Sustainable Production and Consumption 27 (2021) 100–114 Contents lists available at ScienceDirect Sustainable Production and Consumption journal homepage: www.elsevier.com/locate/spc Examining the correlations between stakeholder pressures, green production practices, firm reputation, environmental and financial performance: Evidence from manufacturing SMEs Charles Baaha, Douglas Opoku-Agyemanb , Innocent Senyo Kwasi Acquahc , ∗ , Yaw Agyabeng-Mensaha, Ebenezer Afuma , Daniel Faibil d, Farid Abdel Moro Abdoulayea a Transportation Engineering College, Dalian Maritime University, China b Department of Marketing and Entrepreneurship, University of Ghana, Ghana c Department of Marketing and Supply Chain Management, University of Cape Coast, Ghana d Department of Management and Economics, Dalian University of Technology, China a r t i c l e i n f o a b s t r a c t Article history: Discovering the motivations behind the adoption of green production practices and its impact on firm Received 23 July 2020 performance from the perspective of Small and Medium-sized Enterprises (SMEs) have become crucial Revised 18 September 2020 for both scholars and practitioners. However, there exists a substantial unexplored research gap regard- Accepted 13 October 2020 ing how stakeholder pressures motivate and influence the adoption of green production practices and the Available online 14 October 2020 performance of SMEs in the context of developing countries. Drawing on the institutional theory, stake- Keywords: holder theory and the natural resource-based view, this study explores the framework through which Stakeholder pressure organizational and regulatory stakeholder pressures influence the adoption of green production practices, Green production practices firm reputation, environmental and financial performance. The study employed a quantitative approach Firm reputation and partial least square structural equation modelling technique in making data analysis and interpre- Environmental performance tations due to its appropriateness for predictive research models. Using a survey research design, data Financial performance were collected from owners and managers of manufacturing SMEs. The findings revealed that whiles PLS-SEM 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. © 2020 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved. 1 t v M t i p i D a n m b g t i o t m h 2 . Introduction The continuous rise in globalization and industrialization, since he 19th century to date, has justified the need for sustainable ractices that guarantee environmental preservation ( Gereffi, 2005 ; icken, 2003 ). According to Gereffi (2005) , previous simple eco- omic exchanges have developed into complex and extremely sym- iotic systems of industrial production and economic exchanges hat occurs on a global scale. Organization for Economic Co- peration and Development report ( OECD, 2010 ) further highlights a t ∗ Corresponding author at: Department of Marketing and Supply Chain Manage- c ent, University of Cape Coast, Ghana. n E-mail address: iacquah@ucc.edu.gh (I.S.K. Acquah). ttps://doi.org/10.1016/j.spc.2020.10.015 352-5509/© 2020 Institution of Chemical Engineers. Published by Elsevier B.V. All rightshat industrialization has to a large extent been on the rise in di- erse industries and thus, has motivated the existence of Small and edium-sized Enterprises (SMEs) to constitute above 90% of key ndustries worldwide especially in developing countries. Although ndustrialization and globalization present crucial gains for firms nd nations, the negative impact of these concepts on the environ- ent have attracted key attention from diverse stakeholder groups, overnments, international bodies, among others. As such, achiev- ng environmental sustainability in recent times is no longer op- ional but mandatory for firms. According to Baah et al. (2020) , n in-depth view of environmental manufacturing as referred to in his study as green production is a critical weapon needed to gain ompetitive positions and superior performance in current busi- ess environments. reserved. C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 H t a a t t t o t p t t c t t ( d i d a r c M p t a h b s m o t t i a s L g t o d d n s t o a p s t t o i n f t t t h 2 c s m D b B m i m o e u a i a f i fi f a i t a i t t w g i r r G v i b s i c T d t h a w c h c t a r p t 2 d t 2 h b h i s pAccording to Govindan et al. (2014) , green production prac- ices reflect systems and processes that produce ecological goods nd services using less energy while also ensuring the preserva- ion of natural resources, less pollution in addition to the safety f workers and communities. Green production practices made the ransition from being optional to mandatory since the introduc- ion and implementation of ISO 14,001 in 1996. This standard, oupled with stakeholder demands for environmental preserva- ion, have seen a significant rise since 1996 when it was intro- uced. Although these events happened in developed countries, eveloping countries are also picking up the pace in terms of educing negative environmental impacts in production practices. ittal and Sangwan (2013) further elaborated that the introduc- ion of environmental production standards in addition to stake- older pressures (especially from organizational and regulatory takeholders) to adopt green production practices in both devel- ping and developed countries presented benefits which then con- ributed largely to the massive wave of green practices adoption nd implementation in various businesses. According to Eesley and enox (2006) , organizational and regulatory stakeholders have aken front seat roles in relation to the adoption of green practices ue to their enormous influence on organizational survival. Orga- izational stakeholder pressures, which significantly pushes firms o adopt and implement proactive green production practices em- nate from customers, suppliers, employees and shareholders as pecified by Sarkis et al. (2010) and Eesley and Lenox (2006) . On he other hand, regulatory stakeholder pressures, which coerce or ntimidate firms to adopt reactive green production practices come rom governments, trade associations, other regulatory agents and he media ( Sarkis et al., 2010 ). Based on past studies ( Eesley and Lenox, 2006 ; Sarkis et al., 010 ; Mittal and Sangwan, 2013 ), responding to stakeholder pres- ures presents vital benefits which boost overall firm performance. welling on these benefits, several scholars ( Sangle and Ram abu, 2007 ; Llach et al., 2013 ) focused on assessing and examin- ng the benefits of adopting quality and environmental practices on verall firm performance from an internal and external perspective sing measures that reflect internal and external gains. Addition- lly, the probe on understanding the wider scope of benefits that ccrue to firms through greening production practices have been nconclusive and mostly related to large firms. This study, there- ore, aims to present findings and evidence-based on SMEs to aid n grasping the wide range of benefits that can accrue to firms that dopt green production practices. From the discussions, it is absolute that past studies sought o answer the question how does environmental orientation or reen practices lead to improved competitive positions and supe- ior performance? ( Sangle and Ram Babu, 2007 ; Llach et al., 2013 ). ligor et al. (2016) and Shashi et al. (2019) indicated that engag- ng in green practices have significant gains for competitive po- itions and improving performance. In specific detail, the authors onnoted that undertaking green production practices indicate to iverse stakeholder groups such as suppliers, customers, share- olders, public authorities, among others that the firm complies ith norms and stakeholder demands, which leads to higher stake- older endorsement, trust, loyalty, higher sales among other finan- ial benefits. Baah et al. (2020) further posited that benefits such s stakeholder satisfaction, improved goodwill and deepened com- etitive positions had attracted several firms to adopt environmen- al practices and policies. Despite the global call for green pro- uction practices especially in the manufacturing industries due o the sector being a major contributor to the emission of green- ouse gasses, large contributor to waste production coupled with uge consumption of energy, most manufacturing firms operating n developing countries remain adamant towards environmental ustainability ( Awan, 2017 ; Shashi et al., 2019 ; Baah et al., 2020 ).101 owever, it is worth mentioning that in as much as some firms re unbending to environmental demands, there exist those firms hat are trying with their little resource capacity to integrate sus- ainable practices into business operations. Developed countries, on the other hand, have witnessed a henomenal orientation towards environmental practices due to he early adoption of green production practices and sustainable echnologies which were not available in developing countries Darnell et al., 2010 ). Since the call for environmental sustainabil- ty is global, there should be significant efforts to mainta in it at global level because bad practices in one country or continent an negatively influence another country or continent. From this erspective, although green production practices have been widely ccepted and implemented in developed countries, efforts should e made in raising developing countries to the desired environ- ental sustainability level. This assertion motivated the study in hat various researches on green production practices and how t influences overall firm performance while focusing on the role takeholder pressure plays in the adoption and implementation of reen production practices have been conducted mostly in devel- ped countries. This study thus aims to provide evidence from a eveloping country’s perspective and most importantly, from the tandpoint of SMEs seeing how fast these firms are rising in devel- ping countries. Specifically, this study aims to provide a detailed erspective to connect existing literature gaps through (a) exposing he impact of organizational and regulatory stakeholder pressures n the adoption of green production practices, firm reputation, fi- ancial and environmental performance while (b) also establishing he influence of adopting green production practices on firm repu- ation, financial and environmental performance and (c) assessing ow firm reputation and environmental performance affect finan- ial performance. Most importantly, the study assesses firm perfor- ance from an internal and external perspective as recommended y Sangle and Ram Babu (2007) and also provides evidence from anufacturing SMEs operational in a developing economy since ost studies have focused on large firms operating in developed conomies. In addition to further strengthening the evidence from develop- ng countries and SMEs perspectives, this study reflects