The Role of Green Human Resource Management Practices in Driving Green Performance in the Context of Manufacturing SMEs

Abstract

Organizations around the globe have started to realize the importance of environmental sustainability to achieve long-term success. However, many organizations continue to use traditional production techniques, damaging the environment. To address this issue, this paper aimed to investigate the impact of green human resource management (GHRM) practices on green performance through the mediation of green work climate, green work engagement, and green employee behavior. The extent to which individual green values moderate the relationship between green work climate and green employee behavior was also examined. To meet the objectives, a cross-sectional quantitative study was conducted using simple random sampling, and the data were gathered using structured questionnaires from 390 employees of manufacturing SMEs in Pakistan. The findings of the study supported all the direct and indirect relationships and revealed that the incorporation of GHRM practices in SMEs has performance-enabling effects in terms of achieving green performance. By incorporating the impact of GHRM practices on green performance via mediation–moderation analysis of contemporary green variables in a single research model, the study expands the knowledge base, particularly in the context of SMEs. The study’s unique model and findings provide realistic insights for SMEs to come up with better strategies for greening the environment by ensuring green performance. The findings of the study also provide important implications for academia and practitioners.

1. Introduction

Organizations are currently shifting their strategies and goals to be more environmentally conscious [1], as the significant literature focused on larger firms rather than SMEs despite SMEs highly impacting the environment due to their commercial activities. However, continuous pressure from stakeholders forces SME management to implement environment-related initiatives. The literature highlights that top management plays a vital role and human resources management (HRM) practitioners have the high latitude to influence the environmental performance of the organizations. Accordingly, the top management of SMEs reconsiders their objectives and broadens the scope of their operations by including green HRM practices to improve environmental performance [2]. GHRM has been defined as a way to manage and streamline HRM practices to pursue sustainability [3]. It influences the actions, attitudes, awareness, and motivation of people to have a greener environment [4,5]. Organizations and employees both benefit from the adoption of GHRM practices because it boosts employee morale and productivity [6]. The organization’s financial and environmental performance can both be enhanced by using GHRM [3,7].

GHRM involves practices such as green recruitment and selection (GRS), green training (GT), and green pay and reward (GPR) to increase green employee performance [8]. Hence, GHRM in the organizational setting can improve green performance (GP) by recruiting environmentally concerned employees, providing green training, encouraging employees to be involved in green activities by establishing green reward structures, and creating a platform where employees can engage in green initiatives [9]. Few studies have investigated the impact of GHRM on a company’s GP with a mediation–moderation model [5,10]. Thus, researchers need to identify that GHRM alone is not always enough to enhance performance [11]. In addition, a green work climate (GWC) is essential for increasing green work engagement (GWE) and performance [12]. GWC, GWE, and green employee behavior (GEB) are among the significant constructs in enhancing GP [13,14].

The relationship between GHRM practices, GWC, GWE, GEB, and GP has been built on the basis of abilities, motivation, and opportunities (AMO) theory [15]. According to AMO theory, HRM is carried out by increasing employee ability by motivating employees to become high-performers and boosting employee performance by providing them with a platform through which they can avail opportunities and become more productive [16]. Based on the grounds of AMO theory, the objective of green performance can be achieved if employees are provided with GHRM practices such as GT, are recruited on the basis of green values, and are rewarded conditionally by carrying out an effective performance management system [17]. When these green initiatives are taken by the organizations, employees’ abilities are enhanced and they are motivated because they know that their organization is supportive enough in providing green opportunities [18]. These GHRM practices provide a healthy work atmosphere that makes employees engaged towards their work and that engagement is reflected in their behavior which is the urge to achieve green performance [6,13,19].

Besides these variables, individual green values (IGV) are considered to be an important variable in the organizational context, but they vary from person to person [20]. Contemporary individual values have been emphasized in the literature as a significant construct in explaining individual attitudes and behavior [21]. Individuals nowadays are concerned about the well-being of the environment, which has a major impact on their positive environmental behaviors [22]. Individual green values are extremely important in shaping an individual’s behavior. When an employee’s values are aligned with organizational green values, his/her green behavior would certainly become enhanced [23].

Recently, there has been an increase in the number of manufacturing SMEs around the globe but, unfortunately, very few institutes have attempted to make green practices an integral part of their system [24]. Manufacturing SMEs harm the environment in a variety of ways, e.g., improper hazardous waste disposal, excessive use of resources, e.g., waste, enormous energy use, and lack of awareness of greening the environment.

There is limited research in the context of manufacturing SMEs on the relationship between GHRM and GP through GWC, GWE, and GEB [25,26,27,28]. Moreover, in recent years, GHRM research has flourished, with studies conducted in a variety of industries, including tourism and hospitality [29], the information and technology sector [30], and the automobile sector [31]. Nonetheless, there is a lack of research on GHRM in manufacturing SMEs [24]. This stance was supported by a recent study by [32], who also researched a variety of service sectors.

Therefore, to fill the gaps that have been found, this study proposes the following research objectives that empirically link GHRM practices and GP: to evaluate the impact of GHRM practices on GP through the mediating role of GWC, GWE, and GEB, and to examine the moderating role of IGV on the relationship between GWC and GEB in the SMEs of Pakistan. Pakistan, like many other nations, is dealing with environmental issues. In Pakistan, environmental contamination is rising quickly [26]. The Pakistani government is working to put several legal provisions in the Pakistan Environmental Protection Act into effect in order to address these risks and decrease the harm that environmental pollution causes [33]. In today’s globalized world, environmental issues are essential to avoid long-term or legal consequences because, in such a fiercely competitive atmosphere, focusing solely on profit cannot support organizations [5].

