Green Organizational Culture and Organizational Performance: The Mediating Role of Green Innovation and Environmental Performance

M. Imran, I. Arshad, F. Ismail

Abstract

This study aims to develop and test a theoretical model that empirically examines how green organizational culture affects organizational performance. Additionally, investigated and statistically explored the study model's and their mediating role of environmental performance and green innovation, which had previously received little attention. For the sample size of 170 respondents, a quantitative approach was used. In addition, convenient random sampling was utilized to get data from the respondents. Data was gathered from a field survey utilizing a closed-ended questionnaire from Malaysia's industrial and service organizations from Malacca, Johor, Selangor, and Kedah states. The structural equation modelling approach was used to achieve the research purpose. Green organizational culture was a significant predictor of green performance in this research. Furthermore, the findings reveal that environmental performance and green innovation fully mediate the relationship between green organizational culture and organizational performance. However, this study has several limitations that lead to future research directions. The study's most significant drawback is that the data is collected merely from Malaysian industries, making generalization difficult. In addition, the cross-sectional data adds further restrictions to it. Nevertheless, by addressing organizational performance, which has not been empirically examined, this research adds to the current literature on green organizational culture, environmental performance, and green innovation. Furthermore, this research also presents a novel theoretical explanation for the relationships by understanding the mediating role of environmental performance and green innovation.  

Keywords

green organizational culture; environmental performance; green innovation

Full Text:

PDF

References

Abid, S. K., Sulaiman, N., Chan, S. W., Nazir, U., Abid, M., Han, H., ... & Vega-Muñoz, A. (2021). Toward an integrated disaster management approach: How artificial intelligence can boost disaster management. Sustainability, 13(22), 12560.

Afum, E., Agyabeng-Mensah, Y., & Owusu, J. A. (2020). Translating Environmental Management Practices into Improved Environmental Performance via Green Organizational Culture: Insight from Ghanaian Manufacturing SMEs. Journal of Supply Chain Management Systems, 9(1). 18-24.

Ainin, S., Naqshbandi, M. M., & Dezdar, S. (2016). Impact of adoption of Green IT practices on organizational performance. Quality & Quantity, 50(5), 1929-1948.

Alhadid, A. Y., & As' ad, H. A. R. (2014). The Impact of green innovation on organizational performance, environmental management behavior as a moderate variable: An analytical study on Nuqul group in Jordan. International Journal of Business and Management, 9(7), 51-58.

Anthony Jr, B. (2019). Green information system integration for environmental performance in organizations: An extension of belief–action–outcome framework and natural resource-based view theory. Benchmarking: An International Journal.

Asadi, S., & Dahlan, H. M. (2017). Organizational research in the field of Green IT: A systematic literature review from 2007 to 2016. Telematics and Informatics, 34(7), 1191-1249.

Awan, U., Sroufe, R., & Kraslawski, A. (2019). Creativity enables sustainable development: Supplier engagement as a boundary condition for the positive effect on green innovation. Journal of Cleaner Production, 226, 172-185.

Bassey, B.E., Effiok, S.O. and Eton, O.E., (2013). The impact of environmental accounting and reporting on organizational performance of selected oil and gas companies in Niger Delta Region of Nigeria. Research Journal of Finance and Accounting, 4(3), 57-73.

Bennett, M., & James, P. (Eds.). (2017). The Green bottom line: environmental accounting for management: current practice and future trends. Routledge.

Cegarra-Navarro, J. G., Soto-Acosta, P., & Wensley, A. K. (2016). Structured knowledge processes and firm performance: The role of organizational agility. Journal of Business Research, 69(5), 1544-1549.

Chakraborty, D., & Biswas, W. (2020). Going green with green HRM practices–A strategic initiative for reinvigorating performance optimization in companies. Prabandhan: Indian Journal of Management, 13(10-11), 8-26.

Chan, H. K., Chiou, T. Y., & Lettice, F. (2012). Research framework for analyzing the relationship between greening of suppliers and green innovation on firms’ performance. International Journal of Applied Logistics (IJAL), 3(3), 22-36.

Chan, R. Y., He, H., Chan, H. K., & Wang, W. Y. (2012). Environmental orientation and corporate performance: The mediation mechanism of green supply chain management and moderating effect of competitive intensity. Industrial Marketing Management, 41(4), 621-630.

Chandra, K., Arafah, W., & Basri, Y. Z. (2021). Analysis of the effect of green organizational culture on organizational performance and competitive advantages of green through green innovation in manufacturing industries. Journal of Hunan University Natural Sciences, 48(6).24-29.

