Assessing Environmental Policy Impact on Green Innovation Adoption in Pakistan: Role of Financial Incentives and Disincentives as Mediators

The research was driven by the need to urgently address environmental issues in light of Pakistan’s fast industrialization. It aimed to examine the dynamics of policy success in environmental protection and contribute to the conversation on sustainable development. Therefore, the intervention of financial mechanisms in the adoption process was deemed inevitable to enhance its effectiveness. Financial incentives and disincentives were identified as pivotal intermediaries influencing the effectiveness of government actions promoting eco-friendly innovations in Pakistan. The presence or absence of these incentives significantly shaped individuals’ attitudes and behaviors toward adopting environmentally friendly technologies. To investigate these dynamics, a structured questionnaire was administered to 799 individuals, and data was analyzed using Smart-PLS, SEM, or partial least squares structural equation modeling and SPSS. The methodology details how these data were collected and processed, ensuring a robust analysis. The analysis revealed the crucial role of government policies, financial incentives, and disincentives in promoting sustainable product adoption in Pakistan. It extends the diffusion of innovation theory, emphasizing the critical influence of government intervention in promoting sustainable practices. By showing how well-planned financial mechanisms might increase the influence of environmental regulations, the study provides useful information for politicians. Policymakers can encourage the adoption of environmentally friendly technology and promote long-term economic growth by using these incentives and disincentives. Additionally, other developing nations encountering comparable environmental difficulties can use this research as a model to apply these solutions to their own situations. This research is unique in providing theoretical support and guidance for the government and other stakeholders to encourage individuals to engage actively in practical and empirically supported green product innovation and an economically efficient ecosystem. Furthermore, it enables the achievement of global sustainability goals by examining methods to improve the adoption of eco-friendly technologies. It offers a replicable framework for other regions facing similar challenges.