Green innovation and sustainable performance: The mediating role of sustainability orientation in cluster environments

This study addresses the growing global imperative of aligning corporate strategies with environmental sustainability by examining the role of green innovation in fostering sustainable performance. While firms are increasingly pressured to adopt eco-innovative practices, the mechanisms that connect such innovation to actual sustainability outcomes remain insufficiently understood. In response to this issue, this study explores the mediating role of sustainability orientation in the relationship between two distinct dimensions of green innovation, namely green product innovation and green process innovation, and their impact on sustainable performance within the context of industrial clusters. A conceptual model is tested using a sample of 189 industrial firms in the Valencian Community, Spain, a region recognised for its manufacturing tradition and cluster-based economic organisation. Using advanced mediation analysis techniques, the study evaluates three core hypotheses: (H1) green innovation in two dimensions has a direct positive effect on sustainable performance, (H2) sustainability orientation mediates this relationship, and (H3) this mediating effect can be differentiated by its cluster membership. The results indicate that green innovation, both in products and processes, positively impacts firms' sustainable performance. Moreover, the findings reveal that sustainability orientation is a key mediator in this relationship, though this effect is only significant for firms within a cluster. This underscores the importance of collaboration and shared access to knowledge in such environments, fostering more effective green initiatives as sustainable strategies. Ultimately, these findings highlight the importance of a genuine strategic orientation towards sustainability to maximise the long-term benefits of green innovation.