THE ROLE OF PRODUCT INNOVATION AS A MEDIATOR WITH GREEN TECHNOLOGY ON BUSINESS PERFORMANCE IN BATIK MSMES
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Keywords:
Green Tchnology;, inovasi produk ;, performa bisnis ;
Abstract
This study aims to analyze the effect of green technology adoption on business performance through product innovation in batik micro, small, and medium enterprises (MSMEs) in Lumajang Regency. A quantitative explanatory approach was employed. Data were collected through a structured questionnaire survey of 50 batik MSMEs selected using purposive sampling. Data were analyzed using Partial Least Squares–Structural Equation Modeling (PLS-SEM). that green technology adoption positively affects business performance and product innovation. Product innovation also positively influences business performance and partially mediates the relationship. These findings show that environmentally friendly technology improves operational efficiency and stimulates value-added product innovation. The novelty lies in examining product innovation as a mediating variable in batik MSMEs located in a non-industrial-center area. The originality is reflected in integrating green technology, product innovation, and business performance into a single mediation model using PLS-SEM. This study concludes that green technology adoption, supported by product innovation, significantly enhances batik MSMEs’ business performance.
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References
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Alraja, A. M., Hussein, N., & N, M. (2022). Adoption of green technology and its impact on sustainable performance in SMEs: A TOE framework approach. Journal of Cleaner Production, 352. https://doi.org/10.1016/j.jclepro.2022.131478
Alraja, M. N., Imran, R., Khashab, B. M., & Shah, M. (2022). Technological Innovation, Sustainable Green Practices and SMEs Sustainable Performance in Times of Crisis (COVID-19 pandemic). Information Systems Frontiers, 24(4), 1081–1105. https://doi.org/10.1007/s10796-022-10250-z
Andrianata, M., Sudarmiatin, S., & Rahayu, W. P. (2024). MSME Product Innovation as a Competitiveness Strategy in Local and Global Markets. Oikonomia : Journal of Management Economics and Accounting, 2(1), 39–47. https://doi.org/10.61942/oikonomia.v1i1.279
Aslam, M., Ahmad, B., & Rasheed, T. (2025). Navigating the Impact of Green Innovation, Technological Linkages, and Knowledge Management on Sustainable Performance of SMEs. Journal of International Entrepreneurship. https://doi.org/10.1007/s10843-024-00371-8
Ayu Kusumawardani, Kurnani, S. D., Achmad, T. B., Astari, A. J., & Sunardi, S. (2024). Readiness in implementing green industry standard for SMEs: Case of Indonesia’s batik industry. Heliyon, 10(16), e36045. https://doi.org/10.1016/j.heliyon.2024.e36045
Chen, Y., Lai, S., & Wen, C. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339.
Chhetri, J., Uniyal, A. K., Khan, N., Shareef, M. N., & Johri, A. (2025). The Influence of Green Market Orientation on Business Performance: Exploring the Mediating Role of Green Innovation. International Journal of Sustainable Development and Planning, 20(5), 1917–1923. https://doi.org/10.18280/ijsdp.200509
Dangelico Daniela, R. M. and V. (2017). Green Marketing: An analysis of definitions, dimensions, and relationships with stakeholders. Business Strategy and the Environment, 26(4), 457–475. https://doi.org/10.1002/bse.1935
Ferreras-Méndez, J. L., Newell, S., Fernández-Mesa, A., & Alegre, J. (2022). Depth and breadth of external knowledge search and performance: The mediating role of absorptive capacity. Industrial Marketing Management, 101, 160–172.
Hair, J. F., Hult, G. T. M., & Ringle, C. M. (2019). A Primer on Partial Least Squares Structural Equation Modeling ( PLS-SEM ) (3rd ed.).