firm per- ormance from firm reputation, environmental performance and nancial performance perspectives hence capturing both internal nd external gains. This clarification is based on the recommenda- ion by Sangle and Ram Babu (2007) and Llach et al. (2013) .They ndicated that it is advisable to evaluate both the internal and ex- ernal gains of environmental orientation to devise strategies that ill drive firm desired goals. Internal gains as capture in this study s reflected in financial performance, whereas external gains are eflected in firm reputation and environmental performance. En- ironmental performance was placed under external gains mostly ecause it drains firm resources and projects goodwill which rakes n internal benefits in the form of enhanced financial performance. his study is among the first few to provide an internal and ex- ernal explanation for viewing performance and seeks to provide detailed contribution to literature from SMEs and a developing ountry’s perspective. This paper is organized as follows; Section 2 exposes the litera- ure review. The next Sections 3 , 4 and 5 reflect research methods, esults and discussion and conclusions respectively. . Literature review .1. Stakeholder theory, institutional theory and natural resource ased view Several studies aimed at understanding the adoption of green ractices have mostly been based on stakeholder and institutional C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 t t 2 a t c t c a p t n e s g t i p c p h a t t b i fl r i s s V s s g n i t s s a o d fi t h a t i T D a i g i i o i d t L s c e t m s b a t s a r r w a t l u f f g g f t t d a s d t p v i p r g d t m m l t l r r r m H i o i m fi i h f v t i 2 c h p dheories ( Freeman, 1999 ; Deephouse, 1996 ; Tsinopoulos et al., 018 ). These two theories are intertwined in that the institu- ional theory indicates that the adoption of certain firm prac- ices is mainly based on social influence, accepted industry norms s well as the desire to gain organizational legitimacy as men- ioned by Deephouse (1996) and Tsinopoulos et al. (2018) . How- ver, it is worth mentioning that these social influence and or- anizational legitimacy originate from diverse stakeholder groups n that specific industry. This indicates that firms’ operational in urrent business environments are inseparable from their stake- olders and the society, thus are mostly coerced by stakeholders o adopt certain practices which critically affects their resource ase. Although stakeholder demands and pressures significantly in- uence firm decisions, a firm’s decision to ignore these demands n recent times will be deemed as suicidal, especially when those takeholder groups can affect the survival of the firm ( Kassinis and afeas, 2006 ; Freeman, 1999 ). From Freeman’s (1999) perspective, takeholders are those that are affected and also affect an orga- ization’s decision and actions. Current business practices affect he whole society and as such, firms owe societies responsibilities uch as preserving the environment for future generations among thers especially seeing how stakeholder interconnected societies rms operate in now ( Maak and Pless, 2009 ). Basing on the stake- older theory, the institutional theory can be viewed from institu- ional isomorphism and organizational legitimacy. Institutional isomorphism, as explained by eephouse (1996) shows that firms operating in a particular ndustry tend to adopt strategies and policies that already ex- st in the industry. Thus, institutional isomorphism hinges on r portrays the homogeneity of business practices in the in- ustry. Also, DiMaggio and Powell (1983) and Fernando and awrence (2014) also indicated that organizational behaviour is onnected to accepted norms in the industry. Firms are expected o operate within a social framework of norms, values and as- umptions about what constitutes appropriate and acceptable ehaviour in an industry. Tsinopoulos et al. (2018) further clarified his view by indicating that the institutional theory promotes n organization’s desire to conform to an industry’s established ules and norms. Deephouse (1996) further indicated that a firm’s lignment to existing accepted green practices earns the firm egitimacy with stakeholders. This legitimacy can be explained rom the perspective of stakeholder endorsement, which signifies aining stakeholder support, loyalty, trust and satisfaction. This urther leads to the achievement of social and moral capitals, hus revealing the interconnection between the stakeholder theory nd institutional theory. From the above discussion, it can be educed that firms are motivated to adopt and implement green roduction practices based on stakeholder demands. Besides, there s the perception that adopting and implementing green practices eflect compliance to acceptable organizational behaviour. As such, eviations from these practices lead to poor stakeholder endorse- ent and perception, which negatively influence organizational egitimacy. Furthermore, existing school of thoughts deliberate natu- al resource-based view (NRBV) which is an alteration of the esource-based view theory. This modified theory, as indicated by art (1995) purports that a firm obtains competitive advantage and ther benefits by having positive impacts on the natural environ- ent. According to Hart and Dowell (2011) , the NRBV has helped dentify diverse resources and capabilities that aid firms profit rom environmental orientation among other pollution prevention echniques. In detail, the authors highlight that the NRBV in resolv- ng environmental concerns and issues lead to the development of ritical resources such as continuous product improvements, stake- older integration, innovation integration and cleaner production ractices, which, in turn, also lead to competitive advantages in 102 he form of lower costs, reputation, legitimacy, long-term growth nd sustained future competitive positions. These benefits have re- ently contributed to the surge in environmental practices, espe- ially in developing countries, making it evident as to how the reservation of the natural environment is intertwined and con- ected to a firm’s performance. The NRBV also advocates key mea- ures such as pollution prevention, product stewardship and clean echnology in achieving strong competitive positions and sustained erformance. These measures coupled with satisfying stakeholder ressures are vital in the preservation of the natural environment nd acquisition of advantages since an organization can only sus- ain superior performance and competitive advantage by preserv- ng the natural environment and maintaining healthy stakeholder elationships simultaneously ( Baah and Jin, 2019 ). Recent demands on green production practices of firms by takeholders and response to these demands by firms indicate that takeholder perceptions and trust, captured as organizational le- itimacy under the institutional theory, are very vital for firms n the quest to achieve sustained competitive advantages and uperior performance. Since recent industry norms are centered round protecting the environment, green production practices are eemed as acceptable behaviour especially in manufacturing sec- ors, and as such, adherence to environmental legislation as well s ISO standards based on institutional isomorphism is contribut- ng to the increase in the adoption of green production practices. he above review of the stakeholder theory, institutional theory nd NRBV emphasizing on the motives and benefits of adopting reen production or environmental practices from stakeholder and ndustry perspectives suggest that stakeholder pressures critically nfluence organizational behaviour in terms of being environmen- ally sustainable or not. This motivated the study to assess how takeholder pressure from organizational and regulatory stakehold- rs influence green production practices, firm reputation, environ- ental and financial performances. Drawing on the theoretical background as espoused in the bove, we linked the adopted theories to their respective con- tructs in Table 1 . Although some of the constructs and theo- ies overlap, the theories were linked to the constructs based on here the former and latter were much more apparent and po- ent. The stakeholder theory was linked to organizational and reg- latory stakeholder pressures since these groups affect and are af- ected by the actions of the firm, hence are stakeholders of the or- anization as already captured under the stakeholder theory. Also, he institutional theory was linked to the adoption of green pro- uction practices as well as firm reputation. This is because in- titutional isomorphism has been noted as very key in motivating he adoption of green practices. Moreover, firms operating in di- erse industries seek to ensure conformance to accepted industry ractices, which lead to homogenous practices, policies and strate- ies. Institutional isomorphism also helps the firm gain organiza- ional legitimacy, which is mainly reflected in stakeholder endorse- ent, which is also directly linked to firm reputation. Thus, firms hat engage in green practices based on industry isomorphism are ikely to experience high levels of reputation due to stakeholder ecognition and endorsement. Financial performance and environ- ental performance were linked to the NRBV because engaging n environmental initiatives leads to the development of capabil- ties and competitive advantage, which, in turn, leads to improved nancial and environmental performance. Additionally, the study ighlighted a few closely related papers focusing on the adopted ariables and their respective conclusions, as presented in Table 1 . .2. Stakeholder pressure Past studies have captured the need to adhere to stakeholder emands if a firm seeks to attain superior competitive posi- C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 Table 1 Construct linked theories and relevant literature. Theory Linked construct Stakeholder theory Organizational stakeholder pressure; Regulatory stakeholder pressure Institutional theory Adoption of green production practices; Firm reputation Natural resource based view (NRBV) Financial performance; Environmental performance Related paper Variable Conclusion Schmitz et al., 2019 Regulatory stakeholder pressure; Strategic orientation; Regulatory stakeholder pressure moderated the proactive environmental orientation relationship between Strategic orientation and the adoption of proactive environmental orientation Baah et al. (2020) Organizational and regulatory stakeholder pressure; Positive and significant influence of adopted stakeholder green logistics practices; social and environmental pressures on green logistics practices, social and reputation; financial performance environmental reputation and financial performance Zailani et al. (2012) External institutional drivers; Internal proactive Customer pressure and regulation and incentives environmental strategy; environmental