In addition, this paper discusses how the hypotheses were tested and justifies why the research strategy was chosen. The findings are presented and analyzed and the most important ones are also discussed. This paper finishes by demonstrating important contributions to theory and practice, as well as suggesting some potential research avenues. Moreover, this research contributes to the existing empirical literature on the relationship between GHRM and green performance, making it unique and useful for solving green organizational challenges. Prior studies have only looked at the direct relationships, rather than investigating how the interaction between GHRM and GWC, GWE, and GEB leads to improved GP [10,11]. In reality, research suggests that SMEs are responsible for around 70% of industrial pollution [34]. Manufacturing SMEs are particularly important for a green transition as they are responsible for producing a great amount of the world’s waste, pollution, and resource consumption [35]. Thus, this study reveals how GHRM practices help an organization’s management improve its GP to contribute to society and the literature on GHRM in general and in manufacturing SMEs in particular.

2. Literature Review and Hypotheses Development

2.1. Green HRM Practices and Green Work Climate

Improving environmental performance requires maximizing the incorporation of training, teamwork, monetary and non-monetary rewards, and sustainable goals [10]. Studies that take into account the multidimensional effect of GHRM investigate a variety of related dimensions [20,36]. Chaudhary [37], for example, advocated GHRM incorporates green vision, training, evaluation of environmental performance, and the implementation of reward systems. The constituents of GHRM, according to [31], are GRS, GT, and GPR.

GHRM involves the policies and practices that motivate employees to participate in activities that promote socially responsible green behavior to create an environmentally conscious and resource-efficient organization [8]. Despite the differences in these perspectives, the research has considered GHRM activities to encompass GRS, GT, green performance management, compensation and reward systems, and GE [30]. This study focuses on three GHRM practices: GRS, green training, and GPR, because these three are considered the most important in enabling a green environment [3,6].

In line with this, several studies have found a positive relationship between GRS and GWC [38]. GRS has been recognized as a key constituent of GHRM practices [39]. Some authors outlined GRS in three parts: employees’ green awareness, green employer branding, and green criteria to attract candidates [40].

Firstly, the most crucial part of GRS is employees’ green awareness, and it includes personality qualities such as green conscientiousness awareness and agreeableness that allow sustainable goals to be met [41]. Employees who value a green environment have been discovered to have an active improvement in their environmental knowledge, hence providing a GWC [42].

Moreover, green employer branding is an organization’s reputation in relation to environmental considerations, that is shaped by GHRM practices [42]. Job searchers find a good fit with the organization when their values are aligned with organizational values through green employer branding, according to [43], and they may feel satisfied working for a firm that has a strong environmental reputation [13]. Job searchers frequently use information about an organization’s work environment as a criterion for judging how the company treats its employees [38]. Job searchers may be drawn to companies that send out favorable green signals [44]. Employer green branding is thus a great way of attracting, recruiting, and selecting employees who have a strong environmental vision from this perspective. Prior studies have revealed that GRS plays a major role towards a GWC [22].

The second GHRM practice, GT, plays a key role in forming a GWC [8]. GT is a series of initiatives that supports staff in learning environmental protection techniques and keeping up with green concerns, both of which are crucial for accomplishing sustainable goals [39]. Training can enhance an employee’s environmental awareness, knowledge, and skills [10]. GT and educational sessions should be made accessible to employees at all levels [45].

Furthermore, employees’ knowledge of environmental initiatives in the organization can be improved using GT [46]. GT programs can assist employees to have a better understanding of the importance of addressing green issues, making them more concerned about increasing their awareness of environmental protection and management measures such as waste data collection and pollution source identification [47]. In addition, GT cultivates a GWC that encourages all workers to participate in green activities [25]. Integrated training, according to [48], is a strategy for building a good work environment that includes training programs as well as links them to improved evaluations and ensures successful performance management systems. Therefore, it is evident from the literature that GT leads to a GWC [49,50].

Lastly, green reward and pay, another GHRM practice, has significance in the literature for its relationship with a GWC [40]. GPR involves financial and non-financial benefits to encourage employees to achieve environmental goals, following a strategic approach to incentive management [20]. Non-cash rewards such as praise and recognition may inspire workers more than monetary compensation [11]. When employees are given green rewards and pay, it promotes a green workplace atmosphere [51].

Likewise, incentives and rewards, according to [49], may be more effective than other HRM methods in enhancing employees’ green performance. Most experts, however, agree that having both monetary and non-monetary incentives motivates employees more effectively [11,52]. In this study, it is suggested that non-monetary benefits, such as those related to green travel, green taxation, and green recognition, be provided in addition to financial incentives because they are also significant for creating a green climate [6].

In addition, these incentives also include non-financial rewards that help in creating a green climate [29]. Green recognition involves non-monetary rewards for employees, such as appreciation, gift vouchers, and paid holidays [52]. According to [53], these green recognition benefits develop a sense of pride among employees and support eco-initiatives more effectively. Various studies have confirmed a positive relationship between GPR and GWC [13,42]. Thus, in line with the above discussion, this study proposes the following hypotheses:

H1a. 

Green recruitment and selection positively influence the green work climate.

H1b. 