Chang, C. H. (2011). The influence of corporate environmental ethics on competitive advantage: The mediation role of green innovation. Journal of Business Ethics, 104(3), 361-370.

Chang, C. L. H., & Lin, T. C. (2015). The role of organizational culture in the knowledge management process. Journal of Knowledge management, 19(3), 433-455.

Chang, K. (2015). The impacts of environmental performance and propensity disclosure on financial performance: Empirical evidence from unbalanced panel data of heavy-pollution industries in China. Journal of Industrial Engineering and Management (JIEM), 8(1), 21-36.

Chen, Y., Tang, G., Jin, J., Li, J., & Paillé, P. (2015). Linking market orientation and environmental performance: The influence of environmental strategy, employee’s environmental involvement, and environmental product quality. Journal of Business Ethics, 127(2), 479-500.

Cherchem, N. (2017). The relationship between organizational culture and entrepreneurial orientation in family firms: Does generational involvement matter?. Journal of family business strategy, 8(2), 87-98.

Cherrafi, A., Garza-Reyes, J. A., Kumar, V., Mishra, N., Ghobadian, A., & Elfezazi, S. (2018). Lean, green practices and process innovation: A model for green supply chain performance. International Journal of Production Economics, 206, 79-92.

Chiou, T. Y., Chan, H. K., Lettice, F., & Chung, S. H. (2011). The influence of greening the suppliers and green innovation on environmental performance and competitive advantage in Taiwan. Transportation Research Part E: Logistics and Transportation Review, 47(6), 822-836.

Chouaibi, S., & Chouaibi, J. (2021). Social and ethical practices and firm value: the moderating effect of green innovation: evidence from international ESG data. International Journal of Ethics and Systems, 37(3), 442-465.

Chuang, S. P., & Huang, S. J. (2018). The effect of environmental corporate social responsibility on environmental performance and business competitiveness: The mediation of green information technology capital. Journal of Business Ethics, 150(4), 991-1009.

Cohen, J. (2013). Statistical power analysis for the behavioral sciences. Academic press.

Cohen, L., Manion, L., & Morrison, K. (2017). The ethics of educational and social research. In Research methods in education (pp. 111-143). Routledge.

Dangelico, R. M., & Pontrandolfo, P. (2015). Being ‘green and competitive’: The impact of environmental actions and collaborations on firm performance. Business Strategy and the Environment, 24(6), 413-430.

Dubey, R., Gunasekaran, A., & Ali, S. S. (2015). Exploring the relationship between leadership, operational practices, institutional pressures and environmental performance: A framework for green supply chain. International Journal of Production Economics, 160, 120-132.

Dzhengiz, T., & Niesten, E. (2020). Competences for environmental sustainability: A systematic review on the impact of absorptive capacity and capabilities. Journal of business ethics, 162(4), 881-906.

El-Kassar, A. N., & Singh, S. K. (2019). Green innovation and organizational performance: the influence of big data and the moderating role of management commitment and HR practices. Technological Forecasting and Social Change, 144, 483-498.

Esfahbodi, A., Zhang, Y., & Watson, G. (2016). Sustainable supply chain management in emerging economies: Trade-offs between environmental and cost performance. International Journal of Production Economics, 181, 350-366.

Feng, M., Yu, W., Wang, X., Wong, C. Y., Xu, M., & Xiao, Z. (2018). Green supply chain management and financial performance: The mediating roles of operational and environmental performance. Business strategy and the Environment, 27(7), 811-824.

Forehead, H., & Huynh, N. (2018). Review of modelling air pollution from traffic at street-level-The state of the science. Environmental Pollution, 241, 775-786.

Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of marketing research, 18(1), 39-50.

Foroughi, B., Iranmanesh, M., & Hyun, S. S. (2019). Understanding the determinants of mobile banking continuance usage intention. Journal of Enterprise Information Management.

Fraj, E., Martínez, E., & Matute, J. (2011). Green marketing strategy and the firm's performance: the moderating role of environmental culture. Journal of Strategic Marketing, 19(4), 339-355.

García-Machado, J. J., & Martínez-Ávila, M. (2019). Environmental performance and green culture: The mediating effect of green innovation. An application to the automotive industry. Sustainability, 11(18), 4874.

Gelmez, E. (2020). The Mediation Role of Environmental Performance in the Effects of Green Supply Chain Management Practices on Business Performance. Avrupa Bilim ve Teknoloji Dergisi, (19), 606-613.

