Cogent Business & Management

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Moderating role of green innovation between

sustainability strategies and firm performance in
Tanzania

Hellena Mohamedy Mushi

To cite this article: Hellena Mohamedy Mushi (2025) Moderating role of green innovation
between sustainability strategies and firm performance in Tanzania, Cogent Business &
Management, 12:1, 2440624, DOI: 10.1080/23311975.2024.2440624

To link to this article: https://doi.org/10.1080/23311975.2024.2440624

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Cogent Business & Management
2025, VOL. 12, NO. 1, 2440624
https://doi.org/10.1080/23311975.2024.2440624

Marketing | Research Article

Moderating role of green innovation between sustainability
strategies and firm performance in Tanzania
Hellena Mohamedy Mushi
Department of Business Studies, Mzumbe University Mbeya Campus College, Morogoro, Tanzania

ABSTRACT ARTICLE HISTORY

This journal article investigates the moderating role of green innovation in the Received 24 July 2024
relationship between sustainability strategies and firm performance within the Revised 28 November 2024
manufacturing sector in Tanzania. With increasing global emphasis on environmental Accepted 6 December 2024
sustainability, this study seeks to understand how green practices influence the KEYWORDS
performance of firms striving for a competitive edge. A quantitative research design Firm performance; green
was adopted, with data collected from a structured questionnaire distributed and 340 innovation; sustainability
responses received for analysis from mid-level and senior managers across 10 public strategies; Resource-Based
and private manufacturing companies in Tanzania. The study utilized SMART PLS 4 for Theory; Tanzania
data analysis, testing the proposed hypotheses grounded in Resource-Based Theory SUBJECTS
(RBT). The findings reveal a significant positive relationship between sustainability Marketing; Business;
strategies and firm performance, highlighting the importance of integrating sustainable Management and
practices into business operations. However, while green innovation directly influences Accounting;
firm performance, it does not significantly moderate the relationship between Environmental Economics
sustainability strategies and performance outcomes. These findings suggest that
manufacturing firms in Tanzania can improve performance by adopting sustainable
strategies, even in the absence of a moderating effect from green innovation. The study
concludes by offering actionable recommendations for industry practitioners and
policymakers to encourage sustainable business practices, thereby supporting the
broader goal of sustainable development in Tanzania.

1. Introduction
Green innovation is increasingly recognized as essential for promoting high-quality economic develop-
ment on a national scale. It serves as a critical strategy for businesses to convert external pressures into
opportunities for change, thereby securing strategic competitive advantages amid increasing environ-
mental instability and rapid organizational transformation. Many companies recognize the importance of
addressing climate change, reducing greenhouse gas emissions, and implementing sustainable practices.
However, concerns about rising costs and the challenges in achieving environmental objectives can
threaten their competitiveness. As such, green innovation has become crucial for companies navigating
these transformative shifts, emphasizing the need for agile decision-making and adaptability in the face
of frequent disruptions.
While green innovation is rooted in technological advancements, it has evolved to encompass broader
changes in corporate strategy, organizational structure, and operational processes (Yin & Zhao, 2024).
This evolution reflects the growing recognition that effective sustainability strategies must align with a
firm’s overall mission and operational practices. Notably, research has demonstrated that energy con-
sumption is a significant factor in shaping sustainability strategies and firm performance. For instance,
Pham et al. (2024) found that dirty energy consumption adversely impacts firm profitability, highlighting

CONTACT Hellena Mohamedy Mushi [email protected] Department of Business Studies, Mzumbe University Mbeya Campus
College, Morogoro, P. O. Box 6559, Tanzania.
© 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group
This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which
permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been
published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.
2 H. M. MUSHI

the need for companies to shift towards cleaner energy sources to enhance financial outcomes.
Additionally, Sitompul et al. (2024) discussed the complexities firms face in balancing renewable energy
investments with immediate financial viability, suggesting that while such investments may offer
long-term benefits, the initial costs can be a barrier. Moreover, studies by Simionescu et al. (2020) and
Westerman et al. (2020) indicate that energy-efficient practices lead to improved profitability and opera-
tional performance, reinforcing the argument for adopting green practices and integrating energy man-
agement into sustainability strategies. However, a paradox arises in sustainability strategies: while they
are intended to enhance firm performance, empirical evidence shows mixed outcomes (Alam et al., 2024;
Soomro et al., 2024; Yaputra et al., 2024). Understanding the mechanisms that drive firm performance is
key to overcoming this paradox (Nasution et al., 2024). Successful sustainability strategies depend on
how well organizations adapt to technological changes (Núñez et al., 2024), requiring agility to mitigate
disruptive impacts.
Brand managers utilize strategic measures to promote environmentally friendly products and enhance
brand identity, which is crucial for establishing individual identification. Research by Watson et al. (2024)
indicates that brand loyalty significantly influences decision-making, particularly when there is a strong
connection between brand image and consumer trust. The concept of green trust, defined as ‘the will-
ingness to rely on a product, service, or brand based on perceptions of its credibility, benevolence, and
competence in environmental performance’ (Javed et al., 2024), is vital in this context. Social identity
research shows that individuals seek to validate their identification, especially when it is challenged
(Dangaiso, 2024). Brand trust has become a key factor, enhanced firm performance and supporting sus-
tainability initiatives (Isac et al., 2024). Competitive advantage enables firms to adjust organizational
structures and refine processes flexibly in response to changing environments (Purwanto, 2024). Sharing
information and collaborating across departments and with external partners are crucial for fostering
innovation and breaking down silos (Alam et al., 2024). Despite challenges, competitive advantage can
mitigate paradoxical phenomena associated with green innovation, improving overall firm performance
(Damayanti & Waskito, 2024; Hammoud et al., 2024; & Farahat, 2024). While the direct impact of compet-
itive advantage on firm performance is not fully explored (Kazemi & Soltani, 2024), its role in crisis man-
agement is increasingly recognized.
Consumer demand for environmental responsibility has led to a surge in products marketed as green,
eco-friendly, or sustainable. Despite extensive labeling efforts, consumers often experience confusion
regarding the actual environmental attributes of these products (Seberini et al., 2024). While research
has explored consumer perceptions and motivations towards environmentally friendly products, there
has been limited focus on the impact of eco-label claims specifically in the manufacturing industry.
Consumers’ desire for transparency and reliability drives the investigation of claims that vary in familiar-
ity, specificity, and quality. Eco-labeling is a critical tool in green marketing communication, highlighting
product attributes for consumers (Kumar et al., 2021). These claims aim to provide valuable information,
emphasizing the presence or absence of specific attributes or ingredients. However, the credibility of
eco-label claims varies; specific claims are seen as more objective and informative, while general claims
may be perceived as subjective and could undermine credibility (Hou & Wu, 2021). Eco-labels signifi-
cantly influence consumer perceptions and can directly impact firm performance in the marketplace.
Firm performance is multifaceted and influenced by various factors, including brand trust, eco-labeling
claims, competitive advantages, sustainable strategies, and green innovation, all of which evolve over
time (Rusyani et al., 2021).
This journal article aims to explore these factors influencing firm performance within the context of
the manufacturing industry in public and private companies. The key research question guiding this
study is: What role does green innovation play in the relationship between sustainability strategies and
firm performance? The research framework will establish these connections and test hypotheses to con-
firm them. The journal article begins with a comprehensive review of relevant literature in Section 2,
while Section 3 outlines the study’s methodology, including details on the sample, data sources, and
how variables were measured. Section 4 analyzes the necessity and minimization of truth tables. Finally,
Section 5 concludes by discussing theoretical implications, practical insights, limitations, and suggestions
for future research directions. This journal article enhances our understanding of how adopting green
innovation practices influences firm performance in Tanzania’s specific economic context.
 Cogent Business & Management 3

