Transition towards sustainable environmental performance of SME sector in Bangladesh through green practices: the mediating role of green innovation

Abstract

Recent studies demonstrate growing awareness of environmental concerns among small and medium-sized enterprises (SMEs). This study explores the role of green practices in enhancing the sustainable environmental performance of the SME sector in Bangladesh. Specifically, it examines how green innovation mediates the relationship between green practices and sustainable environmental performance. For this research, data were collected from 403 SMEs in Bangladesh. SmartPLS 4 and SPSS were used to analyze the data, and Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to examine the relationships between the predictor and outcome variables. The findings indicate that green practices—including environmental sustainability strategy, green supply chain management, green human resource management, and green information technology—have a significant positive impact on sustainable environmental performance. Moreover, green innovation not only directly influences sustainable environmental performance but also mediates the relationship between green practices and sustainable environmental performance. The study offers meaningful implications for promoting environmental sustainability and suggests that adopting green practices can help Bangladesh advance toward achieving three Sustainable Development Goals (SDGs) while supporting long-term economic success.