Ghisellini, P., Cialani, C., & Ulgiati, S. (2016). A review on circular economy: the expected transition to a balanced interplay of environmental and economic systems. Journal of Cleaner production, 114, 11-32.

Glisson, C. (2015). The role of organizational culture and climate in innovation and effectiveness. Human service organizations: management, leadership & governance, 39(4), 245-250.

Götz, O., Liehr-Gobbers, K., & Krafft, M. (2010). Evaluation of structural equation models using the partial least squares (PLS) approach. In Handbook of partial least squares (pp. 691-711). Springer, Berlin, Heidelberg.

Gürlek, M., & Tuna, M. (2018). Reinforcing competitive advantage through green organizational culture and green innovation. The service industries journal, 38(7-8), 467-491.

Hadjri, M. I., Perizade, B., & Farla, W. (2019, October). Green human resource management, green organizational culture, and environmental performance: An empirical study. In 2019 International Conference on Organizational Innovation (ICOI 19).

Hair Jr, J. F., Sarstedt, M., Hopkins, L., & Kuppelwieser, V. G. (2014). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European business review.

Hair Jr, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2021). A primer on partial least squares structural equation modeling (PLS-SEM). Sage publications.

Hardika, A. L., Roespinoedji, R., Rashid, A. Z. A., & Saudi, M. H. M. (2019). The effect of green organizational culture and green innovation in influencing competitive advantage and environmental performance. International Journal of Supply Chain Management, 1(1), 18-27.

Helfat, C. E., Finkelstein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., & Winter, S. G. (2009). Dynamic capabilities: Understanding strategic change in organizations. John Wiley & Sons.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2012). Using partial least squares path modeling in advertising research: basic concepts and recent issues. In Handbook of research on international advertising. Edward Elgar Publishing.

Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the academy of marketing science, 43(1), 115-135.

Ifrim, A. M., Stoenica, I. C., Petrescu, A. G., & Bilcan, F. R. (2018). The impact of green innovation on organizational performance: Evidence from Romanian SMEs. Academic Journal of Economic Studies, 4(1), 82-88.

Ikram, M., Zhou, P., Shah, S. A. A., & Liu, G. Q. (2019). Do environmental management systems help improve corporate sustainable development? Evidence from manufacturing companies in Pakistan. Journal of Cleaner Production, 226, 628-641.

Imran, M., & Ismail, F. (2021). The Dimensions of Organizational Culture Influence on Organizational Performance in Pakistan's Public Banking Sector.

Imran, M., Ismail, F., Arshad, I., Zeb, F., & Zahid, H. (2021). The mediating role of innovation in the relationship between organizational culture and organizational performance in Pakistan's banking sector. Journal of Public Affairs, e2717.

Jorge, M. L., Madueño, J. H., Martínez-Martínez, D., & Sancho, M. P. L. (2015). Competitiveness and environmental performance in Spanish small and medium enterprises: is there a direct link?. Journal of cleaner production, 101, 26-37.

Kaplan, R. S., & Norton, D. P. (1996). Linking the balanced scorecard to strategy. California management review, 39(1), 53-79.

Khanifah, K., Udin, U., Hadi, N., & Alfiana, F. (2020). Environmental performance and firm value: Testing the role of firm reputation in emerging countries. International Journal of Energy Economics and Policy, 10(1), 96.

Kline, R. B. (2012). Assumptions in structural equation modeling.

Kraus, S., Rehman, S.U. and García, F.J.S., (2020). Corporate social responsibility and environmental performance: The mediating role of environmental strategy and green innovation. Technological Forecasting and Social Change, 160, 120262.

Küçükoğlu, M. T., & Pınar, R. İ. (2016). The mediating role of green organizational culture between sustainability and green Innovation: A research in Turkish companies. Business & Management Studies: An International Journal, 6, 64-85.

Lee, H. (2020). The role of environmental uncertainty, green HRM and green SCM in influencing organization’s energy efficacy and environmental performance. International Journal of Energy Economics and Policy, 10(3), 332.

Leonidou, L. C., Fotiadis, T. A., Christodoulides, P., Spyropoulou, S., & Katsikeas, C. S. (2015). Environmentally friendly export business strategy: Its determinants and effects on competitive advantage and performance. International Business Review, 24(5), 798-811.

Levinthal, D. A., & Workiewicz, M. (2018). When two bosses are better than one: Nearly decomposable systems and organizational adaptation. Organization Science, 29(2), 207-224.

