Influence of a Green Environmental Orientation on Corporate Sustainable Performance in the Manufacturing Sector

Abstract

As sustainability becomes a strategic imperative in the manufacturing sector, firms are increasingly adopting green environmental practices to enhance their competitive advantage and long-term viability. This study investigates the influence of an Internal (IGEO) or External Green Environmental Orientation (EGEO) on the Green Competitive Advantage (GCA), Green Innovation (GI), and Sustainable Performance (SP). Specifically, this research assesses the direct impact of an IGEO and EGEO on the GCA and GI, as well as their mediating roles in achieving sustainability objectives. To empirically validate the proposed conceptual framework, this study employs structural equation modeling (SEM) using survey data collected from 468 manufacturing firms in China. The findings reveal that an IGEO and EGEO are significant drivers of a GCA and GI, both of which, in turn, positively influence Sustainable Performance. The results underscore the importance of aligning internal sustainability initiatives with external environmental expectations to achieve superior long-term sustainability outcomes. This study contributes to the literature on green management by offering empirical evidence of the mechanisms through which a green orientation fosters sustainability. The insights derived have practical implications for firms seeking to integrate their internal capabilities with external environmental demands to develop a comprehensive and effective sustainability strategy. These findings serve as a valuable resource for researchers and practitioners aiming to enhance green competitiveness and innovation in the manufacturing sector.

1. Introduction

In recent years, sustainability has become a critical driver of corporate strategy, compelling firms to integrate environmentally responsible practices into their operations [1,2]. Heightened regulatory pressures, growing consumer awareness, and the rising costs of environmental degradation have created an urgent need for manufacturing firms to adopt green practices [3,4]. In response, companies are increasingly prioritizing a Green Competitive Advantage (GCA) and Green Innovation (GI) as essential components of long-term competitiveness in an environmentally conscious market. However, despite extensive discussions on sustainability in the literature, a significant gap remains in understanding how an Internal (IGEO) or External Green Environmental Orientation (EGEO) influences corporate Green Innovation, competitive positioning, and Sustainable Performance [5,6].

The existing research broadly addresses factors influencing corporate sustainability, and yet the nuanced impact of an IGEO—encompassing R&D investment, top management commitment, and organizational culture—on Green Innovation and the Green Competitive Advantage has not been thoroughly examined [3,7]. Likewise, the role of an EGEO—shaped by policy pressures, competitive dynamics, and consumer expectations—in driving sustainability remains insufficiently explored [8,9]. This knowledge gap is particularly evident in emerging economies, where regulatory environments and market conditions differ significantly from those in developed nations.

This study investigates how an IGEO and EGEO contribute to the Sustainable Performance in China’s manufacturing sector, which is under increasing pressure to comply with stringent environmental regulations and shifting industry standards. Specifically, this study answers two key research questions: (1) How do Internal and External Green Environmental Orientations impact the Sustainable Performance of Chinese manufacturing firms? (2) What roles do a Green Competitive Advantage and Green Innovation play in mediating these relationships? Answering these questions is essential to developing a comprehensive framework that explains how firms can effectively integrate internal capabilities with external sustainability pressures to achieve long-term environmental and economic benefits.

China’s manufacturing industry has undergone profound structural changes over the past few decades, evolving from a low-cost production hub into an innovation-driven industrial powerhouse [10]. The country’s accession to the World Trade Organization (WTO) in 2001 significantly boosted its manufacturing sector, granting firms broader access to global markets while accelerating technological adoption [11,12]. However, with rising labor costs, intensifying competition, and growing environmental concerns, firms must transition toward sustainable, high-value-added production models [13]. The “Made in China 2025” initiative reflects this strategic shift, emphasizing advanced manufacturing, cleaner production, and sustainable industrial practices to enhance global competitiveness [14].

Despite these initiatives, many firms face challenges in implementing sustainability practices due to the complexity of aligning internal capabilities with external regulatory and market demands. The adoption of a strong Green Environmental Orientation (GEO)—comprising both an IGEO and EGEO—can foster Green Innovation, enabling firms to develop environmentally friendly technologies and processes while securing a competitive edge. However, empirical research on how these orientations contribute to Sustainable Performance within the Chinese manufacturing sector remains limited.

To bridge that gap, this study employed a quantitative research approach, collecting survey data from 468 Chinese manufacturing firms. The data were analyzed using structural equation modeling (SEM) to assess the direct and indirect relationships between an IGEO, EGEO, GCA, GI, and Sustainable Performance. This methodological approach ensures a rigorous examination of how green orientations drive sustainability outcomes.

The contributions of this study are both theoretical and practical. Theoretically, it extends the literature on green management by providing empirical insights into the mechanisms linking an IGEO and EGEO to Sustainable Performance. Practically, the findings offer strategic guidance for business leaders seeking to implement effective sustainability practices, particularly in emerging economies where regulatory and market dynamics are rapidly evolving. By addressing the interplay between Internal and External Green Environmental Orientations, this study enhances the understanding of how firms can optimize their sustainability strategies to remain competitive in the global market.

