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Does green innovation mediate
corporate social responsibility and
environmental performance?
Empirical evidence from
emerging markets
Mandella Osei-Assibey Bonsu, Yongsheng Guo and Xiaoxian Zhu
Green
innovation
Received 17 October 2022
Revised 4 April 2023
Accepted 9 June 2023
International Business School, Teesside University, Middlesbrough, UK
Abstract
Purpose – This paper examines the mediation role of green innovation in the relationship between corporate
social responsibility and environmental performance of manufacturing firms in Ghana.
Design/methodology/approach – The paper chose African emerging markets and surveyed managers
from manufacturing firms. With 301 questionnaires qualified for this study’s final analyses, the authors adopt
the multiple regression with mediation models to estimates the nexus among study variables.
Findings – Results evidence that both corporate social responsibility and green innovation has a positive and
significant impact on environmental performance. Interestingly, the authors find that corporate social
responsibility significantly improves environmental performance through green innovation indicating that
firms could essentially build their dynamic resource and innovation capabilities in sustainability leading to
enhanced environmental performance.
Research limitations/implications – This paper develops a dynamic resource-based view of firm
environmental performance illustrating how firms use resources to build strategic capabilities for competitive
advantage, which leads to improved environmental performance. The paper highlights the mediation role of
green innovation on corporate social responsibility and environmental performance relationships.
Practical implications – This study’s results provide significant insights to owners and managers of
manufacturing companies to integrate corporate social responsibility and green innovation to ensure
environmental performance and sustainability. Furthermore, policy makers should encourage green
innovation when design sustainable development systems in the manufacturing industry.
Originality/value – The paper provides a valuable model showing how green innovation mediates corporate
social responsibility to improve environmental performance and build competitive advantages considering
both small, medium, and large manufacturing enterprises in emerging countries.
Keywords Green innovation, Corporate social responsibility, Environmental performance, Ghana
Paper type Research paper
1. Introduction
For decades, firms globally have engaged in activities that worsen the environment
(Vardhan et al., 2019), which governments and policy makers have debated the severity of
this degradation and the necessity of acting (Yang et al., 2018; Zhang et al., 2020). Firms should
make significant changes to combat and lessen environmental degradation and environmental
impact. Researchers working on environmental protection have been discerning on ways to
incorporate novel strategies and approaches, including green marketing and green innovation
to lessen the effects of environmental degradation (Groening et al., 2018).
Policy makers and the general populace growing concern about environmental
deterioration is causing a significant move in the conduct of businesses and organisations.
Authors would like to thank the Editor in Chief and annonymous reviewers for their constructive
feedbacks to improved the quality of the paper.
Conflict of interest declaration: There is no conflict of interest.
Journal of Applied Accounting
Research
© Emerald Publishing Limited
0967-5426
DOI 10.1108/JAAR-10-2022-0271
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Firms are now looking for innovative solutions to lessen their environmental impact while
still achieving their financial goals (Fernando et al., 2019).
The manufacturing sector has the greatest environmental impact of any economic sector
(Rivera and Clement, 2019; Dahlmann and Bullock, 2020) because of its large role in air
pollution, deforestation, climate change, and waste generation. More people than ever are
becoming aware of how businesses, and manufacturing industries particularly, affect the
environment. The general public expects organisations to act responsibly towards
the environment (Gaganis et al., 2019). Therefore, entrepreneurs are being forced to embrace
the corporate social responsibility business model (Han et al., 2019).
Numerous scholars have examined various aspects of corporate social responsibility including
its influence on firms’ profitability and predicted the significance of CSR for reducing the
environmental impact of economic operations (Lin et al., 2021). A new business model based on
CSR that combines profitability and social responsibility is gradually replacing the previous one,
which is primarily focused on profitability (Chao and Hong, 2019). In this regard, CSR and financial
performance relationship has been researched for a while (Barauskaite and Streimikiene, 2021;
Maqbool and Zameer, 2018), and recent research suggests that, in the context of the manufacturing
industry, environmental investments have a positive impact on firm profitability. According to
Shabbir and Wisdom (2020), environmentally conscious firms outperform less ecologically aware
firms in terms of profitability. Considerable efforts has been expended in researching the CSR
segment of environmental benefits (Kraus et al., 2017; Hussain et al., 2022).
Literature has revealed inconclusive results between CSR and firm performance (Galbreath
and Shum, 2012; Orazalin and Baydauletov, 2020). Scholars suggested essential elements of
mediation or moderation to explain the inconclusive results (Galbreath and Shum, 2012).
Therefore, we propose green innovation as a mediator between CSR and environmental
performance. According to NRBV theory, green innovation (GI) contributes significantly to the
definition of sustainable performance (Hart, 1995), suggesting that sustainable performance is a
key indication when assessing firms’ performance (Qiu et al., 2020; Chen, 2008).
