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Institutional pressure and eco-innovation: The mediating role of green absorptive capacity and strategically environmental orientation among manufacturing SMEs in Egypt

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Listed:
  • Khalid Mady
  • Muhammad Abi Sofian Abdul Halim
  • Khatijah Omar
  • Reda Shaker Abdelkareem
  • Mohamed Battour

Abstract

With the growing concern about climate change, businesses have been under increasing pressure from regulatory agencies and customers to implement proactive environmental practices such as eco-innovation. While environmental pressures have been extensively discussed in the literature as drivers of eco-innovation, empirical evidence on the influence of these pressures on eco-innovation behaviour remains inconsistent. Therefore, the current study essentially aims to investigate the direct effect of institutional pressures, namely, regulation, eco-friendly product demand, and competitive pressure on eco-innovation, coupled with the indirect effect of these pressures by mediating internal drivers of eco-innovation including green absorptive capacity and strategically environmental orientation among manufacturing SMEs in Egypt. Based on a sample of 176 managers and owners of these enterprises, a cross-sectional survey is conducted to collect data related to research constructs. The results of data analysis using Smart-PLS show that all external pressures are not directly associated with eco-innovation. Of the six indirect hypothesized effects, only four indirect effects are supported. The results illustrate that green absorptive capacity mediates the relationship between institutional pressure (eco-friendly product demand and competitive pressure) and eco-innovation. The results also show that strategically environmental orientation mediates the relationship between institutional pressure (regulation and competitive pressure) and eco-innovation. This study provides an in-depth understanding of firms’ responses to institutional pressures as well as the notable implications for SMEs managers, policymakers and future researchers.

Suggested Citation

  • Khalid Mady & Muhammad Abi Sofian Abdul Halim & Khatijah Omar & Reda Shaker Abdelkareem & Mohamed Battour, 2022. "Institutional pressure and eco-innovation: The mediating role of green absorptive capacity and strategically environmental orientation among manufacturing SMEs in Egypt," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2064259-206, December.
    • Handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2064259
    DOI: 10.1080/23311975.2022.2064259
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    Cited by:

    1. Mehdi Bensouda & Mimoun Benali, 2023. "The Role of Institutional Pressure and Dynamic Capabilities in Promoting Energy Efficiency Practices: Evidence from the Moroccan Manufacturing Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 352-361, January.
    2. Torrecillas, Celia & Fernández, Sara & García-García, Claudia, 2023. "Drivers to increase eco-efficiencies in Uruguay, Peru, and Panama," Energy Policy, Elsevier, vol. 183(C).

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