Strategy for increasing green economic performance of small and medium enterprises based on green business management

Abstract

Green management behavioral is quite pertinent to enhance small and medium enterprises economic green performance. Micro, small and medium enterprises (MSMEs) need to adopt environmental paradigms in order to reach the economic green performance. The purpose of this study was to examine relationships between green management and competitive advantage strategies for increasing green economic performance MSMEs in Central Java Province. The population of this study was MSMEs in Central Java. This study was quantitative analysis. The analytical tool in this study used Structural Equation Modeling (SEM) with warp PLS program applications. The results showed that MSMEs that implement green management in their business operations can improve company performance through the ability to compete with these MSMEs. MSMEs could be implementing Green management activities by producing environmentally friendly products, campaigning for environmentally friendly movements, investing capital in environmentally friendly businesses and allocating costs for waste treatment, implementing quality standards that are environmentally friendly in the production process. The better MSMEs in implementing green management, the better MSMEs in competing in the industry, which will improve the company’s green performance such as getting financial benefits from managing environmentally friendly businesses, getting bonuses in the form of prizes from private/government institutions for implementing environmentally friendly businesses, get bonuses in the form of tax rate relief from the government, get bonuses in the form of soft loans from private/government institutions as well as increased sales of MSME products due to applying environmentally friendly businesses. Thus, the application of environmentally sound business management (green business management) needs to be developed among MSMEs players. This is because MSMEs can not only increase additional income, but MSMEs can also participate in preserving the environment.