Green marketing and perceived SME profitability: the meditating effect of green purchase behaviour

PurposeThe concept of green marketing has emerged as a panacea for reducing the negative impact of business activities on the environment. Many studies have investigated the impact of green marketing on green purchase behavior, sustainable competitive advantage, etc., without much being explored about how green marketing translates into firms' profitability, particularly among small and medium enterprises (SMEs) in emerging markets. This study, therefore, investigates the influence of green marketing on perceived SME profitability alongside the mediating effect of green purchase behaviour.Design/methodology/approachA quantitative research approach was adopted, where a cross-sectional survey design was employed to collect the data from 400 SME owners/managers in Ghana. Using Statistical Package for Social Science, the data were analysed through descriptive statistics, correlation and macro Process version 3.4.1.FindingsThe results reveal that the dimensions (environmental knowledge, environmental concern, green price, green advertising and green product) of green marketing distinctively have significant positive effect on perceived SME profitability as well as green purchase behaviour. Furthermore, green purchase behaviour significantly mediates the relationship between green marketing dimensions and perceived SME profitability such that the indirect effects are far greater than the direct effects.Practical implicationsSME managers should include the green marketing dimensions in their business plans and develop strategies to implement them in order to enhance green purchase behaviour of their products and services which will, in turn, lead to profitability.Originality/valueIn augmenting green marketing literature, this study provides an insight into how SMEs can leverage on the distinct dimensions of green marketing to influence green purchase behaviour and profitability in an emerging market context.