Institutional pressures and environmental innovation as drivers of sustainable transformation in Ugandan manufacturing sector

Abstract This study aims to examine the mediating role of environmental innovation in the relationship between institutional pressures and sustainability practices within medium and large manufacturing firms in Uganda. Grounded in institutional theory and dynamic capability theory, the study employs a cross-sectional quantitative design and analyzes data from 208 firms using descriptive statistics, correlation analysis, and Structural Equation Modelling (SEM) with SmartPLS version 4, supported by complementary analyses conducted in IBM SPSS software. The findings show that institutional pressures exert a positive and significant influence on sustainability practices and that environmental innovation independently enhances these practices. Crucially, the results confirm that environmental innovation partially mediates the relationship between institutional pressures and sustainability practices, indicating that institutional demands foster sustainability both directly and indirectly through firms’ innovation-oriented responses. The study concludes that sustainability outcomes in Uganda’s manufacturing sector are most effectively achieved when regulatory, normative, and mimetic pressures are translated into firm-level environmental innovations. From a practical standpoint, the findings highlight the need for policymakers to implement context-sensitive incentives that encourage environmental innovation, while managers are urged to integrate innovative, resource-efficient practices into routine operations. Despite its focus on medium and large manufacturing firms in Uganda, the study provides important theoretical and empirical insights relevant to sustainability advancement in emerging economy contexts.