Green training positively influences the green work climate.

H1c. 

Green pay and rewards positively influence the green work climate.

2.2. Green HRM Practices and Green Work Engagement

A positive, rewarding, task-focused state of mind with dedication and involvement is how GWE is defined [45]. Employee engagement is the level of employees’ involvement in their work on a cognitive, emotional, and physical level [30]. GWE is the amount of effort an employee puts into tasks linked to his or her green employment, the extent to which he or she is willing to make such efforts, and his or her level of absorption in green work [54].

Numerous studies have revealed that GHRM practices such as GT, GPR, and GRS lead to GWE [9]. GRS [39], GT [8], and GPR [11] have all been identified as common antecedents of GWE. The majority of HRM research has focused on the top-down impact of HR procedures and systems on employee engagement [29]. This study explicitly evaluates the influence of GHRM practices on the GWE of employees. For example, [13] provided a model that included GHRM practices that can lead to increased levels of green work engagement. Other studies have also found a positive link between GHRM practices and GWE [9,34].

Consequently, the job demand–resources (JD-R) framework helps to understand the link between GHRM practices and GWE in terms of GHRM and GWE [54]. Organizational resources, such as HRM practices, may encourage a motivational process that links these resources to work engagement [29]. This perspective contends that GHRM at work can serve as a motivator and is therefore positively related to employee GWE [55]. Employee growth and career-oriented goals can be assisted by resources such as GHRM, which can play a key motivational role. As a result, they encourage employees’ commitment to their jobs [30]. Hence, this study proposes the following hypotheses:

H2a. 

Green recruitment and selection positively influence green work engagement.

H2b. 

Green training positively influences green work engagement.

H2c. 

Green pay and reward positively influence green work engagement.

2.3. Green Work Climate and Green Work Engagement

Employees’ perceptions of their work environment drive their work engagement [44], meaning that green work engagement is linked to their impression of the work climate, which might encourage them to do their role with the greatest dedication [22]. Scholars have established that a positive climate at work enhances employee work engagement [13,14]. This is also in line with the seminal literature, which has established the impact of green climate on outcomes such as work engagement [32].

Despite the lack of prior investigation, the evidence supporting the link between a healthy climate and work engagement in general organizational contexts provides us with a solid foundation on which to propose such a link in the green and manufacturing SMEs as well [17]. As a result, we anticipate that green climate will improve employees’ green work engagement in this area, such that when employees believe that their organization’s green policies, practices, and guidelines facilitate and support them, they will devote more time to their green work role to reduce the negative ecological and environmental effects of their activities [22,38]. Hence, it is proposed that:

H3. 

Green work climate positively influences green work engagement.

2.4. Green Work Climate and Green Employee Behavior

GEB involves both in-role and extra-role green behavior [56], as both lead to the outcome of value creation. GEB is determined on the basis of organizations’ expectations from their employees in terms of behavior, such as whether it is in-role or extra-role [57]. Moreover, many employers may demand employees to act green, such as those requiring employees to guarantee that harmful waste is not released into water systems or that dangerous materials are disposed of according to organizational standards and regulatory requirements [44]. These are the kinds of activities that would be expected of an employee and, as a result, are part of a person’s formal work responsibilities [13].

According to HRM behavioral research, a green organizational climate influences employee work attitudes and behavior [32]. Employee outcomes of green behavior are highly dependent on a green work climate, according to HRM behavioral research [42]. Hence, for the following reasons, a GWC has an impact on employees’ green workplace behavior. First, a green climate includes an environmentally friendly workplace environment, communicating information about the organization’s green emphasis, highlighting individual green values, civility, respect, workload management, psychological protection, etc.; these factors are likely to boost employee green cognition and result in employees’ green workplace behavior [32].

In addition, the GHRM attribution literature shows that the impact of a green climate on employee work behavior is determined by employees’ perceptions of how a business chooses to provide certain GHRM activities [20]. An organization’s green climate communicates to employees the positive commitment to environmental stewardship and is more likely to affect shaping employees’ behavior according to the company’s green policies, thus leading to a positive relationship between GWC and GEB at work [22]. Therefore, based on the above discussion, the following hypothesis is proposed:

H4. 

Green work climate positively influences green employee behavior.

2.5. Green Work Climate and Green Performance

Attitude, leadership, beliefs, and the green organizational atmosphere are all factors that influence GP [58]. Scholars have looked into green climate, in particular, to see if it has an impact on GP [39,59]. Suganthi [60], for example, confirmed the positive influence of a green workplace climate on employee green performance. Some authors found similar results, establishing a GWC as a proximal predictor of enhanced employee green performance [38]. In a similar line, [13] claimed that employees’ perceptions of the GWC in their workplace had a favorable impact on their performance. Another researcher took the discussion a step further, arguing that positive evaluations of the green climate encouraged green behavior such as waste recycling, energy-saving, and waste reduction activities, leading to GP [44].

Given that a GWC is a fine-grained manifestation of employees’ GP [21], we anticipate that employees’ positive perceptions of their organization’s green climate will have a positive effect on their performance in manufacturing SMEs. Employees in the manufacturing sector have a lot of opportunities to improve their GP if they have a good perception of their company’s environmental policies [61]. This expectation is backed up by the research conducted by [62], which shows that an organizational atmosphere that promotes employee safety, risk-taking capacity, motivation, and positive feedback boosts green performance. We thus propose the following hypothesis, based on the preceding empirical findings and theoretical support:

H5. 