2. Literature review
2.1. Firm performance
The relationship between sustainability strategies and firm performance has garnered considerable atten-
tion in recent years. Ahmad et al. (2020) demonstrates that both green promotion marketing strategies
and shaded green marketing strategies have a significant and positive impact on marketing performance.
This finding aligns with Resource-Based Theory (RBT), which posits that firms can achieve competitive
advantages by leveraging unique resources such as effective marketing strategies that promote sustain-
ability. Similarly, Rauf et al. (2024) highlight the crucial role of corporate social responsibility (CSR) report-
ing in enhancing corporate value and addressing system inefficiencies, noting a significant moderation
effect of the enterprise life cycle on firm performance in China. This suggests that the impact of CSR on
performance may vary depending on the stage of a firm’s development, which aligns with the Life Cycle
Theory. This theory posits that firms evolve through distinct stages, each requiring different strategic
approaches to optimize performance.
El-Menawy and El-Sayed (2024) emphasize that CSR programs provide competitive advantages for
organizations in developing countries like Egypt. Their findings support the Stakeholder Theory, which
posits that businesses must consider the interests of all stakeholders, including society and the environ-
ment, to enhance their long-term success. By effectively engaging with stakeholders through CSR, firms
can improve their reputation and operational performance. Wang (2024) found that product effectiveness
and novelty mediate the effects of green and digital innovations on firm performance. This highlights
the role of innovation as a critical resource that can improve both product offerings and market posi-
tioning. This is supported by the Dynamic Capabilities Framework, which emphasizes the ability of firms
to integrate, build, and reconfigure internal and external competencies to address rapidly changing
environments.
Mudrika et al. (2024) indicate that green marketing significantly affects consumer satisfaction, loyalty,
social responsibility, environmental safety, product innovation, and development. These findings under-
score the importance of building strong brand equity through sustainable practices, which can enhance
customer loyalty and, consequently, firm performance. Mahsina and Soewarno (2024) reveal that a com-
posite independent board positively influences firm performance and green innovation, although individ-
ual contributions of independent commissaries and directors are not significant. This observation relates
to Agency Theory, which highlights the importance of governance structures in aligning the interests of
management with those of shareholders, ultimately influencing performance outcomes. Moraa et al.
(2024) support Hart’s (1995) theory that green packaging is a critical resource, showing that investments
in green packaging yield tangible benefits. This aligns with the notion that sustainability-oriented
resources can create competitive advantages by meeting the growing consumer demand for environ-
mentally friendly products. Abbas et al. (2024) identify product market competitiveness and digital finan-
cial innovation as positive determinants of firm performance, with digital financial innovation partially
mediating this relationship. This reflects the increasing importance of digitalization in enhancing opera-
tional efficiency and market responsiveness, which are critical for sustained performance in today’s
dynamic business environment.
Hudaibiya and Raza (2024) report a positive correlation between sustainable firm performance (SFP1)
and corporate green strategy, CSR, green innovation, and sustainable firm performance, emphasizing the
need to integrate environmental and social considerations into business strategies. This supports the
premise that firms that prioritize sustainability are likely to perform better both economically and socially.
Alzghoul et al. (2024) provide empirical evidence that the implementation of green marketing signifi-
cantly enhances a company’s environmental consciousness and performance. This finding reinforces the
idea that effective communication of sustainability efforts can bolster a firm’s reputation and foster con-
sumer trust. Despite the substantial contributions of existing studies, several critical gaps remain in the
literature regarding firm performance and sustainability strategies. Firstly, while many studies have
explored the direct effects of green marketing and CSR on performance, there is insufficient focus on the
interaction effects between these variables. Understanding how green marketing, CSR, and innovation
collectively influence firm performance could provide deeper insights into effective sustainability
4 H. M. MUSHI

strategies. Secondly, the current literature often lacks a comprehensive examination of the specific mech-
anisms that mediate the relationships between green practices and firm performance. For example, while
Wang (2024) identifies product effectiveness as a mediator, further exploration of how other factors, such
as brand trust or consumer perceptions, influence these dynamics remains underexplored. Additionally,
there is a need for more empirical studies focusing on diverse industries, particularly in emerging mar-
kets. Most existing research has been conducted in specific contexts, such as developed economies or
particular sectors, leaving a gap in understanding how sustainability strategies affect firm performance
across different cultural and economic environments. Finally, while the role of corporate governance in
influencing sustainability practices is acknowledged, more research is needed to understand how differ-
ent governance structures impact the adoption and effectiveness of green strategies. This understanding
could help firms design more effective governance frameworks that align with their sustainability
objectives.

2.2. Sustainability strategies and firm performance

Sustainability strategies are increasingly recognized for their potential to enhance firm performance
by integrating economic, environmental, and social considerations. Green marketing practices reveal
a significant relationship between these dimensions, emphasizing the need to account for both envi-
ronmental and social impacts. Alam et al. (2024) highlight discrepancies between actual and expected
green marketing adoption among industrial firms, particularly concerning waste management and
water pollution. This gap points to the challenges firms face in implementing sustainable practices
and the importance of aligning marketing strategies with sustainability goals. Nasution et al. (2024)
found that green marketing strategies positively influence purchasing decisions, reinforcing the
notion that effective communication of sustainability efforts can enhance consumer engagement.
Núñez et al. (2024) further demonstrated that women are likely to purchase sustainable products
irrespective of their education level, while young people show a strong interest in environmental
care. These findings suggest that demographic factors significantly influence consumer behavior
towards sustainability, indicating that targeted marketing strategies can effectively promote green
products.
The significance of government policies in shaping sustainability initiatives within firms is under-
scored by the findings of Gao et al. (2024a). Their study on the innovative city policy reveals that
strengthening the integration of innovation and green practices is essential for sustainable urban
development. They found that the innovative city policy significantly enhances urban total factor car-
bon emission efficiency (TFCEE) and demonstrates positive spatial spillover effects on surrounding
regions. This aligns with the notion that effective sustainability strategies require supportive regulatory
environments to thrive. Furthermore, Gao et al. (2024b) identified that the mechanisms for improving
TFCEE stem from enhanced green technology adoption and better resource allocation, highlighting the
critical role of innovation in promoting sustainability. Moreover, Gao et al. (2024a) noted that the spill-
over effects of innovative city policies are more pronounced in developed regions, particularly coastal
areas and those with advanced industrial structures. This suggests that the context in which firms oper-
ate significantly influences the effectiveness of sustainability strategies. Similarly, Deshmukh and Tare
(2023) explain how government regulations and incentives such as legal frameworks, tax breaks, and
public-private partnerships impact green marketing and corporate social responsibility (CSR) practices,
reinforcing the findings of Gao et al. (2024a). Soomro et al. (2024) found that green marketing factors
such as green products, design, supply chains, and production significantly contribute to sustainable
development. They emphasize the need for comprehensive green marketing strategies that incorporate
recycling, reuse practices, and competitive pricing to meet customer expectations. Apaza-Panca et al.
(2024) suggested that green marketplace strategies should focus on reverse logistics or circular econ-
omy principles to avoid environmental harm during commercialization and preserve scarce resources.
They also highlighted the importance of leveraging social networks in green promotion strategies to
optimize resource use.
Rahman and Nguyen‐Viet, (2023) identified significant discrepancies between actual and expected
green marketing adoption among industrial firms, particularly in waste management and water
 Cogent Business & Management 5

pollution control. Alam et al. (2024) noted that despite rapid socio-economic growth and technological
advancements, social-level performance has minimal impact on green marketing strategies in the
ready-made apparel industry. This underscores the need to bridge the gap between the expected and
actual adoption of green practices, particularly in sectors with substantial environmental footprints.
These studies collectively underscore the positive impact of green marketing and regulatory policies on
sustainable development and highlight the necessity for organizations to implement comprehensive
strategies that address recycling, fair pricing, and effective use of social networks while tackling the
gaps in green marketing adoption among industries. Based on these findings, the following hypothesis
can be posed:
H1: Sustainability strategies have a positive significance with firm performance.

2.3. Brand trust and sustainability strategies

Brand trust plays a crucial role in influencing consumer behavior, particularly in the context of sustain-
ability strategies. Shafiq et al. (2023) demonstrated that green marketing, service quality, and brand rep-
utation significantly positively influence brand trust and purchase decisions. This relationship can be
explained through the Brand Equity Theory, which posits that a strong brand reputation enhances con-
sumer trust and loyalty, ultimately affecting purchasing behavior. Pancić et al. (2023) found that green
marketing positively impacts green outcomes, including green advertising, brand loyalty, brand equity,
and brand innovativeness, which in turn enhance repurchase intentions. This finding aligns with the
Theory of Planned Behavior (TPB), suggesting that consumers’ intentions to repurchase are shaped by
their attitudes towards the brand, subjective norms, and perceived behavioral control regarding sustain-
able practices. However, they noted that green satisfaction and green awareness do not significantly
moderate these relationships, indicating that the direct influence of brand loyalty may be more critical
than these factors in shaping purchase intentions.
Isac et al. (2024) reported that greenwashing negatively affects purchase intentions and diminishes
green brand trust, particularly among consumers with higher environmental knowledge. This finding
underscores the Signaling Theory, which posits that consumers rely on signals (such as brand claims) to
gauge the credibility of brands. When consumers perceive greenwashing, their trust diminishes, resulting
in negative purchase intentions. Hepsiba (2024) found that apparent green information does not moder-
ate the relationship between the marketing mix and eco-trust. This suggests that while marketing efforts
aimed at promoting eco-friendly attributes are essential, they must be perceived as genuine to influence
consumer trust effectively. In the context of organic foods in Zimbabwe, Dangaiso (2024) highlighted
that green satisfaction fosters green trust, green brand image, and green brand equity, indicating a pos-
itive influence of green brand image on green trust. This supports the Brand Image Theory, which posits
that a positive brand image can enhance consumer trust and loyalty. Javed et al. (2024) showed that
perceived greenwashing negatively impacts brand credibility, both directly and indirectly through green
skepticism. This aligns with the notion that consumer skepticism towards brands can arise from mislead-
ing green claims, leading to diminished trust.
Watson et al. (2024) established a critical link between consumers’ environmental values and brand
loyalty, mediated by green brand image. This highlights the importance of aligning brand messaging
with consumer values to foster loyalty and trust. Rahman and Nguyen‐Viet, (2023) emphasized that green
advertising receptivity, non-deception, green brand image, and transparency positively influence green
brand trust, which subsequently impacts consumers’ purchasing intentions. This reinforces the idea that
genuine communication about sustainability initiatives is vital for building trust. Qayyum et al. (2023)
found that excessive product packaging predicts greenwashing and green confusion, with greenwashing
negatively impacting green brand equity (GBE). However, brand credibility moderates this negative rela-
tionship, suggesting that strong brand credibility can mitigate the adverse effects of greenwashing on
brand equity. Salehzadeh et al. (2023) revealed that green brand image directly influences green brand
attitude, love, and trust, indicating that a positive brand image is essential for fostering consumer loyalty.
Nguyen-Viet et al. (2024) showed that green trust positively affects word-of-mouth, willingness to pay,
6 H. M. MUSHI

and green purchase intentions, emphasizing the importance of trust and commitment to sustainability.
Wu and Liu (2022) concluded that the relationship between green marketing and brand trust varies
based on spontaneity and compulsion, with brand image playing a mediating role. They also found that
greenwashing significantly negatively regulates this relationship. These studies collectively highlight the
complex interplay between green marketing, brand trust, and green brand equity. Excessive product
packaging can lead to greenwashing and confusion, undermining green brand equity unless mitigated
by strong brand credibility. Positive green brand image and trust are crucial for fostering brand love,
word-of-mouth, and green purchase intentions. However, the negative effects of greenwashing need to
be carefully managed to maintain consumer trust and brand credibility. Based on these findings, the
following hypothesis can be posed:
H2: Brand trust has a positive significance with sustainability strategies.