2. Research Framework and Hypothesis Development

2.1. The Effect of an Internal Green Environmental Orientation

An Internal Green Environmental Orientation (IGEO) refers to the proactive approach organizations adopt to integrate environmental considerations into their internal processes, cultures, and strategic objectives. This orientation encompasses a variety of practices, including the implementation of eco-friendly policies, employee engagement with sustainability initiatives, and the establishment of a corporate culture that prioritizes environmental stewardship [15]. The growing body of literature indicates that an IGEO plays a crucial role in influencing both the competitive advantage and innovation within the manufacturing sector.

Organizations that exhibit a strong IGEO are likely to develop unique capabilities that distinguish them from competitors. Firms that invest in environmental practices often experience cost reductions through improved resource efficiency and waste minimization [16]. This operational excellence not only enhances profitability but also contributes to a positive brand image, attracting environmentally conscious consumers. Furthermore, a robust IGEO can facilitate compliance with increasingly stringent environmental regulations, reducing the risk of legal penalties and enhancing market access [17]. As firms adopt sustainable practices, they can leverage these efforts as a marketing advantage, positioning themselves as leaders in corporate social responsibility (CSR) and sustainability. This differentiation is particularly significant in the manufacturing sector, where consumers increasingly prioritize sustainability in their purchasing decisions, thereby fostering a Green Competitive Advantage [7]. Hence, our first hypothesis posits the following:

H1: 

An Internal Green Environmental Orientation supports the Green Competitive Advantage.

The relationship between an IGEO and Green Innovation is well-established in the literature. Firms that prioritize environmental sustainability are more likely to cultivate a culture of innovation, encouraging employees to generate ideas that lead to the development of eco-friendly products and processes [18,19]. A strong IGEO fosters an environment where employees feel empowered to experiment with new technologies and practices, driving creativity and innovation. This is supported by the notion that organizations with a commitment to sustainability are better positioned to identify and exploit emerging opportunities in green technologies [20]. Additionally, the integration of environmental considerations into the innovation process can enhance the overall Sustainability Performance of the organization, leading to the development of products that meet evolving consumer demands for sustainability [21].

Moreover, firms with a strong IGEO are often more adept at collaborating with external stakeholders, such as suppliers and customers, to co-create innovative solutions that address environmental challenges [22]. This collaborative approach not only enhances the innovation capacity of the organization but also contributes to the establishment of a sustainable supply chain, further reinforcing the firm’s competitive position in the market. Hence, our second hypothesis posits the following:

H2: 

An Internal Green Environmental Orientation supports Green Innovation.

2.2. The Effect of an External Green Environmental Orientation

An External Green Environmental Orientation (EGEO) refers to an organization’s commitment to addressing environmental concerns that extend beyond its internal practices, encompassing interactions with external stakeholders such as customers, suppliers, regulatory bodies, and the broader community. This orientation reflects how organizations engage with and respond to external environmental pressures and expectations, including market demands for sustainable products and compliance with environmental regulations [22].

Research indicates that organizations with a strong EGEO can leverage their sustainability initiatives to enhance their competitive advantage in the market [22]. By actively engaging with customers and other stakeholders around environmental issues, firms can build stronger relationships and foster brand loyalty among consumers who prioritize sustainability. This engagement often leads to the development of green marketing strategies that highlight the firm’s commitment to environmental stewardship, differentiating it from competitors [23]. Furthermore, firms that demonstrate a proactive approach to environmental issues are better positioned to anticipate and adapt to regulatory changes, reducing compliance risks and associated costs. This proactive stance not only enhances the firm’s reputation but also contributes to a sustainable competitive advantage in an increasingly eco-conscious marketplace. Hence, the third hypothesis posits the following:

H3: 

An External Green Environmental Orientation supports the Green Competitive Advantage.

The literature suggests a significant relationship between an EGEO and Green Innovation. Organizations that actively engage with external stakeholders are more likely to identify emerging trends and opportunities related to sustainability, which can drive innovation [20]. By collaborating with suppliers and customers, firms can access new ideas and technologies that facilitate the development of environmentally friendly products and processes. This collaborative approach to innovation is crucial in the manufacturing sector, where the complexities of supply chains and customer expectations necessitate a responsive and innovative mindset.

Moreover, firms with a strong EGEO often invest in partnerships with research institutions and industry groups to foster knowledge sharing and technological advancements in sustainability [24]. This external collaboration can lead to the co-creation of innovative solutions that not only meet regulatory requirements but also address consumer demands for sustainable products. Consequently, a robust EGEO not only enhances the firm’s capacity for Green Innovation but also reinforces its overall Sustainability Performance. Hence, the fourth hypothesis posits the following:

H4: 

An External Green Environmental Orientation supports Green Innovation.

2.3. The Green Competitive Advantage, Green Innovation, and Sustainable Performance

The Green Competitive Advantage (GCA) refers to the unique capabilities and market positioning that organizations achieve through their commitment to environmentally sustainable practices. This advantage not only differentiates firms in the marketplace but also enhances their ability to innovate and perform sustainably [25]. The interplay between the GCA, Green Innovation (GI), and Sustainable Performance (SP) is critical for organizations seeking to thrive in an increasingly eco-conscious environment.

