Knowledge and Sustainability Management under Ethical Pressure: Triggering Sustainability-Oriented Management Practices in European Firms

Abstract

Sustainability-oriented management practices are increasingly important for firms seeking to respond to environmental and institutional pressures. This study examines how tax-related informal payment pressure, innovation capability, and performance-oriented management practices influence sustainability-oriented management practices in European firms. Drawing on the resource-based view and knowledge-based view, the paper argues that internal knowledge-management-related capabilities may support firms in adopting sustainability-related practices, even in environments affected by institutional ethical constraints. Using firm-level data from the World Bank Enterprise Survey 2024 for Czechia, Poland, and Latvia, the study applies Partial Least Squares Structural Equation Modeling. The findings show that innovation capability and performance-oriented management practices have positive and significant effects on sustainability-oriented management practices. However, tax-related informal payment pressure has no statistically significant direct or indirect effect in the model. These results suggest that sustainability-oriented practices are driven more strongly by internal organizational capabilities than by tax-related ethical pressure alone. The study contributes to knowledge management and sustainability research by showing the importance of innovation and structured managerial routines in supporting firm-level environmental practices. It also offers practical implications for managers and policymakers by highlighting the need to strengthen firm-level innovation and management capabilities alongside institutional governance reforms.