Power of Green Capabilities and Artificial Intelligence (AI): Understanding How and When Green Innovation Promotes Sustainability

PurposeThe purpose of this paper is to propose a conceptual framework that establishes the linkages among green dynamic capability (GDC), green innovation (GI), organisational creativity (OC) and organisational agility (OA), which influence small and medium enterprises (SMEs) sustainability performance (SP) in trade and service sectors in Thailand.Design/methodology/approachThis paper conducts a search of existing literature regarding SMEs SP. A conceptual framework is provided that can be used by SMEs to enhance their SP driving sustainable business growth.FindingsA framework for SMEs sustainability is proposed, which demonstrates the connection between GDC and SME SP, with GI and OC as mediators and OA as a moderator.Research limitations/implicationsThis paper is limited in terms of the scope of SME sustainability in the context of the trade and service sector. Future empirical study should be conducted to validate the proposed framework and hypotheses in this study.Practical implicationsThis study forms the basis for the enhancement of SMEs SP in relation to boosting their GDC, GI, creativity and agility.Originality/valueThis paper presents a comprehensive framework that leads to the conceptualisation of SME SP. It will help practitioners and academics to better understand the causes of SMEs SP.

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.

The Covid-19 pandemic has had a major impact on economic growth in Indonesia, one of which is for Micro, Small and Medium Enterprises (MSMEs). Thus, MSMEs need to improve their business performance in a sustainable manner to achieve the desired economic growth, one of which is through the adoption of green innovation. The purpose of this study was to analyze the relationship between the adoption of green innovation and sustainable business performance of MSMEs especially during the Covid-19 Pandemic. The research subjects taken in this study were MSME actors in the food and beverage sector at Pematangsiantar City, totaling 371 MSMEs. The analysis technique used in this study was Structural Equation Modeling (SEM) using the Smart PLS program. The results of this study indicated that green innovation has a positive and significant influence on sustainable business performance, especially on social performance and environmental performance, while it has no significant effect on economic performance.

The present study focuses on stakeholder pressures and the green dynamic capabilities of achieving green innovation and financial performance in various sectors in Indonesia. Data were collected from 120 top management representing their companies involved in this study, and path analysis was applied to test the hypothesis. The study results reveal that stakeholder pressures strengthen organizational green dynamic capabilities and innovation. Moreover, the study finds that stakeholder pressures significantly and positively predict green innovation through green dynamic capabilities and corporate financial performance through sequential mediation involving both green dynamic capabilities and green innovation. This study underscores the significance of green initiatives across various sectors, positioning them as essential components of corporate strategy in the modern business landscape.

Increasing business organizations are also damaging the natural infrastructure, and researchers are pressing hard on this issue since several decades. Moreover, the studies relating to business organizations only focus on the establishment, development, and success of businesses and paid less attention to the dark trade business expansions, i.e., lack of green innovation and increase in pollution and environment damages. Keeping in view these issues, this study is aimed at investigating the effect of green dynamic capabilities, green practices, and green value co-creation on green innovation in SMEs (small and medium enterprises). This study also tested the mediating role of value co-creation in the links between green practices-green innovation and green dynamic capability-green innovation. Structural equation modeling (SEM) was used, and the mediation analysis was conducted through Preacher and Hayes Approach (2004, 2008) and through Soble test. Empirical results proved that green dynamic capabilities, green practices, and green value co-creation improve the mechanism of green innovation in SMEs.

Do corporate social responsibility practices contribute to green innovation? The mediating role of green dynamic capability

Green innovation is increasingly regarded as a strategic approach enabling manufacturing firms to achieve environmental sustainability and maintain a competitive advantage. However, limited research has explored how green dynamic capabilities drive green innovation and sustainable development. This study aims to fill this gap by developing a conceptual framework grounded in the natural resource-based view and dynamic capabilities theory to examine the relationships among green dynamic capabilities, green innovation, and sustainable development. A quantitative survey was conducted with 386 manufacturing firms in Thailand, and structural equation modeling was used to analyze the data. The results reveal that green dynamic capabilities have a significant positive effect on both green innovation and sustainable development. Furthermore, green innovation not only directly enhances sustainable development but also plays a crucial mediating role between green dynamic capabilities and sustainability outcomes. These findings indicate that building green dynamic capabilities enables firms to innovate effectively toward sustainability goals. This study contributes to the literature by integrating dynamic capabilities with green innovation and sustainability research. It also provides practical guidance for managers and policymakers to strengthen green dynamic capabilities and promote green innovation initiatives, ultimately supporting long-term sustainable development in the manufacturing sector.

