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Article

Achieving Corporate Sustainability through Green Human Resource Management: The Role of CSR in the Banking Industry of a Developing Country

by
Ahmad Abo Yahya
1 and
Pouya Zargar
2,*
1
Department of Business Administration, Cyprus International University, Mersin 10, Lefkosa 99010, Turkey
2
Department of Business Management, Girne American University, Mersin 10, Girne 99300, Turkey
*
Author to whom correspondence should be addressed.
Sustainability 2023, 15(14), 10834; https://doi.org/10.3390/su151410834
Submission received: 1 June 2023 / Revised: 30 June 2023 / Accepted: 6 July 2023 / Published: 10 July 2023
(This article belongs to the Special Issue Green Engineering and Sustainable Development in Production and Resource Management)
Browse Figure
Review Reports Versions Notes

Abstract

:
Green human resource management (GHRM) and green innovation are highly important aspects for firms to achieve corporate sustainability, particularly in developing countries. This study explores the effect of GHRM and green innovation on obtaining corporate sustainability through the mediating effect of Corporate Social Responsibility (CSR). A quantitative approach using self-administered surveys is deployed, where a total of 192 data points were obtained from bank managers in Beirut. Partial Least Squares-Structural Equation Modeling (PLS-SEM) is used for analyzing data in Smart-PLS version 3. The findings suggest that both GHRM and green innovation have positive impacts on corporate sustainability. Furthermore, the mediating effect of CSR activities has been supported in both relationships between GHRM and corporate sustainability and between green innovation and corporate sustainability. These results provide both managerial and theoretical implications that can be beneficial for scholars and practitioners alike.

1. Introduction

Corporate Social Responsibility (hereafter CSR) refers to various dimensions that corporations address to aid societies and improve their image and performance [1,2]. Various aspects are involved in CSR, including, but not limited to, the ethical conduct of the firm, the wellbeing of employees, environmental considerations, green human resource management (GHRM), the economy, and leadership. It has been noted that HRM initiatives implemented adequately in a firm can yield positive outcomes such as improved company image [1,3] and corporate sustainability [4,5]. In addition, employees’ perceptions (e.g., commitment and satisfaction) towards the firm can be improved when CSR and HRM initiatives are aligned and enforced, which can aid corporations in facing the challenges in societies and particularly developing countries [6]. Through the mediating effect of CSR, the current research focuses on the effects of both GHRM and green innovation on achieving corporate sustainability.
Corporate sustainability refers to the strategies and practices undertaken by firms that address long-term benefits and value for all stakeholders, including shareholders, staff, customers, and the society in which the firm is conducting business [2,5,6]. CSR is highly effective for obtaining corporate sustainability and establishing sustainable links with stakeholders and society [4]. Three aspects of sustainability are social, economic, and environmental considerations, which are derived from the Triple Bottom Line (TBL) framework [7]. Through CSR initiatives, firms can improve their overall image, create value, enhance their market position, and gain a better reputation among customers. This, in turn, can stabilize the performance of the firm and increase their financial revenue in a sustainable manner [8]. For banks and financial institutions, such outcomes are crucial to maintaining their competitive edge and improving business functions through environmental, social, and governance standards [9]. Corporate sustainability entails strategic decisions made at the corporation level to ensure long-term needs are uncompromised [10]. This research argues that implementing GHRM while enabling an atmosphere for green innovation alongside CSR initiatives can yield corporate sustainability as it can ensure better relationships with stakeholders, an improved reputation, and financial stability in the long run.
GHRM is described as initiatives undertaken by the human resources department that are focused on the environmental, economic, and social performance of employees, which in turn can yield sustainable outcomes for the firm [10,11]. GHRM carries a major role in issuing and implementing green policies for firms while encouraging employees towards green behavior to obtain sustainable performance [1] within the context of CSR [12]. GHRM practices are tools for enabling CSR within the firm to have a positive impact on society as well as the environment. This further ensures profit-making for the company through strategic decision-making that leads to corporate sustainability. GHRM is the focus of this research regarding its effects on corporate sustainability among banks in Lebanon. Similarly, the current research includes green innovation as a means for enhancing the CSR efforts of firms while contributing to achieving corporate sustainability [13]. green innovation entails strategies and actions in the firm that are driven by awareness of environmental impacts [14]. When the workplace is aligned with the concept of sustainability, employees are more likely to engage in behaviors that are pro-environmental. This atmosphere is promoted via strategies and practices implemented by the firm [10,14]. This research investigates the role of GHRM and green innovation on corporate sustainability through the mediating effect of CSR initiatives.
