How to improve financial performance through sustainable manufacturing practices? The roles of green product innovation and digital transformation

Purpose This research aims to explore the relationship between sustainable manufacturing practices (SMP) and financial performance (FP) by considering the mediating role of green product innovation (GPI) and the moderating effect of digital transformation (DT). Design/methodology/approach This study proposes a research model grounded in a practice-based view and a resource-based view and conducts empirical tests by using a sample of 244 manufacturing firms. Findings This study revealed that SMP influences GPI, and GPI mediates the SMP–FP link. In addition, findings demonstrated that DT strengthens the impact of SMP on GPI, and moderates the mediation impact of GPI on the relations between SMP and FP. Originality/value Although overwhelming environmental concerns cause SMP to be considered increasingly crucial, there is a dilemma regarding its impact on FP. Moreover, due to the strategic importance of DT, there is a lot of interest in its relationship with sustainability-related issues. Nevertheless, this association is still not clarified. This study addresses the research gaps, provides an extended understanding of how SMP affects FP and offers a novel insight that reveals the role of DT.