Organizational Capability, Market Perspective, and Green Innovation Adoption: Insight From Indonesian Food Processing Small and Medium-Sized Enterprises

Abstract

The adoption of green innovation is urgent for small- and medium-sized enterprises (SMEs) in the food processing industry to reduce pollution, because the large number of food processing SMEs will contribute more to environmental waste. Nevertheless, SMEs face additional obstacles in adopting innovation compared with large enterprises. This study aims to develop a green innovation adoption model for food processing SMEs to overcome the abovementioned problem and assess the effect of the model on performance. The model consists of two components, namely, organizational capability perspective and market perspective. A total of 245 respondents, who were owners or managers in their respective SMEs, were selected. Data were analyzed using structural equation modeling. The results demonstrate that pro-green leaders, green human capital, and green market orientation significantly influence green innovation adoption, which are, in turn, influenced by absorptive capacity. Furthermore, green innovation adoption and green market orientation significantly influence marketing performance. This finding is important in helping owners of food processing SMEs in formulating strategies for adopting green innovation.