While the literature suggests that individual characteristics, the culture of the firm, and the emphasis on employees are influential in determining firm performance (i.e., sustainability) [15], the concept of GHRM and green innovation incorporate the wellbeing of employees as well as the atmosphere of the workplace. In addition, CSR initiatives are embedded in the current model to emphasize strategies undertaken by firms to improve their performance in a sustainable manner. The current study justifies its conduct based on areas in the literature that have been reported by scholars to need further exploration, as noted in the gaps in this context. These are as follows:
  • GHRM and its role in firms are yet to be fully understood due to challenges in environmental, and societal aspects [1,12];
  • The connection among GHRM practices and CSR initiatives and their outcome regarding corporate sustainability is not thoroughly examined [4,7,13];
  • Developing countries and especially those in the Middle East (i.e., Lebanon) lack empirical evidence in this context when compared to their Western and/or Eastern counterparts [6,10]; and
  • This study explores the mediating effect of CSR on the relationship between GHRM and corporate sustainability as well as green innovation and corporate sustainability, which further develops the existing models.
In light of what was mentioned, examining the mediating role of CSR will enhance the context of the current model as it entails various strategies undertaken by corporations (see Figure 1). In addition, understanding the impact of green innovation on corporate sustainability through CSR’s mediating effect will further contribute to the theoretical and practical implications drawn from current results. To achieve the aforementioned aims, a theoretical setting is established that supports the context of the study (see Section 2) while enabling the researchers to set a framework for the conduct of this research (see Section 4). Accordingly, this research poses several questions that are listed below:
  • How can GHRM contribute to corporate sustainability in the banking industry?
  • Does green innovation enhance corporate sustainability in the banking sector of Lebanon?
  • Does CSR have a mediating effect on the relationship between GHRM and corporate sustainability? And
  • Does CSR mediate the relationship between green innovation and corporate sustainability?
Due to the scarcity of studies that investigate GHRM, corporate sustainability, and green innovation among Middle Eastern countries [16], and the fact that the first researcher is a local of Lebanon, he was provided access to the necessary contacts to obtain data. Having viable networks with banks in Beirut has enabled the collection of appropriate data from several managers, who provided their responses regarding the variables of the current theoretical model. Lebanon is ranked 142nd in the environmental performance index (EPI) [17], which further drives the conduct of this research as the results of such investigations can benefit practitioners in the country as they develop towards sustainability, particularly in the banking sector. The results of this research can be beneficial for scholars interested in GHRM and its role in organizations in the Middle East while contributing to the application and understanding of the theories used in the research. Furthermore, practitioners in the Lebanese banking sector and, by extension, the banking industry of the Middle East region can benefit from current results through comprehension of the relationships among GHRM, green innovation, CSR, and their outcomes (i.e., corporate sustainability), which can contribute to their decision-making regarding strategies necessary for long-term outcomes.
The following sections provide detailed information regarding the theoretical setting of the research and the hypotheses that are derived accordingly. The methodology, design, and framework of the research are described, and data analysis and results are presented. The research is concluded through discussions and conclusions that are compared with the most recent and/or most relevant findings in the extant literature. Lastly, limitations that have hindered the conduct of this research are highlighted and have led to several recommendations for future studies.

