Leveraging Industry 4.0 for Environmental Sustainability: A Moderated Mediation Analysis of Green Supply Chain Practices and Government Regulation

Abstract

In the context of ongoing geopolitical uncertainty and the post–COVID‐19 environment, firms in developing economies face increasing pressure to adopt advanced digital technologies while simultaneously improving their environmental responsibility. Industry 4.0 (I4.0) technologies are widely recognized as enablers of sustainable operations; however, empirical evidence explaining how these technologies translate into improved environmental performance (EP) through responsible supply chain practices remains limited. Addressing this gap, the present study examines the effect of I4.0 technologies on EP, emphasizing the mediating role of green supply chain management (GSCM) and the moderating influence of government regulation. Using survey data collected from textile manufacturing firms in Pakistan, the proposed moderated mediation model is tested employing partial least squares structural equation modeling (PLS‐SEM) and importance–performance map analysis (IPMA). The results demonstrate that I4.0 technologies have a significant and positive influence on the EP; while GSCM significantly and positively mediates the association between I4.0 technologies and EP, and government regulation positively moderates the relationship between GSCM and EP. The results highlight the complementary roles of digital transformation, green supply chain practices, and regulatory governance in promoting environmental sustainability. This study offers actionable insights for managers and policymakers seeking to align technological innovation with corporate social responsibility and environmental management objectives in developing economies.