The present study is undertaken to investigate the underlying mechanism of the relationship between three dimensions of Green Intellectual Capital (GIC), which include Green Human Capital (GHC), Green Structural Capital (GSC), and Green Relational Capital (GRC), with green product innovation (GPDI) and green process innovation (GPRI) within the context of Pakistani manufacturing Small and Medium Enterprises (SMEs). This investigation aims to elucidate the function of green knowledge sharing (GKS) as a mediating mechanism among GHC, GSC, GRC, GPDI, and GPRI by incorporating concepts from the natural resource based view (NRBV) and the knowledge based view (KBV) theories. A quantitative study design was used, with survey data collected from 381 owners and managers of manufacturing SMEs in Pakistan. Structural Equation Modeling (SEM) techniques were used to examine the proposed relationships among these variables. Results show that all components of GIC considerably influence both GPDI and GPRI, directly and indirectly through GKS. GKS has a significant impact on the development of intangible green competencies, resulting in innovative outcomes. This research contributes to the literature by applying NRBV and KBV theories in the context of green innovation within resource constrained SMEs. The study found that these firms can enhance their green innovation performance by leveraging green intellectual capital and cultivating a culture of green knowledge sharing. The study has significant implications for policymakers and business leaders in developing regions, promoting and encouraging the adoption of sustainable approaches.

In today’s competitive world, the growing role of firms’ green innovation (GI) has caused organisations to respond to the demand for sustainable performance. Significantly, increasing environmental awareness has inevitably popularised GI approaches to maximise firms’ sustainable goals. GI receiving international significance has become the prime driver accelerating firms’ socio-ecological practices. Using the theoretical lens of resource-based theory, the study explores the impact of green process innovation, GI strategy and green action innovation on sustainable performance under the mediating role of green product innovation and moderating role of employee green behaviour. The data was collected from the 411 employees working in the Pakistani manufacturing sector. Structural equation modelling (SEM) and Partial Least Squares (PLS) regression were used for the proposed hypothesis testing. The employees’ green initiatives ensure the organisation’s sustainable performance through eco-friendly products. Employee green behaviour moderates between green product innovation and sustainable performance.

This study investigates the drivers of green innovation and their impact on sustainable business performance in small and medium-sized enterprises (SMEs) in Pakistan, with a focus on the moderating role of green technology capability. Drawing upon the Natural Resource-Based View (NRBV), the research conceptualizes green absorptive capacity, sustainable human capital, and organizational support as key antecedents of green innovation while positing that green technology capability enhances these relationships. The study explores the influence of green innovation on the environmental, economic, and social dimensions of sustainable business performance. Using a quantitative research design, data were collected through a structured survey from 321 managers across various SME sectors in Pakistan. Structural Equation Modeling (SEM) was employed to test the hypothesized relationships. Contrary to expectations, the results reveal that green absorptive capacity, sustainable human capital, and organization support do not significantly predict green innovation, and green technology capability does not moderate these relationships. These findings suggest that internal capabilities, while theoretically relevant, may not translate into innovative environmental practices in resource-constrained SME environments without strategic alignment and operational integration. However, green innovation was found to have a significant and positive impact on all three dimensions of sustainable performance, environmental, economic, and social, affirming its role as a critical mechanism for achieving sustainability. The study offers important theoretical contributions by challenging the generalizability of conventional green innovation models in developing economies and emphasizing the need to examine contextual and institutional dynamics. Practically, it highlights the necessity for SME leaders to go beyond capability development and focus on implementation processes, technology integration, and innovation culture to realize sustainability goals.

The increasing recognition of environmental concerns has prompted both nations and corporations to adopt green innovation as a significant strategy for addressing environmental risks and promoting sustainable development. To excel in this pursuit, companies must cultivate green dynamic capabilities, infusing environmental considerations into their strategic decision-making processes. The purpose of this study is to investigate the association between strategic orientation components and green dynamic capabilities, as well as their impact on green product and process innovation, in medium-to-large-sized manufacturing firms in China. Employing a quantitative methodology, an online cross-sectional research design was used to gather 582 valid responses through a structured questionnaire. Results indicated a positive association between learning orientation and green dynamic capabilities. Furthermore, green dynamic capability was found to mediate the relationship between learning orientation and green product and process innovation. However, no significant relationship was observed between green entrepreneurial orientation, market orientation, internationalisation orientation, and green dynamic capabilities. By conducting multi-group analysis and studying the context of Chinese manufacturing firms, this research contributes new insights into the relationship between resource-based theory constructs and green innovation, including the integration of green dynamic capabilities. The results emphasise the significance of adopting a learning mindset, developing green dynamic capabilities, and fostering green innovation. These findings offer useful insights for the Chinese manufacturing industry, enabling it to strengthen its competencies in green innovation.