A green work climate positively influences green performance.

2.6. Green Work Engagement and Green Employee Behavior

Employees who are more engaged with their organizations are more likely to have stable and high-quality relationships with them [14]. As a result, good job-related outcomes emerge [2]. Therefore, such indicators imply that employers not only motivate and help employees in fulfilling their duties but also enable them to participate in volunteer green activities that are unrelated to their jobs, leading to green employee behavior [52]. For example, a recent study [54] has indicated that work engagement is a key predictor of improving green work behavior. Employees with greater levels of GWE are expected to have positive connections with the organization, according to the link between GWE and green behavior [45]. GWE can inspire employees to engage not just in green practices, but also to ensure the implementation of green initiatives and to help other employees interpret the meaning of green behaviors for the organization’s and community’s long-term viability [14].

We believed that GWE would be linked to green behavior as a result of the above discussion. To put it another way, we believed that highly engaged manufacturing SME employees in green activities would demonstrate a willingness to discover and suggest novel ideas to mitigate the negative environmental consequences of their organization’s work through their green behavior. To summarize, when employees engage in green activities with a higher level of engagement, green behavior may be expected to be higher [54]. Hence, the following hypothesis is presented based on the foregoing discussion:

H6. 

Green work engagement positively influences green employee behavior.

2.7. Green Work Engagement and Green Performance

It is hypothesized in the literature that GWE results in improved GP [45]; thus, we believe that green engagement can have a favorable impact on GP improvement criteria. Work engagement, for example, has been found to improve employees’ GP by helping them better understand GHRM principles and giving them the power to apply positive environmental solutions [29]. Employees propagate proactive environmental measures when they are incorporated into their day-to-day roles [63]. As a result, creating an engaging atmosphere has a positive impact on employee performance, allowing employees to focus on improvement projects such as eliminating inefficient tasks [64]. Therefore, minimizing and reusing raw materials improves recycling, reduces resource consumption, lowers prices, and improves overall GP [5].

Moreover, employees who are engaged are more likely to make their own decisions when they are given the authority to recognize and correct detrimental behaviors in the workplace and, as a result, their performance levels rise [65]. Employees, for example, could be given the freedom to identify operations that consume too many raw materials and devise proactive recycling programs to minimize overall usage rates [12]. When given more freedom, employees are more likely to become interested and enhance their GP [1]. Indeed, it has been confirmed in the literature that employee work engagement has a favorable impact on GP [30,45,55]. Therefore, we propose that:

H7. 

Green work engagement positively influences green performance.

2.8. Green Employee Behavior and Green Performance

Green employee behavior can help an organization achieve long-term success [66]. According to the existing literature, green workplace conduct increases green organizational performance [43,67]. Employees in service businesses, in particular, may only perform sustainably if they practice green behavior [14]. Likewise, employees who do not have a green work attitude will not be able to contribute in a green manner [29]. According to [60], green employee behavior is a critical component of successful GP management system deployment and the integration of green policy into workplace practices. Eco-helping, eco-civic participation, and eco-initiatives are three elements of green behavior articulated by [17].

To begin, eco-actions are individual employee initiatives aimed at decreasing negative environmental consequences at work, such as recycling paper, properly disposing of trash, and avoiding resource waste [46]. Second, eco-civic participation includes employee initiatives at the organizational level, such as taking part in green events and projects that an organization has produced, promoting an organization’s green reputation, and voluntarily joining the organization’s environmental activities [17]. Finally, eco-helping entails encouraging coworkers to be environmentally conscious [68]. This sort of behavior is centered on employees cooperating to solve an organization’s environmental challenges, such as voluntary sharing of ideas and skills, and teamwork to identify pollution causes and preventive measures [46].

Employees in several industries have been studied for their green behavior; [42], for example, looked into the impact of employees’ green behavior in manufacturing companies and discovered a link between GEB and GP. Similarly, [32] looked at the green behaviors of workers in a manufacturing company and found that green conduct has a favorable impact on the company’s green performance. Although the relationship between GEB and GP has been studied in the setting of manufacturing companies, it has not been explored in the context of academic staff’s behavior toward GP in manufacturing SMEs [17]. As a result of the preceding debate, the following hypothesis for this research has been developed:

H8. 

Green employee behavior positively influences green performance.

2.9. The Mediating Role of Green Work Climate, Green Work Engagement, and Green Employee Behavior

Empirical evidence from the broader literature on organizational behavior has been presented in the preceding discussion. Several studies have proposed direct links between green work climate, green work engagement, and green employee behavior [13,45,54]. Therefore, because of the complexity of human behavior in both personal and professional settings, we must consider the possibility of more complicated dynamics among these variables via indirect effects flowing between them [42,69]. As a result, it is recommended that exploring the mediating role of GWC, GWE, and GEB between GHRM practices and GP would add novelty to the literature.

Employee perceptions of the green climate and their degree of job engagement are likely to influence the relationship between GHRM and GP as a result of these associations [32]. Prior research has also shown that climate has a mediating effect on the relationship between green HRM and green behavior [13]. A supportive climate, on the whole, mitigates the effects of the GHRM practices to improve GP [21]. Similarly, prior research has found that GWE plays a mediating role in a variety of organizational settings, such as the link between HRM practices and GP in manufacturing SMEs [39], and the link between GWE, GWC, and GEB [54]. In conclusion, GWE influences the relationship between GWC and GEB and also has a direct relation with green HRM and GP [3,9,38].