2. Theoretical Premise

Following the aims and context of the research, which were mentioned in the previous section, relevant theories have been embedded to establish the framework of the study. Accordingly, the theories that are included are: (a) institutional theory; (b) Ability, Motivation, and Opportunity theory (AMO); and (c) competitive advantage theory. These theories have enabled the researchers to develop the setting that is used for this research as they incorporate the core concepts of GHRM, green innovation, CSR, and corporate sustainability. In this sense, institutional theory addresses achieving a legitimate image within the corporation to maintain resilience when facing market, regulatory, or other (e.g., social) challenges [14,18]. In the case of the banking industry in Lebanon and the context of this research, institutional theory explains that corporations should focus on their internal image (i.e., among employees) to improve their legitimacy. This, in turn, can act as a tool for communicating with society and establishing agile strategies for external challenges. These challenges can be strategically approached through the implementation of sustainable initiatives that entail the three pillars of the Triple Bottom Line (i.e., economic, social, and environmental). There have been reports in the literature in favor of the positive impact of GHRM alongside green innovation on firm performance, particularly when the corporation implements ESG standards (e.g., [14,18,19,20]). Upon the noted premise of institutional theory, the corporations from which data were collected had to fit within this scope as a criterion.
In addition to what was mentioned above, Ability, Motivation, Opportunity theory (AMO) [21] relates to the context of this research. AMO specifically addresses the core functions of the HRM department with a green agenda that ensures sustainable outcomes for the firm [1,14,19,21]. These can include enhanced green, innovative, and financial performance while improving the relationship with employees at the organization. It is therefore theorized in this study that corporate sustainability, which is obtaining financial, environmental, and social competitiveness in the long-term, is possible under the premise of AMO [1,14,22]. GHRM is categorized into recruitment, training, performance, rewards, and involvement [22], and AMO assumes an array of elements in corporations, including but not limited to leadership, developmental opportunities, and the psychological and physical well-being of employees [23,24]. This research investigates different green initiatives in the banking sector of Beirut at the corporate level. The perspective of leaders and/or managers is measured in terms of GHRM, CSR, green innovation, and corporate sustainability. Creating value as a corporation is also addressed in AMO, which further strengthens the context of this study [25]. In the same context, GHRM and CSR initiatives are both better comprehended within the premises of AMO [1,26]. CSR can play a major role in improving the performance of employees and the organization across various industries (e.g., [3,19]). The current research applies AMO to the banking sector in general and specifically to Beirut, Lebanon.
While other theories are noted in the extant literature (e.g., signaling, stakeholder, legitimacy, and leadership theories) (e.g., [4,27,28,29]), institutional theory, AMO, and competitive advantage theory provide the necessary support for the context of this study. It can also be considered that through establishing CSR and GHRM initiatives, both legitimacy and stakeholders’ needs are enhanced in a sustainable manner [4]. More specifically, the institutional theory provides further operationalization space regarding the effects on society and employees. This can be relatively significant for Beirut with its various communities and slow development after the pandemic [30]. Furthermore, for managers in corporations, it is essential that HRM activities are aligned with organizational goals, which highlights the importance of sustainable strategies [4,14,31].
Competitive advantage theory [32] incorporates all aspects that are linked to competitiveness and the extent of rivalry in the market. Whether local or international, corporations endeavor to gain a better grasp on the market through their strategies (i.e., GHRM). In this respect, green innovation (GI) can contribute through the implementation of initiatives and tactics that focus on improving the workplace [33]. In turn, employees’ performance is enhanced, which manifests in sustainable benefits for the organization [1,4,14,31]. Within the same scope, GHRM practices include policies that are green-centered and are designed to improve employee awareness, which of employees that fruits in enhanced corporate performance [34]. The competitive advantage theory suggests the production of services and/or goods of high quality with the potential for high revenue rates. As natural resources are finite and low labor costs can be immoral [35], investments in human capital and sustainable practices are key factors in determining corporate sustainability. Having GHRM dimensions implemented in the strategic planning and decision-making of corporations can contribute to their efforts towards sustainable outcomes (i.e., corporate sustainability).
The following section discusses hypotheses from this research that are driven by the combined premises of institutional theory, AMO theory, and competitive advantage theory. Furthermore, the theoretical model of the research (see Figure 1) is designed in accordance with the theoretical premise that was described. Corporate sustainability in the status of the global market (considering the effects of the pandemic) is essential for corporations if they are to continue their business and maintain/increase their market share in the long run. Therefore, this research examines GHRM and Green Initiatives as imperative elements for implementing holistic green strategies while considering economic aspects for the firm alongside social and environmental ones. This research argues that CSR activities can have a significant role in determining the outcomes of such strategies.

3. Hypothesis Development

3.1. GHRM and Corporate Sustainability

Referring to the AMO theory [26], GHRM dimensions (i.e., recruitment, training and development, retain/performance, rewards, and involvement) provide an integrated setting for the company towards their employees, which positively impacts their engagement in green behavior and other enhanced performance outcomes [15,36]. Both institutional theory and AMO in studies that examined GHRM in this context show a high degree of importance regarding HRM initiatives. Across all its dimensions, GHRM should reflect the abilities and skills of recruited individuals (i.e., recruitment and training), meet the needs for motivating them (i.e., working conditions, support, and rewards), and provide opportunities for development (i.e., personal and professional) [15,36]. In this sense, Environmental, Social, and Governance (ESG) initiatives can enhance value creation for the corporation [37]. In the context of this research, ESG standards can be the framework necessary for corporations to enhance their internal strategies towards sustainable outcomes (e.g., performance and financial returns) [37]. While corporate governance ensures compliance with standards, regulations, and policies, environmental and social aspects of ESG align the efforts of leadership and HRM departments in an integrated manner that entails the corporation [9,37].
Implementing GHRM enables firms to open pathways for improving performance via strategies that promote sustainable practices and encourage positive behavior while sustaining wellbeing [1,14,15,26]. Dimensions of GHRM contribute to the implementation of sustainable practices for the firm that ensure positive long-term outcomes (i.e., corporate sustainability) [36,38]. Rewards, compensations, and development plans boost employees’ motivation and involvement in green behaviors, further benefiting the individual, the firm, and society [26,31,39]. As the funnels of GHRM from recruitment to development and sustaining green-oriented individuals in the firm work in ubiquity, processes, functions, strategies, and actions manifest in a sustainable manner that promises highly desirable outcomes such as employee and financial performance. Based on these arguments, a hypothesis is merged in the current context as follows:
Hypothesis 1.
GHRM and its dimensions have a positive influence on corporate sustainability.

