Building a Sustainable Future: Leveraging Green Finance and Innovation for Enhanced Business Performance of Eco-friendly Batik SMEs in East Jawa

Articles in Press

Document Type : Research Paper

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Faculty of Economics and Business, State University of Malang, Jawa Timur 65145, Indonesia

10.22059/ier.2024.379370.1008057

Abstract

This study aims to investigate the influence of green finance and green innovation on the business performance of eco-friendly batik SMEs in East Java, with a particular focus on the mediating role of environmental sustainability practices. In the era of sustainability, green finance and green innovation are critical factors that can drive better business performance while supporting environmental sustainability. The study employs the Partial Least Squares (PLS) method to analyze data collected from 150 eco-friendly batik SMEs in East Java. The results indicate that green finance and green innovation positively and significantly impact business performance. Green finance, which includes access to environmentally friendly funding and green incentive policies, has enhanced operational efficiency and market competitiveness. Meanwhile, green innovation, encompassing adopting eco-friendly technologies and sustainable production practices, significantly improves corporate reputation and customer satisfaction. Moreover, environmental sustainability practices mediate the relationship between green finance, green innovation, and business performance, highlighting their crucial role in achieving sustainable business outcomes. These findings provide important implications for policymakers and business practitioners in promoting the implementation of green finance and innovation to achieve business and environmental sustainability.

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Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 02 October 2024

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