Green Culture and Environmental Outcomes in Manufacturing SMEs: Mediated-Moderated Insights

Abstract

This study investigates the influence of Green Organizational Culture (GOC) on the Environmental Performance (EP) of manufacturing SMEs in Pakistan, examining the mediating role of Green Absorptive Capacity (GAC) and the moderating role of the Regulatory Framework (RF). The research is grounded in the Natural Resource-Based View (NRBV), aiming to understand how internal values and external institutional pressures jointly drive sustainability outcomes in resource-constrained environments. A quantitative research design was employed, using a structured questionnaire administered to 145 top-level managers of Pakistani manufacturing SMEs. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the hypothesized mediated-moderated model. The model examines both direct and indirect effects of GOC on EP, incorporating interaction effects with regulatory factors. The current study explains a series of managerial and policy implications for small and medium businesses, highlighting the necessity to build a strong green culture and improve the absorptive capacity of organizations in absorbing environmental knowledge. In this regard, the policymakers of the state should also implement stricter environmental laws and provide support. These interventions have consistent, material payoffs, viz., reduction of cost, increased energy efficiency, and long-term ecological stewardship of SMEs, despite their activities being limited by resource envelopes.