performance positively and significantly impacted eco-design and environmental performance Gonzales’s-Benito and Governmental and non-governmental stakeholder Non-governmental stakeholder pressure and managerial Gonzalez-Benito’s (2006) environmental pressure; environmental logistics environmental awareness significantly influenced practices; managerial environmental awareness implementation of environmental logistics practices, Shashi et al. (2019) Leanness; process innovation; product innovation; Leanness positively influenced process innovation, environmental performance; financial performance product innovation, environmental and financial performances. Giovanni and Vinzi, (2012) Environmental management; types of environmental Internal and external environmental management practices; and performance positively influenced economic and environmental performance t t 2 i s s y B h c L f p v t s m n ( e l k fi t t a 2 t l s h t s h b i t f b e t s h a r t a g t r t r a w s b g a p t h p g i 2 d o a r t g i c g ( s 2ions and sustained performance ( Baah et al., 2020 ; Shashi et al., 019 ; Kassinis and Vafeas, 2006 ). According to Baah et al. (2020) , takeholder pressures have gained significant attention over the ears, and thus, these pressures have been the motivations be- ind several firms adopting green production practices. Eesley and enox (2006) indicated that stakeholder powers and influence dif- er based on the characteristics of stakeholder groups. Despite the arying definitions of stakeholders, Freeman’s (1999) definition as- erts that stakeholders either affect or are affected by an orga- ization’s actions. Kassinis and Vafeas (2006) grouped stakehold- rs into latent, expectant and definitive stakeholders using three ey attributes, namely; power, legitimacy and urgency. The authors hen indicated that stakeholder groups that possess two or more ttributes were vital stakeholders and that firms had to respond o their demands. Sarkis et al. (2010) also distinguished between takeholder groups based on those that affect the organization and hose the organization affect into primary and secondary stake- olders. The authors elaborated that primary stakeholders signif- cantly affect firm survival while secondary stakeholders do not af- ect the existence of the firm. Additionally, González-Benito and González-Benito (2006) fur- her highlighted and grouped these primary and secondary stake- olders into three groups, namely; organizational, community and egulatory stakeholders. According to the authors, organizational nd regulatory stakeholders critically affect a firm’s survival and hat organizations needed to assess and respond to demands from hese stakeholder groups if the firm aims to achieve competitive nd superior performance. This study, in providing a detailed per- pective of stakeholder pressure assesses how pressures from or- anizational and regulatory stakeholders affect green production ractices as well as firm performance. Organizational stakeholders ave been explained as those stakeholders that make up an or- anization because the firm exists for and by them. This category ncludes customers, suppliers, employees and shareholders as in- icated by Sarkis et al. (2010) . Eesley and Lenox (2006) posit that rganizational stakeholder pressures significantly pushes firms to dopt and implement green production practices. Thus, organiza- ional stakeholder pressures are deemed vital for proactive green nitiatives because these stakeholders understand the capabilities, oals and objectives of the firm. Due to the authority they pos- ess as a result of their roles within the firm, they make sus- 103 ainability decisions which aim at promoting long-term firm prof- tability (through investor attraction and financial advantages) and ustainable societies. A more precise clarification was made by aah et al. (2020) by asserting that environmental proactiveness omes from elevated pressures from organizational stakeholders. Regulatory stakeholders, on the other hand, have coercive owers that intimidate firms to adopt green production initia- ives ( Backer, 2007 ). Regulatory stakeholders comprise govern- ents, trade associations, other regulatory agents and the media Sarkis et al., 2010 ; Baah et al., 2020 ). Media was added to regu- atory stakeholders because media outlets in recent times expose rms that engage in harmful environmental practices in addition o those that disregard green production concerns ( Baah et al., 020 ). The authors indicated in their study that the negative pub- icity from media outlets have dire consequences on firms and ence, firms to an extent also engage in green practices to avoid uch bad publicities. Again, regulatory stakeholder pressures have een critical because regulatory stakeholders represent policies hat serve as guidelines in directing firm production practices and ehaviours toward environmental protection. Whereas proactive nvironmental initiatives have been associated with organizational takeholder pressures, reactive environmental initiatives are mostly ssociated with regulatory stakeholder pressures because, for firms o avoid sanctions, bad publicity and other legal burdens adopt reen production practices that meet environmental legislation and egulations. Seeing the potent powers of both organizational and egulatory stakeholders, Kassinis and Vafeas (2006) in accordance ith Eesley and Lenox (2006) suggest that firms should seek to uild a lasting relationship with both stakeholder groups as well s satisfying both pressures or demands from these stakeholders o entrench competitive positions whiles concurrently improving erformance. .3. Green production practices The rapid depletion of the earth’s resources in addition to the obust consumption of energy and fuel, emission of greenhouse asses as well as wastage of raw materials have motivated re- ent calls for sustainability for manufacturing firms and sectors Kleindorfer et al., 2005 : Govindan et al., 2014 ; Redante et al., 019 ). Manufacturers and stakeholders based on environmental C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 s c m v c t t l c d t s s t i m t n o e 2 s a w a i a t D f o fi p f t u c fi t a t t k a o s l m s f i m w g i u m h g t d c w g s s a t h t s 2 i e a p u ( e e t b m s e a t s h t A a p S i b t t a s a a g s v s p u b n m m r d e p t a p s m i rustainability awareness are undertaking production practices that inimize negative production influences on the environment. Ac- ording to Kleindorfer et al. (2005) , manufacturing firms due to heir enormous negative environmental impacts are receiving in- reasing pressure to account for resource usage and environmen- al footprint. As such, most manufacturing firms are integrating ustainable practices into production operations, thereby promot- ng green production practices. Veleva and Ellenbecker, 20 0 0 fur- her elaborated that sustainable production embodies the creation f goods and services using systems and processes that conserve nergy, are non-polluting, preserve natural resources, ensures the afety of workers and communities as well as present economic nd social gains. The above definition places production practices ithin an environmental, social and economic framework; thus, ndicating that best and sustainable practices can be achieved hrough emphasizing the interconnections between these three rameworks. Having established the relevance of adopting green production ractices, there exist barriers in its implementation, especially in he context of developing economies ( Niemann et al., 2016 ). Ac- ording to Niemann et al. (2016) , barriers that are apparent in he context of emerging economies included lack of sustainable echnology, lack of government regulations and legislation, lack of nowledge and experience, high cost of implementation and lack f management support. The presence of these barriers causes a ack of synergy among diverse stakeholder groups in the fight for ustainable production practices. Majumdar and Sinha, 2019 also n the context of Southeast Asia indicated that the lack of re- ard systems, eco-literacy and training in addition to the complex- ty of green processes, lack of top management support and com- itment, among others, were critical in not achieving sustainable oals. These factors among others have aroused the interests of iverse stakeholder groups in setting regulations and legislations, hich are mandatory and thus ensures compliance from non- upportive management. Therefore, organizations and their man- gement due to recent organizational and regulatory pressures, ave started adopting green production practices to avoid legal anctions and bad publicity. Specifically, several studies have focused on green manufactur- ng and sustainable production, but there still exists a lack of syn- rgy in identifying practices that are deemed as green or sustain- ble ( Veleva and Ellenbecker, 20 0 0 ; Baah et al., 2020 ). This study sing the indicators of green production as highlighted by Veleva t al., (20 0 0)aimed at assessing the current green production prac- ices among SMEs. In relation to the environment, firms in the anufacturing sector are encouraged by organizational stakehold- rs and coerced by regulatory stakeholders to minimize raw ma- erial usage, reduce waste in production processes, reduce green- ouse gasses emissions and reduce energy usage in production. layon et al. (2017) also indicate that in addition to the green roduction practices that target the environment, there still ex- sts the need to engage in green product production. The au- hors then reiterated the need for products and packaging that re designed based on eco-friendliness and safety for workers nd end-users. The authors additionally stressed that technolo- ies and workplaces should also be designed to reduce or pre- ent ergonomic and physical hazards. A holistic view of these ractices according to Alayon et al. (2017) and Veleva and Ellen- ecker, 20 0 0 make up green production and further added the eed to integrate more practices such as management commit- ent to disclosure and openness in terms of environmental pro- uction initiatives with stakeholder groups since these will help in roactive responses to environmental production issues. Addition- lly, green production practices go to the core of environmental trategies and as such, manufacturing companies are making vital nvestments that seek to improve current practices while specifi- 104 ally boosting product and process innovations leading to the de- elopment of capabilities as captured by the NRBV. Green produc- ion practices as captured in the above discussion embraces eco- ogical product design, efficiency and durability, products and pro- uction processes which are user-friendly, environmental and en- ure recycling capabilities. Thus, this study assesses how the adop- ion and implementation of green production practices such as entioned above impacts firm reputation, environmental and fi- ancial