Green Transition! A Bottom‐Up Approach for Sustainable Performance of SMEs

ABSTRACT

This study examines the influence of GHRM practices and environmental‐specific transformational leadership (ETL) on SMEs' sustainable performance (SP). Besides, it investigates the moderated mediating influence of pro‐environmental behavior (PEB) and green innovation (GI). Study examined the moderating role of green supply chain management (GSCM) on the association between GHRM practices, environmental‐specific transformational leadership, pro‐environmental behavior, green innovation, and sustainable performance. Target population comprised of SMEs' employees, managers, and owners. Data were gathered using a simple random sampling technique through a survey questionnaire, and 810 responses were subjected to SEM analysis after data screening. Results revealed that GHRM and ETL encourage employees' PEB, boosting the organizations' green innovation. Meanwhile, GHRM and ETL directly augment sustainable performance along with indirect impact by enhancing the PEB of employees and encouraging green innovation. Findings indicated that GSCM moderates the relationship among GHRM, ETL, PEB, GI, and SP. Creating a system to enhance sustainable performance using GHRM techniques and environmental‐specific transformational leadership in SMEs provides insights into the literature. Study outcomes suggest that managers/owners should encourage the sustenance of ETL and green HR discipline to address the growing environmental concerns within SMEs.