Harnessing Innovation, Green Orientation, and Strategic Agility for Business Performance: The Mediating Role of Sustainable Business Model Innovation

Abstract

In the face of increasing environmental challenges and market volatility, businesses must strategically adapt to sustain long-term competitiveness. This study examines how Innovation Capability, Green Orientation, and Strategic Agility contribute to improved Business Performance, with Sustainable Business Model Innovation (SBMI) serving as a mediating mechanism. Drawing on the Resource-Based View (RBV) and Dynamic Capabilities Theory, the study proposes that firms integrating environmental values with agile and innovative practices are more likely to develop sustainable business models that enhance performance outcomes. Using a quantitative research design, primary data were collected from 360 managerial-level respondents across manufacturing and service firms in Pakistan. Structural Equation Modeling (SEM) was employed to test the hypothesized relationships. The findings confirm that all three independent variables significantly influence SBMI, which in turn positively mediates their effect on business performance. Notably, SBMI emerges as a vital conduit through which green and innovative orientations translate into sustainable competitive advantage. The study contributes to sustainability and strategic management literature by highlighting the mediating role of business model innovation in green and innovation-driven firms. It also provides practical insights for policymakers and business leaders seeking to align growth with sustainability in emerging economies.