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Hidayat, Y. A., Siregar, L. S., & Kurniani, K. (2023). Pengaruh Orientasi Kewirausahaan dan Inovasi Produk Pada Kinerja Bisnis UMKM Kopi Temanggung. Jurnal Agribisnis Indonesia, 11(1), 190–204. https://doi.org/10.29244/jai.2023.11.1.190-204
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Indrayani, L., & Triwiswara, M. (2020). The implementation of green industry standard batik industry to develop eco-friendly. IOP Conference Series: Materials Science and Engineering, 980(1). https://doi.org/10.1088/1757-899X/980/1/012081
Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71–79.
Khan, S. A. R., Ahmad, Z., Sheikh, A. A., & Yu, Z. (2024). Green technology adoption paving the way toward sustainable performance in circular economy: a case of Pakistani small and medium enterprises. International Journal of Innovation Science, 16(5), 801–822. https://doi.org/10.1108/IJIS-10-2022-0199
Komari, A. (2025). Towards an Advanced Economy Through Batik SMEs: The Strategic Role of Green Innovation and Knowledge Management in Local Competitiveness. International Journal of Sustainable Development and Planning, 20(8), 3323–3333. https://doi.org/10.18280/ijsdp.200815
Larios-Francia, R. P., & Ferasso, M. (2023). The relationship between innovation and performance in MSMEs: The case of the wearing apparel sector in emerging countries. Journal of Open Innovation: Technology, Market, and Complexity, 9(1), 100018. https://doi.org/10.1016/j.joitmc.2023.100018
Le, T. T. (2022). How do corporate social responsibility and green innovation transform corporate green strategy into sustainable firm performance? Journal of Cleaner Production, 362, 132228. https://doi.org/10.1016/j.jclepro.2022.132228
Liu, X., Huang, N., Su, W., & Zhou, H. (2024). Green innovation and corporate ESG performance: Evidence from Chinese listed companies. International Review of Economics & Finance, 95, 103461. https://doi.org/10.1016/j.iref.2024.103461
Maldonado-Guzmán, G., Garza-Reyes, J. A., & Pinzón-Castro, S. Y. (2023). Green innovation and firm performance: the mediating role of sustainability in the automotive industry. Management of Environmental Quality: An International Journal, 34(6), 1690–1711. https://doi.org/10.1108/MEQ-02-2023-0058
Marlina, A., Maulana, L. H., Sinaga, H. Z., Fadhila, J., & Miranti. (2025). Determining Marketing Performance Product Innovation and Digital Marketing. Jurnal Ilmiah Manajemen Kesatuan, 13(4), 3301–3312. https://doi.org/10.37641/jimkes.v13i4.3431
Muazza, Markim, M., Siti Syuhada, & Fachruddiansyah Muslim. (2025). Enhancing Sustainability of Batik MSMES Through Product Innovation and E-Commerce: A Case Study of Seberang Jambi Indonesia. International Journal of Islamic Business and Economics (IJIBEC), 9(1), 72–92. https://doi.org/10.28918/ijibec.v9i1.9902
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Rahmat, D. A., Rumanti, A. A., Pulungan, M. A., Rizaldi, A. S., & Amelia, M. (2024). Evaluating the Role of Open Innovation and Circular Economy in Enhancing Organizational Performance: Insights from Batik Small and Medium Enterprises in Banyuwangi, Indonesia. Sustainability, 16(24), 11194. https://doi.org/10.3390/su162411194
Rehman, S. U., Elrehail, H., Poulin, M., Shamout, M. D., & Alzoubi, H. M. (2023). Green managerial practices and green performance: A serial mediation model. International Journal of Innovation Studies, 7(3), 196–207. https://doi.org/10.1016/j.ijis.2022.12.004
Rodrigues, M., & Franco, M. (2023). Green Innovation in Small and Medium-Sized Enterprises (SMEs): A Qualitative Approach. Sustainability, 15(5), 4510. https://doi.org/10.3390/su15054510
Rubio-Andrés, M., Gutiérrez-Broncano, S., Linuesa-Langreo, J., & Sastre-Castillo, M. Á. (2025). Exploring the reality of corporate sustainability strategy and sales performance in entrepreneurial SMEs: the mediating effect of innovation and sustainability performance. International Entrepreneurship and Management Journal, 21(1), 90. https://doi.org/10.1007/s11365-025-01102-8
Sayem, S. M., Gupta, A. Sen, Saki, S. I., Nizum, M. A., & Rahman, M. I. (2025). Crafting Greener Future - Strengthening Sustainable Environmental Performance of SME Sector Through Green Practices: the Mediating Role of Green Innovation. https://doi.org/10.20944/preprints202511.0902.v1
Schrank, J., & Kijkasiwat, P. (2024). Impacts of green innovation on small and medium enterprises performance: The role of sustainability readiness and firm size. Business Strategy & Development, 7(3). https://doi.org/10.1002/bsd2.407
Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Harvard University Press.