As a result of these findings, we propose GWC, GWE, and GEB as possible intervening variables between GHRM practices and GP. Furthermore, a green atmosphere encourages employees to be enthusiastic, confident, and motivated about doing green and meaningful work [44]. Employees can be more engaged and involved in their job as a result of a green atmosphere, which improves their GP [9]. As a result, this study suggests not only the direct effects of the mediating variables but also their sequential mediational effects. Generally speaking, several studies have found that green engagement is a key mediator [29,70]. GWE is commonly thought of as a motivating factor that affects performance [45]. The paper posits GWE as a plausible intervening variable between the independent and dependent variables in this study.

Consequently, the existence of resources (GHRM in this example) is assumed to stimulate goal achievement and instill desirable work-related behaviors [10], such as GWB, according to the JD-R paradigm. As a result, employees will be more motivated to engage in positive green behaviors, and they will be more willing to try new things that could lead to increased GP [71]. In a nutshell, an organization with green HRM practices would promote a green climate [72]; a green climate would lead to green engagement [32], green behavior [13], and GP [21]. The second mediating variable of this study, GWE, has a direct impact on GHRM practices [9] which in turn would impact employees’ green behavior and performance [29,45]. In the same manner, the last mediating variable, green employee behavior, is impacted by GWC and GWE [13,73] and also directly impacts GP [69]. Hence, in line with the above discussion, this study proposes the following hypothesis:

H9. 

Green HRM practices positively influence green performance through the mediating role of green work climate, green work engagement, and green employee behavior.

2.10. The Moderating Role of Individual Green Values

Individual values are important in describing individual attitudes and behavior, according to the recent values literature [22,74]. Personal values, beliefs, and norms, according to the literature, influence employee job behavior [42]. Personal environmental values have a considerable impact on individual ecologically friendly behavior, according to empirical studies such as [20,23]. All of these studies show a direct link between individual green values (IGV) and GEB. According to the supplies–values fit theory, if an employee’s values align with those provided by the company, it will have a positive impact on his/her work behavior [22]. While it is self-evident that organizations and their employees will have some clashing values, it is in the best interests of a company to strive for shared values [23].

A shared ideology develops when employees’ values are in line with organizational values, which can be formulated through positive work behavior [14,42]. Employees are more likely to dedicate themselves to achieving organizational goals if their connection to their organization is strong [75]. Employee behavior, as defined by [76], is the result of the interaction between the individual and the environment.

Green individual values enhance the relationship between green climate and green employee behavior [56]. Employees frequently assess the environmental policies and practices of their employer, and it is these assessments that determine whether or not they psychologically support environmental principles [14]. As a result, the main idea of the supplies–values fit theory, as presented in the research of [21], would support the framework proposed in this study in the sense that if an organization facilitates its employees with a conducive environment, the employees’ green values would align with those of the organization and as such employees would be more likely to exhibit green workplace behaviors.

Employees are less likely to practice green behavior at work if their values conflict with those of the company or if the employment environment does not suit their needs [13]. Individual and corporate green values, in other words, interact to impact GWB [20]. Green HRM practices and a GWC represent employees’ evaluations of the organization’s green values [21]. As a result, IGV will moderate the relationship between a GWC and GEB [56]. As a result, we came up with the following hypotheses:

H10. 

Individual green values moderate the relationship between a green work climate and green employee behavior. This relationship becomes stronger when green individual values are higher.

Figure 1 presents the theoretical relationship between the variables.

3. Methodology

3.1. Research Design and Sample Selection

This study collects data from top management (managers, directors, and CEOs) by surveying manufacturing SMEs in Punjab, Pakistan, as 65% of the manufacturing SMEs are located in Punjab according to the Punjab Board of Investment and Trade [77]. These SMEs have a major contribution to GDP, employment, and exports [78]. Manufacturing-sector SMEs are one of the main contributors to the continual damaging of the environment. In this regard, the government of Pakistan are taking serious measures to enhance environmental performance. To collect the data from manufacturing SMEs (textiles, auto parts, and surgical instruments), 800 questionnaires were distributed through personal visits, emails and by post, and promised complete privacy and secrecy. The details of the respondents were gathered from the database of the Small and Medium Enterprises Development Authority (SMEDA). Based on probability sampling, a simple random sampling technique was employed on the detailed list of SEMs that was developed from the database of SMEDA and the ministry of commerce. There are a total of 7859 registered medium-sized manufacturing SMEs in Pakistan. Based on the Krejcie and Morgan [79] table of minimum sample size calculation, a sample size more than 370 is sufficient for this population. In total, 409 questionnaires were received back from July 2022 to September 2022, out of which 390 were valid and complete; the remaining 19 questionnaires were excluded due to missing values of more than 25%. The effective response rate was 49%. After collecting the data, SMART PLS 4.0 was used to evaluate the measurements’ reliability and validity, as well as the structural model, and to examine the direct and indirect effects of GHRM practices on GP.

3.2. Measures

Each item on a 7-point Likert scale with values ranging from 1 (strongly disagree) to 7 (strongly agree) was tested for enhanced validity of the study instrument. The item scales of GHRM practices GRS, GT, and GPR were based on 3 items each, adopted from the study by [11]. The GP measures were based on a 5-item scale developed by [40]. The scale of GWC and GWE comprised 3 items each, taken from the study of [32]. A 6-item scale for green GEB was taken from [80]. Lastly, the items for individual green values were taken from the study of [20], based on 3 items. Appendix A presents the all number of items.

