The impact of government support and organizational culture on sustainable performance: Unveiling the mediating role of circular economy and eco-innovation

Abstract

Attaining a sustainable competitive edge and exceptional performance stands as the foremost objective for business organizations. Manufacturing industries frequently encounter challenges that hinder their success, primarily due to well recognized factors such as insufficient resources, limited financial capabilities, and a deficiency in managerial skills. Consequently, they frequently seek out sources that are less risky and more convenient to maintain their competitive edge in the market, ultimately leading to limited growth and innovation. Numerous factors have been examined in relation to improving sustainable performance (SP); however, the influence of government support (GS) and organizational culture (OC) in this context has garnered limited focus. This study explores the impact of GS and OC on the SP of manufacturing industries, with the mediating roles of eco-innovation (EI) and the circular economy (CE). Hypotheses were examined through structural equation modeling utilizing Smart PLS4 software, applied to a dataset comprising 200 manufacturing industries in Pakistan. The findings suggest that while GS does not exert a substantial direct effect on SP, its impact is mediated by EI and CE practices. The OC plays a crucial role in improving SP, impacting it in both direct and indirect ways. It is recommended that governmental entities extend both financial and non-financial assistance to the manufacturing sector, which can subsequently enhance economic growth and sustainability. It is recommended that the government implement mechanisms to evaluate adherence to policies and regulations, ensuring that incentives are effectively promoting sustainable practices to enhance organizational sustainable performance. To enhance sustainability results, organizations ought to prioritize developing a culture that encourages innovation and circular practices.