Assessing the Influence of Organizational Green Culture on Green Performance Through Green Innovation: Evidence from a BOI Company in Sri Lanka

Growing global concern over environmental sustainability has compelled firms to realign their strategic priorities toward green innovation. Although organizations increasingly recognize the importance of environmental responsibility, empirical evidence on the mechanisms through which organizational culture enhances environmental outcomes remains limited, particularly in developing economies. This study aims to examine the influence of Organizational Green Culture (OGC) on Environmental Performance (EP) through the mediating role of Green Innovation (GI) within a developing economy context, empirically examine whether green innovation functions as a mediating mechanism linking organizational green culture to environmental performance in a developing economy context."
While prior research has explored green culture and performance in developed economies, limited empirical evidence exists from South Asian emerging markets, particularly Sri Lanka. This study addresses that gap by developing and testing a mediation model using survey data collected from 209 employees of a manufacturing firm located in a Board of Investment (BOI) zone in Sri Lanka. Using Partial Least Squares Structural Equation Modeling (PLS-SEM), the findings reveal that OGC significantly enhances GI, and GI significantly improves EP. However, OGC does not directly affect EP, confirming that green innovation fully mediates the relationship. These results underscore the critical role of green innovation as the key mechanism through which green organizational culture translates into improved environmental outcomes.
The study contributes theoretically by extending the Natural Resource-Based View (NRBV) in a developing country setting and empirically demonstrating that cultural commitment alone is insufficient unless translated into innovation capabilities. The findings offer strategic implications for managers seeking to improve environmental performance through innovation-driven cultural transformation.