Eco-Innovation Capabilities and Sustainable Business Performance during the COVID-19 Pandemic

Abstract

The COVID-19 pandemic has had a direct impact on the manufacturing industry in Malaysia because all economic activities had to be suspended for some time. This study explores the role that eco-innovation capabilities might play in improving sustainable business performance during the ongoing pandemic. This study employs a quantitative method by distributing online questionnaires to 80 small and medium enterprises (SMEs) in Klang Valley, Malaysia. In the study, the relationship between sustainable business performance and the three variables of eco-innovation capabilities, i.e., eco-product innovation, eco-management innovation and eco-logistic innovation, were determined using multiple regression analysis. The results indicate that two hypotheses are accepted and the other one is rejected. The findings indicate that most manufacturing SMEs in Klang Valley have adopted eco-management innovation and eco-logistic innovation as crucial capabilities for their businesses during the pandemic. However, due to the challenges faced by these SMEs during the pandemic, eco-product innovation was found to have an insignificant relationship with sustainable business performance. It is insignificant because of the low productivity rate observed during the pandemic. Hence, the COVID-19 pandemic has caused manufacturing SMEs in the Klang Valley to not be able to maintain their operations and stay on track. Therefore, this research may contribute to the efforts of policymakers, government agencies and managers of manufacturing SMEs in developing a strong innovation platform on which manufacturing SMEs may rely for support in enhancing their business capacity and performance.