Green Innovation Adoption in Turkish and Iranian SMEs: The Effect of Dynamic Capabilities and the Mediating Role of Absorptive Capacity

Abstract

AbstractGreen innovation (GI) adoption of small and medium-sized enterprises (SMEs) especially in middle-income economies plays a significant role to reduce negative impacts of environmental issues and to gain competitive advantage. The main objective of the present paper is to examine the mediating role of absorptive capacity (ACAP) on the relationship between dynamic capabilities (DC) and GI adoption in the context of Turkish and Iranian SMEs, two middle-income economies. For this purpose, a well-established online questionnaire is administered to 296 top executives of Turkish and Iranian SMEs operating in energy industry, a highly dynamic market. Using Hayes Process Macro Model, the results of this paper reveal that ACAP has a significant effect on GI adoption of Iranian SMEs but this effect of ACAP is insignificant in terms of Turkish SMEs. The empirical evidence obtained from the present paper also puts forward that DC positively influnce GI adoption in Turkish SMEs, however, the corresponding relationship is not significant for Iranian counterparts. For both middle-income economies, ACAP has a statistically significant mediating role on the relationship between DC and GI adoption of SMEs. Strategic alliances engagement and governmental incentives on GI investments are recommended to overcome certain barriers of SMEs including resource shortages and to improve ACAP and DC that enhance GI adoption of Turkish and Iranian SMEs in the future. As far as is known, this is the first study that compares possible antecedents of SMEs’ GI adoption in two middle-income economies.