Green innovation for sustainable performance: insights from the TOE framework

The issue of environmental degradation has intensified significantly over the past decade. Governments, society, and businesses have increasingly engaged in discussions on how to ensure the achievement of sustainable development. Following the Paris Agreement, the adoption of green innovation practices has garnered substantial attention worldwide. In Indonesia, Micro, Small, and Medium Enterprises (MSMEs), as the backbone of the nation, play a crucial role in implementing green innovation to ensure sustainable performance. Using the Technology-Organization-Environment (TOE) framework, this study examines the determinants of green innovation and its impact on sustainable performance. A survey was conducted with 180 manufacturing MSMEs, and the data were analyzed using the partial least squares method. The results indicate that technology factors, organizational factors, and environmental factors positively influence green innovation. Furthermore, green innovation is identified as a critical factor for achieving sustainable performance. This study contributes theoretically by expanding the development of models that investigate green innovation and sustainable performance. Practically, it offers insights into sustaining sustainable development by positioning MSMEs as key stakeholders.