Innovation Climate and Leadership Support as Drivers of Sustainable Supply Chain Performance: The Mediating Role of Circular Economy Practices in Pakistan’s FMCG Sector

Abstract

This study examines how innovation climate and leadership support affect sustainable supply chain performance in Pakistan’s fast-moving consumer goods (FMCG) sector. The research also investigates the mediating role of circular economy practices, aiming to understand how organizational innovation and leadership translate into eco-efficient supply chain outcomes. A quantitative, cross-sectional design was adopted. Data were collected from supply chain managers, logistics officers, and operations executives in leading FMCG firms across Karachi, Lahore, and Islamabad. Using stratified random sampling, 470 valid responses were analyzed. Smart-PLS 4.0 was applied to test the measurement and structural models. The study included two independent variables (innovation climate and leadership support), one mediating variable (circular economy practices), and one dependent variable (sustainable supply chain performance). Reliability, convergent validity, discriminant validity, and model fit were carefully assessed. The results indicate that both innovation climate and leadership support significantly enhance sustainable supply chain performance. Circular economy practices partially mediated these relationships, showing that innovation and leadership efforts are most effective when implemented alongside practices such as recycling, material reduction, and resource reuse. The model demonstrated strong reliability, validity, and predictive relevance, confirming robustness in the FMCG context.