Firms that successfully establish a GCA are often more inclined to invest in Green Innovation. This is because the competitive pressures and market expectations for sustainability push these firms to explore new technologies and processes that minimize their environmental impact [26]. By leveraging their GCA, organizations can allocate resources towards research into and development of sustainable products and practices, fostering a culture of innovation that prioritizes ecological considerations. Furthermore, organizations with a GCA are likely to have greater access to information, networks, and partnerships that facilitate innovative efforts, ultimately driving the development of groundbreaking green technologies and solutions [27]. Hence, the fifth hypothesis posits the following:

H5: 

A Green Competitive Advantage supports Green Innovation.

The relationship between the GCA and Sustainable Performance is well-supported in the literature. Organizations that successfully leverage their GCA can achieve superior performance across various dimensions, including economic, environmental, and social outcomes [18,26]. By adopting sustainable practices that resonate with consumer values, firms not only enhance their brand reputation but also improve their operational efficiencies, leading to cost savings and increased profitability. Moreover, Sustainable Performance is often bolstered by the positive feedback loop created by a GCA, where successful sustainability initiatives reinforce the firm’s competitive position, further driving performance improvements [27]. Hence, the sixth hypothesis posits the following:

H6: 

A Green Competitive Advantage supports Sustainable Performance.

Green Innovation is a critical driver of Sustainable Performance, as it encompasses the development of new products, services, and processes that contribute to environmental sustainability while also meeting market demands [28]. Research has shown that organizations that prioritize GI are better equipped to enhance their environmental performance, reduce resource consumption, and minimize waste, which are essential components of overall sustainability [29]. Furthermore, GI can lead to improved customer satisfaction and loyalty, as consumers increasingly seek out sustainable options. This alignment of innovation with sustainability goals not only enhances the firm’s competitive edge but also supports long-term sustainable outcomes. Hence, the seventh hypothesis posits the following:

H7: 

Green Innovation supports Sustainable Performance.

2.4. The Green Environmental Orientation and Sustainable Performance

A company’s Green Environmental Orientation (GEO) is built upon two pillars: its Internal (IGEO) and External Green Environmental Orientation (EGEO). These components reflect a company’s dedication to sustainability, both through its internal operations and its interactions with external stakeholders. The link between a robust GEO and strong Sustainable Performance (SP) is essential for any company striving to achieve lasting success in today’s demanding and ecologically aware market.

Organizations that adopt a strong IGEO are likely to experience enhanced Sustainable Performance through improved operational efficiencies and reduced environmental impacts. By integrating sustainability into their internal processes, firms can achieve better resource utilization, lower waste generation, and enhanced compliance with environmental regulations [30]. This proactive approach not only minimizes operational risks but also leads to cost savings and improved profitability. Moreover, a robust IGEO fosters a culture of sustainability within the organization, encouraging employees to engage in environmentally friendly practices and innovations that further contribute to their overall performance [31]. Research indicates that firms with a strong IGEO are better positioned to meet the sustainability expectations of stakeholders, thereby enhancing their reputation and market standing [32]. Hence, the eighth hypothesis posits the following:

H8: 

An Internal Green Environmental Orientation supports Sustainable Performance.

Similarly, organizations with a strong EGEO are well-equipped to enhance their Sustainable Performance by effectively responding to external pressures and stakeholder expectations regarding sustainability. By engaging with customers, suppliers, and regulatory bodies, firms can identify opportunities for improvement and innovation that align with sustainability goals [33]. This engagement often leads to the development of sustainable products and practices that not only meet market demands but also reduce environmental footprints [34]. Furthermore, a proactive EGEO enables organizations to capitalize on emerging trends in sustainability, positioning them as leaders in their respective industries [35]. The positive impact of an EGEO on SP is also reflected in enhanced brand loyalty and customer satisfaction, as consumers increasingly favor companies that demonstrate a commitment to environmental stewardship. Hence, the ninth hypothesis posits the following:

H9: 

An External Green Environmental Orientation supports Sustainable Performance.

2.5. The Mediating Effect

An Internal Green Environmental Orientation (IGEO) fosters a culture of sustainability within organizations, leading to the development of unique capabilities that enhance the Green Competitive Advantage. This advantage, in turn, enables firms to achieve superior Sustainable Performance. By implementing green practices internally, organizations can streamline their operations, reduce waste, and improve their resource efficiency, which strengthens their competitive positioning [36]. Research suggests that firms with a strong IGEO are more likely to leverage their GCA to differentiate themselves in the market, resulting in enhanced performance metrics [37,38]. Thus, the GCA serves as a critical link between an IGEO and SP, illustrating how internal sustainability efforts translate into tangible performance benefits.

Similarly, an External Green Environmental Orientation (EGEO) enhances organizations’ abilities to engage with external stakeholders, leading to the establishment of a GCA that positively impacts the SP. Firms that actively respond to external environmental pressures can create sustainable products and practices that resonate with consumer values, thereby strengthening their market position. The GCA developed through effective external engagement allows organizations to capitalize on sustainability trends, leading to improved performance outcomes [39]. Therefore, the GCA acts as a mediator between an EGEO and SP, demonstrating how external sustainability efforts can translate into competitive advantages that enhance overall performance.

