The impact of corporate governance and innovative climate on firm performance; A review from the perspective of environmental uncertainty

Ozen Oray () and Erkut Altındag

International Journal of Innovative Research and Scientific Studies, 2025, vol. 8, issue 11, 71-87

Abstract: This study aims to examine the effects of corporate governance practices and innovation climate on firm performance in the context of environmental uncertainty perception. In today's world where globalization, digitalization and technological advancements are accelerating, businesses not only have to manage their internal resources but also have to rapidly adapt to variable and unpredictable environmental conditions. In this context, effective corporate governance practices and a supportive innovation climate stand out as key organizational factors that both increase strategic flexibility and improve firm performance. However, when the impact of these internal structures on performance is evaluated independently of environmental factors, incomplete and context-free results may emerge. Therefore, it is necessary to analyze the mediating or moderating effects of exogenous variables such as the environment on these relationships. The conceptual model was tested using Structural Equation Modeling (SEM). In the conceptual model, corporate governance and innovation climate are considered as independent variables, perception of environmental uncertainty as mediating variable and firm performance as dependent variable. According to the findings of the analysis, corporate governance and innovation climate have direct, significant and positive effects on firm performance. Moreover, the perception of environmental uncertainty plays a significant partial mediating role in the effect of both constructs on performance. The effect of environmental uncertainty on performance is found to be the highest, which reveals the critical role of external environment perception in strategic decision-making processes. The findings of the study both add a multivariate, contextual approach to the literature and provide guidance for managers to redesign organizational structures and develop strategic adaptability.

Keywords: Corporate governance; Environmental uncertainty; Firm performance; Innovation climate; Structural equation modeling. (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:aac:ijirss:v:8:y:2025:i:11:p:71-87:id:10808

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