Green innovation aims to improve existing products and processes more ecologically
sustainable (Albort-Morant et al., 2016). Green innovation can be engineered by selecting
environmentally friendly raw materials, avoiding waste, designing products according to
eco-design principles, lowering carbon footprints and consuming less water, electricity, and
other raw materials (Singh et al., 2020; Gunasekaran and Spalanzani, 2012).
Notwithstanding this, scarce research has been conducted to examine the environmental
performance in African emerging markets. Moreover, less research on CSR has paid attention
to measuring environmental performance (EP) considering both SMEs and large
manufacturing firms with the mediating role of green innovation in Africa, particularly
Ghana. Therefore, we are driven to close this important gap and ask the following research
questions:
RQ1. What are the impacts of CSR and green innovation on Environmental performance?
RQ2. What are the impacts of CSR on green innovation?
RQ3. To what extent does green innovation mediate CSR and environmental
performance?
Manufacturing sector has grown significantly over the years in Africa. Particularly, Ghana’s
manufacturing sector has developed enormously, contributing around 6.8 billion to GDP in
the first quarter of 2021, in line with the country’s continued output growth (roughly 1.1
billion US dollars). However, Ghana is struggling to reinstate a balance between economic
growth and environmental problems. For example, Ghana was ranked 170th of countries
with 27.70 score for environmental sustainability [1]. This index indicates that Ghana is
lagging behind other countries in environmental sustainability with manufacturing
operations contributing for the most problems (Bandehnezhad et al., 2012). Therefore, how
Ghana could decrease environmental problems and figure out manufacturing firms’
application of technological innovations provide excellent support to policy makers.
Adopting questionnaires to managers of Ghanaian manufacturing firms, we received 310
responses and developed a theoretical framework tested using regression with mediation
models. Results evidence that CSR has a significant impact on green innovation and
environmental performance; and green innovation has a positive and significant effect on
environmental performance.
We further found that, CSR significantly improves environmental performance through
green innovations indicating that firms could essentially build their dynamic resource and
innovation capabilities in sustainability leading to environmental performance. Additional
tests were performed with results provided robustness checks and confirmed the preliminary
findings. We incorporated the Natural RBV theory to theoretically validate the findings and
explain the role of green innovation on CSR and environment performance.
We provide contributions to current literature in four folds. First, literature has
extensively focused on large manufacturing firms (Kraus et al., 2020; Rehman et al., 2021b),
with limited research on SMEs (Boiral et al., 2019). SMEs represents most firms globally and
collectively contribute to productivity growth, but often exhibit less resources to address
sustainability issues. Therefore, we fill in the gap and contribute to the literature considering
both SMEs and large manufacturing enterprises. Second, we explain the mixed results of CSR
and environmental performance by validating the mediation role of green innovation. To our
best knowledge, this is the first empirical study from African emerging market, particularly
Ghana. Ghana is recognised as one of Sub-Sahara Africa’s fastest-growing economies, with
an annually average growth of more than 5% during the last three decades. Third, we build
on single framework to integrate CSR, GI and EP based on natural RBV theory, which
proposes that firms take advantage of resources to build strategic capabilities to garner
competitive advantage leading to ensure environmental performance. Finally, we produce
results critical for current policy makers to challenge the progress towards environmental
performance goals by applying GI and CSR as criterion factors to define countries
heterogeneity effects of the variables.
Section 2 reviews literature, theoretical background and hypotheses development. Section
3 provides research methodology. Section 4 presents findings followed by discussions with
the final section providing theoretical and practical implications.
2. Literature review
2.1 CSR policy and practices in Ghana
CSR is a concept that promotes companies to voluntarily incorporate social and environmental
issues into their operations and relationships with stakeholders. CSR describes business
practices considering firms economic, legal, ethical and philanthropic concerns to multiple
stakeholders (Carroll and Shabana, 2010). Currently, the conception of voluntary CSR is
challenged given the several similarities between CSR and the law, including new significant
legislations, particularly in developing countries (Blowfield and Frynas, 2005). Unsurprisingly,
Ghanaian companies are not required by law to carry out CSR initiatives. The initiatives are
undertaken responding to moral principles than the law requirements. Despite the absence of
comprehensive or easily accessible CSR documentation in Ghana, the country has an extensive
range of CSR-related policies, legislation, and practises including Ghana Land policy
documents, constitution provisions and environmental impact assessments as stated in
parliamentary act (Atuguba and Dowuona-Hammond, 2006). Additionally, the government
provides tax incentives to firms engaging CSR initiatives to promote CSR practices. Hence,
most Ghanaian businesses understand the value of CSR practises. Firms’ practices CSR to
Green
innovation
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enhance their reputation and promote socioeconomic development for their key stakeholders.
However, their CSR concepts consists around health, philanthropic, education, environment
and capacity building. Some of the factors motivating companies CSR selection and
implementation in Ghana includes beneficiary community’s needs, interests and expectations
and CSR frameworks and guidelines (Clement and Tackie, 2017). However, some firms CSR
practices are mainly impeded by insufficient funds and human resources. The needs of various
stakeholders and the unclear connections between a firm’s CSR and beneficiary demands
discomfort businesses’ ability to meet beneficiary demands.