performances. .4. Firm reputation Firm reputation, according to Turban and Cable (2003) , is n intangible asset because it is premised on the perceptions nd opinions of firms and industry stakeholders. According to eephouse et al. (2016) , firm reputation to an extent is based n the institutional theory in that it takes good reputation from rms to gain organizational legitimacy. This reasonable assertion urther espouses that when firms, specifically, operating in man- facturing sectors adopt green production practices thereby ful- lling stakeholder groups demand to preserve the environment in ddition to meeting regulatory requirements earn goodwill which ranslates into legitimacy since these firms’ behaviours are deemed cceptable in comparison with industry norms, assumptions and trategies. Several scholars have identified that firm reputation is ultidimensional and that acquiring good reputation can come rom social performance as well as from environmental perfor- ance ( Fombrun, 2005 ; Baah et al., 2020 ). Additionally, firms also ain reputation from characteristics pertaining to resources, prod- ct/services and production processes. Although firm reputation as been designated as an impalpable asset due to how it projects he firm externally, reputation has also been proven to significantly ontribute to improving a firm’s sales in addition to profit mar- ins ( Deephouse et al., 2016 ). This indicates the relevance in under- tanding how green production practices externally places a firm in he minds of stakeholders and how this external position translates o internal gains. .5. Environmental and financial performances Gaining insight into firm performance has been critical for both ractitioners and scholars, especially in the management domain Stainer and Stainer, 1998 ; Shashi et al., 2019 ). In management lit- rature, the dominance of financial measures in assessing the well- eing or success of organizations have been phenomenal. The per- istent use of financial and profitability measures motivated schol- rs such as Stainer and Stainer (1998) to indicate the flaws as- ociated with only using such measures. The authors explained hat an organization is made of several components or dimensions nd, thus, assessing a firm based on a single dimension is flawed. tainer and Stainer (1998) therefore indicated the need to com- ine both financial and non-financial measures in the examina- ion of performance. Based on this recommendation and in con- onance with Shashi et al. (2019) , the study adopts both financial nd non-financial measures in assessing performance. Pricisely, the tudy reflects financial performance which uses profitability mea- ures such as return on investment, return on sales, return on eq- ity, profit margin and net profit. Considering non-financial measures, the study adopts environ- ental performance which reflects firms’ contributions to envi- onmental sustainability. Environmental performance is based on ngaging in sustainable initiatives such as green production prac- ices captured in the study. Although engaging in environmental ractices initially exert significant pressures on financial perfor- ance, however, several scholars approve that involving in envi- onmental practices advances environmental performance, which C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 Fig. 1. Research model showing hypotheses and theories. p B e r r t t i ( a s e f a a t z g a o h w p c c t p l b c g t v i l i a t g s m a i p 2 fi t 2 a g a e h a w T t e t y ( rofits corporate reputation seeing that current stakeholders are nvironmentally conscious decision-makers. Therefore, in the long un environmental performance progresses financial performance hrough market share, sales and stakeholder trust and loyalty Gonzales’s-Benito and Gonzalez-Benito, 2006 ). Additionally, the tudy also adopts firm reputation as another measure of firm per- ormance, seeing that it significantly relates to organization growth nd success. From a functioning perspective, companies that respond to or- anizational and regulatory stakeholder pressures on the adoption f green production practices not only build lasting relationships ith stakeholders but also gain legitimacy, attract investors and ustomers thereby improving market share and financial advan- ages in addition to environmental and social reputation as high- ighted by Backer (2007) and Baah et al. (2020) . This study fo- used on stakeholder pressures on the adoption of green produc- ion practices in the context of an emerging economy and how it nfluences firm performances due to the dire need for sustainabil- ty amid the rapid rise of SMEs in developing countries. Based on he above, the research model or framework illustrated in Fig. 1 hows the hypothesised relationships and interactions among the dopted study variables. .6. Hypothesis development .6.1. Relationships between organizational stakeholder pressure, reen production practices, firm reputation, financial and nvironmental performances A number of scholars have provided significant evidence hich supports the positive and significant relationships be- ween organizational stakeholder pressure, green production prac- ices, firm reputation, financial and environmental performances Tsinopoulos et al., 2018 ; Shashi et al., 2019 ; Baah et al., 2020 ).105 aah et al. (2020) indicated that stakeholder pressures significantly elated to the adoption and implementation of green logistics prac- ices. Furthermore, Shashi et al. (2019) also connoted that engaging n green practices, especially in relation to product development nd innovations, had significant relations with both financial and nvironmental performances. Organizational stakeholder pressures s elaborated by Baah et al. (2020) are critical to firm survival and hus, most firms try their best to respond to pressures from organi- ational stakeholders. This assertion agrees with Gonzales’s-Benito nd Gonzalez-Benito’s (2006) a ssertion that organizational stake- older mostly influences the adoption of proactive environmental ractices due to the power these stakeholders wield. These pre- eding findings indicate that executing green production practices resents benefits that lead to a positive and significant association etween these variables. Specifically, adopting and implementing reen production practices attracts environmentally conscious in- estors, customers, suppliers as well as other stakeholders, thereby eading to larger market shares which ultimately reflect in sales nd profits. Additionally Giovanni and Vinzi, (2012) indicated that reen production practices when well implemented boost environ- ental performance which yields goodwill, social and moral cap- tals, which comes from stakeholder endorsements. Also, as firms ositively respond to stakeholder pressures, the perception that the rm is trying its best to address key environmental concerns leads o positive goodwill and vice versa. Hence, it can be deduced that lthough stakeholder pressures through green practices indirectly ffect goodwill, there also exists a direct influence on the basis of ow firms yield or bend to stakeholder pressures or demands. In ccord with the benefits that green production practices present, sinopoulos et al. (2018) projected that green innovation practices mploy significant resources, which when well implemented will ield both short-term and long-term goals for firms. Some of these C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 b S p u s t A H e c i ( i s 2 n p t p t f t o h B H p w p m B i 2 g p s h f t ( o fi i r h a t b t a c p a p a F n fi s p t fi i a m fi t p w i H m c w m 2 n p t p m H D l c n e a 2 d p o D t l fi S c p g t b t p s e t v fi p e c f t p B fi t s t senefits as capture in the discussion lead to more substantial com- etitive positions and superior performance. Based on the above tudies finding, this study proposes the hypothesis: 1. Organizational stakeholder pressure positively and signifi- antly relates with green production practices (a) , firm reputation b) , financial (c) and environmental (d) performances. .6.2. Relationships between regulatory stakeholder pressure, green roduction practices, firm reputation, financial and environmental erformances Regulatory stakeholder pressure has attracted several atten- ions in the past decade due to the powers that regulatory stake- olders possess ( Gonzales’s-Benito and Gonzalez-Benito, 2006 ). acker (2007) indicated that regulatory stakeholders use their owers to back their pressures in demanding firms to com- ly with established environmental guidelines and legislations. aah et al. (2020) also indicated that regulatory stakeholder by us- ng their legally backed powers had coerced several firms to adopt reen practices especially in the manufacturing sectors and small cale industries. In reality, failure to respond to regulatory stake- older pressures present bad publicity in addition to legal sanc- ions. Thus, majority of SMEs due to their limited capacity focus n satisfying regulatory stakeholder pressures to avoid the legal mplications that come with failure to respond to regulatory stake- older demands as well as also avoid bad publicity, hence making he majority of SMEs reactive in their approach to green produc- ion practices. Responding to regulatory stakeholder pressures, ac- ording to Backer (2007) , leads to high levels of firm reputation nd stakeholder endorsement because firms are perceived as law- biding and also perceived as operating within accepted industry orms, thus earning firms’ legitimacy. Additionally, satisfying these takeholder pressures leads to building stronger ties with regula- ory bodies as well as other stakeholder groups hence, present- ng higher gains in terms of environmental and financial perfor- ances. Orientation towards green production practices also leads o reduced production costs due to efficient raw material usage, aste reduction, minimal use of energy and the reduction or elim- nation of redundant production processes. These practices ensure inimal pollutions through reduced emission of greenhouse gasses hich also reduces costs associated with polluting the environ- ent. These efforts to reduce negative environmental impacts sig- ificantly influences a firm’s reputation, financial and environmen- al performances. From the discussion, this study proposes the hy- othesis: 2. Regulatory stakeholder pressure positively and significantly re- ates with green production practices (a) , firm reputation (b) , fi- ancial (c) and environmental (d) performances. .6.3. Relationships between green production practices, financial erformance, firm reputation and environmental performance Green production practices have widely been studied under he caption "green manufacturing" ( Kleindorfer et al., 2005 ). Ef- cient green production practices centre on effective and effi- ient production practices that embody sustainable strategies and oals, as explained by Govindan et al. (2014) . Veleva and Ellen- ecker, 20 0 0 also further exposed that engaging in sustainable roduction, which in this study is referred as green production nables organizations to be innovative in terms of product de- elopment as well as in production processes. These innovations roduce significant gains for firms, which include attracting new ustomers, creating a market niche while boosting environmen- al, social and financial performance simultaneously. According to aah et al. (2020) , engaging in green industry practices (logis- ics sector in their study) promote good environmental percep- ions, thus boosting environmental reputation and performance. 