Green Innovation Strategies and Environmental Sustainability: A Structural Equation Modeling Analysis of Manufacturing Firms in Kenya

Abstract

Environmental degradation, climate change, increasing resource depletion, and stricter environmental regulations have intensified pressure on manufacturing firms to adopt sustainable production practices. Green innovation has emerged as an important strategic approach for enhancing environmental sustainability. However, existing empirical studies have predominantly examined its influence on financial performance, organizational competitiveness, and operational efficiency, with comparatively limited attention given to environmental sustainability as the primary organizational outcome, especially in Kenya. Guided by the Diffusion of Innovation (DOI) Theory, this study examined the influence of green innovation strategies on environmental sustainability among manufacturing firms in the South Rift region of Kenya. The study adopted a positivist research philosophy and a causal cross-sectional survey design. A census of 81 registered manufacturing firms was undertaken, with primary data collected from 162 senior managers using structured questionnaires and supported by qualitative evidence from semi-structured interviews with 15 purposively selected managers. The measurement model was validated using Cronbach's alpha, Composite Reliability, Average Variance Extracted, the Fornell-Larcker criterion, and the Heterotrait-Monotrait ratio. Descriptive statistics were analyzed using IBM SPSS Statistics Version 27, while the hypothesized relationships were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4. The findings established that green process innovation (β = 0.245, p = 0.005) and green product innovation (β = 0.297, p = 0.003) positively and significantly influenced environmental sustainability, whereas green marketing innovation exhibited a negative but statistically insignificant effect (β = −0.120, p = 0.222). The higher-order construct, green innovation strategies, also exerted a positive and statistically significant influence on environmental sustainability (β = 0.386, p = 0.005). The study concludes that integrated green innovation strategies significantly improve environmental sustainability through cleaner production processes and sustainable product development. It recommends increased investment in cleaner technologies, eco-design, circular economy practices, and supportive policy incentives to accelerate sustainable manufacturing. The findings extend the Diffusion of Innovation Theory by demonstrating that coordinated adoption of complementary green innovations generates superior environmental sustainability outcomes within manufacturing firms.