Despite the extensive research on brand trust and sustainability strategies, several critical gaps remain
in the literature. First, while existing studies emphasize the positive impact of green marketing on brand
trust, there is a lack of comprehensive examination of the underlying mechanisms through which these
relationships operate. For example, while Shafiq et al. (2023) and Pancić et al. (2023) identify various
factors influencing brand trust, the specific role of consumer demographics and psychographics in shap-
ing these relationships has not been adequately explored. Second, the effects of greenwashing on brand
trust warrant further investigation. Although studies like Isac et al. (2024) and Javed et al. (2024) have
addressed the negative impacts of greenwashing, there is insufficient understanding of how different
types of greenwashing (e.g. misleading claims versus genuine mistakes) affect consumer trust differently.
This distinction is crucial for brands seeking to navigate the challenges posed by increasing consumer
skepticism. Moreover, while the literature discusses the importance of government regulations and incen-
tives (Deshmukh & Tare, 2023), there is limited research on how these external factors interact with
brand strategies to influence consumer trust and purchasing decisions. Understanding the role of regu-
latory frameworks in shaping consumer perceptions of brand sustainability is an area ripe for exploration.
Finally, existing studies predominantly focus on specific sectors, such as organic foods or apparel, leaving
a gap in understanding how brand trust and sustainability strategies manifest across diverse industries.
Expanding research to include a broader range of sectors can provide a more comprehensive under-
standing of the dynamics at play.

2.4. Eco-labeling claims and sustainability strategies

Eco-labeling claims are integral to sustainability strategies, acting as crucial signals for consumers seeking
environmentally friendly products. Nguyen et al. (2020) identified three dimensions of consumer percep-
tions of eco-friendly packaging: packaging materials, manufacturing technology, and market appeal.
Consumers primarily associate eco-friendly packaging with materials like biodegradability and recyclabil-
ity, as well as market appeal factors such as attractive design and competitive pricing. However, their
overall knowledge of these concepts remains limited. This aligns with Signaling Theory, which posits that
eco-labels serve as signals of a product’s environmental quality, influencing consumer perceptions and
purchasing decisions. Yaputra et al. (2024) found that green marketing and sustainable advertising sig-
nificantly and positively influence green purchase intentions and behaviors. However, they noted that
eco-packaging and labeling only positively impact green purchase intention. This suggests that while
eco-labels play a vital role in promoting sustainability, their effectiveness may depend on broader green
marketing efforts. This relationship can be interpreted through the Theory of Planned Behavior (TPB),
indicating that consumers’ intentions to purchase green products are influenced not only by the pack-
aging but also by their attitudes towards green marketing and the perceived behavioral control they
have in making sustainable choices.
Borah et al. (2023) revealed that green market orientation does not directly affect new product suc-
cess in manufacturing firms; instead, this relationship is mediated by the firms’ green innovation capabil-
ity. This highlights the importance of innovation as a critical resource and aligns with the Dynamic
Capabilities Framework, which emphasizes that firms must continuously adapt and innovate to maintain
 Cogent Business & Management 7

competitive advantage in rapidly changing environments. In this context, eco-labeling can enhance the
perceived value of new products by signaling their environmental benefits, thereby supporting market
orientation. Kumar et al. (2021) indicated that green brand credibility mediates the impact of green
information quality on green brand evaluation, with consumer knowledge moderating this relationship.
Their findings suggest that the effectiveness of eco-labels in enhancing brand evaluation is contingent
upon the credibility of the claims made. Moreover, they found that credible eco-labels enhance the pro-
cessing of green information, indicating that consumers are more likely to trust and act upon informa-
tion that is supported by recognized eco-labels. This underscores the importance of maintaining high
standards of transparency and accuracy in eco-labeling to build consumer trust. These studies collectively
suggest that while consumers’ understanding of eco-friendly packaging is primarily limited to materials
and market appeal, green marketing and advertising play crucial roles in promoting green purchase
intentions and behaviors. The effectiveness of green market orientation in achieving new product suc-
cess is mediated by green innovation capability. Additionally, green brand credibility and consumer
knowledge are essential in enhancing green brand evaluation and information processing.
Despite the extensive research on eco-labeling and sustainability strategies, several critical gaps remain
in the literature. As highlighted by Nguyen et al. (2020) consumers’ knowledge regarding eco-friendly
packaging is primarily limited to materials and market appeal. More research is needed to explore how
consumer education and awareness initiatives can enhance understanding of eco-labels and their sus-
tainability benefits. While Yaputra et al. (2024) found that eco-packaging positively impacts purchase
intention, further investigation is necessary to understand the specific conditions under which eco-labeling
becomes a decisive factor in consumer purchasing decisions. Research should delve into how different
types of eco-labels and their visibility influence consumer behavior. Borah et al. (2023) indicate that
green market orientation’s effectiveness in achieving new product success is mediated by green innova-
tion capability. However, the interplay between eco-labeling, green innovation, and market success
remains underexplored. More studies are needed to identify how eco-labels can enhance the innovation
processes within firms.
Most existing research predominantly focuses on specific regions or industries, limiting the generaliz-
ability of findings. Understanding how cultural and contextual factors affect the perception and effective-
ness of eco-labels across different markets is essential for developing universally applicable sustainability
strategies. The effects of perceived greenwashing on consumer trust in eco-labels have not been suffi-
ciently addressed in the literature. Future research should examine how consumers differentiate between
genuine eco-labeling efforts and misleading claims, particularly in a market where greenwashing is
prevalent.

2.5. Competitive advantage and sustainability strategies

The integration of sustainability strategies into business operations has increasingly been recognized as
a source of competitive advantage. de Oliveira Lima et al. (2024) found that green marketing serves as
a competitive advantage for organizations by embedding environmental concerns into their market strat-
egies. This approach not only leads to differentiation and operational efficiency but also promotes more
sustainable production processes. The adoption of sustainable practices attracts environmentally con-
scious consumers, ultimately enhancing profitability. This relationship aligns with Porter’s Competitive
Advantage Theory, which posits that firms can achieve superior performance by pursuing cost leadership
or differentiation strategies. Certifications such as ISO 14001 further demonstrate a firm’s commitment to
sustainability, providing a competitive edge by signaling credibility to consumers and stakeholders. Green
marketing not only enhances a company’s image but also engages consumers in sustainable practices,
positioning the organization as socio-environmentally responsible. Kazemi and Soltani (2024) emphasized
that competitive intelligence, as a strategic marketing tool, enables organizations to differentiate them-
selves and become industry leaders in sustainability. This reflects the importance of Resource-Based View
(RBV), which suggests that unique resources and capabilities such as strong green marketing strategies
can be leveraged for competitive advantage.
Metta (2024) highlighted that organizations with a strong internal green marketing orientation expe-
rience market share growth, underscoring the importance of aligning internal operations with strategic
8 H. M. MUSHI

green initiatives. This internal alignment is critical, as it ensures that sustainability efforts are integrated
throughout the organization, enabling firms to optimize market share through effective environmental
marketing. Damayanti and Waskito (2024) found that green competitive advantage significantly affects
purchase intention, while green innovation does not directly influence purchase intentions. Their study
indicates that green marketing orientation significantly impacts green competitive advantage and green
innovation but does not directly influence purchase intention. However, green competitive advantage
mediates the relationship between green marketing orientation and purchase intention. This finding illus-
trates the complex interplay between marketing strategies and consumer behavior, emphasizing the
need for firms to foster competitive advantages through effective green marketing initiatives.
Hammoud et al. (2024) observed that environmentally friendly practices, particularly in the context of
green tourism, can have unintended negative impacts on the natural environment of tourist destinations.
The evolving desires and considerations of tourists, driven by global challenges and adverse environmen-
tal consequences, also influence their choice of tourism destinations. This highlights the need for firms
to balance sustainability initiatives with potential environmental impacts, ensuring that competitive
advantages are sustainable in the long term. Purwanto (2024) reviewed the literature on green innova-
tion strategies, highlighting how both internal and external factors influence the achievement of sustain-
able competitive advantage. The study explored the roles of organizational green learning and green
technological turbulence in implementing green innovation strategies to enhance the company’s sustain-
ability goals and competitive advantage. This underscores the importance of Dynamic Capabilities Theory,
which emphasizes the ability of firms to adapt to changing environments through innovation and learn-
ing. These studies collectively indicate that green marketing and the strategic integration of environmen-
tal concerns not only improve operational efficiency and profitability but also enhance market positioning
and competitiveness. Certifications and internal alignment with green initiatives play crucial roles in
achieving these outcomes. Based on these findings, the following hypothesis can be proposed:
H4: Competitive advantage has a positive significance with sustainability strategies.