106 hashi et al. (2019) also espoused that engaging in green prod- ct innovation and other practices provide financial returns in he long-term together with building lasting stakeholder relations. layon et al. (2017) and Fernando and Wah (2017) moved on to xplain that adopting green production practices aim at sustain- ng the environment for future generations and improving eco- nnovations through reducing energy usage, preserving natural re- ources, eliminating wasteful production processes and avoiding oise as well as greenhouses gasses pollutions. Therefore, firms hat aim for green production practices, by reason of aligning sus- ainable goals with those of stakeholders, develop collaborative ef- orts and relationships that enormously impact performance. Based n the above, this study proposes the hypothesis: 3. Green production practices positively and significantly relate ith financial performance (a) , firm reputation (b) and environ- ental performance (c) . .6.4. Relationship between firm reputation and financial erformance Understanding firm reputation and how it boosts firm per- ormance has been crucial for both practitioners and scholars Deephouse et al., 2016 ). According to Deephouse et al. (2016) , rm reputation is an important asset in current business envi- onments where earning organizational legitimacy is considered core objective or goal. From this perspective, Turban and Ca- le (2003) indicated that firm reputation, although an intangible sset, reflects tangible gains or benefits for firms. The authors ex- lained these tangible gains as those benefits that increase a firm’s rofit margins, customer base and reflect in larger market shares ombrun (2005) also suggested that earning goodwill projects a rm as law-abiding especially in the context of adoption and im- lementation of green production practices and as such, earns a rm stakeholder endorsement, loyalty, trust in addition to social nd moral capitals. The above discussion exposes the influence of rm reputation on financial performance, and thus, this study pro- oses the hypothesis: 4. Firm reputation positively and significantly relates with finan- ial performance. .6.5. Relationship between environmental performance and financial erformance The relationship between environmental and financial perfor- ance have gained significant attention, as indicated by Hart and owell (2011) . Shashi et al. (2019) and Baah et al. (2020) indi- ated that despite the attention given to the interaction between nvironmental and financial performance, findings on the vari- bles have been inconsistent. While some streams of studies in- icate a positive link, others indicate a negative relationship and thers provide no link at all between these variables ( Hart and owell, 2011 ; Shashi et al., 2019 ; Baah et al., 2020 ). Having high- ighted the inconsistency of past studies, this study in line with hashi et al. (2019) asserts that adopting environmental practices resent financial impacts that vary in both short-term and long- erm. This is because engaging in green product innovation prac- ices requires initial investments in the short term, which mean ignificant drain from financial coffers. In contrast, in the long- erm, these initial investments begin to yield gains and thus, boost nancial performance. Baah et al. (2020) also explained that as nvironmental performance rises in the short-term financial per- ormance is likely to reduce, but in the long-term, these two erformances are positively correlated and thus recommend that rms engage in green practices irrespective of immediate costs eeing that it will ultimately present gains from financial and takeholder perspectives. The findings of Shashi et al. (2019) and C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 B Table 2 b Profile of respondents ( n = 210). e Firm characteristics Frequency Percentages (%) p Number of employees e < 10 20 9.5 11–50 29 13.8 H 51–100 48 22.9 w 101–500 62 29.5 > 500 51 24.3 3 Product type Wood, Lumber products and processing 35 16.7 Leather products and processing 32 15.2 3 Textile and fabric products 29 13.8 Food and Beverages 47 22.4 Rubber and other plastic products 24 11.4 i Stationery and allied products 19 9.1 m Others 24 11.4 Work experience (years) d 1–5 58 27.6 l 6–10 62 29.5 l 11–15 48 22.9 t Over 15 42 20 Job Qualification o Owner 62 29.5 o Manager 65 31 a Assistant Manager 50 23.8 c Others 33 15.7 p s l c b e t s i t t h t m w m H l d o fi t R d b t p A d b p d fi e s i t f m S i i t y h f a m s c t o s O t S p y t a p s B r t p fi l w a f 3 i s m a aaah et al. (2020) suggest that environmental performance is ro- ust in influencing financial performance. Thus, firms must aim to mploy environmental practices seeing how it influences financial erformance. From the discussion, this study proposes the hypoth- sis: 5. Environmental performance positively and significantly relates ith financial performance. . Research methods .1. Sample and data collection and common method bias (CMB) The study based empirical analysis on a sample of SMEs operat- ng in the Ghanaian manufacturing sector due to the rapid rise in anufacturing SMEs to constitute over 90% of key industries as in- icated by the OECD report (2010) . Based on the review of related iterature on the study variables namely; organizational and regu- atory stakeholder pressures, green production practices, firm repu- ation, financial and environmental performances, this study devel- ped questionnaires that solicited information from managers and wners of manufacturing SMEs. Through contacting manufacturing ssociations, about two thousand manufacturing SMEs and their ontacts were obtained. By employing Krejcie and Morgan’s sam- ling technique, three hundred and twenty SMEs were randomly elected. Upon selection, the developed questionnaires which fol- owed the guidelines of Podsakoff et al. (2003) to control issues of ommon method bias were sent out selected manufacturing firms etween August 2019 to December 2019. Following the stipula- ions of Podsakoff et al. (2003) in limiting common method bias ssues, the questionnaires assured anonymity to respondents, ob- ained measures from diverse sources and had well-structured sec- ions of measured items. These well-structured questionnaires were sent out to various anagers in manufacturing firms or SMEs in addition to a cover etter detailing the purpose of the study via e-mails, which were btained from the manufacturing associations. Out of the total of hree hundred and twenty questionnaires sent out, only two hun- red and twenty-six questionnaires were received at the end of he data collection process, thus indicating a 70% response rate. fter scrutinizing the data, the questionnaires that were valid to e included in the data analysis and interpretation were two hun- red and ten. The difference, which is sixteen questionnaires were xcluded based on missing entries and invalid responses render- ng these questionnaires inconclusive and hence their exclusion rom the data analysis and interpretation. Furthermore, following hashi et al. (2019) and Baah et al. (2020) , CMB was assessed us- ng Harman’s one-factor test. Based on the exploratory factor anal- sis and principal component analysis methods, the Harman’s one- actor test results indicated that the study had no issues of com- on method bias since the single factor explained 38.8% of the umulative variance, which is less than the recommended thresh- ld of < 50%. Additionally the study adopted the Kaiser-Meyer- lkin Measure of Sampling Adequacy (KMO) and Bartlett’s Test of phericity in assessing if the data is well suited for factor anal- sis and comparing the observed correlation matrix to the iden- ity matrix respectively. From the result, the KMO measure of sam- ling adequacy was 0.785, which is within an acceptable range and artlett’s test showed a significance value of 0.0 0 0 which is less han the threshold of 0.005 as indicated by Kaiser (1974) . These ndings show the adequacy of the sample for factor analysis as ell as no issues of high correlation. .2. Description of measurement items Using a 5point Likert scale, where 1 represented strongly dis- gree to 5 representing strongly agree, the study assessed the 107 xtent to which respondents agreed or disagreed to each mea- urement item as appropriate in their corresponding manufac- uring firms (See Appendix 1). Each construct was modelled to ave five measurement items in the questionnaires but to enhance odel and path strengths, items that had factor loadings < 0.70 ere removed from the model based on the recommendation by air et al. (2013) . Organizational stakeholder pressure reflects the emands of customers, suppliers, shareholders and employees on rms in adopting and implementing green production practices. egulatory stakeholder pressure reveals the efforts of regulatory odies in coercing firms to adopt and implement green production ractices. Green production practices captured the ecological pro- uction practices of manufacturing SMEs. In relation to measuring erformance, firm reputation aimed at specifying the position of rms concerning perceptions and opinions of the firm and industry takeholders. Financial performance measures sought to establish he financial capabilities of manufacturing firms using profitability easures and environmental performance also aimed at reflect- ng contributions to sustainable initiatives such as green produc- ion practices. By focusing on managers, owners and departmental eads captured under others who have working experience above year, the data collected to a large extent reflected actual industry ituations. Before exposing the measurement items, Table 2 shows he characteristics of respondent firms. The demographics of the ample size as captured in Table 2 reflected the demographics of he entire population because their practices, products and em- loyee sizes were similar and related. Table 3 exposed the measurement items for adopted study vari- bles in addition to their factor loadings, outer VIFs, mean and tandard deviation. Outer VIF values being < 3 indicated the best esults according to Ringle et al. (2015) and shows that the study oses no multicollinearity issues. Table 3 further shows that factor oadings, mean and standard deviation were all within an accept- ble range. However, Hair et