Responsible Innovation and Employee Performance: The Mediating Role of Ethical Climate in Manufacturing Firms of Pakistan

Abstract

Factors that threaten competition, sustainability, and ethical conduct are increasing in Pakistan's manufacturing industry, making employee performance a critical issue for organisations. To respond, companies are using responsible innovation to help develop accountable, ethical behaviour, engage with stakeholders, and build sustainability into the companies they develop. Based on Social Information Processing Theory, this research will investigate how responsible innovation relates to employee performance, mediated by ethical climate, in Pakistan's manufacturing sector. A cross-sectional quantitative research design was employed, and data were collected through surveys of employees from various manufacturing entities in Pakistan's major industrial cities. Through a convenience sampling approach, 200 usable survey responses were obtained for statistical analysis using structural equation modelling. The findings of the study show that responsible innovation has a statistically significant positive impact on employee performance and ethical climate, and that ethical climate, in turn, has a statistically significant positive impact on employee performance. Responsible innovation and ethical climate were also found to have a partial mediating effect on the relationship between responsible innovation and employee performance. Therefore, responsible innovation helps create and promote an ethical organisation where employees will be motivated, committed, and effective in their job performance. This study contributes to the responsible innovation and organisational behaviour literature by identifying ethical climate as the behavioural mechanism that connects responsible innovation outcomes to employee performance in developing-market manufacturers.