Examining the correlations between stakeholder pressures, green production practices, firm reputation, environmental and financial performance: Evidence from manufacturing SMEs

Abstract

Discovering the motivations behind the adoption of green production practices and its impact on firm performance from the perspective of Small and Medium-sized Enterprises (SMEs) have become crucial for both scholars and practitioners. However, there exists a substantial unexplored research gap regard- ing how stakeholder pressures motivate and influence the adoption of green production practices and the performance of SMEs in the context of developing countries. Drawing on the institutional theory, stake- holder theory and the natural resource-based view, this study explores the framework through which organizational and regulatory stakeholder pressures influence the adoption of green production practices, firm reputation, environmental and financial performance. The study employed a quantitative approach and partial least square structural equation modelling technique in making data analysis and interpre- tations due to its appropriateness for predictive research models. Using a survey research design, data were collected from owners and managers of manufacturing SMEs. The findings revealed that whiles regulatory stakeholder pressures positively and significantly influenced the adoption of green production practices, firm reputation, financial and environmental performance, organizational stakeholder pressures positively and significantly influenced the adoption of green production practices, firm reputation, and environmental performance. Green production practices also proved significant and positive in influenc- ing firm reputation and environmental performance. The findings particularly exposed that organizational stakeholder pressures and green production practices had a negative yet significant influence on financial performance. The study highlights the significance of stakeholder pressures in making green production initiatives mandatory for organizational growth while also guiding policymakers, managers and scholars.