Green Innovation is a critical outcome of an Internal Green Environmental Orientation, as organizations that prioritize sustainability internally are more likely to invest in innovative practices that enhance their environmental performance [40]. By fostering a culture of innovation, firms can develop new products and processes that not only meet regulatory standards but also exceed customer expectations for sustainability. This innovation leads to an improved SP, as sustainable practices often result in cost savings, increased efficiency, and enhanced brand loyalty [41]. Thus, GI serves as a mediator between an IGEO and SP, highlighting the importance of innovation in achieving sustainability goals.

Furthermore, Green Innovation (GI) plays a mediating role between a company’s External Green Environmental Orientation (EGEO) and its Sustainable Performance (SP). Companies that prioritize engagement with external stakeholders are more likely to uncover opportunities for sustainable innovations. This engagement provides valuable insights into market demands and environmental challenges, which can then be addressed through innovative solutions. Such external collaborations can foster innovations that not only sharpen a company’s competitive advantage but also contribute to enhanced sustainability outcomes. Therefore, GI serves as a critical bridge connecting an EGEO and SP, demonstrating how a focus on external sustainability initiatives can drive innovation that ultimately leads to an improved overall performance. Hence, the remaining hypotheses posit the following (Figure 1):

H10: 

A Green Competitive Advantage plays a mediating role between an Internal Green Environmental Orientation and Sustainable Performance.

H11: 

A Green Competitive Advantage plays a mediating role between an External Green Environmental Orientation and Sustainable Performance.

H12: 

Green Innovation plays a mediating role between an Internal Green Environmental Orientation and Sustainable Performance.

H13: 

Green Innovation plays a mediating role between an External Green Environmental Orientation and Sustainable Performance.

3. Research Methodology

3.1. Sampling and Data Collection

To ensure the relevance and reliability of this study’s findings, a structured methodology was employed in both participant selection and data collection. A purposive sampling approach was utilized, targeting manufacturing enterprises that had either implemented, were in the process of implementing, or were planning to implement environmentally sustainable practices. This strategy was directly aligned with the research objectives to ensure coherence with this study’s focus.

The sampling framework was designed to include a broad range of manufacturing sectors, thereby enhancing the generalizability of the findings. The selected industries encompassed firms engaged in heavy machinery and equipment, consumer goods, electronics, chemicals and pharmaceuticals, food and beverages, and textiles and apparel. Additionally, a category was designated for other manufacturing activities to account for any sectors not explicitly mentioned. This diversification was intended to give a comprehensive perspective on sustainability adoption across the manufacturing industry.

For data collection, structured questionnaires were distributed to managerial personnel within the selected organizations. The questionnaire was designed to obtain quantitative data regarding firms’ perceptions of Internal and External Green Environmental Orientations, Green Competitive Advantages associated with sustainable practices, advancements in green technologies, and overall Sustainable Performance. This methodological approach facilitated an in-depth analysis of the interconnections between these variables.

In total, 468 valid responses were obtained from a diverse array of manufacturing firms during December 2024–January 2025. The collected data underwent rigorous statistical analysis to evaluate this study’s hypotheses and generate meaningful insights into how environmental orientations influence organizational performance. To assess the adequacy of the sample size, this study followed established methodological guidelines. Previous research suggests a minimum of 5 respondents per observed variable, with a more robust recommendation of 10 to 20 respondents per variable [42]. Given that this study incorporated 42 observed variables and 5 latent variables, the final sample size of 468 was considered sufficient based on these established criteria (

Table 1. Demographic characteristics (n = 468).

Variables	Items	Frequency	Percentage (%)
Gender	Male	323	53.36
	Female	145	37.35
Age	20–30 Years	85	18.16
	31–40 Years	221	47.22
	41–50 Years	146	31.20
	51–60 Years	12	2.56
	Older Than 60 Years	4	0.85
Education	Bachelor’s Degree or Lower	295	63.03
	Master’s Degree	151	32.26
	Doctoral Degree	22	4.70
Year of Experience	Less Than 5 Years	86	18.38
	5–10 Years	256	54.70
	11–15 Years	104	22.22
	16–20 Years	16	3.42
	More Than 20 Years	6	1.28
Type of Manufacturing	Heavy Machinery and Equipment	63	13.46
	Consumer Goods	61	13.03
	Electronics	58	12.39
	Chemicals and Pharmaceuticals	75	16.03
	Food and Beverages	66	14.10
	Textiles and Apparel	68	14.53
	Other	77	16.45
Location of the Enterprise	North China	68	14.53
	South China	78	16.67
	East China	68	14.53
	Central China	65	13.89
	Northwest	54	11.54
	Southwest	60	12.82
	Southeast	45	9.62
	Northeast	30	6.41
Total		468	100.0

).