Setyaningrum, R. P., Kholid, M. N., & Susilo, P. (2023). Sustainable SMEs Performance and Green Competitive Advantage: The Role of Green Creativity, Business Independence and Green IT Empowerment. Sustainability (Switzerland), 15(15). https://doi.org/10.3390/su151512096
Shahzad, M., Qu, Y., Rehman, S. U., & Zafar, A. U. (2022). Adoption of green innovation technology to accelerate sustainable development in manufacturing industry. Journal of Innovation & Knowledge, 7(4), 100231. https://doi.org/10.1016/j.jik.2022.100231
Sugiyono. (2019). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Alfabeta.
Sugiyono. (2021). Statistika untuk Penelitian. Alfabeta.
Theo, K., Nugroho, A., & Natasari, N. (2025). Dampak Orientasi Pasar Hijau Dan Inovasi Hijau Terhadap Kinerja Bisnis UMKM Kawasan Pariwisata Situ Buleud Purwakarta. Jurnal Minfo Polgan, 14(2), 1680–1688. https://doi.org/10.33395/jmp.v14i2.15133
Tornatzky, Fleischer, L. G., Chakrabarti, M., & Alok K. (1991). The processes of technological innovation. The Journal of Technology Transfer, 16(1), 45–46. https://doi.org/10.1007/BF02371446
Wang, M., Li, Y., Li, J., & Wang, Z. (2021). Green process innovation, green product innovation and its economic performance improvement paths. Journal of Environmental Management, 297, 113282. https://doi.org/10.1016/j.jenvman.2021.113282
Widjajanti, K., & Sugiyanto, E. K. (2023). Impact of Traditional Environmental Management Measures and Ecological Product Diversification on MSME Performance: Evidence of the Batik Industry in Central Java, Indonesia. Jurnal Manajemen Bisnis, 14(2), 378–393. https://doi.org/10.18196/mb.v14i2.19301
Wu, S., Cheng, P., & Yang, F. (2024). Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation. PLOS ONE, 19(8), e0306603. https://doi.org/10.1371/journal.pone.0306603
Yayan, B., & Hendayana, R. I. and. (2024). Sustainability and Technology Use in SMEs: A Pathway to Green Innovation. International Journal of Sustainable Business, 12(2), 88–101.