Green innovation is widely regarded as a beneficial strategy for manufacturing enterprises to accelerate green transformation. Drawing the natural resource‐based view with dynamic capabilities, this study proposes a model linking green innovation, green dynamic capability, and firm performance. Using survey data from 236 heavy polluting manufacturing firms in China, this study investigates the impact of green innovation on firm performance. The results show that green innovation is positively correlated with both enterprise performance and green dynamic capability, whereas green dynamic capability also has a significant impact on enterprise performance. Furthermore, the survey found that the green resource integration ability, organizational learning capability, and environmental insight capability of green dynamic capability play a moderating effect on the relationship between green innovation and enterprise performance. Additionally, we provide useful enlightenment for policymakers and business managers to stimulate green innovation in enterprises. Our research not only assists managers to better grasp the effects of green innovation practices but also provides some important implications for policymakers.

This study examines direct and indirect effects among stakeholder pressure, green dynamic capabilities, green innovation, and performance of emerging market small and medium‐sized enterprises (SMEs). Using survey questionnaires, we collected multisource data from 248 SMEs in the manufacturing sector. We used the partial least squares (PLS) path modeling approach (PLS‐PM) to examine the hypotheses of the study. The study results indicate that stakeholder pressure influences green dynamic capability, green dynamic capability influences green innovation, and green innovation influences firm performance. Furthermore, results also suggest that green dynamic capability mediates the influence of stakeholder pressure on green innovation and green innovation mediates the impact of green dynamic capability on firm performance. The findings of the study suggest critical implications for both theory and practice.

The fashion industry, particularly the fast fashion segment, significantly contributes to environmental degradation through excessive resource use and waste. This study examines how competitive pressure, green product innovation, and green process innovation influence sustainable firm performance among fashion Micro, Small, and Medium Enterprises (MSMEs) in a region. Using the Natural Resource-Based View (NRBV) as a theoretical framework, the research highlights the strategic role of green innovation in building environmentally valuable, rare, inimitable, and non-substitutable (VRIN) capabilities. A quantitative method was employed, with data collected from 100 MSME actors via a structured questionnaire and analyzed using Covariance-Based Structural Equation Modeling (CB-SEM) in AMOS. The findings reveal that competitive pressure, as well as green product and process innovations, have a positive and significant effect on sustainable firm performance. Green product innovation, including eco-friendly materials and circular design, and green process innovation, such as waste-reducing technologies, are identified as crucial strategies for achieving environmental and business goals.

The modern business environment depends on green innovation to achieve sustainable growth through environmentally friendly products that boost both operational effectiveness and market competencies. Research explains how external environmental pressures relate to green innovation measures alongside their effects on firm performance and continues to grow more because current studies show insufficient evidence of these interdependent connections. The study examines multiple elements affecting green innovation performance through external influences to help organizational leaders, together with policymakers, bring sustainable practices into an environmentally aware business market. This study investigated the influence of green innovation on firm performance only through the subjects of management engagement, customer demand for sustainability, and supply chain risk. Optimizing green innovation is a strategic process aimed at increasing the long-term resilience and sustainable performance of an organization. The study draws from theories of green innovation, sustainability, and firm performance, hypothesizing interactions among green practices, managerial support, consumer preferences, and supply chain dynamics. The study combines environmental policies, employee involvement, and external collaboration to enhance its theoretical framework. The quantitative method of PLS-SEM was used to analyse data gathered from 621 companies in Pakistan. This approach uses structured questions to measure constructs, which include green product innovation, green process innovation, management commitment and firm performance. Green product and process innovation drives the performance of a firm, with both management and consumers in need of sustainability. However, supply chain risks reduce the impacts. The findings imply that sustainability in central business and supply chain shortcomings are three factors that need to be considered. The research includes empirical findings related to green innovation. It can help managers develop sustainable policies that are performing well in coping with market requirements and reducing risk. It also shows companies’ contributions to the progress of environmental goals. The study reconnects determinants and impediments of green innovation; it highlights the influence on the firm and provides principal implemented indications towards the aim of sustainable exercise.