Green Intellectual Capital and Innovation: Keys to Sustainable Environmental Performance in Manufacturing

This research explores the critical influence of green intellectual capital (GIC), green dynamic capabilities (GDC), and green innovation on the environmental performance of manufacturing firms. In light of escalating global environmental challenges, companies are increasingly urged to implement sustainable practices to secure their competitive advantages. This study posits that GIC—comprising the intangible assets related to environmental knowledge and capabilities—alongside green innovation, which represents advancements in eco-friendly technologies, plays a vital role in improving environmental performance. Employing structural equation modeling (SEM) through AMOS, data were gathered from the Top Management Teams (TMT) of manufacturing companies in the Riau Islands, Indonesia. The analysis reveals that both GIC and GDC have a significant positive impact on environmental performance, suggesting that firms that prioritize environmental competencies and knowledge achieve enhanced sustainability metrics. Additionally, green innovation is shown to elevate both environmental performance and competitive advantage. These findings highlight the necessity for organizations and policymakers to foster intellectual capital development and innovative practices as integral components of sustainable business models, thereby addressing ecological challenges effectively.