2.2 Theoretical background and hypothesis
We use the Natural Resource Based View (Hart, 1995) to theorise the relationships between
CSR and environment performance with the mediation role of green innovation. According to
the theory, firms can get a competitive advantage by using various environmental approaches
including environmental protection, sustainable product development, and environmental
conservation (Hart, 1995; Hart and Dowell, 2011). To support the theory, we suggest that green
innovation can be viewed as both an organisational resource and a dynamic capability that is
always advancing. From this angle, firms may gain an advantage over rivals by enhancing
the impact of CSR on green innovation and their environmental performance (Rehman et al.,
2021b). By incorporating the information gained through green innovation into their CSR and
using corporate social responsibility to further green innovation, manufacturing companies
may also continuously improve their competitive advantage. Exploratory green innovation is
concerned with developing new products and technologies that have the potential to restore
environmental damage as well as exploitative green innovation, which focuses on enhancing
currently available products and technologies to lessen their detrimental effects on the
environment. Hence, we consider natural RBV theory on economic, social, and environmental
responsibility dimensions, green innovation, and environmental performance of
manufacturing firms in Africa emerging market such as Ghana.
2.2.1 Corporate social responsibility and environmental performance. The contact of the
environment with firms influences the economy. Firms are challenged to implement pollution
controls and other environmentally friendly initiatives. If these issues are unresolved, it forms
risk depleting resources and harming society by concentrating only on their economic interests
(Tilaye, 2019). Recently, researches on CSR and business achievement confirmed that, CSR
significantly increase economic performance (Hernandez et al., 2020). However, CSR initiatives to
measure environmental performance have received less attention (Orazalin, 2020). CSR refers to
firms’ commitment to pursuing strategies, making decisions and undertaking actions that
advantage larger community. According to Huang and Watson (2015), firms integrating
environmental considerations into their management systems improves its environmental
results. Some previous research revealed that, CSR enables firms to develop environmental
competency generating sustainable development (Wong, 2013). Using the NRBV theory, CSR is
a resource for firms to improve their environmental performance (Hart, 1995).
Notably, studies on CSR and environmental performance nexus are inconsistent and
require further study. Kraus et al. (2020) and (Rehman et al. (2022) found no direct impact of
CSR on environmental performance of manufacturing firms. However, other studies
discovered direct and significant impact of CSR on environmental performance (Zhou et al.,
2023; Hussain et al., 2022). Hence, studies are required to comprehend the inconsistencies of
CSR and environmental performance nexus leading to our first hypothesis.
H1. CSR has a significant effect on environmental performance.
2.2.2 Corporate social responsibility and green innovation. Green innovation is the creation of
new or enhanced goods, procedures, or technology that both help the economy and the
environment (Li et al., 2020). GI is more unpredictable and disruptive than traditional
innovation since it depends on a wider range of knowledge and the integration of more
technology components (Wicki and Hansen, 2019). The evolution of applied technology within
the workplace in accordance with community requirements and the company’s sustainability
and strategy is the interaction between CSR and green innovation. CSR and green innovation
have a positive reciprocal relationship that is highly dynamic (Handayani et al., 2017; Shahzad
et al., 2020). The realisation of green innovation that makes the company competitive in the
market is influenced by the continuity of CSR implementation (Rehfeld et al., 2007).
Studies have shown that there exists a connection between CSR and innovation
(McWilliams and Siegel, 2000). CSR is considered as networks of acquiring information,
knowledge, and financial resources from environments that can be used for internal
investment in various stages of innovation (Surroca et al., 2010). According to the Natural
RBV theory, firms using their resources and capabilities can link CSR with green innovation
(Broadstock et al., 2019). Kraus et al. (2020) discovered significant effect of CSR on green
innovation. Similarly (Hao and He, 2022), revealed that CSR is significantly related to green
innovation promotion among Chinese firms. According to Shahzad et al. (2020), firm’s CSR
implementation will lead to an increase in green innovation and environmental sustainability.
Moreover, Novitasari and Tarigan (2022) showed that, firms concerned with the environment
can improve green innovation. Therefore, we argue that CSR has significant effect on firms’
green innovation leading to our second hypothesis:
H2. CSR significantly influences green innovation.
2.2.3 Green innovation and environmental performance. Green innovation refers to
technological advancements that are used to reduce waste, global warming, water use, air
pollution, and energy consumption. Climate change is considered a severe problem faced by
the world (Li et al., 2021), and green innovation is indispensable to reducing its harmful
impacts. Green innovation considerably encourages environmental performance and
connected to organisational environmental management agenda (Adegbile et al., 2017).
