Green Servitization and Sustainability in Manufacturing: The Mediating Role of Circular Economy Practices and the Moderating Effect of Environmental, Social, and Governance Compliance in Jordan

Abstract

As environmental concerns and stakeholder expectations continue to grow, manufacturers are under increasing pressure to adopt sustainable practices. Green servitization involves integrating environmentally friendly services into traditional product offerings, has emerged as a promising strategy to support both economic and environmental objectives. However, little is known about how green servitization contributes to sustainability performance in emerging economies, particularly when considering the roles of circular economy practices and environmental, social, and governance compliance. This study investigates these relationships within the Jordanian manufacturing sector. Drawing on the natural resource-based view, the study examines whether circular economy practices mediate the relationship between green servitization and sustainability performance, and whether environmental, social, and governance compliance moderates this relationship. Data were collected from 214 manufacturing firms and analyzed using structural equation modeling. The findings reveal that green servitization positively influences sustainability performance both directly and indirectly through circular economy practices. Furthermore, the positive impact of green servitization on sustainability is stronger in firms with higher levels of environmental, social, and governance compliance. These results highlight the importance of aligning strategic innovation, operational circularity, and institutional responsibility to achieve meaningful sustainability outcomes in resource-constrained industrial contexts such as Jordan.