3.2. Green Innovation and Corporate Sustainability

Green innovation (hereafter GI) contains products/services and processes/actions of the firm that are also aligned with other sustainable strategies deployed at the organizational level (i.e., GHRM policies) [4,14,40]. The strategies and actions undertaken by the firm can include green and otherwise innovative practices to improve the workplace for employees and positively influence their wellbeing (e.g., organizational citizenship behavior) [39]. In addition, the degree of commitment of the firm towards green products and/or services is among the strategies that can enhance the workplace by directing employees towards sustainable behavior [1,10,14,31]. Referring to the concept of competitive advantage theory, green innovation can be a major element in determining improved competitiveness as employees’ performance is focused upon [32,33]. These yield various streams of sustainable outcomes for the company that provide an edge within the market, especially when rivalry is high (i.e., in the banking sector) [41,42]. Furthermore, institutional theory ensures that green policies are legitimately implemented in the firm and strategies are developed to achieve sustainable goals that are aligned to the TBL by creating revenue, enhancing the reputation, and improving green performance [14,18,43]. In a similar scope, AMO theory supports the influence of GI on corporate sustainability as it directs HRM activities towards green and innovative approaches that can gain financial benefits for the organization. Furthermore, through green strategies and products/services, the company can improve its image for its current and future employees [1,19,21,44]. Corporate sustainability can be achieved through improved social, financial, and environmental abilities of the firm in the long term. This is since GI is a nexus of improved performance as it contributes to the competence of firms [45,46]. Following what was mentioned, the following hypothesis is developed:
Hypothesis 2.
Green innovation and its dimensions have a positive impact on corporate sustainability.

3.3. CSR Mediating the GHRM-CS Relationship

From the perspective of competitive advantage theory, Corporate Social Responsibility (CSR), which integrates leadership, HRM, and marketing departments, enables organizations to improve interactions with stakeholders both internally (e.g., employees) and externally (e.g., customers) [4,6,9,47]. CSR initiatives can aid the corporation in its endeavors towards sustainable outcomes as they are unique to the firm and its objectives and thus are not easily imitated [9,47,48]. Corporate sustainability (CS) is embedded in the strategies of the firm and is reflected in its goals and missions. It develops relationships with stakeholders at the institutional level and builds upon long-term interactions [6,49]. These can also manifest in the processes and dimensions of GHRM practices and policies [50]. When corporations genuinely implement ESG practices in this context, it is more likely that sustainable financial performance can be achieved [9]. Through CSR initiatives, a corporation can demonstrate its commitment to society and the environment while creating economic value [1,51]. However, the literature calls for further investigation regarding the role of CSR in the context of GHRM and CS, and particularly regarding the banking sector [1,49,51,52]. This further aligns with the premises of AMO theory, as CSR activities have a positive impact on the image of the company from the perspective of its employees [53]. The literature supports the argument that CSR can be a positive influence on a company’s efforts towards obtaining corporate sustainability. In this sense, the current research presents the following hypothesis:
Hypothesis 3.
CSR mediates the relationship between GHRM and corporate sustainability.

3.4. CSR Mediating Green Innovation—Corporate Sustainability Relationship

CSR practices are generally designed to aid the company in building its reputation and/or improving its image, which can translate into improved performance [1,2,5]. Alignment of managerial decisions and HRM activities (i.e., GHRM) unifies the effectiveness of practices implemented in the firm. The ultimate result is achieving desired outcomes for the corporation (i.e., corporate sustainability). In this sense, CSR and GI can complement each other through innovative approaches to products and services and the actions of the organization [4,54,55]. Furthermore, as GI emphasizes high-quality products which also fit within the context of competitive advantage theory, CSR activities can be adjusted to match goals that are strategically set [56]. Employees’ perceptions of the company can be improved via GI [5,56,57]. CSR activities that are well developed (i.e., actions and products) can be crucial for improving the quality of the workplace for employees, increasing their awareness, and potentially fostering higher performance [3,57,58]. The previously noted arguments also fit in the context of AMO theory, which incorporates motivational aspects and opportunities that can be made available for employees. In light of what was noted, the following hypothesis is formed:
Hypothesis 4.
CSR mediates the relationship between green innovation and corporate sustainability.

4. Methodology

4.1. Sampling and Data Procedures

A quantitative approach is employed in this study, which is conducted through a self-administered survey. The questions included in the survey are derived from the most recent and/or most relevant and available resources in the literature (see Section 4.2). Based on the proposed theoretical model (see Figure 1) and the theoretical framework of the study (see Section 2), managers from two banks have been selected to participate in the survey. The banks have more than fifty branches across the country, with a minimum of ten branches in Beirut. Furthermore, having GHRM practices and premises of institutional theory in the corporation were other criteria set to select the appropriate banks for the research. The sample size was calculated with G*power software version 3.1 with 90% statistical power, an effect size of 0.01, and 3 arrows towards the dependent variable, which resulted in N = 164. Additionally, the recommendations of experts in statistics were followed [59], which implies that any sample above 185 should suffice to achieve the desired statistical significance. A total of 230 surveys were distributed, of which 192 were qualified for final analysis (several responses were eliminated in the data treatment process due to incomplete answers).
The first researcher used personal and professional contacts to establish the first stage of data collection from managers through a purposive sampling method. This was followed by the snowball sampling method, through which participants introduced other managers (ranging from top to mid- and low-level) who participated in the survey based on their willingness, availability, and consent. No unnecessary information (i.e., personal) was gathered to further encourage participation and lower possible biases. The survey was translated into Arabic to improve understandability for participants and back translated into English using a second translator to minimize errors and lower common method bias [60]. A pilot test was conducted with 15 managers from a third corporation, for which the data was not included in the final analysis. Participants were informed of the purpose and scope of the research and were given the opportunity to withdraw at any point. Data confidentiality and anonymity were provided to all participants, and written consent was obtained. Any identifiable data was deleted after transformation in statistical software. As a local, the first researcher was able to increase the response rate (83.47%) by explaining the context of the study while the second researcher treated and analyzed the data.