Despite the insights provided by existing studies, several critical gaps remain in the literature regard-
ing competitive advantage and sustainability strategies. While the impact of green competitive advan-
tage on purchase intentions is noted Damayanti and Waskito (2024), there is a lack of in-depth exploration
of how different consumer segments perceive and respond to green marketing strategies. Understanding
the nuances of consumer behavior could help firms tailor their sustainability initiatives more effectively.
Although studies like de Oliveira Lima et al. (2024) highlight the importance of integrating sustainability
into business strategies, there is insufficient research on the comprehensive frameworks that can guide
firms in effectively leveraging sustainability for competitive advantage across different industries. The
literature currently lacks an examination of how perceived greenwashing impacts consumer trust and
competitive advantage. Understanding the consequences of misleading environmental claims is essential
for firms striving to maintain credibility and loyalty among consumers. While Kazemi and Soltani (2024)
emphasize competitive intelligence, there is limited research on how external factors such as regulatory
changes, market conditions, and technological advancements affect the sustainability strategies of firms
and their resultant competitive advantages. Most research has been conducted in specific sectors, with
limited focus on how sustainability strategies and competitive advantages manifest in various contexts,
particularly in emerging markets. Broader research could provide insights that are relevant across diverse
industries and geographical locations.

2.6. Moderating effects of green innovation

Recent research has elucidated several critical factors that significantly impact the performance and sus-
tainability of businesses through green innovation. Yin and Zhao (2024) have shown that digital green
value co-creation behavior and digital green network embedding play vital roles in enhancing digital
green innovation performance. This finding emphasizes the importance of leveraging digital technologies
and collaborative networks to foster innovation in the green sector. The Resource-Based View (RBV) sup-
ports this, as it suggests that firms can gain competitive advantage by effectively utilizing unique
 Cogent Business & Management 9

resources, such as digital technologies and collaborative networks. Similarly, Ahmed et al. (2023) high-
lighted that both product and process innovations are pivotal in driving green innovation. This under-
scores the necessity for companies to continually innovate their offerings and operations to achieve
sustainable growth. The Dynamic Capabilities Framework further supports this notion, positing that firms
must develop and adapt their capabilities in response to changing environmental demands to sustain
competitive advantage.
In line with this, Malik et al. (2023) provided empirical evidence indicating that environmental disclo-
sure not only directly enhances firm financial performance but also promotes green innovation, particu-
larly within Chinese firms. This suggests that transparency and accountability in environmental practices
can lead to better financial outcomes and foster a culture of innovation. The Stakeholder Theory under-
scores this relationship, emphasizing that firms must consider the interests of all stakeholders, including
consumers and regulators, to enhance their performance through sustainable practices. The age of a
business also plays a role in benefiting from green innovations. Asad et al. (2024) found that older busi-
nesses gain more from green invention and utility-model innovations compared to younger enterprises.
This indicates that established businesses, with their more extensive experience and resources, have
greater potential to invest in and benefit from green technologies and practices.
Eco-innovation is especially crucial for small and medium-sized enterprises (SMEs), as emphasized by
Achmad et al. (2023). Their research indicates that environmental collaboration significantly improves
both environmental and social outcomes for Indonesian SMEs. This highlights the importance of collab-
orative efforts in achieving sustainable business practices in smaller enterprises, supporting the
Collaborative Advantage Theory, which posits that partnerships can enhance capabilities and perfor-
mance. Qu et al. (2022) revealed that green core competence has a positive impact on green innovation
performance, with green absorptive capacity acting as a mediator. This finding underscores the impor-
tance of developing core competencies in green practices and the ability to absorb and implement new
knowledge to enhance innovation performance. The Absorptive Capacity Theory suggests that a firm’s
ability to recognize the value of new information and integrate it into its operations is crucial for foster-
ing innovation. Additionally, Shahbaz et al. (2024) identified that green intellectual capital significantly
boosts green innovation within SMEs, leading to improved environmental performance. They also found
that green creativity serves as a crucial moderator, suggesting that fostering an environment that pro-
motes creativity is essential for leveraging intellectual capital to achieve environmental goals. This finding
is consistent with Creative Capital Theory, which posits that creative capabilities are vital for innovation
and competitive advantage. Al-Swidi et al. (2024) demonstrated that green technology turbulence posi-
tively moderates the relationship between green entrepreneurial orientation and green innovation. This
suggests that dynamic technological environments can enhance the impact of entrepreneurial orienta-
tion on green innovation, aligning with Innovation Diffusion Theory, which posits that the rate of adop-
tion of new technologies is influenced by the surrounding technological environment.
Employee engagement is another critical factor influencing green innovation. Li et al. (2023) found
that employees’ green initiatives ensure the organization’s sustainable performance through eco-friendly
products. Furthermore, employee green behavior moderates the relationship between green product
innovation and sustainable performance, emphasizing the need for organizations to foster green behav-
ior among employees. This aligns with Social Exchange Theory, which posits that positive interactions
and relationships within the workplace can enhance overall organizational performance. Institutional
pressures also play a significant role in driving corporate green innovation. Wu et al. (2024) showed that
institutional investor ESG activism is more likely to stimulate exploratory green innovation in family firms,
particularly in second-generation family firms. Zhang et al. (2024) found that institutional pressures can
drive corporate green innovation, suggesting that external factors significantly influence firms’ sustain-
ability efforts. However, they also noted that a high entrepreneurial orientation can undermine sustain-
able performance in firms with insufficient green innovation due to increased risk. This highlights the
nuanced relationship between entrepreneurial orientation, innovation, and performance. Lastly, Mittal
and Kaur (2023) indicated the positive and significant mediating role of green innovation (both product
and process) between Green Human Resource Management (GHRM) and environmental performance.
They also found that servant leadership moderates this relationship, thereby strengthening the positive
10 H. M. MUSHI

influence of GHRM on environmental performance. This suggests that leadership styles play a crucial role
in facilitating green practices and enhancing innovation within organizations.
Based on these findings, the following hypothesis can be posed:
H5: Green innovation moderates the relationship between sustainability strategies and firm performance.

Despite the valuable insights from existing studies on the moderating effects of green innovation,
several critical gaps remain in the literature. While several studies highlight the relationship between
green innovation and firm performance, there is insufficient exploration of the specific mechanisms
through which green innovation influences sustainability strategies. For instance, the interplay between
different types of green innovation (product vs. process) and their distinct impacts on performance
needs further investigation. Most existing research predominantly focuses on specific regions or indus-
tries, limiting the generalizability of findings. There is a need for studies that explore how green innova-
tion strategies can be applied across various sectors and geographical contexts, particularly in emerging
markets. The influence of organizational culture on the effectiveness of green innovation initiatives has
not been thoroughly examined. Understanding how cultural factors shape the adoption and implemen-
tation of green practices could provide deeper insights into achieving sustainable performance. While
the importance of employee engagement in promoting green initiatives is recognized, the role of con-
sumer engagement in driving green innovation remains underexplored. Future research should examine
how consumer feedback and involvement can enhance green innovation processes. The relationship
between institutional pressures and green innovation needs more nuanced exploration. Understanding
how varying types of institutional pressures interact with firm-level strategies can provide insights into
enhancing green innovation practices. This study aims to address these gaps by exploring the relation-
ships between green innovation, sustainability strategies, and firm performance, particularly within the
context of the Tanzanian manufacturing sector. By addressing these unexamined areas, this research
seeks to provide a more comprehensive understanding of how green innovation can effectively enhance
sustainability initiatives and improve firm performance.
In Figure 1 the conceptual framework, the independent variables include Brand Trust, Eco-Labeling
Claims, and Competitive Advantage. These variables are hypothesized to influence Sustainability Strategies.
This means that factors like the trust consumers place in a brand, the use of eco-labeling claims, and
the competitive advantage a firm hold are expected to shape or impact the sustainability strategies a
company adopts. Once the Sustainability Strategies are influenced by the independent variables, they, in
turn, have an effect on the Firm Performance. This suggests that the strategies a company employs to
promote sustainability (e.g. green initiatives, responsible practices) are likely to improve or alter the per-
formance of the firm. Furthermore, Green Innovation acts as a moderator in this framework. This means
that Green Innovation influences the strength or weakness of the relationship between Sustainability
Strategies and Firm Performance. For example, if a company has strong green innovation practices, the

Figure 1. Conceptual framework.

