Green absorptive capacity and environmental performance: a perspective of SMEs’ relational capability and green supply chain management practices

Due to the substantial scientific development in the economy and the increasingly dynamic competitive market, small- and medium-sized manufacturing enterprises (SMEs) face great difficulties in utilizing the available resource potentials. This requires SMEs to adopt non-traditional tools and techniques to compete in the market. This study aims to develop an empirical model to assess the role of SMEs dynamic capability through green absorptive capacity (GAC) in building a significant relationship between green supply chain management practices (GSCMP), relational capability (RC) and environmental performance (EP).The model was established through an extensive review of existing works of literature and was tested with 265 managers and entrepreneurs from manufacturing SMEs operating in Karachi, the largest city in Pakistan. In this paper, PLS structural equation modeling approach was employed to validate the proposed research hypotheses. The findings confirmed that GAC directly relates to EP. Moreover, the results significantly uncovered that GSCMP positively impacts the GAC and EP. It was also confirmed that RC has a positive significant effect on GAC and EP. Finally, the outcomes confirmed that GAC mediates the linkages among GSCMP, RC, and EP.Green absorptive capacity in the setting of a manufacturing organization as a dynamic capability is a novel approach explained in this study. The study focused on how small- and medium-sized enterprises can enjoy a competitive edge through acquiring and disseminating dynamic environmental knowledge throughout the value chain and by practicing strategically green supply chain management and relational capabilities to boost environmental performance. The outcomes will incorporate industry practitioners through practicing superior green dynamic capabilities like green SCM practice, relational capability, and green absorptive capacity to achieve high environmental goals and organizational excellence.

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