Exploring paths from institutional pressure to corporate sustainability: mediating effects of green knowledge and green innovations

Purpose This study examines the pathways through which institutional pressures, specifically environmental regulatory and green market pressures, influence corporate sustainability. It focuses on the mediating roles of green knowledge and green innovations, integrating the Porter hypothesis with institutional theory and knowledge resource-based views. Design/methodology/approach The research utilizes structural equation modeling (SEM) on data collected from 414 manufacturing firms in China. The study investigates the relationships between environmental institutional pressures, green knowledge, green innovations (process and product), and their collective impact on sustainable performance. Findings The findings confirm that institutional pressures positively affect green knowledge, which in turn enhances both green process and product innovations. These innovations significantly contribute to sustainable performance across environmental, economic, and social dimensions. Furthermore, green knowledge acts as a crucial mediator, particularly in translating green market pressure into green process and product innovation. Practical implications Organizations can leverage green knowledge as a critical intangible asset to navigate institutional pressures and foster green innovation. Policymakers should consider strengthening green market mechanisms to encourage sustainable corporate practices and innovation, particularly in emerging markets. Originality/value This study provides a comprehensive framework linking institutional pressures, green knowledge, and innovations to sustainable performance. By integrating multiple theoretical perspectives, it highlights the importance of green knowledge and innovation strategies for achieving sustainability in industrial contexts.