A Mediation Framework: Green Innovation as a Mediating Bridge Between Knowledge Management Processes and Business Sustainability

Abstract

Organizations are systematically including sustainability considerations in their strategic frameworks, given the rise of environmental challenges and increasing stakeholder demands. This paper proposes and empirically validates a mediation framework in which green innovation is a significant mechanism linking knowledge management processes & business sustainability. Drawing via dynamic capability theory & RBV, we argue that appropriate knowledge-management processes enhance the development of green innovations, which in turn enhance the environmental, economic, and social sustainability dimensions. Using SEM to assess survey data from 327 companies in various industries in Pakistan, we find strong evidence that emphasizes the green innovation mediating role. Results indicate that knowledge management processes affect green innovation (β = 0.62), which, in turn, exerts a significant effect through business sustainability (β = 0.48). Furthermore, the indirect effect remains statistically significant at 95% CI [0.21, 0.39], which supports the partial mediation. The present study enriches theoretical understanding by integrating existing literature on knowledge management, green innovation, and sustainability, and provides practical implications for managers interested in leveraging knowledge for achieving sustainable advantage.
Keywords: Knowledge management; Green innovation; Business sustainability; Mediation; RBV; Dynamic capabilities