Role of organizational and environmental factors in firm green innovation and sustainable development: Moderating role of knowledge absorptive capacity

Climate change and resource degradation is the critical challenge the world is experiencing at this moment. The sharp resource consumption by manufacturing firms predominantly causes them to meet public demands and maximize their revenue. The United Nations (UN) has urged businesses to follow eco-friendly practices to protect and revive nature. In this regard, it is imperative to investigate which factors facilitate firms in achieving the UN sustainable development goals. Using the lens of the stakeholder theory, this study delves into investigating the role of environmental and organizational factors in firms’ green innovation and sustainable development activities. Considering the imperative role of organizational capabilities to absorb and capitalize on the knowledge, the authors took knowledge absorptive capacity (KAC) as the moderating variable in the main model. The authors received data from manufacturing firms in Turkey and analyzed it through the PLS-SEM technique. It is found that organizational and environmental factors significantly help firms achieve green innovation and sustainable development goals. Moreover, the organizational capacity to absorb knowledge bolsters the relationship between the main hypotheses. However, an insignificant moderating role of KAC was identified between environmental factors and sustainable development. Considering environmental and organizational factors as driving forces of firm performance, this study links them with green innovation and sustainable development activities by integrating KAC as an acute boundary condition. The findings provide practical implications to industrialists and stakeholders for complying with the United Nations' sustainable development goals by capitalizing on studied variables.