4.2. Measurements

To measure GHRM and its dimensions, three sources were used that also had a similar scope within the perspective of AMO theory. All dimensions of GHRM were included (i.e., recruitment, training and development, rewards and compensations, performance, and involvement) [15,22,61] within the categories of abilities, motivation, and opportunities. A total of nine items were included for measuring green human resource management (GHRM) (see Appendix A). Similarly, green innovation (GI) is measured based on its two dimensions (i.e., processes and products/services), which were derived from a reliable and commonly used scale in the literature [62]. A total of six questions were included in the survey (see Appendix A). Corporate Social Responsibility (CSR) was measured through a scale that consists of five questions in the survey, as attached in Appendix A [63]. Lastly, corporate sustainability (CS) was measured via three questions derived from a reliable source [64] that include several important elements (e.g., strategic management, social management, and environmental management). All questions were measured with a five-item Likert scale that ranged from 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly agree.

5. Results

The data was analyzed using Smart-PLS software version 3. and the partial-least squares structural equation modeling (PLS-SEM) technique to verify the current hypotheses. This analytical approach is suitable for this research as the proposed model includes latent variables, the research has a setting for adequate statistical significance considering a relatively small sample size, and there are no concerns regarding the normal distribution of the data [59].

5.1. Demographic Characteristics

As noted in the methodology section (see Section 4), no personal or sensitive data was obtained from participants. The demographic variables included in the survey were, namely, gender, age, and experience. It is also important to note that these variables were defined as control variables for the data analysis process [10].
The demographic profile of the participants is presented in Table 1 below:

5.2. Measurement Model Assessment

In the first stage of data analysis, the model and its parameters were measured, with the results reported in Table 2 below. Following Table 2, the results show that outer loadings are above the required threshold of 0.710 [65]. Similarly, Rho A, internal consistency (α), and convergent validity (Table 2) have been reported to be satisfactory as calculated values are above 0.7 [66,67]. In addition, Table 2 provides the results of VIF, which show that there are no concerns regarding multicollinearity as the values are above 3 [68,69,70]. The Average Variance Extracted (AVE) and heterotrait-monotrait (HTMT) ratios show that convergent validity is acceptable (above 0.5) and discriminant validity is satisfactory (below 0.85), which states the goodness of fit for the current model [59,71]. These are shown in Table 3 and Table 4, respectively.

5.3. Structural Model Assessment

In the second stage of data analysis, the structural model presented in Figure 1 was assessed. The results that are provided in Table 4 support the hypotheses of the research based on the following values:
(a)
Normal Fit Index and Standardized Root Mean Square Residual value are satisfactory (NFI = 0.918 and SRMR = 0.023) [72].
(b)
Multicollinearity does not pose any issues as VIF values are below 3 (see Table 3) [65].
(c)
The values for both predictive power (R-square) and predictive relevance (Q-square) were found acceptable [70].
The hypotheses of the research are tested in Table 5, where, based on what was noted, they have been supported. Accordingly, in support of the first hypothesis (β = 0.314), GHRM has been found to have a significant effect on CS. The results also suggest that GI positively impacts CS in the banking sector of Beirut (β = 0.311), which supports the second hypothesis. With regards to the indirect effects under examination in the research, the mediating effect of CSR on the relationship between GHRM and CS was found to be statistically significant (β = 0.284), implying support for the third hypothesis. Lastly, the fourth hypothesis of the research was supported (β = 0.270), suggesting that CSR has a mediating effect on the relationship between GI and CS. In the light of these results, it can be interpreted that to achieve sustainable outcomes for corporations (i.e., in the banking industry), it is essential that HRM activities and processes are green (i.e., GHRM) and that the firm is engaged in CSR activities. Furthermore, having GI embedded in the strategies of the firm can ensure sustainability for the corporation, which, combined with CSR activities, can manifest in highly desirable outcomes such as environmental, social, and economic performance in the long run.