3.2. Measures’ Development and Data Assessment

In this study, the development of measures and data assessment were carried out with careful consideration of the research questions and the conceptual framework. The questionnaire was meticulously designed to capture the relevant constructs, with each observed variable informed by a thorough literature review. The Internal Green Environmental Orientation (IGEO) was measured through three observed variables: R&D investment, top management support, and firm culture [43,44]. Similarly, the External Green Environmental Orientation (EGEO) was assessed using perceived policy effectiveness, competitor competition, and customer demand [44,45,46]. For Green Competitive Advantage (GCA), the dimensions of differentiation advantage and cost advantage were employed [47]. Green Innovation (GI) was evaluated through green product innovation and green process innovation [48,49]. Lastly, Sustainable Performance (SP) was measured using economic, environmental, and social performance [30,50].

The questionnaire employed a 5-point Likert scale, ranging from 1 (Strongly Disagree) to 5 (Strongly Agree), which was chosen for its ability to effectively capture the degree of respondents’ agreement with each statement. The question design was guided by the established literature and expert consultations to ensure both validity and reliability.

The collected responses underwent a thorough statistical analysis to assess the relationships among key variables. The Likert scale provided a structured framework for evaluating the proposed hypotheses and deriving meaningful insights into the influence of Green Environmental Orientations on the Sustainable Performance, Green Competitive Advantage, and Green Innovation. By adopting a systematic approach to measure development and data evaluation, this study ensured that its findings were anchored in robust theoretical foundations and empirical evidence.

4. Hypotheses Testing and Results

4.1. Reliability Analysis

Table 2. Correlations and reliability estimates.

	CR	AVE	IGEO	EGEO	GCA	GI	SP
IGEO	0.879	0.448	0.669
EGEO	0.869	0.426	0.177 **	0.653
GCA	0.854	0.498	0.406 **	0.422 **	0.706
GI	0.853	0.495	0.416 **	0.405 **	0.484 **	0.704
SP	0.896	0.402	0.467 **	0.454 **	0.557 **	0.570 **	0.634

Note: * p < 0.05, ** p < 0.01. The diagonal blue numbers are the square root values of AVE.

presents the correlation coefficients and reliability estimates for the Internal (IGEO) and External Green Environmental Orientation (EGEO), Green Competitive Advantage (GCA), Green Innovation (GI), and Sustainable Performance (SP). To assess the internal consistency of the measurement model, Composite Reliability (CR) values were examined. All constructs produced CR values exceeding 0.85, indicating strong reliability, with SP achieving the highest CR value of 0.896, demonstrating robust measurement consistency.

Convergent validity was evaluated using the Average Variance Extracted (AVE) values. While all AVE values surpassed 0.40, none reached the recommended 0.50 threshold, suggesting that the constructs explain a substantial portion of the variance in their respective indicators. In terms of correlations, the IGEO exhibited a significant relationship with the EGEO at 0.177 (p < 0.01). Additionally, the GCA showed strong associations with the IGEO and EGEO, with correlation values of 0.406 and 0.422, respectively (p < 0.01). Likewise, GI demonstrated significant correlations with the IGEO (0.416), EGEO (0.405), and GCA (0.484), all at p < 0.01. SP displayed notable correlations with all other variables, particularly with the GCA (0.557) and GI (0.570), reinforcing its strong associations (p < 0.01).

The diagonal values in the table, highlighted in blue, represent the square roots of the AVE for each construct, serving as a measure of convergent validity. The results confirm that these values exceed their corresponding correlations with other constructs, affirming their adequate convergent validity. Overall, Table 2 illustrates significant relationships among the IGEO, EGEO, GCA, GI, and SP, with all constructs exhibiting high reliability. These findings establish a strong basis for hypothesis testing and support the validity of the measured constructs.

4.2. Structural Model

After confirming the measurement model’s reliability and validity, AMOS v.23 was employed to analyze the structural model and test the proposed hypotheses. When using Confirmatory Factor Analysis (CFA) with 5000 bootstrap samples, the model demonstrated a strong fit, as indicated by the fit indices detailed in

Table 3. Fit indices for SEM.

Indices	Criteria	Statistical Values
χ2/df	<3	1.01
GFI	>0.8	0.98
AGFI	>0.8	0.97
CFI	>0.9	0.99
RMSEA	<0.08	0.01
RMR	<0.08	0.02
IFI	>0.9	0.99

. The structural equation modeling (SEM) results were as follows: χ²/df = 1.01, GFI = 0.98, AGFI = 0.97, CFI = 0.99, RMSEA = 0.01, and RMR = 0.02. Additionally, Figure 2 visually illustrates the measurement model, depicting the factors and their relationships to enhance the reader’s understanding of the models’ structural validity.

The fit indices confirm that the model aligns well with the observed data. Specifically, a χ²/df value below 3 suggests an acceptable model fit. GFI and AGFI values exceeding 0.90 indicate a strong overall fit, while a CFI value above 0.95—consistent with the reported 0.99—demonstrates an excellent model performance. Furthermore, the RMSEA value of 0.01, remaining below the 0.06 threshold, signifies a close model–data fit, and the RMR value of 0.02, well under the 0.08 benchmark, suggests minimal residual discrepancies.

