Examining the determinants of green innovation adoption in SMEs: a PLS-SEM approach

Abstract

Purpose Currently, environmental and social concerns have made green innovation more popular among researchers and practitioners around the globe. Developed countries tend to focus more on this issue, compared to developing countries. However, the reality shows that small- to medium-sized enterprises (SMEs) are considered as high contributors to environmental pollution. This study is designed for, and conducted on, SMEs in a developing country, Pakistan. The purpose of this paper is to highlight the main determinants of green innovation adoption in SMEs in Pakistan. Design/methodology/approach A data sample of 288 SMEs from five different sectors was collected and analyzed using the partial least squares structural equation modeling technique. Findings The results of the study indicate that organizational and human resource factors, market and customer factors, and government support and technological factors have a positive and significant impact, whereas external partnership and cooperation, and rules and regulatory factors have an insignificant impact on green innovation adoption in SMEs in Pakistan. Originality/value The outcomes of the study have important implications for managers as well as for government policy makers regarding framing better policies to promote green practices in SMEs.

Does green intellectual capital matter for green innovation adoption? Evidence from the manufacturing SMEs of Pakistan

“…lack of financial resources, weak enforcement of environmental regulations, lack of green knowledge-sharing cooperation among SMEs and poor environmental management system in industries (Chaowanapong et al, 2018). Various government policies and rules and regulations, including taxes and subsidies, providing technical assistance, knowledgesharing platforms and training the manpower have proven effective for enhancing green innovations and ecological protections (Jun et al, 2019).…”

“…The following six items were used to quantify the GIA, and items were adopted from the research of Jun et al (2019). GIA1 5 whether your company chooses ingredients for products, which minimises environmental hazards.…”

Green Innovation in Environmental Complexity: The Implication of Open Innovation

“…Compared to other innovation types, the concept of "environmental responsibility" is referred to as green innovation, which is the formulation of new processes and products that offer a clear benefit, but in a way that respects the environment. Besides the areas mentioned above, green innovation reduces pollution, eliminates waste, and better manages natural resources [4,5]. The "Greening of Industries" generally refers to new technology, process, and business activities implemented to protect and preserve the environment; e.g., to obtain a new or improved result, such as a product, process, or organization, which incorporates environmentally friendly procedures or ideas.…”

“…Green innovation is a specific type of innovation that incorporates environmental responsibility [4]. A more precise definition of green innovation includes identifying new methods and products that offer added value by minimizing negative impacts on the environment while also advancing sustainable goals [5].…”

“…The rationale that drives companies toward green innovation is based not only on consumers' increased ecological awareness; governments are also developing strict policies and regulations for manufacturing industries to prevent environmental degradation [4]. Companies are forced to adopt environmentally friendly practices by government regulators, customers, society, and their competitors.…”