6. Discussions

Following the findings in Section 5, GHRM is found to be a major contributor to achieving sustainability for the banks in Beirut (corporate sustainability). Considering the challenges faced by the country (i.e., political, financial, and cultural/sectarian), banks require a high level of performance to maintain their performance and continue their business in the future. However, investing in green strategies and activities can be an effective tool for corporations to reduce costs while improving products and services by implementing green strategies across products, services, and processes of the firm (green innovation). Furthermore, banking institutions can implement CSR activities to improve interactions with society while creating a sense of legitimacy and commitment for their employees. This, in turn, can yield a higher engagement of employees in sustainable actions and generate innovative ideas that can aid the efforts of the corporation towards achieving CS. Combined with the green policies and practices of the HRM department, corporations can amplify the effectiveness of their CSR activities by addressing the abilities and motivational needs of their employees as well as providing opportunities to develop personally and/or professionally. As the institution as a unit endeavors to implement and follow strategies that benefit society, are eco-friendly, and can gain economic benefits, lasting results can be gained. Through which sustainable performance outcomes are more likely to arise. This can be seen in the case of the banking sector in Beirut, as the current results suggest.
Regarding the first hypothesis, it is reported in the literature that GHRM dimensions that start with recruiting individuals with environmental awareness and fit the overall objectives of the corporation are key to positive performance outcomes (e.g., [1,15,26,36]). The current findings are in consensus with these reports and further apply the premise of institutional and competitive advantage theories, more specifically the AMO theory [14,19]. Training and development of employees in a sustainable manner and with a focus on green aspects not only benefits the individuals and the company but also further contributes to the Sustainable Development Goals (i.e., SDGs 4, 8, and 9) [73]. The conclusion section of this research further elaborates on the relationship between findings and implications from the SDGs (see Section 7). Rewards and compensations, performance appraisals, and including the employees in decision-making and enabling their voice lead to higher commitment, satisfaction, and wellbeing [74]. Therefore, it can be stated that banking institutions in Beirut can greatly benefit from GHRM embeddedness in their strategies.
Referring to the second hypothesis of the research, GI is also found to be an important element for determining CS for banking corporations in Beirut. There have been similar reports in the literature from the healthcare, tourism, and manufacturing industries (e.g., [1,10,14,31]). The current results contribute to the understanding of GI and its importance in the banking sector, particularly for developing countries in the Middle East region (i.e., Lebanon). Fostering green products and services while improving the processes of the firm through innovative green ideas can smooth the path towards higher performance outcomes. Specifically, CS can be achieved through such changes as sustainable processes and products/services that can manifest long-term benefits for the firm [43]. The current results suggest that banks in Lebanon and the Middle East, by extension, can achieve corporate sustainability while improving their workplace performance by establishing GI for the corporation. The perspective of bank managers in Beirut supports the noted claim.
The third and fourth hypotheses pertain to the mediating effect of CSR on GHRM-CS and GI-CS relationships, respectively. CSR activities are greatly aligned with HRM practices, policies, and procedures [50,51]. Importantly, GHRM further has an innate connection with CSR as it entails social responsibility and environmental considerations, which are aligned with practices within the ESG framework [4,6,9,47]. In this sense, the current results show that CSR better explains the relationship between GHRM practices among banks in Beirut and their efforts to achieve CS. While similar results have been reported in the extant literature (e.g., [48,49,50]), the current findings contribute to the understanding of the link between GHRM and CSR activities and their role in determining sustainable outcomes for the organization. The findings are within the scope of AMO theory, as GHRM was measured based on abilities, motivations, and opportunities for employees from the perspective of bank managers. As the results show, it can be stated that such considerations can significantly impact CS, especially when combined with CSR activities that target corporation image, reputation, stakeholders, and society [58]. Similarly, CSR is shown to mediate the relationship between GI and CS, which further implies that banks need to implement green initiatives across their corporations in a holistic manner if they seek to achieve financial stability and security, high performance, and good relationships with their internal and external stakeholders (i.e., employees and customers). There have been studies in the literature addressing this issue where similar reports have been made (e.g., [5,56,57]). This suggests a crucial element for the success and competitive edge of banks in their local and/or regional markets in the Middle East. The current findings open possibilities for theoretical and practical implications to be drawn with regards to the context of this research. Competitive advantage theory is embedded in the current results, which, along with AMO and institutional theory, are further addressed in the following sections (see Section 7.1).

7. Conclusions

In the light of previously noted discussions and similarities with the existing body of knowledge, the vitality of GHRM, CSR, and GI for better performance outcomes was established. In developing countries, especially Lebanon, where financial, political, and social challenges have pressurized the nation for decades, it is essential that corporations take sustainable actions, embed strategies that align with future developments, and nurture resources for future generations. It becomes imperative that corporations engage in sustainable actions as it provides opportunities for financial achievements that can expand into long-term strategies. Therefore, achieving corporate sustainability becomes easier through an integrated green approach that entails all domains of the business. These include HRM activities, policies, and procedures; marketing efforts to enhance the company’s image and increase engagement in societal events (CSR); and initiating green processes while developing green products and/or services. For developing countries, especially in the Middle East (i.e., Lebanon), such initiatives undertaken by corporations can be significant in society and have a positive influence on its development towards a better future [75,76].