In summary, the findings presented in Table 3 and Figure 2 reinforce the robustness of the structural model and the hypothesized relationships. The detailed fit indices and visual representation of measurement model factors provide strong evidence of the model’s validity and reliability, supporting its applicability in this research.

4.3. Hypotheses Testing—Direct Effects

Table 4. Summary of path coefficients of hypotheses.

X→Y	Estimate	SE	z (CR Value)	p	Standard Estimate	Hypothesis Testing Results
IGEO→GCA	0.358	0.038	8.644	0.000 **	0.457	H1 support
IGEO→GI	0.261	0.044	6.343	0.000 **	0.299	H2 support
EGEO→GCA	0.385	0.036	9.149	0.000 **	0.483	H3 support
EGEO→GI	0.222	0.042	5.862	0.000 **	0.250	H4 support
GCA→GI	0.433	0.050	6.191	0.000 **	0.388	H5 support
GCA→SP	0.345	0.040	6.155	0.000 **	0.314	H6 support
GI→SP	0.345	0.036	6.874	0.000 **	0.349	H7 support
IGEO→SP	0.174	0.034	5.203	0.000 **	0.202	H8 support
EGEO→SP	0.170	0.035	5.670	0.000 **	0.194	H9 support

Note: ** p < 0.01; → indicates path influence relationship.

presents the path coefficients for all tested hypotheses, illustrating the relationships among the Internal (IGEO) and External Green Environmental Orientation (EGEO), Green Competitive Advantage (GCA), Green Innovation (GI), and Sustainable Performance (SP). The table provides estimates, standard errors (SEs), z-values (CR values), p-values, and standardized estimates, offering a detailed assessment of the significance and strength of each relationship.

The findings indicate that an IGEO significantly supports the GCA, with a path coefficient of 0.358 (p < 0.001), confirming Hypothesis 1 (H1). Likewise, an IGEO also positively influences GI, as reflected in the coefficient of 0.261 (p < 0.001), confirming Hypothesis 2 (H2). Regarding the EGEO, the results show a significant impact on both the GCA (0.385, p < 0.001) and GI (0.222, p < 0.001), validating Hypotheses 3 (H3) and 4 (H4), respectively.

Additionally, a GCA strongly supports GI, with a coefficient of 0.433 (p < 0.001), confirming Hypothesis 5 (H5). Moreover, the GCA significantly enhances SP, as evidenced by a coefficient of 0.345 (p < 0.001), confirming Hypothesis 6 (H6). GI also contributes positively to SP, with a path coefficient of 0.345 (p < 0.001), providing support for Hypothesis 7 (H7).

Further, the IGEO demonstrates a positive relationship with SP, with a coefficient of 0.174 (p < 0.001), confirming Hypothesis 8 (H8). Similarly, the EGEO significantly affects SP, as indicated by a coefficient of 0.170 (p < 0.001), supporting Hypothesis 9 (H9).

Overall, the results confirm that an IGEO and EGEO play critical roles in strengthening the GCA and GI, which, in turn, positively contribute to SP. These findings highlight the significance of a green orientation in fostering a competitive advantage and driving innovation, ultimately enhancing Sustainable Performance. The substantial path coefficients and their associated p-values further reinforce the robustness of the relationships among the studied constructs.

4.4. Hypotheses Testing—Mediation Effect

Table 5. Mediating effect test.

Mediating Effect Test
Hypothesis		Effect	Point Estimate	Bootstrapping		Result
				Bias-Corrected 95% CI
				Lower	Upper
H10	IGEO→GCA→SP	Total effect	0.298	0.212	0.384	Supported
		Direct effect	0.174	0.100	0.248	Supported
		Indirect effect	0.124	0.062	0.186	Supported
H11	IGEO→GI→SP	Total effect	0.264	0.182	0.346	Supported
		Direct effect	0.174	0.100	0.248	Supported
		Indirect effect	0.090	0.051	0.129	Supported
H12	EGEO→GCA→SP	Total effect	0.303	0.226	0.380	Supported
		Direct effect	0.170	0.090	0.250	Supported
		Indirect effect	0.133	0.076	0.190	Supported
H13	EGEO→GI→SP	Total effect	0.247	0.166	0.328	Supported
		Direct effect	0.170	0.090	0.250	Supported
		Indirect effect	0.077	0.047	0.107	Supported

outlines the results of the mediation analysis, evaluating the indirect relationships among the Internal (IGEO) and External Green Environmental Orientation (EGEO), Green Competitive Advantage (GCA), Green Innovation (GI), and Sustainable Performance (SP). Each hypothesis is examined in terms of total, direct, and indirect effects, utilizing bias-corrected 95% confidence intervals (CIs) generated through bootstrapping.

Hypothesis 10 (H10) assesses whether GCA mediates the relationship between an IGEO and an SP. The total effect is 0.298, with a 95% CI ranging from 0.212 to 0.384, indicating a strong overall impact. The direct effect of an IGEO on SP is 0.174 (95% CI: 0.100 to 0.248), while the indirect effect via the GCA is 0.124 (95% CI: 0.062 to 0.186). Since both direct and indirect effects are significant, the mediation effect of the GCA is confirmed.