Li, D., Huang, M., Ren, S., Chen, X., & Ning, L. (2018). Environmental legitimacy, green innovation, and corporate carbon disclosure: Evidence from CDP China 100. Journal of Business Ethics, 150(4), 1089-1104.

Lin, H., Zeng, S. X., Ma, H. Y., Qi, G. Y., & Tam, V. W. (2014). Can political capital drive corporate green innovation? Lessons from China. Journal of cleaner production, 64, 63-72.

Lisi, I. E. (2015). Translating environmental motivations into performance: The role of environmental performance measurement systems. Management Accounting Research, 29, 27-44.

Mahrous, A. A., & Genedy, M. A. (2019). Connecting the dots: The relationship among intra-organizational environment, entrepreneurial orientation, market orientation and organizational performance. Journal of Entrepreneurship in Emerging Economies, 11(1), 2-21.

Manrique, S., & Martí-Ballester, C. P. (2017). Analyzing the effect of corporate environmental performance on corporate financial performance in developed and developing countries. Sustainability, 9(11), 1957-1961.

Margaretha, M., & Saragih, S. (2013, March). Developing new corporate culture through green human resource practice. In International Conference on Business, Economics, and Accounting (Vol. 1, No. 10).

Masri, H. A., & Jaaron, A. A. (2017). Assessing green human resources management practices in Palestinian manufacturing context: An empirical study. Journal of cleaner production, 143, 474-489.

Muisyo, P. K., & Qin, S. (2021). Enhancing the FIRM’S green performance through green HRM: The moderating role of green innovation culture. Journal of Cleaner Production, 289, 125720.

Neutzling, D. M., Land, A., Seuring, S., & do Nascimento, L. F. M. (2018). Linking sustainability-oriented innovation to supply chain relationship integration. Journal of Cleaner Production, 172, 3448-3458.

Nishant, R., Teo, T., Goh, M., & Krishnan, S. (2012). Does environmental performance affect organizational performance? Evidence from green IT organizations.

Papadopoulos, T., Gunasekaran, A., Dubey, R., Altay, N., Childe, S. J., & Fosso-Wamba, S. (2017). The role of Big Data in explaining disaster resilience in supply chains for sustainability. Journal of Cleaner Production, 142, 1108-1118.

Paul, I. D., Bhole, G. P., & Chaudhari, J. R. (2014). A review on green manufacturing: it's important, methodology and its application. Procedia materials science, 6, 1644-1649.

Perez‐Valls, M., Cespedes‐Lorente, J., & Moreno‐Garcia, J. (2016). Green practices and organizational design as sources of strategic flexibility and performance. Business Strategy and the Environment, 25(8), 529-544.

Pham, T. N., Phan, Q. P. T., Tučková, Z., Vo, T. N., & Nguyen, L. H. (2018). Enhancing the organizational citizenship behavior for the environment: the roles of green training and organizational culture. Management & Marketing-Challenges for the Knowledge Society.

Porter, T. H., Gallagher, V. C., & Lawong, D. (2016). The greening of organizational culture: revisited fifteen years later. American Journal of Business.

Qu, X., Khan, A., Yahya, S., Zafar, A. U., & Shahzad, M. (2021). Green core competencies to prompt green absorptive capacity and bolster green innovation: the moderating role of organization’s green culture. Journal of Environmental Planning and Management, 1-46.

Ramanathan, R. (2018). Understanding complexity: The curvilinear relationship between environmental performance and firm performance. Journal of Business Ethics, 149(2), 383-393.

Rawashdeh, A. (2018). The impact of green human resource management on organizational environmental performance in Jordanian health service organizations. Management Science Letters, 8(10), 1049-1058.

Roscoe, S., Subramanian, N., Jabbour, C. J., & Chong, T. (2019). Green human resource management and the enablers of green organisational culture: Enhancing a firm's environmental performance for sustainable development. Business Strategy and the Environment, 28(5), 737-749.

Schein, E. H. (1992). How can organizations learn faster?: the problem of entering the Green Room.

Scholz, P., & Voracek, J. (2016). Organizational culture and green management: innovative way ahead in hotel industry. Measuring Business Excellence, 20(1), 41-52.

Sepahvand, R., Sepahvand, M., Arefnezhad, M., & Nazarpouri, A. H. (2020). The effect of green HRM practices on green innovation with the mediating role of green organizational culture. Organizational Culture Management.

