Unleashing the role of artificial intelligence in financial management practices and green innovation: accounting perspectives

Purpose The purpose of this study is to understand how businesses use artificial intelligence (AI) to efficiently perform financial management practices to enhance green innovation performance. Specifically, the authors propose that firms leveraging AI can effectively manage their cash, inventory and receivable, which in turn contributes to their green innovation. Design/methodology/approach The authors collected 208 responses from manufacturing firms in developing economies and tested the model using SmartPLS. Findings The results of this study indicate that while AI does not directly contribute to green innovation in manufacturing firms, it does so indirectly through improved financial management practices. Specifically, AI enables firms to optimize their financial management practices, particularly cash management and inventory management, thereby enhancing green innovation. However, receivables management did not show a significant mediating role between AI and green innovation. Practical implications This research recommends that firms focus on AI adoption to use financial resources for achieving green innovation. Social implications To support society in green innovation, manufacturing industry needs to focus on digital transformation and AI adoption to foster sustainable development. Originality/value This research fills a significant gap by integrating AI with financial management in SMEs to enable green innovation, making it a unique contribution to the literature on environmental science and accounting.