7.1. Theoretical Implications

AMO theory is used in this research as an anchor that contains the concepts of GHRM and CS [1,21]. This theory addresses the importance of considering the factors that motivate employees to remain in the corporation while meeting their needs for improvement by providing opportunities to develop. In addition, AMO in the current context suggests that the banking industry can greatly benefit from implementing its premises in their green activities [14,19]. Through the lens of AMO, corporations in Beirut and perhaps the Middle East can enhance their performance over time, leading to corporate sustainability and positive outcomes for the future of the firm. Financial, environmental, and social competitiveness can be emphasized in this sector [15,36], when AMO is implemented in GHRM policies and procedures. Similarly, institutional theory shows the importance of an integrated approach to social and environmental challenges. Based on the premises of this theory, employees are more likely to develop a sense of legitimacy towards their corporations as long as there are solid regulations and/or processes for facing crises and remaining resilient [14,18]. This theory further explains the pillars of TBL (i.e., economic, social, and environmental), which fall within the same context as GHRM policies and green innovation strategies [19,20,31] at the corporate level. This premise was used as a selection criterion for this research, which implies the importance of having a unified approach towards corporate sustainability. Lastly, Competitive advantage theory covers all aspects of the current findings, as green initiatives in different domains of the business are effective tools for gaining competitiveness in the market as they are unique to the company [1,4,32,34]. Green innovation in terms of processes and products/services that are green-centric and innovative opens an array of pathways for the firm to increase its competitive prowess. Implementation of green strategies in the core of corporations contributes to their competitiveness as the quality of services and/or products increases and human capital is invested to improve performance in all aspects [4,13,33]. In this sense, finite resources are preserved, ethical means of conduct are employed, and the wellbeing of society is addressed, which in turn ensures financial gains for the corporation.

7.2. Practical Implications

In light of what was mentioned, the current results provide practical implications that can be beneficial for managers in the banking industry of developing countries, particularly in the Middle East. In this respect, managers can direct corporations towards green strategies and actions by introducing green innovation dimensions (i.e., products/services and processes). This can be achieved through strategic decision-making processes at the managerial level. Furthermore, HRM departments can emphasize GHRM dimensions in their recruitment, training, appraisal, and involvement/retention policies to further support managerial and leadership positions on sustainable strategies. The training programs can be expanded into blogs and/or seminars to engage with a wider audience and initiate CSR activities that provide social benefits. By focusing on different green aspects (i.e., social, environmental, and economic), managers can improve the workplace alongside their HR teams to improve the engagement, commitment, and wellbeing of their employees. This, combined with amplifying their voice and encouraging them to be innovative, can significantly improve the overall performance of the organization. Through integrating managerial and HR efforts with the marketing department, corporations can have a wider impact on society by increasing awareness among the public, creating opportunities for learning, and creating pathways for better infrastructures and a sustainable future. ESG standards and frameworks can be an opening for corporations in which GHRM and CSR are not fully established. The image and reputation of the firm can also be enhanced by such activities, which can further contribute to its endeavors towards obtaining corporate sustainability.

8. Limitations

This study was limited by several factors that have affected its results and, therefore, interpretations. In this sense, the sample size of the research is relatively small, which can cause bias in sample representativeness and generalizability of results. Particularly when considering various communities and groups that live in Beirut, cultural and sectarian aspects were not included in this research, further limiting sample representativeness. Similarly, the quantitative nature of the current research implies that deeper insights are difficult to obtain, which can be addressed by future studies noted in the final section. As the data was collected through a cross-sectional approach, the generalizability of the findings is limited. Changes in the behavior of employees or other stakeholders cannot be analyzed through the current approach. Furthermore, the scarcity of studies surrounding the Middle East and Lebanon specifically is regarded as another limitation for the arguments made in this research. Additionally, social and political factors were not noted in this research as they fell beyond its scope. These are influential elements that can impact the strategies and actions of corporations.

9. Recommendations for Future Studies

Following what was noted in the previous section, future studies can provide a deeper understanding of the subject at hand by gathering larger amounts of data (from institutions or cities) that can better reflect the diversity of the population. Furthermore, qualitative studies can gain a deeper insight into managerial decision-making processes, challenges, and other influential elements. Cultural aspects as well as leadership, organizational support, and the influence of politics or social changes can be addressed by scholars interested in providing a better understanding of corporate sustainability, green innovation, and GHRM. While this research focused on the perspective of managers, employees’ perceptions can also be analyzed in the banking industry to provide comparative results. This can also be applied in neighboring countries to increase the empirical evidence from this region in the literature. Lastly, factors that hinder managerial and/or GHRM efforts as well as those that negatively influence employees’ willingness to engage in green behaviors can be investigated. Such explorations can provide insight by obtaining data that contrasts the current model.

Author Contributions

Conceptualization, A.A.Y.; methodology, P.Z.; validation, P.Z.; formal analysis, P.Z.; investigation, A.A.Y.; resources, A.A.Y.; data curation, A.A.Y.; writing—original draft preparation, A.A.Y.; review and editing, P.Z.; supervision, P.Z. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Informed consent was obtained from the respondents to the survey.

Data Availability Statement

The data presented in this study are available on request from the corresponding author.

Conflicts of Interest

The authors declare no conflict of interest.

