Development of green SMEs: Integrating green entrepreneurship and innovation for environmental sustainability

Abstract Micro, Small, and Medium Enterprises (MSMEs) are vital to Indonesia’s economy, contributing significantly to income generation across sectors. These enterprises, often small or micro-scale, are owned and managed by entities meeting specific size criteria. This study in Bangka Belitung Province aims to assess Green SME adoption among MSMEs and propose policies for sustainable practices. Using quantitative methods, the study collected numerical data to analyze relationships between variables. Research instruments were rigorously validated, with validity coefficients exceeding 0.300 and reliability surpassing 0.600. Through purposive sampling, 50 actively engaged MSMEs were selected, with data collected via questionnaires, observations, and documentation. Structural Equation Modeling (SEM), specifically Partial Least Squares Path Modeling (PLSPM), was used for its ability to handle complex relationships. Findings show that Green Entrepreneurship and Innovation significantly enhance environmental sustainability in MSMEs, promoting carbon-neutral activities and resource efficiency. Sustainable Business practices under the Green SMEs framework reduce operational costs and prioritize environmental conservation, shaping a model integrating environmental principles into business strategies. Policy recommendations include incentivizing green practices, training for sustainable methodologies, and supporting green innovation. These steps are crucial for enhancing MSME resilience and sustainability while advancing environmental goals in Bangka Belitung and beyond.