The Role of Green Innovation between Green Market Orientation and Business Performance: Its Implication for Open Innovation

Bambang Tjahjadi,Nanik Kustiningsih,Hariyati Hariyati,Viviani Nadyaningrum,Lina Nasihatun Nafidah,Noorlailie Soewarno

doi:10.3390/joitmc6040173

Abstract

The focus of this research was to investigate the effect of green market orientation on business performance. For that purpose, this research tested that green market orientation has a direct effect on business performance, that green market orientation affects green innovation, and that green innovation affects business performance. As a quantitative research, partial least squares structural equation modeling (PLS–SEM) was used to test the hypotheses. Data were collected by using both online and offline questionnaires from owners/managers of the manufacturing micro, small- and medium-sized enterprises (MSMEs) in the East Java Province of Indonesia. A total of 175 respondents participated in this study. The results show that green market orientation has a positive and direct effect on business performance. The results empirically support the theory of sustainability and entrepreneurship in the research setting of Indonesian MSMEs. The results also imply that the owners/managers of MSMEs need to balance economic, environmental, and social issues in their business. In the era of sustainable development and environmental awareness, manufacturing MSMEs need to adopt a green market orientation and carry out green innovation in their business processes to obtain a better business performance.

Highlights

In the last few decades, the world has faced very serious environmental problems
Shows that green market orientation has a positive effect on business performance (β coefficient = 0.67; p < 0.01); Hypotheses 1 (H1), which stated that green market orientation has a positive effect on business performance, is supported
The first hypothesis, which states that green market orientation has a positive effect on business performance, is supported

Summary

Introduction

In the last few decades, the world has faced very serious environmental problems. Many countries have issued environmental regulations in an effort to overcome worsening environmental problems [1,2,3]. Since 1980, China has enacted environmental regulations to address environmental problems in the country [4]. The European Community has instructed an effective restriction of the use of certain hazardous substances (RoHS), as well as electronic and electrical equipment (WEEE), since 2006 [5]. The Indonesian Ministry of Environment and Forestry has developed an environment performance rating system (PROPER) to encourage companies to apply green economy principles [6]. In line with Sustainable Development Goals (SDGs), the responsible consumption and production is one of the targets that must be achieved by 2030, by all member states of the United Nations (UN)

Methods

Findings

Discussion

Conclusion