Appendix A

Table
Table A1. Survey Items.
Table A1. Survey Items.
GHRMGreen Human Resource Management
Abilities
1.
Corporate effort into recruiting the right people.
2.
Environmental values are a key advantage in being hired.
3.
Environmental training is mandatory for all employees.
Motivation
4.
Performance appraisals consider environmental performance.
5.
There are rewards for green behavior and initiatives.
6.
Obtaining green competencies is recognized and supported.
Opportunities
7.
Training and development programs create value and/or improve the skills of employees.
8.
Groups and teams are encouraged to solve problems through green and innovative approaches.
9.
Career and personal development plans are available by HR.
Corporate Social Responsibility
CSR
1.
Environmental protection is highly valued in this corporation.
2.
This corporation partakes in social programs and values customers’ benefits.
3.
The firm is active in delivering messages to society and engages in initiatives to communicate and interact with people.
GIGreen Innovation
Processes
1.
The corporation is actively trying to use recyclable materials in its products.
2.
Suppliers providing green and eco-friendly materials are endorsed and preferred to conduct business with.
3.
Company implies new strategies that are sustainable (economic, social, and environmental).
Products/Services
1.
Organization endeavors to develop and/or improve green products and services.
2.
Reducing energy consumption and waste production is highly focused.
3.
Employees are encouraged to generate green and innovative ideas for the firm.
Corporate Sustainability
CS
1.
Corporate governance focuses on economic strategies.
2.
There are codes of conduct for risk and crisis management.
3.
Environmental performance and audits are regular.
4.
Social policies and responsibilities for social issues are implemented.
5.
Employees are provided with benefits, rights, and standards.

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Sustainability 15 10834 g001 550
Figure 1. Research model.
Figure 1. Research model.
Sustainability 15 10834 g001
Table
Table 1. Respondents’ Profile.
Table 1. Respondents’ Profile.
AgeBelow 40 years40–50 yearsAbove 50 years
558453
GenderMale Female
103 89
ExperienceBelow 5 years5–8 yearsAbove 8 years
519248
Table
Table 2. Measurement Model Assessment.
Table 2. Measurement Model Assessment.
ConstructDimensionsIndicatorOuter LoadingsαRho ACRAVE
GHRMAbilities AB10.7220.7260.7040.7400.613
AB20.805
AB30.733
Motivation MT40.8040.7870.7570.8210.682
MT50.809
MT60.801
Opportunities OPT70.7680.7390.7640.7660.634
OPT80.729
OPT90.811
GIProcesses PRC10.8440.8070.8110.8230.645
PRC20.829
PRC30.852
Products/ServicesPS40.8320.7790.7640.8060.611
PS50.725
PS60.741
CSR-CSR10.7840.7850.7800.8130.623
CSR20.746
CSR30.802
CS-CS10.7910.7840.7840.8020.612
CS20.785
CS30.767
CS40.743
CS50.727
Table
Table 3. Assessment of Reflective-Formative Constructs.
Table 3. Assessment of Reflective-Formative Constructs.
ConstructItemsConvergent ValidityWeightsVIFt-Statistics
GHRMAbilities0.7200.3811.8674.255
Motivation0.3741.7944.151
Opportunities0.5222.2975.083
GIProcesses0.7140.4151.9465.359
Products/Services0.4062.0345.461
Table
Table 4. Heterotrait-Monotrait Ratio.
Table 4. Heterotrait-Monotrait Ratio.
ABMTOPTPRCPSCSR
AB
MT0.718
OPT0.4790.525
PRC0.7170.6260.741
PS0.6740.7020.6570.734
CSR0.7110.4960.6930.7420.805
CS0.7020.7030.7070.7240.7340.766
Table
Table 5. Hypothesis Testing.
Table 5. Hypothesis Testing.
EffectsRelationsβt-StatisticsƑ2Decision
Direct
H1GHRM → CS0.3144.235 ***0.129Supported
H2GI → CS0.3114.234 **0.116Supported
Mediation
H3GHRM → CSR → CS0.2843.704 **0.042Supported
H4GI → CSR → CS0.2703.648 *0.039Supported
Control Variables
Gender → CS0.1202.208 *
Age → CS0.1272.230 *
Education → CS0.1292.251 *
R2CIU = 0.41/Q2CIU = 0.1
R2UTAUT = 0.62/Q2UTAUT = 0.42
SRMR: 0.023; NFI: 0.918
* 0.05, ** 0.01, *** 0.001.
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Yahya, A.A.; Zargar, P. Achieving Corporate Sustainability through Green Human Resource Management: The Role of CSR in the Banking Industry of a Developing Country. Sustainability 2023, 15, 10834. https://doi.org/10.3390/su151410834

AMA Style

Yahya AA, Zargar P. Achieving Corporate Sustainability through Green Human Resource Management: The Role of CSR in the Banking Industry of a Developing Country. Sustainability. 2023; 15(14):10834. https://doi.org/10.3390/su151410834

Chicago/Turabian Style

Yahya, Ahmad Abo, and Pouya Zargar. 2023. "Achieving Corporate Sustainability through Green Human Resource Management: The Role of CSR in the Banking Industry of a Developing Country" Sustainability 15, no. 14: 10834. https://doi.org/10.3390/su151410834

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