Hypothesis 11 (H11) explores whether GI serves as a mediator between an IGEO and SP. The total effect remains at 0.264 (95% CI: 0.182 to 0.346), with a direct effect of 0.174 (95% CI: 0.100 to 0.248) and an indirect effect through GI of 0.090 (95% CI: 0.051 to 0.129). The statistical significance of both effects confirms GI’s role as a mediator in this relationship.

Hypothesis 12 (H12) examines the GCA’s mediating influence between an EGEO and SP. The total effect is recorded at 0.303 (95% CI: 0.226 to 0.380), with a direct effect of 0.170 (95% CI: 0.090 to 0.250) and an indirect effect via the GCA of 0.133 (95% CI: 0.076 to 0.190). Since both effects are supported, the GCA is confirmed as a mediator in this pathway.

Hypothesis 13 (H13) evaluates whether GI mediates the relationship between an EGEO and SP. The total effect remains at 0.247 (95% CI: 0.166 to 0.328), with a direct effect of 0.170 (95% CI: 0.090 to 0.250) and an indirect effect through GI of 0.077 (95% CI: 0.047 to 0.107). The significance of both pathways confirms GI’s mediating role.

Overall, the findings from Table 5 provide strong evidence that both the GCA and GI act as mediators in the relationships between an IGEO and SP, as well as between an EGEO and SP. The results underscore the crucial roles of a competitive advantage and innovation in enhancing Sustainable Performance through green environmental orientations. These insights highlight the necessity of fostering both strategic and innovative capabilities to achieve sustainability objectives.

5. Conclusions and Discussion

This research provides valuable insights into the interconnected relationships between the Internal (IGEO) and External Green Environmental Orientation (EGEO), Green Competitive Advantage (GCA), Green Innovation (GI), and Sustainable Performance (SP). By examining these elements together, this study emphasizes the need for a comprehensive approach to green management, where internal initiatives and external collaborations work in tandem to achieve sustainability goals. The findings suggest that organizations with a strong IGEO, combined with active engagement with external stakeholders, can significantly boost their GCA and GI, leading to enhanced SP. This highlights the importance of integrating sustainability into strategic planning, leveraging both internal resources and external partnerships to foster innovation and maintain a competitive edge.

From a practical perspective, this study offers actionable recommendations for managers. Implementing holistic green strategies, investing in sustainable innovation, and developing robust systems to measure and track sustainability performance are essential steps for organizations aiming to excel in today’s environmentally conscious market. Additionally, fostering a culture of continuous improvement and strengthening relationships with external stakeholders can amplify the positive impact of green initiatives on overall performance.

Despite its contributions, this study has certain limitations. The use of cross-sectional data restricts the ability to establish causal relationships, and the focus on specific industries may limit the generalizability of the findings. To address these limitations, future research could adopt longitudinal approaches to explore how these relationships evolve over time. Expanding the scope to include a wider range of industries and geographic regions would also provide a more nuanced understanding of the factors influencing Sustainable Performance.

A particularly promising direction for future research is the comparative analysis of the same industrial sector across different economies. For example, comparing manufacturing firms in developed and developing countries could reveal how variations in cultural, regulatory, and economic contexts influence the adoption and effectiveness of green practices. Such studies would not only deepen the theoretical understanding of green management but also offer practical insights for multinational organizations seeking to implement sustainable strategies across diverse markets. Understanding these differences could help businesses tailor their approaches to align with local conditions while maintaining global sustainability standards.

In summary, this study advances the theoretical framework of green management while offering practical guidance for organizations striving to improve their sustainability performance. As the global business landscape continues to evolve, the ability to balance Internal and External Green Environmental Orientations will be critical to achieving long-term success. By embracing sustainability as a core strategic objective, organizations can drive innovation, strengthen their competitive position, and create lasting value for stakeholders in an increasingly sustainability-driven world.

5.1. Theoretical Contributions

First, this study significantly enhances the understanding of how the Internal (IGEO) and External Green Environmental Orientation (EGEO) influence the Green Competitive Advantage (GCA) and Green Innovation (GI), which in turn affect Sustainable Performance (SP). Unlike previous research, which often focused on isolated aspects of green practices, this integrated framework demonstrates the importance of both internal and external orientations in achieving sustainability goals [37]. By highlighting the interplay between these dimensions, this study contributes to the literature by providing a more holistic perspective on how organizations can effectively implement green strategies.

Second, the identification of the GCA and GI as mediators in the relationships between green orientations and SP adds depth to the theoretical framework of sustainability. Previous studies have primarily examined direct relationships, often overlooking the mediating mechanisms at play [28]. By illustrating that the influence of green orientations on performance operates through competitive advantages and innovation, this research aligns with and extends resource-based views and dynamic capabilities theories. This nuanced understanding encourages future scholars to consider mediating constructs, thereby enriching the discourse on how organizations can strategically leverage green practices for an improved performance.