Yudawisastra, H. G., Mardiana, S., Suparjiman, S., & Suarsa, A. (2024). The Role of the Green Economy in The Correlation to The Circular Economy and Sustainable Business : A Case Study on The MSMEs of The GRI Community. Indonesian Journal of Sustainability Accounting and Management, 3. https://doi.org/10.20448/ijsam.v9i1.7279
Zhang, Q., & Ma, Y. (2021). The impact of environmental management on firm economic performance: The mediating effect of green innovation and the moderating effect of environmental leadership. Journal of Cleaner Production, 292, 126057. https://doi.org/10.1016/j.jclepro.2021.126057
Zhang, X., Sun, J., & Liu, H. (2021). Green innovation and firm performance: Evidence from manufacturing enterprises. Journal of Cleaner Production, 312, 127682. https://doi.org/10.1016/j.jclepro.2021.127682
Alraja, A. M., Hussein, N., & N, M. (2022). Adoption of green technology and its impact on sustainable performance in SMEs: A TOE framework approach. Journal of Cleaner Production, 352. https://doi.org/10.1016/j.jclepro.2022.131478
Alraja, M. N., Imran, R., Khashab, B. M., & Shah, M. (2022). Technological Innovation, Sustainable Green Practices and SMEs Sustainable Performance in Times of Crisis (COVID-19 pandemic). Information Systems Frontiers, 24(4), 1081–1105. https://doi.org/10.1007/s10796-022-10250-z
Andrianata, M., Sudarmiatin, S., & Rahayu, W. P. (2024). MSME Product Innovation as a Competitiveness Strategy in Local and Global Markets. Oikonomia : Journal of Management Economics and Accounting, 2(1), 39–47. https://doi.org/10.61942/oikonomia.v1i1.279
Aslam, M., Ahmad, B., & Rasheed, T. (2025). Navigating the Impact of Green Innovation, Technological Linkages, and Knowledge Management on Sustainable Performance of SMEs. Journal of International Entrepreneurship. https://doi.org/10.1007/s10843-024-00371-8
Ayu Kusumawardani, Kurnani, S. D., Achmad, T. B., Astari, A. J., & Sunardi, S. (2024). Readiness in implementing green industry standard for SMEs: Case of Indonesia’s batik industry. Heliyon, 10(16), e36045. https://doi.org/10.1016/j.heliyon.2024.e36045
Chen, Y., Lai, S., & Wen, C. (2006). The influence of green innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339.
Chhetri, J., Uniyal, A. K., Khan, N., Shareef, M. N., & Johri, A. (2025). The Influence of Green Market Orientation on Business Performance: Exploring the Mediating Role of Green Innovation. International Journal of Sustainable Development and Planning, 20(5), 1917–1923. https://doi.org/10.18280/ijsdp.200509
Dangelico Daniela, R. M. and V. (2017). Green Marketing: An analysis of definitions, dimensions, and relationships with stakeholders. Business Strategy and the Environment, 26(4), 457–475. https://doi.org/10.1002/bse.1935
Ferreras-Méndez, J. L., Newell, S., Fernández-Mesa, A., & Alegre, J. (2022). Depth and breadth of external knowledge search and performance: The mediating role of absorptive capacity. Industrial Marketing Management, 101, 160–172.
Hair, J. F., Hult, G. T. M., & Ringle, C. M. (2019). A Primer on Partial Least Squares Structural Equation Modeling ( PLS-SEM ) (3rd ed.).
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2019). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (2 (ed.)). SAGE Publications.
Hidayat, Y. A., Siregar, L. S., & Kurniani, K. (2023). Pengaruh Orientasi Kewirausahaan dan Inovasi Produk Pada Kinerja Bisnis UMKM Kopi Temanggung. Jurnal Agribisnis Indonesia, 11(1), 190–204. https://doi.org/10.29244/jai.2023.11.1.190-204
Indrawati, H., Caska, C., Hermita, N., Sumarno, S., & Syahza, A. (2025). Green innovation adoption of SMEs in Indonesia: what factors determine it? International Journal of Innovation Science, 17(1), 19–37. https://doi.org/10.1108/IJIS-02-2023-0047
Indrayani, L., & Triwiswara, M. (2020). The implementation of green industry standard batik industry to develop eco-friendly. IOP Conference Series: Materials Science and Engineering, 980(1). https://doi.org/10.1088/1757-899X/980/1/012081
Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard: Measures that drive performance. Harvard Business Review, 70(1), 71–79.
