Impact of Institutional Pressure on Cleaner Production and Sustainable Firm Performance

Abstract

This study aspires to investigate the influence of institutional pressure (IP) on cleaner production (CLP) practices and sustainable firm performances in the clothing industry of Bangladesh. Moreover, the research work explores the mediating role of cleaner production between institutional pressure and firms’ environmental performance. It also analyzes environmental performance as a mediator between cleaner production and firms’ economic performance. Data were collected from 246 textile and garments manufacturing units and analyzed using structural equation modeling (SEM) with the partial least square (PLS) method. The study findings unveiled a direct and positive relationship between institutional pressure and cleaner production, environmental performance and cleaner production, and firms’ environmental and economic performance. The study’s results also reveals that cleaner production partially mediate the relationship between institutional pressure and environmental performance while environmental performance is also partially mediate between cleaner production and firm’s economic performance. The research outcomes recommend that the clothing manufacturing sector welcome institutional pressures and employ cleaner production practices, leading to sustainable performance. Finally, the study highlights the managerial and theoretical implications.