al. (2013) indicated that items with actor loading < 0.70 should be deleted from models and some tems were deleted based on this recommendation, other items uch as OSP1, GPP1 and EP1, were left and not deleted from the odel due to their strong influence on the model’s path strengths nd predictive relevance. C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 Table 3 Measurement items. Construct Measurement item Factor loadings Outer VIFs Mean SD Organizational stakeholder OSP1: Customers 0.696 1.059 3.71 0.97 pressure OSP2: Employees 0.730 1.948 3.99 0.96 OSP4: Shareholders 0.708 1.749 4.08 0.98 OSP5: Suppliers 0.766 1.882 3.80 0.94 Sarkis et al., 2010 ; Schmitz et al., 2019 ; Baah et al., 2020 Regulatory stakeholder RSP2: Government 0.730 1.474 3.70 0.98 pressure RSP3: Trade associations and unions 0.789 1.975 4.16 0.75 RSP4: Media 0.812 2.015 3.94 0.97 RSP5: Adherence to environmental guidelines from other 0.896 2.449 4.22 0.71 regulatory agents González-Benito and González-Benito, 2006 ; Backer, 2007 ; Baah et al., 2020 Green production practices GPP1: Our firm frequently reconfigure production processes 0.669 1.663 3.70 0.77 to improve compliance with environmental production guidelines, standards and legislations GPP3: Our company reduces waste and emissions through 0.808 2.140 3.43 0.78 recycling programs, reverse logistics, among others GPP4: Our company invests in internal and external green 0.741 1.614 3.85 0.95 production processes to produce safer and eco-friendly products GPP5: Our company improves production processes to avoid 0.831 2.034 3.94 0.94 raw material waste and high energy consumption Veleva and Ellenbecker, 2000 ; Kleindorfer et al., 2005 : Govindan et al., 2014 Firm reputation FR1: Our firm encourage diverse stakeholder involvement in 0.763 1.861 4.12 0.86 planning and executing environmental practices FR2: From an environmental perspective, our business engage 0.807 1.656 4.18 0.95 in philanthropic/charitable practices FR3: Our firm also ensure employees safety and quality of life 0.755 1.807 3.80 0.82 FR4: Our firm improves the community in which we operate 0.730 1.465 4.07 0.73 Turban and Cable, 2003 ; Fombrun, 2005 ; Deephouse et al., 2016 Environmental EP1: Our firm minimizes environmental impacts of its 0.618 1.098 3.69 0.94 performance operations EP2: Encourage stakeholders involvement in planning and 0.706 1.429 3.78 0.98 executing environmental practices EP3: Allow environmental audits 0.775 1.975 4.12 0.97 EP4: Adoption of cleaner production methods 0.807 2.321 3.89 0.96 González-Benito and González-Benito, 2006 ; Shashi et al., 2019 ; Agyabeng-Mensah et al., 2020 Financial Performance FP1: Return on sales 0.756 1.786 3.45 0.94 FP2: Return on equity 0.703 1.612 3.95 0.95 FP3: Return on investment 0.763 1.957 3.97 0.93 FP4: Profit margin 0.827 1.963 3.84 0.92 FP5: Net profit 0.635 1.352 3.77 0.97 Shashi et al., 2019 ; Baah et al., 2020 ∗SD – Standard Deviation. 3 0 d s s s F c t S b p t t A i c g s m s r m H a c m t t r 2 v a r 3 H f s t.3. Assessment of internal consistency reliability, convergent and iscriminant validities This study, taking an exploratory approach, adopted a survey re- earch design and a quantitative approach to data analysis specifi- ally using partial least square structural equation modelling (PLS- EM) technique in making interpretations due to its suitability for redictive research models. The study also implemented a posi- ivist methodological model, which involves formulating and test- ng hypotheses empirically. As such, SmartPLS3 software, which is rounded in regression, path, principal components factor analy- is and competent in testing and generating standardized regres- ion for paths in structural models besides factor loadings for easurement items, was used in this study. Adopting PLS-SEM pproach to data analysis requires an assessment of a structural odels performance and suitability based on measurement criteria hat examine the model’s reliability and validity ( Henseler et al., 015 ). In assessing internal consistency reliability, the Cronbach’s lpha and composite reliability are scrutinized if they meet their ecommended thresholds of ≥ 0.70 and ≥ 0.60 as suggested by enseler et al. (2015) . Examining the model’s convergent validity ocuses on Average Variance Extracted (AVE) of the model’s con- tructs scrutinizing if it meets its recommended threshold of > 108 .50. From Table 4 , it is established that the model and its con- tructs have internal consistency reliability and convergent validity ince all thresholds are satisfied. With regards to discriminant validity, the study focused on ornell-Larcker criterion and HTMT ratio. The Fornell-Larcker cri- erion specifies that the square root of AVEs of constructs ought to e larger than the correlations between constructs. From Table 5 , he study realizes discriminant validity since the square roots of VEs are larger than the correlations between constructs as indi- ated by items in bold. The HTMT ratio, as also shown in Table 6 , also indicate the odel further achieves discriminant validity. This is because HTMT atios presented in Table 4 were all below the threshold of 0.90. enceforth the model has high levels of discriminant validity be- ause the HTMT ratio, which uses the correlation estimates ob- ained from investigating the heterotrait- monotrait ratio of cor- elations in determining if models meet high levels of discriminant alidity was satisfied. .4. Assessment of the structural model Hair et al. (2013) further suggested that after establishing he model satisfies reliability and validity thresholds the next C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 Table 4 Construct internal consistency reliability and convergent validity. Construct Cronbach’s Alpha Composite Reliability Average Variance Extracted (AVE) Environmental Performance 0.704 0.819 0.533 Financial Performance 0.792 0.857 0.547 Firm Reputation 0.763 0.849 0.584 Green Production Practices 0.761 0.848 0.585 Organizational Stakeholder 0.727 0.816 0.526 Pressure Regulatory Stakeholder 0.823 0.883 0.654 Pressure Table 5 Fornell-Lacker criterion. Construct 1 2 3 4 5 6 1. Environmental Performance 0.730 2. Financial Performance 0.599 0.740 3. Firm Reputation 0.476 0.687 0.764 4. Green Production Practices 0.623 0.490 0.641 0.765 5. Organizational Stakeholder Pressure 0.600 0.283 0.501 0.540 0.725 6. Regulatory Stakeholder Pressure 0.440 0.718 0.626 0.509 0.265 0.809 Square root of AVEs is indicated by bold diagonal values. Table 6 HTMT ratio. Construct 1 2 3 4 5 6 1. Environmental Performance 2. Financial Performance 0.761 3. Firm Reputation 0.640 0.858 4. Green Production Practices 0.855 0.623 0.818 5. Organizational Stakeholder Pressure 0.679 0.343 0.645 0.640 6. Regulatory Stakeholder Pressure 0.558 0.849 0.774 0.648 0.321 Table 7 i Structural model R2 and Q2 . s Construct R2 R2 Adjusted Q ² 4 Environmental Performance 0.508 0.500 0.243 Financial Performance 0.710 0.702 0.346 Firm Reputation 0.568 0.561 0.296 Green Production Practices 0.436 0.430 0.236 m F s s t s l a t G p v T S t t o a t t s F G v t 0 m g a f 2 d t F d i c p e p p v i V t tep is to examine the structural model using explained vari- nces (i.e. R2 ), the model’s predictive relevance (i.e. Stone- eisser’s Q2 ), path coefficients ( β) and significance levels (p- alues). Hair et al. (2013) indicated that studies that adopt PLS- EM approach need to report Stone-Geisser’s 2 Q to show predic- ive relevance. In addition to reporting Stone-Geisser’s Q2 , the 2 R nd R2 adjusted also need to be reported to show the variances of he dependent variables explained by the independent variables. rom Table 7 , the structural model predicted 0.508 variance of en- ironmental performance, 0.710 variance of financial performance, .568 of the variance of firm reputation and 0.436 variance of reen production practices. The R2 adjusted of environmental per- ormance, financial performance, firm reputation and green pro- uction practices were 0.500, 0.702, 0.561 and 0.430, respectively. urther examining the structural model, the blindfolding procedure ndicated that environmental performance (Q2 = 0.243), financial erformance (Q2 = 0.346), firm reputation (Q2 = 0.296) and green roduction practices (Q2 = 0.236) have predictive relevance as Q2 alues are > 0 as presented in Table 7 . Additionally, the inner IF values between the paths relationships have been presented 109 n Table 8 . Since the VIF values presented are < 3, there is strong upport that the study is free from multicollinearity issues. . Result and discussion Having established the reliability and validity of the structural odel, the next step focuses on discussion of the study results. rom the analysis and examination of the results, organizational takeholder pressure proved significant in predicting the other tudy variables which are green production practices, firm reputa- ion, financial performance and environmental performance. In re- ation to the hypotheses, hypothesis H1a, which sought to establish he positive and significant influence of organizational stakeholder ressure on green production practices was supported ( β= 0.435, = 8.662, f2 = 0.313). The robust and large influence of organiza- ional stakeholder pressure on the adoption and implementation f green production practices as shown by 2 the β and f shows hat manufacturing firms yield to pressures from organizational takeholders. This finding was supported by Gonzales’s-Benito and onzalez-Benito’s (2006) when the authors asserted that organiza- ional stakeholders due to their ability to affect firm survival nor- ally take the front seat role in terms of managerial decisions and s such, receive significant attention from managers. Schmitz et al., 019 also indicated support for the above finding by connoting hat the adoption of proactive environmental strategies is mostly ependent on pressures from diverse stakeholder groups espe- ially organizational and regulatory stakeholders. Thus strength- ning support for H1a. The results also indicated support for hy- othesis H1b, which aimed at establishing the positive and signif- cant effect of organizational stakeholder pressure on firm reputa- ion ( β= 0.224, T = 2.853, f2 = 0.082) as indicated in Table 8 . The C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 Table 8 Analysis of hypothesis. Hypothesis Relationship β T value P value Decision f2 Inner VIFs H1a OSP ➔ GPP 0.435 8.662 0.000 Supported 0.313 1.075 H1b OSP ➔ FR 0.224 2.853 0.004 Supported 0.082 1.412 H1c OSP ➔ FP −0.234 4.635 0.000 Not Supported 0.102 1.839 H1d OSP ➔ EP 0.374 4.300 0.000 Supported 0.201 1.412 H2a RSP ➔ GPP 0.394 6.673 0.000 Supported 0.256 1.075 H2b RSP ➔ FR 0.224 2.853 0.004 Supported 0.284 1.351 H2c RSP ➔ FP 0.374 7.033 0.000 Supported 0.265 1.817 H2d RSP ➔ EP 0.171 2.142 0.032 Supported 0.044 1.351 H3a GPP ➔ FP −0.141 2.065 0.039 Not Supported 0.030 2.261 H3b GPP ➔ FR 0.313 5.008 0.000 Supported 0.128 1.772 H3c GPP ➔ EP 0.334 3.828 0.000 Supported 