Moreover, GI reduces the negative environmental impact of company while simultaneously
enhancing organisational social and financial performance through reduction of waste and
expense (Weng et al., 2015). Kraus et al. (2020) discovered that, green innovation significantly
impacted environmental performance. Similarly, Edeh et al. (2020) shown that, technological
innovation significantly enhances export performance. However, technological innovation
transfers can negatively influence the environment (Ferreira et al., 2020). Researchers also
observed CSR as having an impact on the EP of manufacturing enterprises, with GI acting as
a mediator (Seman et al., 2019; Kraus et al., 2020). However, the above-mentioned studies are
unable to determine how well GI predicts environmental performance. The uniqueness of GI
significantly affects the environmental performance. However, Chiou et al. (2011) contended
that green innovation has significant influence whiles green managerial innovation has no
impact. This evidence is that the effects of GI on environmental performance is inconclusive
and needs further investigation. Using Natural RBV theory, we propose that GI becomes an
important firm resource that the firm employs to enhance its environmental performance and
gain the trust stakeholders. Hence, we propose that:
H3. Green innovation significantly influences environmental performance.
2.2.4 The mediating role of green innovation. The previous discussions on the relationships
between CSR, GI and EP highlight that CSR influence green innovation resulting to improve
firms’ environmental performance. Literature has confirmed that green innovation positively
impacts environmental performance (Kraus et al., 2020; Wang et al., 2021; Ahmed et al., 2021).
Moreover, studies have demonstrated that CSR significantly improves both sustainable
financial and organisational performance (Orazalin and Baydauletov, 2020; Long et al., 2020;
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Feng et al., 2022). Notably, Hussain et al. (2022) discovered that, green innovation, green
capability and environmental strategy significantly mediates the relationships between CSR
and EP of big industrial firms in Pakistan. Similarly, Kraus et al. (2020, b) found that GI
significantly mediate the CSR impact on EP of large manufacturing firms in Malaysia. The
study also claimed the connection between CSR and firm performance is ambiguous and
needs further research considering the inclusion of a mediating variable.
According to the Natural RBV, green innovation and environmental practices describe the
relationship between environmental resources and competitive advantage (Kraus et al., 2020;
Hart, 1995). Hence, we used GI as mediating factor to examine the relationships between CSR
and EP leading to our fourth hypothesis:
H4. Green innovation significantly mediates between CSR and environmental
performance.
3. Methodology
We focus Ghanaian manufacturing firms regulated under the Ghana Enterprises Agency.
Ghana economy is diverse, resource rich and industrial including digital technology,
automatic production and exporting of several and valuable resource including
hydrocarbons and industrial raw materials. Moreover, Ghana has free market economy
with few barriers to market entry activities, so there is massive growth of manufacturing
firms. We purposively surveyed 250 manufacturing firms of which 140 were from small and
medium manufacturing and 110 from large manufacturing firms and were contacted through
email. We ensured that, these firms understand green innovation. Our research was limited to
businesses in the Greater Accra Region, considered as Ghana’s most important site for
manufacturing operations (Rankin et al., 2002). In Ghana, the Greater Accra region is home to
over 80% of all manufacturing companies.
We developed questionnaires on 7 Likert scale ranging from (1 strongly disagree to 7
strongly agree), which were in three sections: First section examined the respondents
demographic profiles including age, gender, education, and experience.
The second section measured respondents firm background information including firm
age, size, and industry competitiveness, and firm categories respectively. The final section
measured variable constructs: CSR dimensions (economic, social, and environmental), green
innovation, and environmental performance.
We sent questionnaires to owners of the small and large manufacturing firms from
October to December 2021 through email and LinkedIn. To ensure high response rate,
assurance of respondent’s confidentiality and their firm were given. We randomly selected
the respondents which allowed us to obtain sample of 310 respondents representing
managers of sampled firms. These respondents were engaged because they have global
vision for green product, and processes and hence assess the intervening role of green
innovation on CSR and environmental performance relationship.
3.1 Measures
We measured CSR with twenty-one items on economic, social and environmental dimensions
from (Alvarado Herrera, 2008). Specifically, each dimension recorded seven items. Green
innovation was measured using five items taken from the extant literature (Chang, 2011;
Tang et al., 2018). Environmental performance comprises five items adopted from
(Laosirihongthong et al., 2013). Moreover, we reported firm age, firm size, and industry
competition as control variables. Existing literature indicates that, the firm’s characteristics
effect firm environmental practices (Aguilera-Caracuel and Ortiz-de-Mandojana, 2013; Shu
et al., 2016). Hence, we operationalised firm age and size as the natural logarithms of years of
operations and the number of employees respectively. For industry competition, we followed
Shu et al. (2016) wherever respondents were asked to specify the most suitable account of
their industry on the following: “not competitive, to extremely competitive”. Therefore, we
develop novel model for relationships between CSR, green innovation, and environmental
performance, taking control variables into account (See Figure 1).
Green
innovation
3.2 Data analysis
In testing the hypothesis on the mediation role of GI on CSR and environmental performance
of Ghanaian manufacturing firms, we applied the multiple regression with mediation tests
due to the number of data sets (Eckstein et al., 2015). We constructed the following models to
test the hypothesises controlling variables including firm age, firm size and industry
competitiveness which effects environmental practices.