 Cogent Business & Management 11

positive effect of sustainability strategies on firm performance might be enhanced. Conversely, if green
innovation is weak or absent, the impact of sustainability strategies on firm performance might be less
significant.

3. Research methodology
3.1. Research design
This journal article presents a quantitative study aimed at exploring the factors influencing firm perfor-
mance. Utilizing a questionnaire-based approach for data collection, the study selected this methodology
for its capability to conduct a detailed analysis of the complex nature of firm performance. The primary
objective of the study was to test the Resource-Based Theory (RBT), which posits that firm performance
hinges on its valuable, rare, inimitable, and non-substitutable (VRIN) resources. Therefore, adopting a
deductive approach, the article verifies existing theoretical frameworks rather than proposing new ones.
The study utilized SMART PLS 4 software for quantitative analysis, distributing questionnaires to
selected private and public manufacturing industries to gather empirical data. Highlighting RBT as the
foundational theory, the article underscores its prevalence and applicability across various manufacturing
industries. For instance, a study by Wasim et al. (2024) documented a significant increase in the use of
RBT within marketing research, emphasizing its role in fields such as international marketing, branding,
innovation, strategic management, and human resources. This theoretical framework supports investiga-
tions at both organizational and individual levels of analysis (Khuwaja et al., 2019).

3.2. Sample selection

Sample enterprises were selected in Tanzania based on robust support from prior studies examining the
relationship between green marketing and firm performance through insights from mid-level and senior
managers. The chosen samples had to meet specific criteria: The companies had to be well-established,
listed enterprises with over 10 years of operational history. They had to belong to the manufacturing
sector, encompassing a variety of types to enable comprehensive and detailed analysis and to enhance
the generalizability of the research. The availability and accessibility of data and materials were essential,
with a preference for publicly listed companies that attract significant social interest. Information about
these companies was gathered from various sources including websites, media, journals, and other out-
lets, ensuring the data’s diversity and authenticity. Consequently, 10 diverse enterprises were selected to
ensure heterogeneity and maximize variance within the sample. These enterprises include Tanzania
Breweries Public Limited Company, Vertigo Trading Company Limited, Tanzania Portland Cement Public
Limited Company, Tanzania Cigarette Public Limited Company, A To Z Textile Mills Limited, Tanga Cement
Public Limited Company, Red Earth Limited, Aviv Tanzania Limited, Lake Cement Limited, and Superdoll
Trailer Manufacture Co. (T) Limited.

3.3. Data sources

This journal article utilizes a blend of primary and secondary data to gather information from various
sources. The Directorate of Research and Postgraduate Studies (DRPS) at Mzumbe University, through its
ethical and research committee, granted ethical approval for this study before data collection com-
menced. Written consent to participate in the survey was also obtained from respondents at the begin-
ning of the survey. The study duly acknowledged all data sources and ensured the confidentiality and
anonymity of the participants. Primary data were collected through questionnaires sent to mid-level and
senior managers. 400 questionnaires were distributed and only 340 were returned and analyzed. The
response rate was 85%. Secondary data were primarily obtained from the official websites and annual
reports of the sample enterprises in Tanzania. The study aims to investigate the relationship between
firm performance (dependent variable) and brand trust, eco-labeling, and competitive advantage (inde-
pendent variables), moderated by green innovation (moderating variable) and mediated by sustainability
12 H. M. MUSHI

strategies. The unit of analysis is the ‘manufacturing industries,’ represented by mid-level and senior man-
agers from both public and private sector manufacturing industries in Tanzania.
The survey method, known for its adaptability to various research settings, was employed to explore
relationships between certain variables. Surveys are particularly effective in testing hypotheses, describ-
ing populations, developing measurement scales, and suggesting methodological improvements in busi-
ness research (Sarstedt et al., 2024). Consequently, a cross-sectional quantitative survey method was
adopted for this study. The survey method is not only swift, economical, and time-saving but also effec-
tive in collecting data from larger sample sizes compared to the interview method (Cheah et al., 2024).
The confidentiality of respondents’ backgrounds was ensured during data collection. The survey method
facilitates data collection and allows researchers to perform statistical analyses, as well as reliability and
validity tests on the instrument, it is feasible for large samples, allows for responses to numerous ques-
tions on a given topic, and is reliable. The collected data were carefully reviewed and organized, with
key data analyzed using SMART PLS 4 to ensure the reliability and authenticity of the research findings.

3.4. Measurement of variables

3.4.1. Firm performance
The measurement of firm performance is primarily based on the research by Abbas et al. (2024). The
scale comprises six items, each examined using a five-point Likert scale. Green innovation is evaluated
through two dimensions: financial profit (fp) and firm fund access (ff ).

3.4.2. Green innovation

The measures of green innovation are primarily derived from the research by Ahmed et al. (2023). The
scale used consists of six items within a single dimension, with an AVE of 0.680. These items include: ‘I
know about the features of green products’, ‘When buying a product, I consider the environmentally
friendly features of the product’, ‘Eco-friendly products are innovative products’, ‘The eco-friendlier the
features in the product, the more innovative it is’, ‘Green features increase the cost of the product, so
you have to pay more because there is a difference between the features of green products and ordinary
products’, and ‘I am happy with environmentally friendly products despite the price increase’.

3.4.3. Sustainability strategies

The measurement of sustainability strategies is primarily informed by the research conducted by Mudrika
et al. (2024). This scale includes six items within a single dimension, with an AVE of 0.858 and Cronbach
Alpha of 0.959. The items are: ‘Use of raw materials (selection of low-impact materials, non-hazardous
materials, non-exhaustible materials, low energy content materials, recycled materials, and recyclable
materials)’, ‘Manufacture to use (optimization of production techniques, alternative production techniques,
fewer production processes, low/clean energy consumption, low generation of waste, and few/clean pro-
duction consumables)’, ‘Application of less/clean packaging, optimized weight and volume of product
and package, efficient transportation and transport mode’, ‘Product use (reduction of the environmental
impact in the user stage, low energy consumption, clean energy source, few consumables needed during
use, clean consumables during use, and no energy/auxiliary material use)’, and ‘Design for end of life
(optimization of end-of-life system, Life-Cycle Assessment on environmental compatibility of packaging
materials, reuse of product, remanufacturing, recycling of materials, and clean incineration like depolym-
erization of PET waste)’.

3.4.4. Brand trust

The measurement of brand trust is based on the findings of Wu and Liu (2022). It consists of six items
within a single dimension, with an AVE of 0.834 and Cronbach Alpha of 0.951. These items are: ‘I feel
more comfortable using environmentally friendly products compared to regular products’, ‘I prefer envi-
ronmentally friendly brand products over regular products’, ‘I prefer to buy brand products that show
concern for customers and the environment through their promotions’, ‘Environmentally friendly brand
 Cogent Business & Management 13

products give a positive message to customers and make customers interested in the product’, ‘Brand
trust can be achieved through green marketing’, ‘I trust green products more than regular products’, and
‘I recommend others to buy environmentally friendly brand products’.

3.4.5. Eco-labeling claims

The measurement of eco-labeling claims is primarily drawn from the research by Moraa et al. (2024). It
consists of six items within a single dimension. The items include: ‘Adopted Eco-Labeling to describe the
information of a product about the environmental impact associated with its use’, ‘Eco-Labeling criteria
consider the general overall life cycle of a product’, ‘Considers Eco-Labeling to be a valuable tool for
purposes of communicating its products’ qualities as well as the firm’s concern for the environment’,
‘Adopted Eco-Labeling to represent a tool for governments, manufacturers, and consumers to address
environmental problems associated with the firm’s products’, ‘Supports the idea of private Eco-Labeling
schemes for soft drink manufacturing firms worldwide’, and ‘Carrying out business process changes to
continuously improve and expand Eco-marketing helps save the environment’.

3.4.6. Competitive advantage

The measurement of competitive advantage is primarily based on the research by Damayanti and Waskito
(2024). It consists of six items within a single dimension, with an AVE of 0.527 and Cronbach Alpha of 0.775.

4. Analysis of variable data

This study employs quantitative data for two main reasons. First, firm performance is a multidimensional
and complex concept, and quantitative data can effectively analyze the role of green innovation in mod-
erating the relationship between firm performance and sustainability strategies, as well as the three inde-
pendent variables influencing firm mechanisms and performance. Second, the context-specific nature of
these variables necessitates a robust understanding, and quantitative research methods can uncover the
strategies by which organizations in various settings or stages strategically adapt based on external and
internal factors to enhance firm performance. Consequently, a manual assessment of green innovation
implementation and firm performance was conducted for 10 enterprises.
A dedicated team was established for the assignment process, consisting of one associate professor,
one lecturer, and four master’s students. The team members, who have a strong theoretical background
in green innovation and firm performance, met weekly to ensure the reliability and validity of the assign-
ments. Throughout the variable assignment process, information from the selected companies was con-
tinuously integrated to finalize the assignment scheme. In the event of any disagreement after completing
the assignments, the team members would collectively review the findings, re-evaluate the study values
by integrating theory and practice, and work towards a consensus. Following these assignment guide-
lines, the team assigned values to each of the 10 companies regarding green innovation implementation,
performing analysis using SMART PLS 4 to ensure objective data on firm performance.

