The Influence of Green Market Orientation on Business Performance: Exploring the Mediating Role of Green Innovation

1.1 Green market orientation (GMO)

Green market orientation (GMO) refers to a strategic business approach that emphasizes integrating environmental considerations into marketing practices. It involves aligning business operations with green principles, such as sustainable resource use, energy efficiency, and pollution reduction, to cater to environmentally conscious consumers. A strong GMO enhances a company's ability to adapt to market demands while addressing ecological concerns. Furthermore, companies that adopt GMO strategies often experience significant improvements in business performance, such as increased competitiveness, cost savings, and a more substantial market reputation. By prioritizing environmental values alongside business goals, GMO enables organizations to achieve sustainable growth while meeting customer expectations.

1.2 Green innovation (GI)

Green innovation (GI) focuses on developing products, processes, and practices that are environmentally friendly and contribute to sustainability goals. As highlighted by Baquero [1], this includes creating energy-efficient products, reducing pollution, recycling waste, and minimizing the use of harmful chemicals. Abedin et al. [2] further emphasize that GI aims to meet environmental standards while enhancing competitiveness and minimizing negative environmental impacts. GI is driven by multiple factors, including consumer demand for eco-friendly products, competitive pressures, and regulatory requirements. Beyond improving existing products and processes, GI emphasizes the creation of innovative, sustainable alternatives. This approach enables businesses to align operations with environmental goals, fostering long-term success and contributing to improved environmental, social, and economic outcomes. Ultimately, GI represents a strategic effort to integrate sustainability into core business operations, strengthening the alignment between corporate growth and the global sustainability agenda.

1.3 Business performance (BP)

It refers to how efficaciously a corporation achieves goals and aims through numerous metrics along with profitability, performance, patron satisfaction, and aggressive benefit [3]. In the context of this, it consists of the following factors Economic Performance This entails profitability, cost performance, and financial benefits due to sustainable practices and inexperienced improvements. Companies undertaking green marketplace orientations frequently see increased earnings due to decreased prices and improved aid control. Environmental Performance This measures the discount in pollutants, electricity conservation, waste recycling, and standard ecological effects of commercial enterprise sports. GI improves environmental performance by integrating eco-friendly practices into production and operational processes [4]. This includes aspects such as employer satisfaction, buyer satisfaction, and the company's reputation. A strong GMO retains workers and meets increasing buyer demand for sustainable products. Business performance (BP) in this context is the holistic calculation of a company's success in integrating economic, environmental, and social dimensions through GMO and innovation [5]. This integrated approach ensures long-standing sustainability and competitiveness in the market.

Sustainability has emerged as a critical global concern, particularly for the business sector, which must address economic, societal, and environmental dimensions [5]. The Triple Bottom Line (TBL) framework emphasizes integrating these three pillars into business operations to achieve financial success, societal well-being, and environmental quality. For instance, Bapat et al. [6] highlight that sustainable development involves meeting present needs without compromising resources for future generations. Green practices, such as energy-efficient production, resource conservation, and pollution reduction, play an essential role in attaining sustainability goals. Companies aligning their strategies with the TBL framework benefit from enhanced competitiveness, cost reduction, and a stronger market reputation. Additionally, Hanna and Rajkumar [7] underscore the indispensable role of businesses in promoting sustainable development, as these efforts cannot succeed without active corporate participation. While sustainability practices and the TBL framework are well-documented, there is limited research on how these practices enhance BP, particularly in medium-level enterprises. Although studies, such as those by Katewa et al. [8], have explored the relationship between green practices and business success, there remains a need for deeper insights into the specific strategies production organizations must adopt to promote responsible consumption and sustainable production effectively. This study aims to provide actionable recommendations for production organizations to align their operations with sustainability objectives by encouraging responsible consumption and manufacturing practices.

1. To analyse the effect of GMO on BP in medium-level enterprises.
2. To analyze the effect of GMO on GI in medium-level enterprises.
3. To analyse the effect of GI on BP in medium-level enterprises.
4. To mediate the effect of GI between GMO and BP relationship.

5.1 Research design/ data collection

This study adopts a quantitative research design using Partial Least Squares Structural Equation Modeling (PLS-SEM) to explore the relationship between GMO, GI, and BP within Indian MSMEs.

PLS-SEM Approach: PLS-SEM was chosen for its robustness in handling complex models with multiple variables and for its effectiveness in evaluating both direct and indirect relationships. This method also facilitates testing mediation effects and dealing with multicollinearity, especially when working with relatively small sample sizes [28].