Env Perfit ¼ β0 þ β1 ðCorporatesocial responsbilityÞit þ β2 ðgreen InnovationÞit þ εit
Green Innovationit ¼ β0 þ β1 ðCorporate Social ResponsibilityÞit þ εit
Env perfit ¼ β0 þ β1 ðCSR*Green innovationÞit þ β2 ðFirmageÞit þ β3 ðfirmSizeÞit
þ β4 ðComp:IndÞit þ εit
“Model 1 estimates the impact of CSR and green innovation on environmental performance,
Model 2 estimate the impact of CSR on green innovation and model 3 tested the mediation role
of green”
Out of distributed questionnaires, we received 350 completed responses. 40 responses were
not integrated in the final analysis since they were incomplete. Therefore, we obtained a final
sample of 310 representing a response rate of 62%. Table 1 presents respondent’s profiles.
3.3 Non-response and common method bias
We lessen non-response bias by applying the t-test method to estimate response differences
between the early wave (220) and late wave (90) groups (Tsou and Hsu, 2015). Results indicate
significant value of (p 5 0.31), which proved the absence of non-responses bias. However, the
total responses found to be fit were 310. Since we collected data from a single source and
survey questionnaires, there is a chance of common method bias that can taint the results
Corporate Socia;
Responsibility
(CSR)
H1
Environmental
Performance (EP)
H4
H2
H3
Green Innovation
(GI)
indirect effects
direct effect
Source(s): Figure created by authors
Figure 1.
Research model
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Profile
Characteristics
No. of respondents
Percentage
Gender
Male
Female
210
100
67.74
32.26
Small and Medium
Large
1–15
16–50
51–100
101- above
120
190
90
74
64
82
38.71
61.29
29.03
23.87
20.64
26.46
108
114
88
34.83
37.77
27.4
Firm Nature
Employees
Firm age
Table 1.
Respondents profile
1–10 years
11–15 years
16- above years
Source(s): Table created by the authors
(Rehman et al., 2021a; Kraus et al., 2020). Hence, we performed common method bias using
post hoc Harman single factor method which yielded 34.16% less than 50% benchmark
(Fuller et al., 2016; Podsakoff et al., 2003) indicating that research data used had no common
method bias that could impact the relationship between variables.
3.4 Measurement models
We run convergent and discriminant validity tests before estimating values using the multiple
regression to ensure measurement model is appropriate. Table 2 shows the summary of
convergent and reliability validity results of study constructs. Factor loadings of each constructs
exceed 0.6 which confirmed the attainments of indicator validity with the minimum benchmark
of 0.5. Composite reliability and Cronbach’s alpha coefficients for each constructs exceeded the
approval 0.70 threshold recommended in the extant literature. However, the average variance
estimates (AVE) values for each constructs was above 0.5 recommended benchmark, implying
that the variations recorded by the questionnaire items were substantially greater than the
changes caused by measurement error (Raykov, 2012).Therefore, we confirmed the convergent
and internal consistency of the research variables.
Correlations among each set of variables remained in the range between 0.33 and 0.54.
We used the Fornell and Larker AVE metric to examine discriminant validity. The average
variance estimates (AVE) square root of the latent variable should be greater than the
correlations across dimensions in the model to meet the discriminant validity criteria. The
AVE square root for environmental and economic CSR, for example, was 0.85 and 0.86
(Table 3), respectively, which is higher than their correlations of 0.41 in Table 3. Hence,
discriminant validity was found between the two conceptions. However, all average variance
estimates square roots were larger than correlations among all variables. Hence, the research
accepts discriminant validity.
4. Empirical results and discussions
After confirming that the indicators of all variables were reliable and valid, we test the
research hypothesis using the multiple regression with mediation controlling firm age, firm
size and industry competitiveness which effects environmental practices.
Table 5 reports estimations highlights and empirical evidence from models employed.
First, we estimate the R2 model for environmental performance and green innovation. The
models were found to explain an appropriate level of variability in the constructs (R2 for
Main Variables
Indicators
loadings
CA
CR
AVE
EC-1
0.878
EC-2
0.877
0.912
0.953
0.744
EC-3
0.878
EC-4
0.769
EC-5
0.883
EC-6
0.869
EC-7
0.878
Social CSR
SC-1
0.748
SC-2
0.881
0.915
0.918
0.557
SC-3
0.882
SC-4
0.883
SC-5
0.878
SC-6
0.772
SC-7
0.874
Environmental CSR
ENV-1
0.817
ENV-2
0.888
ENV-3
0.818
ENV-4
0.808
0.804
0.946
0.718
ENV-5
0.827
ENV-6
0.868
ENV-7
0.828
Green Innovation
GI-1
0.883
GI-2
0.878
0.881
0.926
0.715
GI-3
0.772
GI-4
0.874
GI-5
0.817
Environmental Performance
EP-1
0.751
0.812
0.895
0.682
EP-2
0.851
EP-3
0.868
EP-4
0.829
Note(s): The table presents the reliability and validity results. EC, SC, ENV, GI, and EP represents economics,
social, environmental, green innovation, and environmental performance respectively. CA is Cronbach Alpha,
CR Composite Reliability, and AVE is Average Variance Estimates, respectively
Source(s): Table created by the authors
Green
innovation
Economic CSR
CA
AVE
EC
SC
ENV
GI
Table 2.
