 manufacturing SMEs in Lahore, Faisalabad, Islamabad and Sialkot, Pakistan, and analysed using partial least squares structural equation modelling (PLS-SEM). GIL was positively related to GKS and directly related to environmental and social performance, but not to economic performance. GKS was positively related to both innovation capabilities and to all three performance dimensions. Green product innovation capability predicted economic, environmental and social performance, whereas green process innovation capability predicted environmental performance only. GKS mediated the effect of GIL on all three performance dimensions, and the serial path from GIL through GKS and innovation capability was supported for economic performance (via product innovation capability) and environmental performance (via both capabilities). GOC was positively related to GKS but did not moderate the GIL–GKS relationship (β = .022, p = .657) or the serial indirect effects. The findings show that green leadership creates value in SMEs mainly by mobilizing knowledge and building innovation capability, and that its benefits differ across the dimensions of sustainable performance.