Sample Selection: Data were collected from 128 MSME owners/managers in northern India, specifically focusing on enterprises involved in green product manufacturing. The study utilizes quota sampling to ensure representation from diverse geographical regions, namely cities like Lucknow, Amritsar, and Dehradun, which are becoming significant hubs for sustainable business practices.

This region-specific focus is critical to understanding how GMO and innovation practices vary across different Indian states. The choice of northern India reflects a unique opportunity to capture evolving trends in GI in regions where there has been growing awareness and adoption of sustainability initiatives.

Sample Constraints: A total of 29 questionnaires were distributed, and 128 valid responses were received. The response rate was 42.67%, which, while acceptable, introduces potential sampling biases. Specifically, the respondents may be more inclined toward green practices compared to those who did not participate, which could limit the generalizability of the findings. The sample is thus constrained to MSMEs in northern India, and future studies should consider expanding the geographical scope to include other regions of India, as well as other industries, to test the robustness and applicability of the findings on a broader scale.

Incorporating Digital Tools: An additional unique aspect of this study is the incorporation of digital technologies in the analysis of GI. As MSMEs in India are increasingly adopting digital tools to enhance their sustainability practices, the study highlights the growing role of digital solutions in driving GI and improving BP. Future research could expand on this by examining the impact of specific digital tools and platforms that support green practices.

5.2 Result and findings

The descriptive statistics in Table 1 indicate a consistently positive perception of GMO, GI, and BP, with mean values exceeding 4.0. For instance, the highest agreement is observed for BP6 (mean = 4.51), suggesting that respondents strongly align with the statement reflecting cost efficiency and market competitiveness resulting from sustainable practices. However, slight variability in responses, such as for GI5 (Std. Dev = 1.178), highlights areas where perceptions of GI are more diverse. This finding warrants further exploration of the specific challenges or inconsistencies in adopting GIs.

Table 1. Descriptive statistics

Source: Data managed through researchers.

The reliability test validates excellent results by a Cronbach's Alpha based on the standardized items 0.961 of 29 items (Table 2). This indicates that the scale used in the study is highly reliable and suitable for measuring the concepts of interest. Strong reliability supports data for further analysis.

Table 2. Reliability statistics

Source: Data managed through researchers.

The factor loadings presented in Table 3 confirm the construct validity of the measurement items across GMO, GI, and BP. All loadings exceed the generally accepted threshold of 0.7, indicating that the items strongly represent their respective constructs. Even the lowest loading, BP11 at 0.679, is considered marginally acceptable, contributing adequately to the overall reliability of the model. These strong factor loadings validate the robustness of the constructs and support the data's suitability for further structural analysis.

Table 3. Rotated component matrix

Source: Data managed through researchers.

5.3 Structural version analysis

The indirect impact in this mediation evaluation is calculated as the product of path coefficients from GMO to GI (0.80) and from GI to BP (0.42), resulting in an indirect effect of 0.336. The total effect, representing the relationship between GMO and BP before including the mediator, is 0.78. The direct effect, after accounting for the mediation of GI, is 0.67. These values highlight the partial mediation role of GI between GMO and BP.

These results are summarized in Table 4, which presents the direct and mediated path coefficients, along with the calculated Variance Accounted For (VAF) of 43.08%. This confirms that GI partially mediates the GMO–BP relationship, with other factors also contributing to the overall effect.

Table 4. Structural model analysis

Source: Data managed through researchers.

The (VAF) value is used to regulate the degree to which a mediating variable (in this case, GI) mediates the relationship between an independent variable (GMO) and a dependent variable (BP). The calculation is given below:

$V A F=\frac{(\text { Indirect effect })}{(\text { Total effect })}$

$V A F=\frac{0.336}{0.78} \times 100=43.08 \%$

The VAF indicates how much of the effect of GMO on BP is mediated by GI. In this study, the indirect effect (0.336) accounts for 43.08% of the total effect (0.78), which means that GI partially mediates the relationship between GMO and BP. Since the VAF is between 20% and 80%, it confirms partial mediation, suggesting that other factors also contribute to the direct impact of GMOs on BP.

This study underscores the great effect of GMO, and GI on improving BP. The outcomes imply that adopting GMO results in enhanced operational efficiency, multiplied patron delight, and a stronger aggressive edge. Furthermore, GI plays a crucial role as a mediator in the dynamic, fostering progressed BP in the operation of sustainable practices towards the improvement of sustainable green merchandise. The findings emphasize the importance for corporations to integrate green strategies into their operations to pressure long-term sustainability, innovation, and common success. By aligning business strategies with environmental goals, organizations can't best reap operational blessings but additionally contribute to broader ecological dreams, thereby securing a competitive gain in a more and more eco-conscious market. This study requires organizations to enhance BP through GI.