Results of convergent
and discriminant
validity
EP
Economics CSR
0.91
0.744
0.86
Social CSR
0.91
0.557
0.39
0.75
Environmental CSR
0.80
0.718
0.41
0.29
0.85
Green Innovation
0.88
0.715
0.51
0.33
0.54
0.84
Environmental Performance
0.81
0.682
0.45
0.30
0.366
0.45
0.82
Note(s): Table presents the descriptive and discriminant for sampled firms. EC, CSR, SC, ENV, GI, EP
represent average variance estimates, environmental performance, corporate social responsibility, green
innovation, social, economics, and environmental respectively. CA is Cronbach Alpha and AVE is Average
Variance Estimate which is shown on the diagonal
Source(s): Table created by the authors
EP 5 0.70, R2 for GI 5 0.612, and R2 for EP 5 0.717). These results were consistent with (Chin,
1998) criteria; hence the model’s empirical validity was determined to be adequate.
Table 3.
Descriptive and
discriminant validity
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Table 4.
Full sample Results
From model 1 (See Table 4), CSR is positive and significant on environmental performance
which supports H1. The positive effects suggest that 1% increase in CSR dimensions will
significantly improve the environmental performance of manufacturing companies in Ghana
by about 37.4%, which supports the NRBV theory affirming that, natural resources increase
sustainable effectiveness (Hart, 1995). The results confirm the results of (Orazalin and
Baydauletov, 2020; Hernandez et al., 2020; Zhou et al., 2023). Regarding green innovation,
there is evidence of positive and significant effect at 1% on environmental performance
suggesting that green innovation increase the environmental performance of all firms as they
technologically innovate (see Table 4). However, the result support H2 and confirms with (ElKassar and Singh, 2019; Kraus et al., 2020) indicating that, green innovation is positively
related with firm competitive advantage. The result further validates the NRBV (Hart, 1995)
in that innovation fosters sustainable performance.
From model 2, CSR has positive effect on green innovation at 1% significance level. The
positive effect of CSR shows that rising dimensions of CSR leads 34.92% increase in green
innovation of firms. The results accept H3 (Table 5) affirming that CSR leads to ecoinnovations of firms in conserving the economic, social, and cultural elements of operating
environment in Ghana (Abbas, 2020). However, environmental CSR and green innovation
relationship is limited in the extant literature (Zhou et al., 2019), particularly in Africa. Thus,
we cover that in Africa perspective contributing to the extant literature.
To address the indirect effect, we discovered that CSR has indirect effect on environmental
performance with the existence of green innovation as a mediator (See Table 4). The result
supports Natural RBV theory and H4 suggesting that the rising dimension of CSR would
Green Innovation
Environmental Performance
Model 1
Test/p-value
0.374(0.00) ***
0.3715(0.00) ***
Model 2
Test/p- value
0.3492(0.000) ***
Model 3
Test/p-value
CSR
GI
Mediation effect
CSR*GI
0.1512 (0.000) ***
Control Variables
LnInD
0.265(0.000) ****
LnSize
0.365(0.000) ***
LnAge
0.313(0.00) ***
0.70
0.612
0.717
Adj. R2
Obs
310
310
310
Note(s): Table presents the empirical results of sampled firms. CSR represents corporate social responsibility,
GI, green innovation, ***, **, * indicate significance at 1%, 5 and 10% level, p-value is provided in the
parenthesis
Source(s): Table created by the authors
Hypothesis
Table 5.
Hypothesis testing
Environmental performance
Relationships
Estimates
P-value
Prove
H1
CSR→EP
0.374
0.000***
Confirmed
H2
CSR→GI
0.349
0.000***
Confirmed
H3
GI→EP
0.371
0.000***
Confirmed
H4
CSR→GI→EP
0.1512
0.000***
Confirmed
Note(s): Table presents the hypothesis for firms. CSR represents corporate social responsibility, GI, green
innovation, and EP, environmental performance with ***, **, * indicate significance at 1%, 5 and 10% level
Source(s): Table created by the authors
leads to improve environmental performance through green innovation at coefficient of
15.12%. Therefore, along with direct effect, green innovation also has indirect effect to
improve environmental performance in Ghana. We confirm the findings with (Hussain et al.,
2022; Kraus et al., 2020). However, the result is novel in the extant literature from the
standpoint of Africa emerging country.
For control variables impact on environmental practices, we found competition intensity
significant and positive on environmental performance at 1% suggesting that intense
industry competition across firms increases environmental performance of firms by 26.5% of
the coefficient (see Table 4). Similarly, we find that EP and firm size has positive relationships
at 1% significance level suggesting that 36.5% surge in Ghanaian manufacturing leads to
improve environmental performance. Finally, results found positive and 1% significant effect
of firm age to achieving EP suggesting that, firm age increase will lead to upsurge
environmental performance at 31.3% of the coefficient. Long existing firms are having
enough resources for green innovation and implementing CSR dimensions including
environmental responsibility, and this positively and significantly improve firm
environmental performance outcomes.
