The Effect of Green Purchasing Practices on Financial Performance under the Mediating Role of Environmental Performance: Evidence from Türkiye

Abstract

This study aims to examine the impact of green purchasing practices (GPP) on the financial performance (FP) of companies and the mediating role of environmental performance (EP) in the context of Türkiye, a developing country. GPP are represented by their all-related activities, such as green supplier selection (GSS), green supplier development (GSD), green supplier collaboration (GSC), and green supplier evaluation (GSE). Although much attention has been paid to GPP and their impact on FP in recent years, empirical evidence is still needed, particularly for companies in developing countries. For this purpose, this study explores the effect of GPP on FP and the mediating role of EP with survey data obtained from 455 companies in Türkiye. The findings reveal that GPP, in general, make a positive contribution to both the EP and FP of companies in Türkiye. However, the two GPP sub activities, GSD and GSE, do not have a significant effect on EP, contrary to our expectation. In addition, it is found that EP causes a significant increase in FP and plays a partial mediating role in the effect of GPP on FP. The insight gained from this study is that the increase in FP brought directly by GPP and indirectly through the increase in EP may offset the additional cost posed by GPP. In fact, this is an important finding in terms of overcoming the obstacles encountered in the transition to GPP in developing countries.