4.1. Outlier detection and removal

Outliers in the dataset were identified using Mahalanobis distance (D2), with 60 observations considered
in total. The degrees of freedom (df ) were calculated to be 59, and the corresponding Chi-square value
for df = 59 at a significance level of p = 0.001 was 98.34. Any Mahalanobis value greater than 98.34 was
regarded as an outlier in this study. To ensure the accuracy of the data analysis and mitigate the poten-
tial adverse effects of these outliers, 49 observations exceeding the threshold were removed.
Consequently, the final dataset for analysis contained 340 observations after eliminating the 49 outli-
ers. The respondent IDs and their corre­ sponding Mahalanobis values are presented in Table 1. A
Mahalanobis distance with a low p-value in the Chi-square distribution suggests the rejection of the null
hypothesis, meaning that these outliers likely do not originate from the same population as the rest of
the responses. Unlike univariate outliers, which typically have a smaller impact on the means, multivari-
ate outliers can have significant effects on the analysis and cannot be easily disregarded.
14 H. M. MUSHI

Table 1. Mahalanobis values.

S/No Respondent ID Mahalanobis (D2)
1 318 98.73607
2 133 99.05426
3 12 99.55641
4 309 99.6877
5 331 99.76038
6 216 101.0468
7 276 101.5121
8 281 101.5185
9 324 101.9362
10 311 102.5013
11 338 103.6567
12 334 105.4622
13 332 105.7325
14 24 105.7848
15 307 106.9043
16 321 107.8355
17 337 108.8629
18 153 109.6693
19 224 110.3265
20 268 110.5763
21 174 111.1745
22 35 111.9567
23 338 112.2388
24 245 112.4989
25 323 112.6332
26 108 113.9988
27 196 114.747
28 21 115.2486
29 308 116.3844
30 334 117.9582
31 340 117.9777
32 343 118.2868
33 104 118.5783
34 173 119.4331
35 150 119.7413
36 366 121.1994
37 312 121.2497
38 333 121.9915
39 76 124.6119
40 321 124.7203
41 316 125.9636
42 326 132.8244
43 239 133.7235
44 34 134.7949
45 272 135.1313
46 313 137.3749
47 252 147.129
48 82 147.8585
49 330 201.4289

Table 2. Descriptive statistics of variables.

Variables Mean Variance Std. Deviation
Firm Performance 3.74 2.753 1.659
Green Innovation 3.30 2.471 1.572
Sustainability Strategies 4.85 3.715 1.928
Brand Trust 3.23 2.646 1.627
Eco-Labeling Claims 4.15 1.866 1.366
Competitive Advantage 4.42 3.265 1.807

In Table 2 the variable Firm Performance had a mean of 3.74 (SD = 1.66), suggesting that respondents
generally rated firm performance positively, though with some variability. Green Innovation showed a
mean of 3.30 (SD = 1.57), indicating a slightly lower average rating, with a similar level of dispersion in
the responses. The highest mean value was observed for Sustainability Strategies (M = 4.85, SD = 1.93),
which indicates that sustainability strategies were perceived more favorably by respondents compared to
other variables. Eco-Labeling Claims had a mean of 4.15 (SD = 1.37), demonstrating relatively high per-
ceptions of eco-labeling, though with lower variance compared to sustainability strategies. Brand Trust
(M = 3.23, SD = 1.63) and Competitive Advantage (M = 4.42, SD = 1.81) showed moderate means, with
 Cogent Business & Management 15

Table 3. Factor loadings.

Competitive Sustainability
Brand trust advantage Eco-labeling claims Green innovation strategies ff fp
bt1 0.919
bt2 0.936
bt3 0.903
bt4 0.928
bt5 0.871
bt6: 0.901
ca 4 0.909
ca 6 0.871
ca1 0.890
ca2 0.908
ca3 0.897
ca5 0.847
elc1 0.844
elc2 0.878
elc3 0.905
elc4 0.812
elc5 0.891
elc6 0.863
ff 1 0.857
ff 2 0.882
ff 4 0.824
ff 5 0.867
ff3 0.890
fp1 0.922
fp2 0.898
fp3 0.948
fp4 0.906
fp5 0.854
gin1 0.768
ginv2 0.814
gnv3 0.872
gnv4 0.861
gnv5 0.855
gnv6 0.825
ss1 0.876
ss5 0.852
In Table 3 bt = brand trust, ca = competitive advantage, elc = eco labelling claims, gnv = green innovation ss = sustainability strategies, gin = green
innovation, fp = financial profit, ff = firm fund access. In Table 1 Factor Loadings range from −1.0 to +1.0 so the threshold was meet.

competitive advantage receiving a somewhat higher rating. The variance for these variables suggests
some degree of heterogeneity in the responses. The descriptive statistics show that the variables related
to sustainability and competitive advantage tend to have higher mean values, while variables like green
innovation and brand trust exhibit more moderate evaluations.

4.2. Measurements model: Lower order constructs (LOC) analysis

The quality of the constructs in the journal article is assessed through the evaluation of the measure-
ment model. This begins with evaluating the factor loadings, followed by establishing construct reliability
and validity.
In Table 4 the Variance Inflation Factor (VIF) statistic is used to evaluate multicollinearity among the
indicators (Cha, 1994). According to Hair and Alamer (2022) multicollinearity is not a significant concern
if the VIF value is below 5. Table 5 in the journal article presents the VIF values for the indicators, show-
ing that each VIF value is below the recommended threshold.
In Table 5 Cronbach’s Alpha values ranged from 0.762 to 0.958, and Composite Reliability statistics
ranged from 0.855 to 0.967. Both of these reliability indicators surpass the necessary threshold of 0.7
(Crocetta et al., 2021), confirming that construct reliability is established.
In Table 6 the AVE value is greater than or equal to the recommended threshold of 0.50, items con-
verge to measure the underlying construct, thus establishing convergent validity (Fornell & Larcker, 1981).
Therefore, convergent validity is confirmed.
In Table 7 bold and Italics represent the square root of AVE. he square root of AVE for each construct
is greater than the correlations between that construct and the others, which meets the Fornell and
Lacker criterion for discriminant validity. Discriminant validity is confirmed because, for each construct,
16 H. M. MUSHI

Table 4. Multicollinearity statistics (VIF) for indicators.

VIF
bt1 3.000
bt2 2.721
bt3 2.172
bt4 3.233
bt5 3.201
bt6: 2.861
ca 4 2.748
ca 6 2.358
ca1 2.712
ca2 2.021
ca3 3.181
ca5 2.159
elc1 3.174
elc2 2.180
elc3 2.112
elc4 2.321
elc5 3.383
elc6 2.940
ff 1 3.205
ff 2 3.209
ff 4 2.230
ff 5 3.295
ff3 3.682
fp1 2.346
fp2 3.692
fp3 2.117
fp4 4.001
fp5 2.844
gin1 2.053
ginv2 2.252
gnv3 2.029
gnv4 2.688
gnv5 2.499
gnv6 3.241
ss1 1.324
ss5 1.324
bt = brand trust, ca = competitive advantage, elc = eco labelling claims, gnv = green innovation ss = sustainability strategies, gin = green innova-
tion, fp = financial profit, ff = firm fund access.

Table 5. Construct reliability analysis (Cronbach alpha and composite reliability).

Cronbach’s alpha Composite reliability (rho_c)
Brand trust 0.958 0.967
Competitive advantage 0.946 0.957
Eco-labeling claims 0.933 0.947
Green innovation 0.915 0.932
Sustainability strategies 0.762 0.855
Firm fund access 0.915 0.937
Financial profit 0.945 0.958

Table 6. Construct convergent validity (AVE).

Average variance extracted (AVE)
Brand trust 0.828
Competitive advantage 0.787
Eco-labeling claims 0.750
Green innovation 0.694
Sustainability strategies 0.747
Firm fund access 0.747
Financial profit 0.821

Table 7. Discriminant validity Follen and Lacker criterion.

Brand trust Eco-labeling claims Sustainability strategies ff fp
Brand trust 0.910
Competitive advantage 0.567
Eco-labeling claims 0.544 0.866
Green innovation 0.680 0.672
Sustainability strategies 0.441 0.623 0.864
Firm fund access 0.397 0.623 0.686 0.864
Financial profit 0.665 0.465 0.594 0.680 0.906
 Cogent Business & Management 17

the square root of AVE (diagonal values) is greater than the correlations between that construct and
other constructs (off-diagonal values). This suggests that the constructs are distinct and measure differ-
ent dimensions, meeting the requirements of the Fornell and Lacker criterion. The table confirms that
the discriminant validity of the constructs is well-established according to the Fornell and Larcker (1981).
This is an important step in ensuring that the constructs in the model are unique and do not overlap
excessively, which strengthens the overall validity of the model.
In Table 8 all items in the table strongly load onto their respective parent constructs rather than onto
other constructs in the study. Therefore, based on the evaluation of cross-loadings, discriminant validity
is achieved (Crocetta et al., 2021).
Table 9 meet the criteria of discriminant validity as for measures of different concepts are distinct or
not correlate too highly. Discriminant Validity is considered acceptable for most constructs as HTMT

Table 8. Discriminant validity – cross loadings.

