Green Manufacturing: A Pathway to Improve the Performance and Sustainability of Indonesian SMEs

This study examines the factors that drive and hinder the adoption of green manufacturing and its impact on SMEs in Indonesia using a more integrated framework. The sample used in this study comprises 258 SMEs in Indonesia, all of which have adopted green manufacturing practices. The modeling in this study employs structural equation modeling (SEM) with the aid of the SmartPLS 3.0 application for data processing. The results show that several factors such us organizational capability, competitiveness, relative advantage, also top management support affect the implementation of green manufacturing. The implication of adopting as well as all hypotheses that test the implications of adopting green manufacturing, namely financial performance, social performance, and environmental performance, are supported. This shows that micro, small, and medium enterprises in Indonesia tend to adopt green manufacturing with organizational capability, competitiveness, relative advantage, and top management support supporting this practice. In addition, green manufacturing practices have also been proven to impact financial, social, and environmental performance.