3.3. Common Method Variance Assessment

The questionnaire design and Harman’s single-factor test were commonly picked as the two relevant methodologies for the research [81]. As a result, the items in our study were ordered in different sections at random, and the questionnaire was then delivered to the respondents. To some extent, data provided by different respondents in the organizations helped to reduce each respondent’s potential consistency.

Furthermore, a substantial degree of common method variance is recorded when the first factor’s variance is greater than half of the overall variance: 50 percent, according to Harman’s single-factor test [81]. The first component explained 32.302 percent of the entire variance, and seven factors with values greater than 1.0 were identified. In conclusion, common technique variance had no significant impact on the conclusions drawn from the data.

4. Results

4.1. Measurement Model

The results in

Table 1. Final Results of Measurement Model.

	Cronbach’s Alpha	CR	AVE	VIF	Factor Loading
GEB	0.918	0.919	0.710	2.588–3.595	0.804–0.862
GP	0.854	0.864	0.634	1.507–2.821	0.695–0.881
GPR	0.753	0.781	0.669	1.342–1.698	0.729–0.875
GRS	0.818	0.842	0.731	1.778–1.975	0.837–0.877
GT	0.800	0.878	0.684	1.673–1.789	0.717–0.908
GWC	0.875	0.889	0.800	2.052–2.856	0.883–0.916
GWE	0.834	0.852	0.753	1.778–3.171	0.799–0.945
IGV	0.907	0.945	0.842	1.429–2.965	0.729–0.862

demonstrate reasonable reliability, according to [82]. Cronbach’s alpha and composite reliability values of all the constructs are higher than the standard of 0.7, which shows that the item scale selected is good and reliable. Moreover, all AVE (Average Variance Extracted) values should be above 50% [83], which is the case for the current data, and the appropriate convergent validity is recognized.

The Fornell–Larcker criterion is used to test discriminant validity. The square root of each construct’s AVE must be greater than the construct’s highest correlation with any other construct in the model for each variable.

Table 2. Fornell–Larcker Criterion.

	GEB	GP	GPR	GRS	GT	GWC	GWE	IGV
GEB	0.843
GP	0.495	0.796
GPR	0.215	0.133	0.818
GRS	0.055	0.180	0.119	0.855
GT	0.179	0.178	0.169	0.072	0.827
GWC	0.301	0.308	0.236	0.207	0.167	0.894
GWE	0.414	0.406	0.203	0.225	0.199	0.365	0.868
IGV	0.140	0.040	0.023	0.047	0.056	0.190	0.109	0.918

presents the values for the Fornell–Larcker criterion and the values are less than 0.90. For discriminant validity, the Heterotrait–Monotrait Ratio (HTMT) values should be less than 0.90, according to [84]. All of the variables’ HTMT values are less than 0.90.

Table 3. Heterotrait–Monotrait Ratio (HTMT).

	GEB	GP	GPR	GRS	GT	GWC	GWE	IGV
GEB
GP	0.543
GPR	0.247	0.202
GRS	0.071	0.237	0.155
GT	0.179	0.202	0.245	0.089
GWC	0.329	0.356	0.292	0.235	0.160
GWE	0.466	0.471	0.254	0.266	0.220	0.415
IGV	0.151	0.075	0.067	0.052	0.081	0.210	0.117

indicates the HTMT values. As a result, we conclude that the discriminant validity of our study has been established. Furthermore, the Variance Inflation Factor (VIF) value range for all variables is less than 5.0, indicating the absence of collinearity. Finally, the range of factor loadings shows the contribution of each observable variable to the construct or latent variable. The factor-loading range for all constructs is more than 0.650, indicating that the loadings are quite good.

4.2. Direct Influences

The evaluated results of the direct influences in

Table 4. Path Coefficients.

	Original Sample (O)	T Statistics	p Values
GEB -> GP	0.372	7.602	0.000
GPR -> GWC	0.195	3.721	0.000
GPR -> GWE	0.096	2.077	0.038
GRS -> GWC	0.175	3.586	0.000
GRS -> GWE	0.144	2.830	0.005
GT -> GWC	0.121	2.553	0.011
GT -> GWE	0.124	2.568	0.010
GWC -> GEB	0.160	2.665	0.008
GWC -> GP	0.119	1.969	0.049
GWC -> GWE	0.292	5.201	0.000
GWE -> GEB	0.332	5.917	0.000
GWE -> GP	0.209	4.029	0.000
IGV -> GEB	0.091	2.070	0.038
IGV × GWC -> GEB	0.122	2.967	0.003

show that GEB (Coefficient value (Cv) = 0.441, p-value < 0.05) significantly and positively influences GP. For GPR and GWC (Cv = 0.199, p-value < 0.05), GPR and GWE (Cv = 0.079, p-value < 0.05) are also positive and significant. Moreover, the significant and positive links between GRS and GWC (Cv = 0.176, p-value < 0.05) and GRS (Cv = 0.143, p-value < 0.05) represent a positive and significant relationship between the variables.

