Effects of sustainable supply chain integration on green innovation and firm performance

Abstract

Sustainability has a well-established influence on innovation, but less scrutiny about the efficacy of sustainable supply chain integration as a determinant of green innovations has been done. Based on information processing theory and dynamic capability view, this study proposes a framework relating sustainable supply chain integration, green innovation, and firm performance. Primary survey data and secondary data of annual reports published by 296 manufacturing firms from 19 different sectors in Pakistan were collected, and structural equation modeling (AMOS 26 and SPSS 25) was employed. Results indicate that sustainable internal, supplier, and customer integration foster both green managerial and process innovations. Findings also suggest that green managerial innovation has a significant positive influence on the firm's financial performance. In contrast, the influence of green process innovations on firm performance is negatively significant, suggesting that rapid changes in manufacturing processes and operational procedures cost firms in multiple ways and decrease firms’ profits. The new findings have implications for both managers and researchers in managing sustainable supply chains and green innovation .