Unveiling the Nexus of Green Supply Chain Management Practices, Green Innovation, and Environmental Performance Insights from Bottled Water Firms in Ethiopia

Abstract

Given the lack of knowledge and early stages of green practices in Ethiopia's bottled water industry, this study investigates the effect of green supply chain management (GSCM) practices on the environmental performance of Ethiopia's bottled water manufacturing firms, with the mediation role of green innovation (GIN). To achieve the study’s objective, we used an explanatory research design where cross-sectional primary data was collected through a structured questionnaire survey from 323 managers of bottled water manufacturing firms in Ethiopia. Covariance-based structural equation modelling (CB-SEM) was used to test the proposed structural model. Our results, obtained through a CB-SEM analysis, reveal both direct and indirect significant effects of certain GSCM practices on environmental performance. Our results, obtained through a CB-SEM analysis, reveal significant effects of certain GSCM practices on environmental performance. Specifically, all five GSCM practices—eco-design (β =.178, p <.05), investment recovery (β =.166, p <.05), internal environmental management (β =.134, p <.05), green purchasing (β =.146, p <.05), and environmental cooperation with customers (β =.149, p <.05)—were found to have a positive impact on firm environmental performance. Additionally, green innovation (β =.094, p <.05) was found to have a statistically significant positive effect on environmental performance. Our mediation analysis further reveals that green innovation partially mediates the influence of investment recovery (β =.026, p <.05), internal environmental management (β =.014, p <.05), and green purchasing (β =.015, p <.05) on environmental performance. However, it is important to note that green innovation does not exhibit a significant positive mediating effect on the relationship between eco-design, customer cooperation, and environmental performance. This study unveils the mediating role of green innovation and provides insights for managers and policymakers into a key mechanism that manufacturers can utilize to enhance their environmental performance through GSCM practices.