Similarly, GT is positively and significantly affected by GWC and GWE (Cv = 0.118, p-value < 0.05), and GEB (Cv = 0.122, p-value < 0.05). In addition, the relationship between GWE and GEB (Cv = 0.416, p-value < 0.05), GWC and GWE (Cv = 0.297, p-value < 0.05), GWC and GP (Cv = 0.176, p-value < 0.05), GWC and GEB (Cv = 0.173, p-value < 0.05), and GWE and GP (Cv = 0.209, p-value < 0.05) is also positive and significant. Based on the above results, H1a, H1b, H1c, H2a, H2b, H2c, H3, H4, H5, H6, H7, and H8 are therefore supported. Figure 2 presents the structural model.

4.3. Indirect Influences

Table 5. Specific Indirect Effects.

	Original Sample (O)	T Statistics	p Values
GRS -> GWC -> GWE -> GEB -> GP	0.006	2.160	0.031
GPR -> GWC -> GWE -> GEB -> GP	0.007	2.743	0.006
GT -> GWC -> GWE -> GEB -> GP	0.004	2.133	0.033

illustrates the results of the sequential mediation influences between GHRM practices and GP. The sequential relationship between GRS and GP through the mediation of GWC, GWE, and GEB is positive and significant (Cv = 0.007, p-value < 0.05). For GPR -> GWC -> GWE -> GEB -> GP (Cv = 0.007, p-value < 0.05) and GT -> GWC -> GWE -> GEB -> GP (Cv = 0.005, p-value < 0.05), this makes the sequential relationship positive and significant. Hence, this leads to the acceptance of H9.

4.4. The Interactive Influence

The moderating influence of individual green values was calculated using an interaction technique. This method entails using the product of the two variables involved in moderation to create interaction terms. Table 4 shows the results of these interaction guesstimates. The interaction effect of IGV on GWC and GP (Cv = 0.122, p-value < 0.05) reveals positive and significant paths. According to the results, these findings explicitly result in the acceptance of H10 in this study. Figure 3 presents the interaction analysis.

5. Discussion

The findings of this study are highlighted and discussed on the basis of the research objectives. Firstly, the findings signify that the three GHRM practices (GRS, GT, and GPR) lead to GWC which is in line with the study of [56]. Secondly, GRS, GT, and GPR also have a positive relationship with GWE, as when employees are provided with GHRM practices their engagement level increases. The study of Aboramadan [54] also supports the same relation. Moreover, the findings also reveal that when GWC is ensured by an organization, it results in GWE. The results of this relationship are also supported in the research of [32]. Support for the hypothesis suggests that employees may be more engaged, passionate, and dedicated to carrying out environment-related tasks at work if they have a positive perception of their organization’s dedication to environmental protection and believe their organization is operating in an environmentally responsible manner. The direct relation of GWC with GEB and GP is also positive and significant, and the results are in line with the work of [6,56]. Expanding the discussion to the next relationship of GWE with GEB and GP, the findings show that GWC leads to both GEB and GP. The former relation is supported by the study of [9], and the latter relationship is in line with the research of [30]. The last direct relationship between GEB and GP is positive and significant and is supported by [31].

Based on the findings, the study confirms that GHRM practices (GRS, GT, and GPR) are important enablers for strengthening GP in the manufacturing sector. Therefore, strategies such as offering proper training to employees, e.g., on waste recycling, waste reduction, energy saving, etc., and providing opportunities for them to participate in green schemes, e.g., creating recycling programs, green events, etc., could help in improving GEB, as well as their GP. Moreover, employees who come up with the successful implementation of green behaviors, i.e., eco-centric, eco-civil and eco-helping behaviors, can be provided with monetary and non-monetary rewards. Our findings further reveal a link between GHRM practices and environmental performance. Organizations should implement policies related to environmental sustainability targeted at improving employees’ competencies (e.g., effective GRS policies, training programs, and a smooth incentive and pay system) to encourage individual responsibility and improve workplace performance [6].

Through the mediation of GWC, GWE, and GEB, our findings also demonstrate linkages between GHRM practices and green performance. Thus, implementing a green work climate, green employee involvement, and green employee behavior help to improve green [21,69,70,84]. Manufacturing SMEs should adopt the Go Green idea to promote an environmentally friendly workplace climate [50]. Manufacturing SME employees, including teaching, research, and administrative personnel, should use green and environmentally friendly techniques in their daily activities [54]. Furthermore, this study proves the benefits of GHRM practices on GP via mediating variables. The findings are in line with the studies of [8,13,45]. As a result, the findings of this study are consistent with the previous GHRM literature.

GHRM methods, apart from having a direct impact on green performance, also indirectly influence green performance. For example, providing a healthy workplace environment, engaging them through GHRM practices, and appraising performance may help to improve environmental knowledge, skills, and abilities, resulting in higher GP [39]. These practices also encourage employees to become involved in sustainable practices [14]. Hence, this is the first study in which such mediating effects have been examined to fill the research gap in published studies. The empirical findings show that through the mediating influence of GWC, GWE, and GEB, the three green HRM practices result in stronger GP. As a result, increasing the effectiveness of GP aimed at attaining the organization’s green goals requires encouraging employees’ commitment to green policies and encouraging them to change their green behavior at work.

In addition, the results confirm the premise that integrating IGV considerably increases GP, especially when IGV is high. High green values enhance the positive impact of GWC on green behavior. The research of [56] also supports this relationship. This fills in the gaps in the research on the interaction of individual green values. Therefore, organizations must hire those individuals whose individual values are aligned with organizational green values. Lastly, by investigating the AMO theory [18], parts of GHRM, and how they contribute to the firm’s green performance, our study provides a substantial contribution to green management research. The paper also proposes a novel paradigm for maximizing GP by combining GHRM and GP. Thus, the findings of this study contribute to a better understanding of how manufacturing SMEs might achieve optimal GP. The study also presents an integrated research framework through which firms can make efficient strategic green management decisions, opening up new research opportunities for future green management research.

