The impact of customer pressure and the environmental regulation on green innovation performance

Abstract

In recent years, global climate change and environmental issues have become the serious attention of many parties. This is due to the growing awareness of customers, government and communities as the parties who are related to degradation of natural resources and environmental pollution matters. Firms encounter various external pressures, including consumer pressure and environmental regulation, so that they have to implement some environmentally friendly practices to achieve sustainable development, such as green innovation. The purpose of this study is to examine the impact of consumer pressure on green innovation performance and the role of moderating environmental regulation in this relationship. The conceptual model was verified using partial least square (PLS). Data was obtained from 80 food sector SMEs in Batu, East Java-Indonesia. The results show that customer pressure has a significant positive effect on green innovation performance. Likewise, environmental regulations have a significant positive effect on the relationship between customer pressure and green innovation performance. These results offer important implications on how the companies are more concerned about improving green innovation.