Third, the empirical validation of the constructs involved in this study provides a solid foundation for future research. While earlier studies have proposed various models of green management [22], the robust statistical methods and bootstrapping techniques employed here reinforce the reliability and validity of an IGEO, EGEO, GCA, GI, and SP as essential components of the green management literature. This empirical foundation not only enriches the theoretical framework but also encourages further scholarly exploration into how organizations can effectively leverage green orientations to drive sustainable outcomes. These contributions highlight the strategic significance of green practices in enhancing Sustainable Performance, setting this research apart from previous studies that may not have rigorously validated their constructs through empirical analysis.

5.2. Limitations and Future Research Directions

While this study provides valuable insights into the relationships between Internal and External Green Environmental Orientations, the Green Competitive Advantage, Green Innovation, and Sustainable Performance, it is not without limitations. First, the reliance on cross-sectional data presents a potential constraint, as these data only capture a single point in time. This limitation restricts the ability to establish causal relationships between the variables. To address this, future research could employ longitudinal designs to track these relationships over time, offering a more comprehensive understanding of how green orientations influence Sustainable Performance in the long run.

Second, this study’s focus on specific industries may limit the generalizability of the findings. While the selected sectors provide relevant insights, green practices and their impacts may vary across industries and geographical regions. Future studies should extend this research to a broader range of industries and cultural contexts to enhance external validity and identify industry-specific factors that shape green management strategies.

Third, although this study highlights the Green Competitive Advantage (GCA) and Green Innovation (GI) as mediating factors, it does not thoroughly investigate the potential bidirectional relationships or the underlying mechanisms through which these elements impact Sustainable Performance. Future research could explore how the GCA and GI not only contribute to but are also influenced by sustainability initiatives over time. Furthermore, examining additional variables such as the organizational culture, leadership approaches, or employee involvement could provide a more comprehensive understanding of the dynamic processes that facilitate the successful adoption and long-term maintenance of green strategies.

Furthermore, this study primarily focuses on the benefits of Internal and External Green Environmental Orientations and their positive impact on Sustainable Performance. However, organizations often encounter challenges in implementing green initiatives, such as financial constraints, resistance to change, or conflicting stakeholder expectations. Future research should investigate these obstacles to provide a more balanced and pragmatic perspective on green management, offering insights into strategies for overcoming these challenges.

In summary, while this study establishes a strong foundation for understanding the interplay between Internal and External Green Environmental Orientations and Sustainable Performance, it also highlights opportunities for future research. By addressing these limitations and exploring new dimensions of green management, scholars can contribute to a more comprehensive theoretical and practical understanding of sustainability strategies in the evolving business environment.

6. Implications

The findings of this study provide valuable insights for organizations striving to enhance their Sustainable Performance through effective green management strategies. Sustainability is increasingly recognized as a fundamental driver of long-term business success, requiring organizations to adopt proactive and strategic approaches to environmental responsibility.

First, this study underscores the significance of both the Internal (IGEO) and External Green Environmental Orientation (EGEO) as key enablers of a Green Competitive Advantage (GCA) and Green Innovation (GI). This highlights the need for managers to cultivate a sustainability-oriented corporate culture that not only prioritizes internal environmental responsibility but also actively engages with external stakeholders, including suppliers, customers, policymakers, and industry partners. A well-integrated green strategy that seamlessly aligns internal initiatives with external collaborations can create a synergistic effect, leading to enhanced resilience, regulatory compliance, and overall organizational performance.

Second, the mediating role of the GCA and GI emphasizes the critical need for organizations to invest in initiatives that strengthen these factors. To drive sustainable innovation and achieve a competitive edge, managers should allocate resources toward environmentally conscious research and development, sustainable product designs, eco-efficient production processes, and advanced green technologies. Encouraging cross-functional collaboration on sustainability projects, fostering an innovation-driven mindset, and forming strategic partnerships with green technology providers and academic institutions can help organizations develop cutting-edge solutions that contribute to long-term success in an increasingly sustainability-conscious market. Moreover, embedding circular economy principles—such as waste reduction, resource efficiency, and product lifecycle sustainability—can further enhance an organization’s green competitive position.

Third, the empirical validation of green management constructs underscores the importance of establishing robust Sustainability Performance measurement systems. Organizations should develop comprehensive key performance indicators (KPIs) to systematically track the IGEO, EGEO, GCA, GI, and Sustainable Performance (SP). A data-driven approach to monitoring and assessing these variables will enable managers to identify strengths, address areas for improvement, and make evidence-based decisions that align with long-term sustainability goals. Implementing sustainability audits, adopting internationally recognized environmental standards (such as ISO 14001 and ESG reporting frameworks), and leveraging digital sustainability tools (such as blockchain for supply chain transparency and AI-driven carbon footprint analysis) can further enhance organizational accountability and environmental stewardship.

In conclusion, this study highlights the necessity of a holistic and integrated approach to green management. By aligning internal and external sustainability efforts, strengthening competitive and innovative capabilities, and adopting data-driven, performance-based sustainability strategies, organizations can significantly enhance their long-term environmental and economic performance. This approach not only fosters corporate resilience and regulatory adaptability but also provides a strategic advantage in a business landscape increasingly influenced by sustainability considerations, stakeholder expectations, and evolving global environmental regulations.