Integrating intellectual capital and sustainable leadership to strengthen green business innovation and sustainability of SMEs

Purpose This study aims to investigate the impact of intellectual capital (IC), in the lens of human capital (HC), structural capital (SC) and relational capital (RC), on business sustainability (BS), considering the mediating effect of green business innovation (GBI) and the moderating effect of sustainable leadership (SL). Design/methodology/approach The 510 samples were gathered from small-medium enterprises (SMEs) firms in Pakistan and examined using the Smart PLS-3 software functionality. Findings The study confirms the positive relationships between HC, SC and RC and BS. GBI mediates these relationships, while SL acts as a moderator, enhancing the effect that IC has on sustainability outcomes. Practical implications The findings underscore the importance of incorporating sustainable practices and leadership styles into SMEs. The IC development by managers will become a prerequisite for assuring long-term business success with enhanced organizational sustainability through the practice of SL. Policymakers and business advisors may apply these findings to design programs and incentives to help businesses incorporate green innovation into the firm’s strategic agenda and to create leadership pipelines that support sustainability as an imperative in the firm’s corporate culture. Originality/value This research extends the applicability of ambidexterity theory into a new context of sustainable business practices, exploring how IC and SL contribute to the sustainable state of businesses. An overall explanation framework is provided for SMEs to determine the dynamics of GBI. Therefore, this study advances the theoretical limits of BS by introducing a holistic-innovation and leadership-focused approach that enables understanding the interaction between IC within a sustainable business perspective.