Environmental pressures and eco-innovation in manufacturing SMEs: the mediating effect of environmental capabilities.

Abstract

Purpose: Although environmental pressures have been covered in great detail in prior literature as the drivers of eco-innovation, there remains inconsistency in the empirical results concerning the effects of these pressures on eco-innovation behaviour. Hence, this paper aims to investigate the impact of environmental pressures, namely, regulatory pressure, green demand and competitive pressure, on eco-innovation among manufacturing SMEs. Moreover, it examined the mediating role of environmental capabilities on the environmental pressure–eco-innovation relationship. Design/methodology/approach: Quantitative data were collected using an online self-reported questionnaire survey to test the hypothesised model. A total of 183 valid questionnaires were collected from managers and owners of manufacturing SMEs in Egypt. Findings: The results of the data analysis using the Smart-PLS software package revealed that among environmental pressures, only green demand had a direct effect on eco-innovation. In addition, environmental capabilities only mediated the effect of competitive pressure on eco-innovation. Originality/value: This study has been one of the few addressing the issue of how the drivers of eco-innovation interact. It has also provided the managers and owners of SMEs and policymakers with practical implications.