Brand Competitive Eco-labeling Green Sustainability
trust advantage claims innovation strategies ff fp
bt1 0.919 0.543 0.505 0.615 0.438 0.346 0.589
bt2 0.936 0.558 0.454 0.646 0.432 0.358 0.647
bt3 0.903 0.505 0.531 0.615 0.411 0.375 0.611
bt4 0.928 0.526 0.526 0.651 0.407 0.397 0.630
bt5 0.871 0.421 0.471 0.558 0.304 0.327 0.562
bt6: 0.901 0.520 0.483 0.622 0.392 0.360 0.583
ca 4 0.460 0.909 0.587 0.686 0.622 0.422 0.385
ca 6 0.390 0.871 0.681 0.715 0.601 0.480 0.371
ca1 0.643 0.890 0.688 0.701 0.606 0.510 0.529
ca2 0.623 0.908 0.742 0.719 0.641 0.494 0.488
ca3 0.494 0.897 0.717 0.650 0.597 0.530 0.441
ca5 0.391 0.847 0.535 0.672 0.533 0.404 0.329
elc1 0.567 0.567 0.844 0.535 0.473 0.551 0.449
elc2 0.514 0.653 0.878 0.611 0.527 0.589 0.439
elc3 0.459 0.655 0.905 0.578 0.522 0.545 0.384
elc4 0.419 0.617 0.812 0.500 0.437 0.492 0.342
elc5 0.410 0.673 0.891 0.596 0.557 0.525 0.352
elc6 0.467 0.684 0.863 0.642 0.668 0.537 0.440
ff 1 0.386 0.465 0.572 0.540 0.549 0.857 0.688
ff 2 0.400 0.491 0.599 0.567 0.606 0.882 0.613
ff 4 0.348 0.467 0.513 0.486 0.586 0.824 0.547
ff 5 0.251 0.445 0.493 0.467 0.605 0.867 0.535
ff3 0.334 0.443 0.519 0.481 0.616 0.890 0.566
fp1 0.656 0.472 0.423 0.675 0.604 0.587 0.922
fp2 0.612 0.441 0.429 0.683 0.550 0.596 0.898
fp3 0.608 0.440 0.445 0.700 0.551 0.635 0.948
fp4 0.530 0.369 0.394 0.610 0.484 0.665 0.906
fp5 0.591 0.445 0.413 0.615 0.487 0.610 0.854
gin1 0.424 0.700 0.537 0.768 0.665 0.424 0.385
ginv2 0.447 0.749 0.644 0.814 0.667 0.518 0.450
gnv3 0.689 0.627 0.533 0.872 0.446 0.422 0.738
gnv4 0.676 0.607 0.543 0.861 0.437 0.519 0.755
gnv5 0.661 0.582 0.517 0.855 0.415 0.537 0.762
gnv6 0.615 0.494 0.515 0.825 0.404 0.512 0.716
ss1 0.399 0.486 0.586 0.513 0.876 0.670 0.563
ss5 0.362 0.695 0.488 0.604 0.852 0.511 0.460
bt = brand trust, ca = competitive advantage, elc = eco labelling claims, gnv = green innovation ss = sustainability strategies, gin = green innova-
tion, fp = financial profit, ff = firm fund access.

Table 9. Discriminant validity – HTMT.

Brand Competitive Eco-labeling Green Sustainability
trust advantage claims innovation strategies ff fp
Brand trust
Competitive 0.588
advantage
Eco-labeling claims 0.577 0.786
Green innovation 0.745 0.804 0.702
Sustainability 0.547 0.802 0.777 0.778
strategies
Firm fund access 0.424 0.574 0.675 0.639 0.806
Financial profit 0.695 0.503 0.493 0.813 0.744 0.737
18 H. M. MUSHI

values are mostly below 0.85, indicating that the constructs are distinct and measure different aspects
(Fornell & Larcker, 1981).

4.3. Validating higher order constructs (HOC)

The higher-order constructs were also validated as part of the measurement model assessment. Each
construct was evaluated for reliability and convergent validity. Additionally, as recommended by Sarstedt
et al. (2024) the higher-order constructs were tested for discriminant validity against lower-order con-
structs. The results demonstrated that both reliability and validity for the higher-order constructs were
established. For all constructs, reliability was confirmed with values greater than 0.70, and convergent
validity was confirmed with an AVE greater than 0.50, as shown in the table. Furthermore, discriminant
validity between higher-order and lower-order constructs was assessed. The results using (Fornell &
Larcker, 1981) criterion indicated that the square root of the AVE for each construct was higher than its
correlation with all other constructs. Additionally, the HTMT values were below 0.90, further establishing
discriminant validity (Table 10).
In Table 10 shows the constructs Reliability and Convergent Validity. An AVE value of 0.843 is well
above the threshold of 0.50, indicating that the Firm Performance construct has very good convergent
validity. This means that the indicators used to measure Firm Performance explain a substantial portion
of the variance in the construct. Firm Performance shows: Good internal consistency (Cronbach’s alpha =
0.815), Very strong reliability (Composite reliability = 0.915), Excellent convergent validity (AVE = 0.843).
These results suggest that the Firm Performance construct is well-measured, with its indicators reliably
reflecting the underlying concept of firm performance and explaining a significant amount of the vari-
ance in the construct.
In Table 11 all the Fornell Lacker criterion meet the requirements. The diagonal values represent the
square root of the AVE for each construct. These values show the AVE for each construct, and the values
are all high (close to 1), which suggests that each construct is well-explained by its indicators. The
Fornell-Lacker criterion is met because the diagonal values (AVE) for each construct are greater than the
off-diagonal correlations. This indicates that each construct is distinct from the others, meeting the require-
ments for discriminant validity in higher-order constructs (Fornell & Larcker, 1981).
Table 12 shows discriminant validity. The HTMT criterion is another method used to assess discrimi-
nant validity. It measures the ratio of the correlation between heterotrait pairs (constructs that are the-
oretically distinct) to the correlation between monotrait pairs (same construct). Discriminant validity is
considered adequate when the HTMT value is below 0.85, though some researchers use a threshold of
0.90 for stricter assessment. These values are all below the threshold of 0.85, indicating acceptable dis-
criminant validity for these construct pairs. The HTMT values are all below 0.85, indicating that the con-
structs exhibit good discriminant validity. This supports the findings from Table 9 and further validates
that the constructs are distinct from one another.
Table 13 shows the hypotheses of the study.

Table 10. Higher order construct reliability and convergent validity.

Cronbach’s alpha Composite reliability (rho_c) Average variance extracted (AVE)
Firm Performance 0.815 0.915 0.843

Table 11. Fornell and Larcker, (1981) criterion – higher order discriminant validity.
Competitive Eco-labeling Firm Green Sustainability
Brand trust advantage claims performance innovation strategies
Brand Trust 0.910
Competitive 0.571 0.887
Advantage
Eco-Labeling Claims 0.546 0.746 0.866
Firm Performance 0.587 0.552 0.586 0.918
Green Innovation 0.707 0.723 0.637 0.745 0.841
Sustainability 0.634 0.769 0.679 0.670 0.629 0.821
Strategies
 Cogent Business & Management 19

Table 12. HTMT-higher order discriminant validity.

Competitive Sustainability
Brand trust advantage Eco-labeling claims Firm performance Green innovation strategies
Brand trust
Competitive advantage 0.588
Eco-labeling claims 0.577 0.786
Firm performance 0.652 0.626 0.679
Green innovation 0.745 0.804 0.702 0.846
Sustainability strategies 0.687 0.837 0.747 0.793 0.735
Green innovation x 0.576 0.335 0.393 0.544 0.522 0.487
Sustainability
strategies

Table 13. Direct relationship results.

Standard deviation
Original sample (O) (STDEV) T statistics (|O/STDEV|) P values
H2: Brand Trust -> Sustainability 0.260 0.072 3.605 0.000
Strategies
H4: Competitive Advantage -> 0.496 0.074 6.703 0.000
Sustainability Strategies
H3: Eco-Labeling Claims -> 0.167 0.058 2.849 0.000
Sustainability Strategies
Green Innovation -> Firm 0.498 0.071 7.062 0.000
performance
H1: Sustainability Strategies -> 0.308 0.058 5.269 0.000
Firm performance
Green Innovation x Sustainability −0.073 0.027 2.664 0.008
Strategies -> Firm
performance

4.3.1. Hypotheses testing

H1: There is a significant impact on sustainability strategies and firm performance. The results revealed that
that sustainability strategies have significant effect with firm performance:

=( B 0= 269 , p 0.000 )
.308 , t 5.=

H2: There is a significant impact on brand trust and sustainability strategies. The results revealed that that
brand trust has significant effect with sustainability strategies:

=( B 0= 605, p 0.000 )
.260 , t 3.=

H3: There is a significant impact on eco-labeling claims and sustainability strategies. The results revealed that
that eco-labeling claims have significant effect with sustainability strategies:

=( B 0= 849, p 0.000 )
.167, t 2.=

H4: There is a significant impact on competitive advantage and sustainability strategies. The results revealed
that that competitive advantage has e significant effect with sustainability strategies:

=( B 0= 703, p 0.000 )
.496 , t 6.=

Table 14 shows the moderation effects of the study.

