The Impact of Green Organization Capabilities on MSME Competitive Advantage: Mediating Role of Green Innovation

Yanah Yanah () and Bambang Tjahjadi ()
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Yanah Yanah: Airlangga University, Student of Department Accounting
Bambang Tjahjadi: Senior Lecturer of Airlangga University

A chapter in Proceedings of the 12th Gadjah Mada International Conference on Economics and Business (GAMAICEB 2024), 2025, pp 93-117 from Springer

Abstract: Abstract The increasing environmental pollution caused by MSME waste, such as tofu, tempeh, rattan, and other factories, has raised concerns and an urgent need for sustainable practices. This research aims to build a new framework for Environment-Friendly Organization Capabilities for MSMEs and to address the research gap in the relationship between the capacity of environmentally friendly organizations and Competitive Advantage while exploring the mediating effects of Green Innovation. The novelty of this study explains the innovations made by MSMEs in utilizing waste from MSME production to become more economically valuable. Research methods using Structural Equation Modeling (SEM), with sample of 339 respondents. The results of the study show that green organization capabilities have a direct influence on competitive advantage and indirect effect through green innovation. The conclusion from the results of this study is that if MSMEs want to increase their competitive advantage, they must be able to carry out green organization capabilities and green innovation. MSMEs must choose raw materials that do not pollute the environment and are environmentally friendly, and waste from MSMEs is collected somewhere, and then special incineration is made. The ashes are made for a mixture of paving blocks, while for the disposal of tofu and tempeh factory waste is disposed of in places far from residential areas so as not to disturb the health of the surrounding community.

Keywords: Environmentally Friendly Organization Capabilities; competitive advantage; green innovation; MSMEs (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-692-5_7

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DOI: 10.2991/978-94-6463-692-5_7

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