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Does Green Innovation Improve SME Performance?

Author

Listed:
  • Ni Wayan Rustiarini

    (Accounting Department, Faculty of Economics and Business, Universitas Mahasaraswati Denpasar, Kamboja Street No.11A Denpasar, Denpasar 80231, Indonesia)

  • Desak Ayu Sriary Bhegawati

    (Accounting Department, Faculty of Economics and Business, Universitas Mahasaraswati Denpasar, Kamboja Street No.11A Denpasar, Denpasar 80231, Indonesia)

  • Ni Putu Yuria Mendra

    (Accounting Department, Faculty of Economics and Business, Universitas Mahasaraswati Denpasar, Kamboja Street No.11A Denpasar, Denpasar 80231, Indonesia)

Abstract

The environmental damage phenomenon is a challenge for businesses today, including for small and medium industries in developing countries, such as Indonesia. Green innovation is a solution to answer public concerns over global environmental issues. However, the Small and Medium Enterprises (SMEs) sector generally still focuses on achieving their economic performance. Green innovation is a strategic step for SMEs to increase sustainability and financial performance in the global market. This study aimed to holistically identify the antecedents and consequences when implementing green innovation in SMEs. This study also analyzed the role of green innovation as a mediator in the relationship between intellectual capital, sustainability performance, and financial performance. The survey was conducted on 336 SMEs in Bali, Indonesia. The questionnaire was directly distributed to owners or managers of SMEs over three months. This study proved that intellectual capital positively increased green innovation, SME sustainability, and financial performance. Green innovation was also considered as a mediating variable in the relationship between intellectual capital, sustainability performance, and financial performance. Thus, the implementation of green innovation directs entrepreneurs to fulfill not only social and environmental responsibilities but also encourages SMEs to achieve their economic benefits.

Suggested Citation

  • Ni Wayan Rustiarini & Desak Ayu Sriary Bhegawati & Ni Putu Yuria Mendra, 2022. "Does Green Innovation Improve SME Performance?," Economies, MDPI, vol. 10(12), pages 1-13, December.
    • Handle: RePEc:gam:jecomi:v:10:y:2022:i:12:p:316-:d:1000191
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    References listed on IDEAS

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    1. Reza Ansari & Azar Barati & Ali Akbar Abedi Sharabiani, 2016. "The role of dynamic capability in intellectual capital and innovative performance," International Journal of Innovation and Learning, Inderscience Enterprises Ltd, vol. 20(1), pages 47-67.
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