KnE Social Sciences

Published date: Sep 10 2025

Journal Title: KnE Social Sciences

Issue title: The International Conference on Economic and Sustainable Development (ICESIDE)

Pages: 12 - 25

DOI: 10.18502/kss.v10i20.19611

Ambariyanto Ambariyantoambariyanto@trunojoyo.ac.idDepartment of Economics, Faculty of Economic and Business, Universitas Trunojoyo Madura

Henny OktaviantiDepartment of Economics, Faculty of Economic and Business, Universitas Trunojoyo Madura

This study investigates the institutional factors influencing the adoption of green innovation among small and medium-sized enterprises (SMEs) in Indonesia, with a focus on its implications for sustainable development. The research draws on institutional theory to examine the impact of regulatory, normative, and mimetic pressures on green innovation adoption. It also evaluates the effects of these pressures on the economic, social, and environmental dimensions of sustainability. A quantitative approach, in conjunction with partial least squares structural equation modelling (PLS-SEM), was employed to collect data from 132 SMEs across four districts on Madura Island. The findings indicate that regulatory and normative pressures exert a substantial and positive influence on the adoption of green innovation, while mimetic pressure demonstrates no significant impact. Moreover, the adoption of green innovation has been demonstrated to significantly enhance economic performance, social responsibility, and environmental sustainability. These results underscore the critical role of institutional pressures in promoting sustainable practices within SMEs and highlight green innovation as a vital strategy for achieving balanced and inclusive growth.

Keywords: SMEs, green innovation, institutional

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