MEDIATING ROLE OF GREEN INNOVATION IN THE RELATIONSHIP BETWEEN GREEN INCLUSIVE LEADERSHIP AND ENVIRONMENTAL PERFORMANCE: EMPIRICAL EVIDENCE FROM SMES IN KHYBER-PAKHTUNKHWA

Abstract

This research examines the relationship between Green Inclusive Leadership (GIL) and Environmental Performance (EP), focusing on the mediating role of Green Innovation (GI) in Small and Medium Enterprises (SMEs) in Khyber-Pakhtunkhwa. This quantitative study, guided by the positivist paradigm, collected data from 341 SMEs. Reliable instruments from the literature were used for the survey. Data analysis involved descriptive statistics, a correlation matrix, and regression models using SPSS version 28 and E-Views. Additionally, the Sobel test was employed to assess the mediating effect. The results indicated that GIL has both direct and indirect influences on environmental performance (β = 0.62, p < 0.001). Moreover, this relationship is partially mediated by green innovation, as shown by the Sobel test results (Sobel z = 4.45, p < 0.001). Fostering green inclusive leadership at all levels in SMEs is essential to achieve sustainable performance.