Vinculum of Green Innovation, Corporate Governance Index, and Impact on Financial Firm Performance: A Comparative Study of Two Southeast Asian Countries

Abstract

Abstract The current production and conception have impacted the environmental hazards. Green Innovation (GI) is the ideal solution for sustainable production, consumption, and ecological conservation. The objective of the study is to compare comprehensive green innovation (covering product, process, service & organization) impact on firm financial performance in Malaysia and Indonesia, along with the first study to measure the moderation role of the corporate governance index. This study has addressed the gap by developing the green innovation and corporate governance index. Collected panel data from the top 188 publicly listed firms for three years and analyzed it using the General Least Square (GLS) method. The empirical evidence demonstrates that the green innovation practice is better in Malaysia, and the outcome also shows that the significance level is higher than in Indonesia. In addition, this study provides empirical evidence that board composition has a positive moderation relationship betwixt GI and business performance in Malaysia but is insignificant in Indonesia. This comparative study provides new insights to the policymakers and practitioners of both countries.