Empirical analysis of ESG-driven green innovation: the moderating role of innovation orientation

Abstract

PurposeThe purpose of this study is to examine the influence of ESG practices on green innovation with the moderating effect of innovation orientation in Malaysian manufacturing listed companies.Design/methodology/approachThis study employed a quantitative research approach by using a well-structured questionnaire for data collection. The questionnaire was distributed to 204 Malaysian manufacturing listed companies in consumer products and services sector. Finally, partial least square-structural equation modeling (PLS-SEM) was utilized to examine the relationship between constructs.FindingsBased on stakeholder theory, results indicated that environmental, social and governance (ESG) practices significantly improve green innovation. The insignificant moderating effect of innovation orientation was identified between the relationship of environmental and social practices and green innovation. Interestingly, results affirmed the negative moderating effect between the relationship of governance practices and green innovation.Research limitations/implicationsThis study is limited to Malaysian manufacturing companies of consumer products and services sector in Bursa Malaysia. Hence, the findings of this study cannot be generalized to manufacturing companies of other geographical contexts.Practical implicationsThis work provides constructive implications to management and policymakers of Malaysian manufacturing companies in strategic planning toward enhancing green innovation and developing business competitiveness to achieve sustainable business performance.Originality/valueThis research magnifies valuable insights into the literature through a comprehensive model that simultaneously investigates the relationships between ESG practices, innovation orientation and green innovation. In addition, this is the first attempt to investigate the influence of ESG practices on green innovation with a moderating effect of innovation orientation, which indeed strengthens the originality of this study.