Green
innovation
4.1 Additional tests and robustness checks
We performed additional tests to ensure robustness of our results. We believed that SMEs
have cash flow and short-term debt, whereas larger firms have a proportion and total debt,
which could influence their CSR engagements and use of technological innovation for
environmental performance. Therefore, we conduct robustness checks by finding regressions
for large and small manufacturing firms.
4.1.1 Results for large firms. As evidence in Table 6, there are large effects of CSR on
environmental performance by 1% significant level. The coefficient confirms the existence of
positive relations amid CSR and environmental performance. Similarly, green innovation is
positive and significant on environmental performance of large manufacturing firms in
Ghana. The positive coefficient suggests that rise in green innovation activities will improve
environmental performance through 38% confirming the results of Kraus et al. (2020).
In model 2, the large and positive impact of CSR on green innovation reveals that 1% increase
in CSR dimensions leads to 18.57% increase in green innovation. Model 3 support positive
and significant mediation role of GI on CSR and environment performance at 1% significance
level, suggesting that large manufacturing firms practicing levels of CSR enhance their
environmental performance through green innovations at12.6% coefficient. Interestingly,
Environmental performance
Green Innovation
Environmental Performance
Model 1
Test/p-value
0.471(0.00) ***
0.380(0.00) ***
Model 2
Test/p-value
0.1857(0.000) ***
Model 3
Test/p-value
CSR
GI
CSR*GI
0.126(0.000) ***
LnInD
0.396(0.000) ****
LnSize
0.106(0.000) ***
LnAge
0.075(0.000) ***
0.617
0.721
0.751
Adj. R2
Obs
190
190
190
Note(s): Table presents the regression results for large firms. CSR represents corporate social responsibility,
GI, green innovation, ***, **, * indicate significance at 1%, 5 and 10% level, p-value is provided in the
parenthesis
Table 6.
Source(s): Table created by the authors
Results for large firms
JAAR
our results support industry competitiveness and firm size positively and significantly
related to EP for large manufacturing in Ghana at 1% significant level. This suggests that
intense industry competition and the size of firm determines the environmental performance
of large manufacturing firms.
4.1.2 Results for small firms. From model 1, CSR exerts positive and significant impact on
environmental performance. Firm CSR dimensions increase at 1% leads to an upsurge in
small and medium environmental performance by 27.16% of resistance of CSR (see Table 7).
Likewise, GI is positive and significant on EP at 1% significance level suggesting that 1%
increase in green innovation leads to improve environmental performance of small and
medium firms in Ghana by 0.2153%. From model 2, CSR is found to be positive and
significant on green innovation at 1% significance level. CSR dimensions increase fallouts to
upsurge green products and process innovations at coefficient of CSR resistance (0.263%).
Moreover, the results found positive and significant mediation role of green innovation on
CSR and environment performance at 1% significance level (see Table 7). This suggests that
small and medium firms increasing extents of CSR improves their environmental performance
through green innovations at coefficient of 1.1134%. Our results for large firms demonstrated
large positive and significant effect of size on environmental performance but found fewer
positive and significant on environment performance. Interestingly, age has positive and
significant influence on environment performance suggesting that age of SMEs 1% longer
existence leads to improve EP at about 0.0218%. Finally, we found positive and significant
effect of industry competitiveness on EP of Ghanaian SMEs at 0.0251%.
Comparing both results (large-smaller firms), both CSR and green innovation has positive
and significant impact on environmental performance. Imperatively, green innovation is
positive and significant for both firms, but the significance will last longer for firms. The
indirect effect of GI is still positive and significantly related to CSR and environmental
performance at 1% significance level signifying that by estimating both firms on the nexus
between GI, CSR and environmental performance, the regressions evidence unchanged which
confirms that, GI mediates CSR and environmental performance for both large and SMEs
manufacturing firms. Therefore, our findings presented above are robust based on the
consistent results of study models.
5. Conclusions and policy implications
We highlighted and bridged the gap to examine the mediation effects of GI on CSR and
environmental performance grounded on Natural RBV theory. We found that both CSR and
Table 7.
Results for small and
medium firms
Environmental performance
Green Innovation
Environmental Performance
Model 1
Test/p- value
0.2716(0.000) ***
0.2153(0.000) ***
Model 2
Test/p- value
0.2635(0.000) ***
Model 3
Test/p-value
CSR
GI
CSR*GI
0.1134(0.000) ***
LnInD
0.0251(0.000) ****
LnSize
0.0566(0.000) ***
LnAge
0.0218(0.00) ***
0.514
0.621
0.641
Adj. R2
Obs
120
120
120
Note(s): Table presents the regression results for large firms. CSR represents corporate social responsibility,
GI, green innovation, ***, **, * indicate significance at 1%, 5 and 10% level, p-value is provided in the
parenthesis
Source(s): Table created by the authors
GI have positive and significant effect on environmental performance supporting the NRBV
theory. Additionally, we discovered positive and significant effect of CSR on GI, suggesting
that green innovation through CSR would demonstrate firms’ legitimacy and support to
achieve sustainable advantage leading to improve environmental performance. Finally, we
discovered that CSR positively achieving environmental performance through the role of GI.
