As global environmental awareness grows, companies increasingly adopt eco-friendly mindsets and align their business strategies accordingly. Heightened external pressures serve as catalysts for firms to enhance their environmental performance. However, implementing green business practices often requires substantial investments, prompting managers to seek commensurate returns. The evaluation of sustainability performance thus remains a highly relevant and compelling area for further research. This study investigates the impact of green supply chain management (GSCM) on sustainability performance, competitive advantage, and financial stability. Despite growing global interest, empirical research on this topic—especially within Indonesia as an emerging economy—remains scarce. Using a quantitative approach, primary data were collected via questionnaires distributed to 85 managerial-level decision-makers, including Senior Managers, General Managers, and Directors within Indonesian manufacturing firms. Data were analyzed using Structural Equation Modelling (SEM). The results indicate that while GSCM significantly enhances sustainability performance, it does not directly influence competitive advantage or financial stability. However, sustainability performance functions as a critical mediating variable, significantly reinforcing the relationship between GSCM and both competitive advantage and financial stability. For the first time, this study empirically demonstrates the indirect pathway by which GSCM contributes to strategic and financial outcomes through sustainability in the context of Indonesian manufacturing firms. Managers, especially in Indonesia, are still hesitant to shift to green business practices because, apart from requiring expensive investments, they are not yet fully convinced of the benefits they will gain. Moreover, research on this subject is still limited, particularly in Indonesia as an emerging economy. By further developing the conceptual linkage between green practices and organizational performance in emerging markets, this study offers both theoretical and practical contributions. It highlights the strategic importance of embedding environmental and social considerations into core business operations, calling for firm-wide commitment to sustain green practices and foster long-term value creation.
Hasibuan et al. (Sat,) studied this question.