H5: The moderation effects between sustainability strategies and firm performance were not supported the
model reveals that:

(B =
−0.073, t = 0.008 )
2.664 , p =
20 H. M. MUSHI

4.3.2. Structural model

The next step in structural equation modeling is to assess the hypothesized relationships to substantiate
the proposed hypotheses.
Figure 2 shows the structural model which also shows all independents, dependent variable, mediator
and moderator of the study.

Table 14. Moderation effects.

Original Sample Standard deviation T statistics (|O/
sample (O) mean (M) (STDEV) STDEV|) P values
Brand Trust -> Firm 0.080 0.081 0.030 2.703 0.007
performance
Brand Trust -> Sustainability 0.260 0.260 0.072 3.605 0.000
Strategies
Competitive Advantage -> 0.153 0.151 0.033 4.687 0.000
Firm performance
Competitive Advantage -> 0.496 0.494 0.074 6.703 0.000
Sustainability Strategies
Eco-Labeling Claims -> Firm 0.051 0.052 0.021 2.454 0.014
performance
Eco-Labeling Claims -> 0.167 0.170 0.058 2.849 0.004
Sustainability Strategies
Green Innovation -> Firm 0.498 0.500 0.071 7.062 0.000
performance
Sustainability Strategies -> 0.308 0.308 0.058 5.269 0.000
Firm performance
H5: Green Innovation x −0.073 −0.071 0.027 2.664 0.008
Sustainability Strategies
-> Firm performance

Figure 2. Structural model.

 Cogent Business & Management 21

5. Discussion
This study investigates the moderating role of green innovation in the relationship between sustainability
strategies and firm performance in Tanzania’s manufacturing sector. The findings reveal a significant pos-
itive relationship between sustainability strategies and firm performance, aligning with previous studies
that emphasize the benefits of adopting sustainable practices (Alam et al., 2024; Soomro et al., 2024).
The direct impact of green innovation on firm performance is confirmed, but its moderating effect in the
relationship between sustainability strategies and firm performance is found to be insignificant. This
result presents a unique insight into the dynamics of green innovation in emerging markets, particularly
within the Tanzanian context.

5.1. Comparison with previous studies

5.1.1. Sustainability strategies and firm performance
Our findings support previous studies that highlight the positive impact of sustainability strategies on
firm performance. For instance, Ahmad et al. (2020) found that green marketing and sustainability strat-
egies significantly enhance marketing performance. Similarly, Hudaibiya and Raza (2024) argue that sus-
tainability strategies positively influence firm performance by improving operational efficiencies and
brand reputation. These studies highlight the importance of adopting sustainability practices for gaining
a competitive advantage and improving overall performance. Our results further confirm these assertions,
demonstrating that firms in Tanzania benefit from adopting comprehensive sustainability strategies.
However, Soomro et al. (2024) and Yaputra et al. (2024) caution that the success of these strategies is
contingent on various external factors, such as market conditions and regulatory frameworks. Our study
further reinforces this notion, highlighting the contextual differences that might explain the mixed results
found in some other regions. For example, while firms in developed countries may experience significant
financial gains from sustainability strategies due to consumer awareness and stringent regulations, firms
in Tanzania may face challenges in translating these strategies into immediate financial benefits.

5.1.2. Green innovation and firm performance

The direct positive impact of green innovation on firm performance found in this study is consistent with
research by Hudaibiya and Raza (2024) and Isac et al. (2024), which argue that green innovations can
improve operational efficiency and create a competitive edge. These studies suggest that green innova-
tions reduce resource consumption, enhance brand image, and attract environmentally conscious con-
sumers, which ultimately leads to improved financial outcomes. Our findings contribute to this literature
by confirming that green innovation itself plays a crucial role in driving firm performance. However, in
contrast to some studies that emphasize the moderating role of green innovation (Boons & Lüdeke-Freund,
2013), our results reveal that green innovation does not significantly moderate the relationship between
sustainability strategies and firm performance. This finding is somewhat surprising, as Pham et al. (2024)
and Salguero Núñez et al. (2024) suggest that green innovation amplifies the benefits of sustainability
strategies by introducing new technologies and practices that enhance both environmental and eco-
nomic performance. The lack of a moderating effect in this study may be explained by the unique chal-
lenges faced by firms in Tanzania, such as limited access to advanced green technologies and the high
costs associated with their implementation. These challenges could reduce the potential moderating
effect of green innovation, particularly in a developing market context.

5.1.3. Implications of energy consumption

The study also addresses the critical issue of energy consumption in sustainability strategies. Pham et al.
(2024) found that energy consumption, particularly from non-renewable sources, negatively impacts firm
profitability. Similarly, Sitompul et al. (2024) highlighted that energy efficiency improvements can significantly
enhance firm performance. While our study did not directly investigate energy consumption, it aligns with
these findings by underscoring the importance of green practices, such as energy-efficient technologies, in
enhancing sustainability strategies. Firms that invest in energy-efficient practices may see long-term cost
savings and performance improvements, despite the initial high costs associated with such investments.
22 H. M. MUSHI

5.2. The role of green innovation in emerging markets

The findings of this study contribute to the growing body of literature on green innovation in emerging
markets. While many studies focus on developed countries, this research sheds light on the Tanzanian
context, where firms may face unique barriers to the adoption of green innovation, such as limited
access to capital, technological infrastructure, and skilled labor. Our results suggest that while green
innovation can directly enhance firm performance, its role in moderating the relationship between sus-
tainability strategies and firm performance is less pronounced in Tanzania compared to more developed
economies. This discrepancy can be attributed to the different stages of green innovation adoption in
developing countries. According to Simionescu et al. (2020) and Westerman et al. (2020), developing
countries are still in the early stages of adopting energy-efficient and eco-friendly technologies, which
could explain why green innovation does not yet fully enhance the impact of sustainability strategies in
Tanzania. As green technologies become more accessible and affordable, their moderating effect may
become more pronounced in the future.

5.3. Practical implications for policy and practice

The study’s findings offer important implications for both industry practitioners and policymakers in
Tanzania. For businesses, the results suggest that adopting sustainability strategies can lead to
improved firm performance, even without a significant moderating effect from green innovation.
Firms should focus on implementing sustainable practices that reduce waste, improve energy effi-
ciency, and promote eco-friendly products, as these can improve operational efficiency and market
positioning. For policymakers, the study underscores the need for greater support for green innova-
tion. Providing incentives for firms to invest in green technologies, such as subsidies for energy-efficient
equipment or tax breaks for sustainable practices, could help enhance the moderating effect of green
innovation. Additionally, fostering an ecosystem of innovation through partnerships between private
and public sectors can help overcome the barriers to green technology adoption faced by firms in
Tanzania.

5.4. Limitations and future research directions

While this study provides valuable insights, it is not without limitations. First, the sample size is rela-
tively small, limited to 10 firms in Tanzania, which may not be fully representative of the broader man-
ufacturing sector. Future studies could expand the sample to include more firms from different industries
or regions to increase the generalizability of the findings. Second, the study focuses on the Tanzanian
context, which may differ from other emerging markets due to unique economic, political, and cultural
factors. Future research could examine green innovation and sustainability strategies in other develop-
ing countries to compare the moderating effects of green innovation across different contexts. Lastly,
future studies could explore additional variables that may influence the relationship between sustain-
ability strategies, green innovation, and firm performance, such as consumer behavior, market condi-
tions, and regulatory frameworks. Investigating these factors could provide a more comprehensive
understanding of the dynamics at play and help refine strategies for enhancing firm performance
through sustainability.

Non-author contributors
I acknowledged individuals of a study’s data and conclusions.

SMART PLS 4
This article used SMART PLS 4 to analyze data and the tool has a Copyright.
 Cogent Business & Management 23

Disclosure statement
No potential competing interest was reported by the authors.

Funding
I declare this work has no sponsor or fund received.

About the author

Dr. Hellena Mohamedy Mushi (PhD) is a Tanzanian Senior Lecturer in Marketing at Mzumbe University. She holds
Post Doctorial in Investments from COMSATS University Pakistan in 2023. She holds also a PhD in Marketing with a
focus on Consumer Behavior and Market Analysis from Universiti Utara Malaysia (UUM), completed in 2017. Her
doctoral research explored factors influencing consumer behavior in purchasing pirated music CDs in Tanzania. With
research interests spanning marketing theory, consumer behavior, quantitative impact assessment, and market-based
research, Dr. Mushi has published extensively in both local and international journals. She has held various academic
and managerial roles at Mzumbe University, showcasing a rich blend of teaching, research, and community engage-
ment experience. As of January 2023, Dr. Mushi serves as the Head of the Department of Research, Consultancy,
Short Courses, and Outreach Activities at Mzumbe University Mbeya Campus College. She excels in teaching a range
of business and marketing courses and actively supervises Master’s students in their research endeavors. Fluent in
English and Kiswahili, Dr. Mushi remains dedicated to advancing marketing knowledge and contributing to Tanzania’s
higher education landscape. Her certifications and extensive research portfolio underscore her commitment and
expertise in the academic sphere.

ORCID
Hellena Mohamedy Mushi http://orcid.org/0000-0003-3377-1197

Data availability statement

Data available on request from the author.

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