Customer participation, and green product innovation in SMEs: The mediating role of opportunity recognition and exploitation

Abstract

Small and medium enterprises (SMEs) often face substantial pressure from their customers on issues of environmental sustainability but lack the resources and capabilities to offer innovative green products. To address this dilemma, we propose that customer participation can serve as a viable way of co-opting customer pressure and promoting green product innovation in SMEs. Drawing on the literature on stakeholder engagement and the entrepreneurship process, we suggest that customer participation enhances green product innovation by facilitating the recognition and exploitation of opportunities on the part of SMEs. An analysis of a dataset of 195 SMEs in China lends support to our hypotheses. Our findings have important theoretical and practical implications for green product innovation and stakeholder management.