5.1. Implications of the Research

5.1.1. Implications for Scholars

In the following respects, this work contributes to the literature on green performance. To begin, it applies the AMO arguments to green management by looking at how companies use GHRM practices, a green work climate, green employee engagement, and green employee behavior to achieve optimal green performance. Other GP research [13,38,42] focuses on GHRM and GP relationships without looking at the moderating influence of individual green values. The research presents a theoretical underpinning for how organizations might adopt GHRM practices to achieve optimum GP in terms of GHRM practices.

As a result, the study proposes that by incorporating GHRM principles, manufacturing SMEs can achieve an ideal level of GP while also complying with regulatory authorities. By making this suggestion, the study broadens the AMO theory’s relevance to GP. In order to better understand environmental performance and give institutes a way to think about implementing GHRM techniques, the study leverages the AMO as a theoretical foundation. Second, by proposing an integrated framework within which to evaluate how organizations achieve increased GP by integrating IGV and GHRM practices, the study contributes to the green management literature. Previous studies have simply looked at the GHRM and GP link without taking into account the mediation of GWC, GWE, and GEB with the moderating influence of IGV. As a result, the report provides a broader view of the firm’s GP and expands on prior research that did not take these factors into account.

5.1.2. Implications for Managers and Policymakers

The research has implications for senior management as well as academia. According to the findings, human resource managers may establish green competencies through hiring, training, and the development of staff. They can also inspire employees to be more environmentally conscious by implementing effective recruitment and selection processes, as well as developing reward and pay systems for employees who are more environmentally conscious. They can also give green opportunities by including staff in green planning, appreciating their green knowledge, and empowering them to implement fundamental green practices. The insights will also assist managers in creating a green work environment. This will result in increased green work engagement, employee behavior, and performance.

Moreover, green individual values are the subject of research. Academia will use the study’s findings to teach students and future managers about the potential of green individual values (GIV), as well as the interactional effect of GIV on green climate and green employee behavior. The teaching of green values has been difficult due to a lack of scientific evidence, must-know principles, and best practices. Even though the literature portrays green individual values as a critical topic, it lacks sufficient empirical evidence (surveys and case studies) to justify manufacturing SMEs.

Lastly, the study also provides evidence-based knowledge to top management on how different parts of GHRM affect an organization’s GP, as well as the impact of the combined effect of GHRM, GWC, GWE, and GEB on a company’s GP. As a result of this presentation, they can prioritize resource allocation for the sake of GP. The findings also offer a proactive way for manufacturing SMEs to improve their GP while complying with legal requirements.

5.2. Limitations and Future Research

Despite substantial contributions, this research has a number of limitations. First, the sample size is limited; therefore, the results’ applicability to a broader scale may be limited. This is because the employee population of Pakistan’s manufacturing SMEs is too large to allow such broad generalization.

Second, the study is cross-sectional; therefore, it is suggested that future researchers who want to build on our work can do so by using a different data source. They may use longitudinal data to determine the direction of causality and gain a clear picture of how GHRM qualities, green work climate, green work engagement, and green employee behavior connect to GP at diverse manufacturing SMEs. Future research should investigate using secondary data drawn from publicly available information and annual reports, according to our recommendation.

Finally, our research focuses solely on manufacturing SMEs in a single province. This could create cultural and industrial barriers, limiting the generalizability of our findings. Researchers may investigate duplicating our study in different backgrounds and circumstances to check our hypotheses, even though we assume that organizations in other nations and industries may come up with similar results.

6. Conclusions

This study aimed to investigate the role of GHRM practices, i.e., GRS, GT, and GPR on GP through the intervening roles of GWC, GWE, and GEB. The findings of the study provide realistic insights concerning the dire need for ensuring a sustainable environment through the implementation of GHRM practices to enhance GP. However, it is essential to understand that GHRM practices may not directly enhance GP; it is instead a series of sequential paths involving significant contemporary variables that aid increasing GP. Thus, the findings reveal that GHRM practices help in providing a GWC and enable GWE of employees. When GWC and GWE are ensured, it ultimately enables GEB and enhances GP. Surprisingly, individual green values have been found to significantly moderate the relationship between GWC and GEB. Second, by looking at IGV as an underlying mechanism explaining the connection between GWC and GEB, this research aims to add to the emergent body of literature on GHRM.

This paper presents some key research contributions to deepen the understanding of GHRM practices. First, the study establishes a unique conceptual framework connecting GHRM practices with GP by empirically supporting the sequential mediation and moderation model. Second, by taking into account GWE, GEB, and GWE in the model, the study aims to enhance the scarce GHRM literature by determining the circumstances that may strengthen the association between GHRM and GP. Third, this study looks at individual green values as an underlying mechanism explaining the association between GWC and GEB in an attempt to add to the emerging literature on GHRM. Last, this study provides unique and realistic insights for managers, practitioners, and policymakers to switch from traditional to contemporary GHRM practices and ensure GP for the betterment of society as a whole. Hence, organizations must ensure the adoption of GHRM practices and encourage the development of GWC to enable GEB and GWE among employees in line with the organizational green goals to successfully achieve EP.