Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management
Small and Medium-sized Enterprises (SMEs) are vital to economic growth, job creation, and sustainable development. However, sustainability remains a challenge, especially for SMEs in developing countries facing resource limitations, market fluctuations, and technological constraints. Among them, Bat...
Saved in:
| Main Authors: | , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2025-06-01
|
| Series: | Journal of Open Innovation: Technology, Market and Complexity |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2199853125000678 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1849769024715489280 |
|---|---|
| author | Fandi Achmad Iwan Inrawan Wiratmadja |
| author_facet | Fandi Achmad Iwan Inrawan Wiratmadja |
| author_sort | Fandi Achmad |
| collection | DOAJ |
| description | Small and Medium-sized Enterprises (SMEs) are vital to economic growth, job creation, and sustainable development. However, sustainability remains a challenge, especially for SMEs in developing countries facing resource limitations, market fluctuations, and technological constraints. Among them, Batik SMEs in Indonesia struggle with barriers to green innovation, such as limited knowledge, shifting market trends, rising production costs, and a lack of innovation, threatening long-term sustainability. This study examines the role of knowledge management (KM) in fostering green innovation (GI) and its impact on organizational performance (OP) and competitive advantage (CA) in Batik SMEs. A quantitative survey was conducted with 191 Batik SMEs in Rembang Regency and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The research model tests four hypotheses: The first hypothesis is that KM has a positive effect on GI; the second hypothesis is that GI improves OP; the third hypothesis is that OP strengthens CA, and the fourth hypothesis is that innovation capability moderates the relationship between KM and GI. The findings confirm that KM significantly enhances GI (β=0.401, p < 0.05), which positively influences OP (β=0.508, p < 0.05). Furthermore, OP strengthens CA. However, innovation capability does not significantly moderate the relationship between KM and GI (p > 0.05). These results highlight the crucial roles of knowledge management and green innovation in improving performance and competitiveness. SME owners and managers are encouraged to integrate green innovation into business strategies while strengthening internal capabilities to support sustainable practices. By doing so, Batik SMEs can enhance organizational performance, maintain market competitiveness, and achieve long-term sustainability. |
| format | Article |
| id | doaj-art-90f0ad9f6b294f8fba62e84e7d54a9e2 |
| institution | DOAJ |
| issn | 2199-8531 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Journal of Open Innovation: Technology, Market and Complexity |
| spelling | doaj-art-90f0ad9f6b294f8fba62e84e7d54a9e22025-08-20T03:03:36ZengElsevierJournal of Open Innovation: Technology, Market and Complexity2199-85312025-06-0111210053210.1016/j.joitmc.2025.100532Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge managementFandi Achmad0Iwan Inrawan Wiratmadja1Department of Industrial Engineering, Telkom University, Bandung, Jawa Barat 40257, Indonesia; Center of Excellence for Digital Business Ecosystem, Telkom University, Bandung, Jawa Barat 40257, Indonesia; Corresponding author at: Department of Industrial Engineering, Telkom University, Bandung, Jawa Barat 40257, Indonesia.Department of Industrial Engineering, Bandung Institute of Technology, Jawa Barat 40132, IndonesiaSmall and Medium-sized Enterprises (SMEs) are vital to economic growth, job creation, and sustainable development. However, sustainability remains a challenge, especially for SMEs in developing countries facing resource limitations, market fluctuations, and technological constraints. Among them, Batik SMEs in Indonesia struggle with barriers to green innovation, such as limited knowledge, shifting market trends, rising production costs, and a lack of innovation, threatening long-term sustainability. This study examines the role of knowledge management (KM) in fostering green innovation (GI) and its impact on organizational performance (OP) and competitive advantage (CA) in Batik SMEs. A quantitative survey was conducted with 191 Batik SMEs in Rembang Regency and analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). The research model tests four hypotheses: The first hypothesis is that KM has a positive effect on GI; the second hypothesis is that GI improves OP; the third hypothesis is that OP strengthens CA, and the fourth hypothesis is that innovation capability moderates the relationship between KM and GI. The findings confirm that KM significantly enhances GI (β=0.401, p < 0.05), which positively influences OP (β=0.508, p < 0.05). Furthermore, OP strengthens CA. However, innovation capability does not significantly moderate the relationship between KM and GI (p > 0.05). These results highlight the crucial roles of knowledge management and green innovation in improving performance and competitiveness. SME owners and managers are encouraged to integrate green innovation into business strategies while strengthening internal capabilities to support sustainable practices. By doing so, Batik SMEs can enhance organizational performance, maintain market competitiveness, and achieve long-term sustainability.http://www.sciencedirect.com/science/article/pii/S2199853125000678Knowledge managementGreen innovationOrganizational performanceInnovation capabilityCompetitive advantagePLS-SEM |
| spellingShingle | Fandi Achmad Iwan Inrawan Wiratmadja Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management Journal of Open Innovation: Technology, Market and Complexity Knowledge management Green innovation Organizational performance Innovation capability Competitive advantage PLS-SEM |
| title | Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management |
| title_full | Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management |
| title_fullStr | Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management |
| title_full_unstemmed | Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management |
| title_short | Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management |
| title_sort | organizational performance and competitive advantage in smes the role of green innovation and knowledge management |
| topic | Knowledge management Green innovation Organizational performance Innovation capability Competitive advantage PLS-SEM |
| url | http://www.sciencedirect.com/science/article/pii/S2199853125000678 |
| work_keys_str_mv | AT fandiachmad organizationalperformanceandcompetitiveadvantageinsmestheroleofgreeninnovationandknowledgemanagement AT iwaninrawanwiratmadja organizationalperformanceandcompetitiveadvantageinsmestheroleofgreeninnovationandknowledgemanagement |