Evaluating the Impact of Green Environmental Practices on Business Performance Considering the Economic Crisis of Small and Medium Agricultural Businesses in Kerman Province

Introduction
Economic crises can arise from a variety of factors. Typically, such crises stem from unsustainable macroeconomic policies, including an oversized public sector, excessive budget deficits, challenges in servicing short-term debt, high inflation, misaligned exchange rates, credit contractions, or withdrawal of foreign capital. Economic crises affect multiple dimensions of society, particularly the market environment in which firms operate. Implementing green environmental practices within companies can help mitigate these impacts. These practices may involve waste reduction, adoption of eco-friendly production methods, utilization of renewable energy sources, and development of sustainable products and services. Beyond preserving the environment, green practices enhance corporate reputation, strengthen compliance with environmental standards, increase customer loyalty, lower costs, and ultimately improve profitability and firm performance.
In the agricultural sector, green environmental practices also encourage better relationships between agribusinesses, suppliers, and customers, motivating efforts toward superior environmental outcomes. To achieve this, agricultural enterprises must ensure that suppliers provide eco-friendly raw materials, minimizing environmental damage throughout production processes. Concurrently, they must increase operational performance to meet customers’ demands for sustainable products. Collaborative interactions among customers, suppliers, partners, and research and development units foster continuous environmental improvement. Implementing optimal environmental practices allows agribusinesses to maximize profitability even during economic crises. This is particularly relevant in agriculture, as it experiences higher resource pressures than other sectors. Such pressures, largely due to intensive use of chemical fertilizers and pesticides, as well as growing water and energy consumption, underscore the importance of environmental practices as a source of competitive advantage. Although previous research has examined challenges and opportunities within agricultural enterprises, no study has yet explored the influence of environmental practices on agribusiness performance during periods of economic crisis. Hence, the central research question is: Do green environmental practices affect the environmental and business performance of agricultural enterprises, particularly during an economic crisis?
 
 
Methodology
The statistical population comprised 544 owners of small and medium-sized agricultural businesses in Kerman Province. Based on Cochran’s formula, with a margin of error of 0.05, a sample size of 225 respondents was selected through simple random sampling. The present study is applied in purpose and descriptive–survey in method, aiming to depict the prevailing conditions and phenomena. The research literature was compiled using the library method, and data were collected via a structured questionnaire. Cronbach’s alpha, composite reliability, convergent validity, and discriminant validity were employed to assess the reliability and validity of the constructs.
 
Findings
The results indicated that the adoption of environmental practices significantly influenced environmental performance in both pre-crisis and crisis periods, with beta coefficients of 0.48 and 0.36 respectively (p < 0.05). Similarly, environmental practices showed a significant impact on business performance before and during the economic crisis, with beta values of 0.67 and 0.28 (p < 0.05). The interaction between the economic crisis and environmental practices revealed a negative and significant effect on environmental performance, where the coefficient was −0.20 (p < 0.05). The consequences of the crisis—such as layoffs, increased demand pressures, budget cuts, and reduced innovation and investment—have weakened the positive relationship between environmental practices and environmental performance, turning it negative. This implies that during crises, such practices may be curtailed, leading to a decline in environmental performance. Therefore, the repercussions of economic downturns pose a substantial threat to environmental initiatives. Conversely, the economic crisis exhibited a positive and significant effect on business performance (coefficient = 0.17, p < 0.05), indicating that environmental practices continue to enhance agricultural business performance, albeit to a lesser extent than in stable periods. It can be inferred that certain approaches—such as the acquisition of environmental technologies and innovation related to environmental management—remain vital even during economic crises due to their strong operational relevance.
 
Discussion and Conclusion
This study examined the effects of adopting environmental practices on environmental and business performance in conditions with and without economic crisis. For agricultural enterprises, implementing practices such as waste reduction, environmentally compatible production methods, green energy utilization, and the creation of eco-friendly products and services enhances overall environmental performance. Companies are recommended to invest in environmentally responsible and cost-effective projects to achieve profitability and long-term sustainability. As energy and material consumption decrease, stakeholder relationships strengthen, costs decline, and product quality improves. Consequently, the adoption of environmental practices transforms business operations, fosters sustainable growth and market advantage, and positively influences long-term corporate performance.