Shahzad, M., Qu, Y., Javed, S. A., Zafar, A. U., & Rehman, S. U. (2020). Relation of environment sustainability to CSR and green innovation: A case of Pakistani manufacturing industry. Journal of Cleaner Production, 253, 119938.

Singh, M. P., Chakraborty, A., & Roy, M. (2016). The link among innovation drivers, green innovation and business performance: empirical evidence from a developing economy. World Review of Science, Technology and Sustainable Development, 12(4), 316-334.

Singh, S. K., Chen, J., Del Giudice, M., & El-Kassar, A. N. (2019). Environmental ethics, environmental performance, and competitive advantage: role of environmental training. Technological Forecasting and Social Change, 146, 203-211.

Tahir, R., Athar, M.R., Faisal, F. and Solangi, B., (2019). Green organizational culture: A review of literature and future research agenda. Annals of Contemporary Developments in Management & H.R. (ACDMHR), Print ISSN, pp.2632-7686.

Tan, C. L., Zailani, S. H. M., Tan, S. C., & Shaharudin, M. R. (2016). The impact of green supply chain management practices on firm competitiveness. International Journal of Business Innovation and Research, 11(4), 539-558.

Tang, M., Walsh, G., Lerner, D., Fitza, M. A., & Li, Q. (2018). Green innovation, managerial concern and firm performance: An empirical study. Business Strategy and the Environment, 27(1), 39-51.

Trumpp, C., & Guenther, T. (2017). Too little or too much? Exploring U‐shaped relationships between corporate environmental performance and corporate financial performance. Business Strategy and the Environment, 26(1), 49-68.

Úbeda‐García, M., Marco‐Lajara, B., Zaragoza‐Sáez, P. C., Manresa‐Marhuenda, E., & Poveda‐Pareja, E. (2021). Green ambidexterity and environmental performance: The role of green human resources. Corporate Social Responsibility and Environmental Management, 1-14

Vallaster, C., Kraus, S., Kailer, N., & Baldwin, B. (2018). Responsible entrepreneurship: Outlining the contingencies. International Journal of Entrepreneurial Behavior & Research, 30(4), 666-683.

Venkatraman, N., & Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of management review, 11(4), 801-814.

Wang, C. H., & Juo, W. J. (2021). An environmental policy of green intellectual capital: Green innovation strategy for performance sustainability. Business Strategy and the Environment.

Wang, H., Khan, M. A. S., Anwar, F., Shahzad, F., Adu, D., & Murad, M. (2021). Green Innovation Practices and Its Impacts on Environmental and Organizational Performance. Frontiers in Psychology, 11, 3316.

Waruhiu, H. (2014). Rebalancing the Balanced Scorecard: a sequel to Kaplan and Norton. European Journal of Business and Management, 6(29), 116-124.

Weng, H. H. R., Chen, J. S., & Chen, P. C. (2015). Effects of green innovation on environmental and corporate performance: A stakeholder perspective. Sustainability, 7(5), 4997-5026.

Wijethilake, C., Munir, R., & Appuhami, R. (2018). Environmental innovation strategy and organizational performance: Enabling and controlling uses of management control systems. Journal of Business Ethics, 151(4), 1139-1160.

Wujiabudula, A., & Zehir, C. (2016). The effects of organizational learning on firm performance through product innovation. Journal of Global Strategic Management, 10(1), 79-88.

Wong, C. W. (2013). Leveraging environmental information integration to enable environmental management capability and performance. Journal of Supply Chain Management, 49(2), 114-136.

Wu, S. I., & Wu, Y. C. (2014). The influence of enterprisers' green management awareness on green management strategy and organizational performance. International Journal of Quality & Reliability Management, 31(4), 455-476.

Yang, Z., Sun, J., Zhang, Y., & Wang, Y. (2017). Green, green, it’s green: A triad model of technology, culture, and innovation for corporate sustainability. Sustainability, 9(8), 1369.

Zameer, H., Wang, Y., Yasmeen, H., & Mubarak, S. (2020). Green innovation as a mediator in the impact of business analytics and environmental orientation on green competitive advantage. Management Decision.

Zhang, F., & Zhu, L. (2019). Enhancing corporate sustainable development: Stakeholder pressures, organizational learning, and green innovation. Business Strategy and the Environment, 28(6), 1012-1026.

Zhao, N., Liu, X., Pan, C., & Wang, C. (2021). The performance of green innovation: From an efficiency perspective. Socio-Economic Planning Sciences, 101062.