Green innovation adoption of SMEs in Indonesia: what factors determine it?

Abstract

Purpose An important global issue is the harm that businesses are posing to the environment. However, the impact of small and medium enterprises’ (SMEs) operations on the environment often goes unnoticed, and their willingness to adopt green innovations is limited. Therefore, this study aims to examine the factors influencing the adoption of green innovation among SMEs in Indonesia. Design/methodology/approach The research used a survey to investigate SMEs operating in the pineapple-based food sector, which is a leading commodity in Riau Province, Sumatera, Indonesia. Specifically, the research focused on the districts of Kampar, Siak and Dumai, with data collecting taking place from April to August 2022. SMEs were selected purposively based on a minimum operational tenure of 10 years. A total of 225 respondents met the selection criteria and participated in this study. The research data were collected through a questionnaire. To analyse the data, the study used structured equation modelling with partial least squares. Findings There are three categories of factors influencing SMEs to adopt green innovations: technological, environmental and organizational. Of these factors, organizational factors emerge as the primary determinant of green innovation adoption among SMEs in the country. Research limitations/implications The generalizability of the findings in this study is limited due to the specific focus on food sector SMEs in Riau Province. To obtain more generalized results, it is recommended that future research be conducted on SMEs across different sectors in other cities and countries. Originality/value This study provides a deeper understanding of the specific dimensions of organizational factors that play a crucial role in driving green innovation adoption, especially within the context of SMEs in the food sector in Indonesia.