0.128 1.772 H4 FR ➔ FP 0.445 7.249 0.000 Supported 0.294 2.325 H5 EP ➔ FP 0.451 7.222 0.000 Supported 0.342 2.041 r n p w a S t u s t p t b p i t s d e f e f z c i u H e a t G fi a s a i t e t d s B t s g fl r n w e p a p l i a c r i l g t t f s o i s a s a l z t 0 v r r r t a l e H f m v s a p p t fi o tesults imply that SMEs that respond to organizational stakeholder ressures and adopts green production practices will significantly nd positively gain goodwill. This goodwill originates not only from he perspective of organizational stakeholders but from the per- pectives of all stakeholders since the adoption of green production ractices is obvious for all stakeholders. This finding was supported y Shashi et al. (2019) by connoting that engaging in green product nnovations breed goodwill with customers, suppliers, and other takeholders. Deephouse et al. (2016) and Freeman (1999) further spoused that the green or environmental practices positively ori- nt with firm reputation and as such, firms that respond to organi- ational stakeholder pressures are much more likely to gain legit- macy, which, in turn, boosts reputation. Thus further supporting 1b. Although hypothesis H1c which aimed at establishing the posi- ive and significant effect of organizational stakeholder pressure on nancial performance ( β= −0.234, T = 4.635, f2 = 0.102) was not upported, the relationship between the two variables was signif- cant. Thus, further proving how potent organizational stakehold- rs are in terms of mounting pressures aimed at influencing firm ecisions. Although past studies ( Gonzales’s-Benito and Gonzalez- enito, 2006 ; Eesley and Lenox, 2006 ) indicate a positive relation- hip between stakeholder pressures and financial performance, or- anizational stakeholder pressures in this study show a negative elationship with financial performance. This finding harmonizes ith Zailani et al. (2012) in indicating that internal stakeholder ressures or demands to adopt and implement green production ractices are very potent and as such, requires substantial initial nvestments which also significantly and negatively impacts finan- ial performance. Baah et al. (2020) further explained that adopt- ng green practices require the presence of sustainable technolo- ies, experts and other green investments which increase expendi- ure. Thus, also supported the negative relationship between pres- ures from organizational stakeholder and financial performance n the short-term or initial green production practices adoption nd implementation stage. From Table 8 , hypothesis H1d, which imed at showing the positive and significant effect of organi- ational stakeholder pressure on environmental performance ( β= .374, T = 4.300, f2 = 0.201) was supported. This result explains that esponding to organizational stakeholder pressure improves envi- onmental performance mainly because green production practices im at preserving the environment and pressures from stakehold- rs to preserve the environment lead to higher environmental per- ormance, which also leads to higher firm reputation and the de- elopment of capabilities. These capabilities present competitive dvantages, as explained by the institutional and NRBV theories. Collectively, hypothesis 2 which sought to indicate a posi- ive and significant influence of regulatory stakeholder pressure n green production practices (H2a), firm reputation (H2b), fi- 110 ancial performance (H2c) and environmental performance (H2d) ere supported. The above finding agrees with the findings of chmitz et al., 2019 when the authors indicated that external reg- lators mostly intimidate firms into the adoption of either proac- ive or reactive environmental strategies due to the legal powers hey possess. In detail, regulatory stakeholders, due to the legal owers they possess to place sanctions as well as affect key ac- ivities of firms make them receive significant attention. Thus, the istinction between regulatory stakeholder pressures and pressures rom other stakeholder pressure groups is that, compared to other orms of pressure, regulatory stakeholder pressures, though coer- ive, and firms cannot ignore their demands. From the results, reg- latory stakeholder pressure robustly and to a large extent, influ- nced green production practices ( β= 0.394, T = 6.673, f2 = 0.256) s indicated by the β and the f2 values. Gonzales’s-Benito and onzalez-Benito (2006) and Backer (2007) support this finding by greeing that responding to demands from regulatory stakeholders re no longer optional but mandatory. The compulsory nature of hese demands pushes firms to engage in green production prac- ices that preserve the environment. Hence the positive relation- hip between regulatory stakeholder pressure and green produc- ion. Thus, supporting H2a. Additionally, regulatory stakeholder pressure also positively in- uenced 2 firm reputation ( β= 0.224, T = 2.853, f = 0.284). This sig- ificant and large effect also explains that regulatory stakehold- rs can critically influence a firm’s goodwill. Firms that refuse to dhere to regulatory stakeholder pressures suffer from bad pub- icity in addition to the financial costs that result from sanctions nd other legal actions. Vice versa, companies that also respond to egulatory stakeholder demands, form collaborative and lasting re- ationships with key regulatory bodies, thus, building firm reputa- ion as explained by Backer (2007) and Eesley and Lenox (2006) . In urther examination of the results, hypothesis H2c, which focused n indicating the positive influence of regulatory stakeholder pres- ure on financial performance ( β= 0.374, T = 7.033, f2 = 0.265) was upported. The strong relationship and large effect between regu- atory stakeholder pressure and financial performance strengthen he notion that adhering to regulatory stakeholder pressures pro- ide financial benefits for firms. Especially in the case of SMEs, egulatory stakeholders, among other bodies in perceiving the lit- le efforts of SMEs to be susta inable will likely support, fo rmu- ate and implement policies that will be beneficial for such firms. ence, serving as further motivation for adopting more environ- ental production practices. Lastly, regulatory stakeholder pres- ure positively and significantly associated with environmental erformance ( β= 0.171, T = 2.142, f2 = 0.044) as reflected by hy- othesis H2d. By responding to regulatory stakeholder pressures, rms seek to satisfy existing guidelines, regulations and legisla- ions related to manufacturing practices. These regulations and leg- C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 i i t p a h i i B i b i p e fl a t t w t f e ( p p t s p ( t S T i i g a t m b v p c w t s t b l A d p d T fl i s r slations promote the adoption of reactive green production prac- ices as compared to organizational stakeholders who stimulate doption of proactive environmental practices as supported and ndicated by Gonzales’s-Benito and Gonzalez-Benito (2006) and aah et al. (2020) . Shashi et al. (2019) also agree and support H2d y asserting that whether a firm adopts reactive or proactive green roduction practices, these practices significantly and positively in- uence environmental performance. In relations to hypothesis 3, which focused on establishing he positive and significant influence of green production prac- ices on financial performance (H3a), firm reputation (H3b) and nvironmental performance (H3c), the results showed that hy- othesis H3b and H3c were supported whiles H3a was not sup- orted. Hypothesis H3a, from Table 8 , showed a negative relation- hip between green production practices and financial performance β= −0.141, T = 2.065, 2 f = 0.030). This finding was supported by hashi et al. (2019) and Giovanni and Vinzi, (2012) by underlin- ng that in the short-term, where firms are now aiming to inte- rate green practices into production and other processes, the ini- ial financial burdens are high as such, financial performance may e negatively related to adoption and implementation of green roduction practices in the short-term unlike long-term cases here firms begin to reap benefits from investments made in the hort-term, hence the long-term presenting positive relationship etween green production practices and financial performance. gain, hypothesis H3b indicated that green production practices ositively and significantly influenced firm reputation ( β= 0.313, = 5.008, 2 f = 0.128). Tsinopoulos et al. (2018) reinforced this find- ng by indicating that adopting innovative green practices boosted eputation based on the institutional theory, specifically from gain- Fig. 2. Structural model 2 showing R , path 111 ng organizational legitimacy. Freeman (1999) also indicated sup- ort for the study finding by explaining that responding to stake- olders’ requirements or demands (in this case the adoption and mplementation of green production practices by SMEs) potently nfluenced firm reputation. Finally, hypothesis H3c was supported n that green production practices robustly and largely impacted nvironmental performance ( β= 0.334, T = 3.828, f2 = 0.128). As lready reflected, the orientation towards production practices hat aim at reducing negative environmental production impacts ill significantly and positively correlate with environmental per- ormance as explained by Gonzales’s-Benito and Gonzalez-Benito 2006) , Eesley and Lenox (2006) and Tsinopoulos et al. (2018) . Hypothesis 4 was supported in that firm reputation was found o have a positively strong and significant influence on financial erformance ( β= 0.445, T = 7.249, f2 = 0.294). The finding explains hat firm reputation which is considered as an impalpable asset by urban and Cable (2003) translates into benefits mostly reflected n larger sales, larger market share, stakeholder satisfaction as well s endorsement. These benefits significantly boost financial perfor- ance, hence the robust and large effect size between the two ariables. Deephouse et al. (2016) in agreeing to the above finding larified that engaging in practices that are demanded by indus- ry institutions and seen as acceptable behaviour relying on insti- utional isomorphism also earns firm reputation through enhanced egitimacy. It is worth mentioning that in these times, where all in- ustries are centered on environmental preservation, business pro- uction practices will be deemed acceptable behaviour if they re- ect green orientation and thus, lead to enhanced performance as tructurally presented in Fig. 2 . coefficients ( β) and factor loadings. C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 m t T p h s a p m d i t e m l 5 Z t r s t h t o c r t o t l a m ( p d h v m s i p g r t T B H t v g b i p i s h s s Z p g o t e h c s t s d t t p t t v c a p g i i h t S h p e s v i g p a i t t m a o m t a t t o p e b g M c r t u f t e e g p r wLastly, hypothesis 5 was supported seeing that environmen- al performance positively and significantly related to financial