Green practices and economic performance: Mediating role of green innovation in Ethiopian leather, textile, and garment industries—An integrated PLS-SEM analysis

Abstract

Incorporating green issues into business operations is indisputable, as this is mandatory in today's environmental era. The purpose of this study was to explore the structural link between green practices such as green manufacturing, green marketing orientation, green human resource management, green investment, and the economic performance of textile and leather firms in Ethiopia through green innovation. This study was carried out utilizing a quantitative method, and 201 surveys were used to gather the data from the top managers and general managers of medium and large textile and leather firms in Ethiopia using stratified random sampling. To test the hypothesis, partial least squares structural equation modeling (PLS-SEM) was used. The results of this study demonstrate that green practices, specifically green manufacturing practices (GMP), green marketing orientation (GMO), and green investment (GIV), have a positive and substantial contribution to firms' economic performance (EP) and green innovation (GIN). However, the advancement of GIN is not significantly affected by the adoption of sustainable human resources management (HRM). Moreover, green innovation facilitates the connection between economic success, GIV, and GMO. Nonetheless, when it comes to the relationship between GHRM, green manufacturing practices, and economic success, green innovation plays no mediating function. According to this research, a company's management ought to strengthen its green practices as lower expenses would boost its economic outcome.