Hence, CSR should be a top priority for managers and owners because of its significant
impact on firm environmental performance. Additionally, managers of firms should embrace
green innovation to achieve sustainable development and plays essential role in developing
green products and services that can enhance environmental performance and sustainability.
Excluding few scholarships of theoretical existence within CSR-EP and innovation
studies, our paper is the first academic effort based on Natural RBV RBV theory to highlight
the role of green innovation on CSR and EP from Africa. Therefore, we conclude that,
manufacturing firms use green innovations along with CSR activities to achieve sustainable
performance leading to improve environmental performance. Finally, we performed
robustness tests by finding regressions for large and small manufacturing firms. Our
results were robust consistent with results of the study models. In conclusion, we highlight
the significance of GI and CSR in achieving firm EP, which supports the Natural RBV theory.
The NRBV theory provides framework for understanding the strategic value of these
resources and their potential for improving environmental performance of
manufacturing firms.
5.1 Theoretical implications
Our results have four main implications to advance theory. First, we contribute to advance
the NRBV theory to validate CSR, GI and EP relationship in Africa emerging markets.
Second, we tested a model considering the unique qualities of both SMEs and large
manufacturing enterprises based on Natural RBV theory as no research has link the theory to
CSR and environmental performance with the intervening role of green innovation in Africa,
particularly, Ghana.
Thirdly, we provide a significant theoretical contribution through adopted measurements
scale of CSR, GI, and EP. To summarise, this is the first empirical evidence to estimate the
relations in novel single framework of managers from Ghanaian markets. However, their
measures have been validated statistically for reliability, convergent and discriminants
validity. Hence, academics could apply them for similar studies from other emerging and
developed countries.
Finally, we propose resource-based view of firm environmental performance (Figure 2) to
illustrate the process. Firms take advantage of resources including natural resources, labour,
physical and financial capitals, information and technology, social network, and reputation to
build competitive advantages. This model recognises the interaction between natural
environment and the firm as a way of building competitive advantages apart from the
traditional sources. Furthermore, this model identifies six strategic capacities including CSR
strategy, green innovation, efficient utilising, organising, and managing resources, and
marketing capabilities that firms established to improve environmental performance.
Likewise, green innovation enhances environmental performance by reducing CO2 emission,
decreasing waste, lowering resource use, preserving water, and using renewable energy.
Finally, improved environmental performance will create further competitive advantages by
enhance firm image and reputation.
5.2 Policy implications
We provide significant practical implications based our findings. First, we confirmed that
CSR has positive significant impact on environmental performance, and indirect impact
Green
innovation
JAAR
Figure 2.
A resource-based view
of firm environmental
performance
Resources
Strategic
capability
Environmental
Performance
Natural resources
Labour
Capital
Information and
technology
Network and
reputation
CRS Strategy
Green Innovation
Efficient utility
Organisation
Management
Marketing
Reduce emission
Decrease wastes
Lower resource use
Preserve water
Use renewable energy
Source(s): Figure created by authors
through green innovation implementations of manufacturing firms. Hence, green innovation
and CSR should be developed and executed as an integral part of the firm strategies.
Managers should recognise and implement green innovation and CSR to improving
environmental performance, which is tedious to achieve without GI and CSR.
Second, we encourage managers, owners and policy makers to use our research context of
environmental performance to decrease wastes, noise, pollutants, preserve water, and invest
in renewable energy to ensure environmental performance. Imperatively, management
should look beyond profitability when implementing CSR and green innovation engagements
in their operations, as CSR-GI is observed as a mechanism to achieve environmental
performance leading to SDGs.
Finally, developing countries particularly, Africa, should seek to design sustainable
development systems to encourage manufacturing firms to invest in green innovation.
Therefore, activities for the implementation of green environmental initiatives should be
highlighted; thus, encouraging green product funding is critical to achieving environmental
performance.
Despite these contributions, we encountered some limitations. First, we used
manufacturing firms in Africa emerging markets adopted cross-sectional method.
Therefore, further studies could adopt longitudinal approach for better firm conclusion on
causal relationships and even compare both developed and emerging markets. Finally, other
mediating factors such as green transformational leadership and green financing can be
observed on CSR and environmental performance nexus from COVID-19 perspective.
Note
1. Environmental performance Index. Accessed at https://epi.yale.edu/epi-results/2022/component/epi
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Corresponding author
Mandella Osei-Assibey Bonsu can be contacted at: m.osei-assibeybonsu@tees.ac.uk
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