erformance ( β= 0.451, T = 7.222, 2 f = 0.342). This positive and ignificant influences as indicated by hypothesis H5 was sup- orted by Shashi et al. (2019) and Baah et al., (2020) by in- icating that environmental performance depends on the execu- ion of environmental practices and significantly attract environ- entally conscious investors, customers, suppliers among others eading to an improvement in the financial performance of firms. ailani et al. (2012) and Shashi et al. (2019) further indicated he need to engage in environmental practices that boost envi- onmental performance, which also boosts environmental reputa- ion and collectively promote financial performance in both short- erm and long-term. Additionally, although the study did not fo- us on the indirect relationships in the model, the results indicate hat green production practices, firm reputation and environmen- al performance played mediating roles between organizational nd regulatory stakeholder pressures and financial performance See Appendix 2). From a theoretical perspective, the study employed the stake- older, institutional and NRBV theories in understanding what otivates firms to be sustainable. In explaining these theories, t was noted that several firms had been motivated to adopt reen practices because of their stakeholders and adaptation to heir demands as captured by the stakeholder theory ( Gonzales’s- enito and Gonzalez-Benito, 2006 ). More spe1cifically, organiza- ional and regulatory stakeholders were found as the two main roups that significantly influenced firm decision due to their abil- ty to affect the survival of a firm. Despite both stakeholders hav- ng significant influence on green production, organizational stake- olders were found to have a stronger influence on green deci- ions more than regulatory stakeholders. Thus, the assertion by ailani et al. (2012) and Baah et al. (2020) that internal and or- anizational stakeholder pressures induce the adoption of proac- ive environmental practices while external and regulatory stake- older pressures promote reactive environmental practices were upported. Moreover, the institutional theory also highlighted that firms, epending on the industry in which they operate, adopt practices hat are deemed as acceptable behaviour and are the norms of he industry. This act of adopting industry practices to avoid de- iation from industry norms and accepted behaviours is regarded s institutional isomorphism. In addition to promoting the homo- eneity of industry practices, policies and strategies, institutional somorphism also leads to organizational legitimacy. Responding o pressures from organizational and regulatory stakeholders en- ance institutional isomorphism and organizational legitimacy, as xplained by the institutional theory. The natural resource-based iew theory further espoused that the benefits of engaging in reen production practices, among other environmental initiatives lso motivated the adoption of green practices. These benefits that nclude attracting environmental experts and technologies leading o the development of capabilities that are rare, non-substitutable nd inimitable improve a firm’s competitive advantage, perfor- ance and market dominance. The study results as presented in Table 8 and Fig. 2 show hat the adoption of green production practices mostly depends n the interventions of organizational and regulatory stakehold- rs. The large beta coefficients indicate that these stakeholder roups largely motivate the adoption of green initiatives in the ontext of developing countries because such economies tend o be more dependent on the consumption of natural resources or production purposes and economic growth than developed conomies ( OECD, 2010 ). As such, the absence of stakeholder roups, among other bodies to control and guide firm actions in elation to conserving natural resources as well as the environ- 112 ent, will significantly contribute to environmental degradation. o avoid such negative environmental implications, diverse stake- older groups have taken the role to promote sustainable practices mong firms and have also linked such practices to firm perfor- ance ( Tang et al., 2018 ). Therefore, the findings of this study and ts interpretations show consistency in the context of a developing conomy. . Conclusion This study from a developing country and SMEs perspectives crutinized the correlations between stakeholder pressures and ow these pressures influenced the adoption and implementation f green production practices, firm reputation, financial and envi- onmental performances. The results and discussions showed that rganizational stakeholder pressure positively and significantly re- ated to green production practices, firm reputation and environ- ental performance. On the other hand, regulatory stakeholder ressure also positively and significantly correlated with green pro- uction practices, firm reputation, financial performance and en- ironmental performance. Green logistics practices positively and ignificantly correlated with firm reputation and environmental erformance. Firm reputation and environmental performance cor- elated positively and significantly with financial performance. hese findings indicated support for hypotheses H1a, H1b, H1d, 2a, H2b, H2c, H2d, H3b, H3c, H4 and H5. Although most study ariables positively interacted with each other, the relationships etween organizational stakeholder pressures, green production ractices and financial performance were found to be negative and ignificant. These findings indicated a lack of support for hypothe- es H1c and H3a. The findings also prove that the adoption of green practices resents enormous benefits that critically influence reputation and verall performance and can lead to market dominance if prop- rly managed. Furthermore, green production practices and pro- esses lead to cleaner production, which decreases costs related o pollution, waste management, materials/inventory handling and torage, among others. This study again delivers evidence that he adoption and implementation of green production practices erform an essential role in positively moulding a firm’s repu- ation consequently leading to better financial performance and ompetitive edge. Additionally, the negative relationships (as ex- osed by H1c and H3a) indicate that the initial financial costs and nvestments associated with responding to organizational stake- older pressures and adopting green production practices are huge. uch huge expenditures significantly drain financial resources, es- ecially in the short-term. These negative relationships further how that most SMEs that were capture in this study are in the nitial stages of adoption and implementation of green production ractices. Moreover, the study espouses that organizational and regula- ory stakeholders are vital in influencing decisions since their de- ands critically shape firms in the adoption and implementation f environmental practices. The study outcomes further indicate hat among the two pressure groups, organizational stakeholders pply huge pressure and carry high impacts since their actions go o affecting the survival of the firm. Thus, their pressures should roduce fast and compulsory answers from managers as advised y González-Benito and González-Benito (2006) and Agyabeng- ensah et al. (2020) . Additionally, the results also indicated that esponding to stakeholder pressures breed high levels of firm rep- tation, which also converts into higher financial performance. In he same way, adherence to stakeholder pressures further boosts nvironmental practices which also lead to higher environmental erformance, thereby leading to higher financial performance as ell. Finally, the study provides results, which will be significant C. Baah, D. Opoku-Agyeman, I.S.K. Acquah et al. Sustainable Production and Consumption 27 (2021) 100–114 f D t m D i r D o t E d F c t F o t F f p F p G A p D b g G fi e G i p G p a H a fi H t p H b H d h t K t K d K D L c M i M S M f N R O A P A R A R B S B S B S D S D or regulatory bodies in addition to other stakeholders in the fight o promote green production practices and preserve the environ- ent. These results will also aid several SMEs and firm mangers n strategizing based on gaining competitive advantages and supe- ior performance using environmental orientation as their source r competitive weapon, especially in current business settings. Fur- hermore, to promote green initiatives, SMEs can cooperate with iverse stakeholder groups to gain legitimacy, social and moral apitals which will help in responding to environmental or sus- ainability demands. Also, policymakers can aid manufacturing SMEs to have a grip n green production practices by setting policies and helping in he subsidization of green investments and technologies. Such acts rom policymakers will boost cleaner production techniques, es- ecially regarding material and resource use, product innovation, roduct packaging, product development and product recycling. gain, adhering to stakeholder pressures and implementing green roduction practices also promote healthy and environmentally alanced societies characterized by safer consumer products, hy- ienic working environment, high stakeholder satisfaction and high rm performance. To further understand the expanding scope of nvironmental orientation and stakeholder demands, future stud- es can consider other dimensions of the variables to give a com- rehensive view of their interactions. The study model can be em- loyed in other industries since environment preservation is glob- lly demanded and this study also targeted SMEs operational in n emerging economy, and further studies can also consider larger rms operating in emerging economies as well. Again, the idea hat less developed and developing countries are still engaging in roduction practices that do not embody sustainability can further e explored as this study confirms that there are pressures groups emanding otherwise. Also, to improve understanding on stake- older pressures and how they influence green production prac- ices, data can be collected periodically to assist in understanding he long-term behaviours of stakeholder pressures and green pro- uction practices on SMEs performance. eclaration of Competing Interest The authors declare that they have no known competing finan- ial interests or personal relationships that could have appeared to nfluence the work reported in this paper. upplementary materials Supplementary material associated with this article can be ound, in the online version, at doi:10.1016/j.spc.2020.10.015 . eferences gyabeng-Mensah, Y. , Afum, E. , Ahenkorah, E. , 2020. Exploring financial perfor- mance and green logistics management practices: examining the mediating influences of market, environmental and social performances. J. Clean. Prod., 120613 . layón, C. , Säfsten, K. , Johansson, G. , 2017. 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