The mediating role of internal organisation factors between external environment and green innovation adoption among manufacturing small and medium enterprises: the moderating effect of big data analytics

Muhammad, Hamza (2026) The mediating role of internal organisation factors between external environment and green innovation adoption among manufacturing small and medium enterprises: the moderating effect of big data analytics. Master dissertation/thesis, UTAR.

PDF Download (1745Kb)

Abstract

The depletion of natural resources and environmental concerns have gained attention at the individual and economic levels in recent years. These environmental concerns have compelled the manufacturing sector all over the globe to adopt environmentally friendly practices, also termed green innovation adoption. The manufacturing sector covers the essential needs of individuals, and demand for its products increases on a daily basis. The green innovation adoption rate among manufacturing Small and Medium-sized Enterprises (SMEs) in developed countries is much higher than the adoption rate of such practices among developing nations. Therefore, there was a need to study the factors influencing manufacturing SMEs to adopt green innovation in developing countries like Malaysia, as the manufacturing industry plays an essential role in the Malaysian economy. This study examines the external and internal factors influencing eco-innovation adoption. The external environmental factors include the institutional and market environments. The institutional environment was further narrowed down into formal and informal institutions. Moreover, the market environment was classified into customer green demand and green competition. Additionally, the internal organisational factors were classified as green dynamic capabilities and organisational green culture. Specifically, the objectives of the present study were: (i) to assess the influence of the institutional environment and the market environment on green innovation adoption; (ii) to investigate the mediating role of internal organisational factors; and (iii) to examine the moderating effect of big data analytics capability. This study is theoretically grounded in institutional theory, organisational culture theory, and dynamic capability theory, providing a multilevel lens to explain how external pressures, internal resources, and technological capabilities interact to foster green innovation adoption. This study adopts a survey research design targeting Malaysian manufacturing SMEs using the quota sampling technique. The sample consists of 204 manufacturing SMEs from Selangor, Johor, Kuala Lumpur, Perak, and Penang and was analysed using PLS-SEM. The results show that institutional and market environments had a positive and significant impact on green innovation adoption among manufacturing SMEs, whereas green dynamic capability mediated the relationship between market environment and green innovation adoption. Additionally, organisational green culture mediated the relationship between green competition and green innovation adoption. Lastly, big data analytics capability moderated the relationship between green dynamic capabilities and green innovation adoption. The findings of the current research contribute theoretically by integrating three complementary perspectives to explain green innovation adoption in manufacturing SMEs, and practically by offering actionable insights for policymakers and SME managers. For instance, policymakers can design targeted incentives and regulatory frameworks to strengthen institutional roles, while SME managers can cultivate internal organisational factors and invest in data-driven capabilities to enhance competitiveness and sustainability. These findings serve as a benchmark for developing more effective strategies to accelerate green innovation adoption in Malaysia's manufacturing sector and for extending future research on green innovation adoption.

Actions (login required)