Balancing Exploration and Exploitation: How Green Knowledge Integration Drives Supplier Performance in Sustainable Supply Chains

Background: This study examines how Green Knowledge Integration Capability (GKIC) influences supplier performance within sustainable supply chains by balancing exploration (acquiring new knowledge) and exploitation (refining existing knowledge) strategies. Methods: Based on Social Exchange Theory, Relationship Motivation Theory, and Absorptive Capacity Theory, a conceptual model was developed and tested using cross-sectional survey data collected from 398 managers representing 240 multinational corporations (MNCs) operating in Pakistan. Structural Equation Modelling (SEM) was employed to analyse the relationships among exploration and exploitation focus, Green Management Innovation (GMI), GKIC, Green Absorptive Capacity (GAC), and supplier performance. Results: The findings indicate that exploration and exploitation strategies significantly enhance supplier performance, with GKIC acting as a mediating mechanism linking strategic focus and innovation to performance outcomes. Moreover, GAC strengthens the impact of the exploration and exploitation focus on performance but exhibits limited moderating effects for GMI and GKIC pathways. Conclusions: The results highlight GKIC’s critical role in translating strategic and innovation initiatives into supplier performance gains. This study contributes to the sustainable supply chain literature and provides actionable insights for managers and policymakers to enhance sustainability outcomes through knowledge integration and absorptive capacity development.