Khan, S. A. R., Ahmad, Z., Sheikh, A. A., & Yu, Z. (2024). Green technology adoption paving the way toward sustainable performance in circular economy: a case of Pakistani small and medium enterprises. International Journal of Innovation Science, 16(5), 801–822. https://doi.org/10.1108/IJIS-10-2022-0199
Komari, A. (2025). Towards an Advanced Economy Through Batik SMEs: The Strategic Role of Green Innovation and Knowledge Management in Local Competitiveness. International Journal of Sustainable Development and Planning, 20(8), 3323–3333. https://doi.org/10.18280/ijsdp.200815
Larios-Francia, R. P., & Ferasso, M. (2023). The relationship between innovation and performance in MSMEs: The case of the wearing apparel sector in emerging countries. Journal of Open Innovation: Technology, Market, and Complexity, 9(1), 100018. https://doi.org/10.1016/j.joitmc.2023.100018
Le, T. T. (2022). How do corporate social responsibility and green innovation transform corporate green strategy into sustainable firm performance? Journal of Cleaner Production, 362, 132228. https://doi.org/10.1016/j.jclepro.2022.132228
Liu, X., Huang, N., Su, W., & Zhou, H. (2024). Green innovation and corporate ESG performance: Evidence from Chinese listed companies. International Review of Economics & Finance, 95, 103461. https://doi.org/10.1016/j.iref.2024.103461
Maldonado-Guzmán, G., Garza-Reyes, J. A., & Pinzón-Castro, S. Y. (2023). Green innovation and firm performance: the mediating role of sustainability in the automotive industry. Management of Environmental Quality: An International Journal, 34(6), 1690–1711. https://doi.org/10.1108/MEQ-02-2023-0058
Marlina, A., Maulana, L. H., Sinaga, H. Z., Fadhila, J., & Miranti. (2025). Determining Marketing Performance Product Innovation and Digital Marketing. Jurnal Ilmiah Manajemen Kesatuan, 13(4), 3301–3312. https://doi.org/10.37641/jimkes.v13i4.3431
Muazza, Markim, M., Siti Syuhada, & Fachruddiansyah Muslim. (2025). Enhancing Sustainability of Batik MSMES Through Product Innovation and E-Commerce: A Case Study of Seberang Jambi Indonesia. International Journal of Islamic Business and Economics (IJIBEC), 9(1), 72–92. https://doi.org/10.28918/ijibec.v9i1.9902
Nuryakin, N. (2022). Green Product Innovation, Green Process Innovation, and its Impact on Green Performance of Batik SMEs. Benefit: Jurnal Manajemen Dan Bisnis, 7(1), 1–8. https://doi.org/10.23917/benefit.v7i1.18132
Rahmat, D. A., Rumanti, A. A., Pulungan, M. A., Rizaldi, A. S., & Amelia, M. (2024). Evaluating the Role of Open Innovation and Circular Economy in Enhancing Organizational Performance: Insights from Batik Small and Medium Enterprises in Banyuwangi, Indonesia. Sustainability, 16(24), 11194. https://doi.org/10.3390/su162411194
Rehman, S. U., Elrehail, H., Poulin, M., Shamout, M. D., & Alzoubi, H. M. (2023). Green managerial practices and green performance: A serial mediation model. International Journal of Innovation Studies, 7(3), 196–207. https://doi.org/10.1016/j.ijis.2022.12.004
Rodrigues, M., & Franco, M. (2023). Green Innovation in Small and Medium-Sized Enterprises (SMEs): A Qualitative Approach. Sustainability, 15(5), 4510. https://doi.org/10.3390/su15054510
Rubio-Andrés, M., Gutiérrez-Broncano, S., Linuesa-Langreo, J., & Sastre-Castillo, M. Á. (2025). Exploring the reality of corporate sustainability strategy and sales performance in entrepreneurial SMEs: the mediating effect of innovation and sustainability performance. International Entrepreneurship and Management Journal, 21(1), 90. https://doi.org/10.1007/s11365-025-01102-8
Sayem, S. M., Gupta, A. Sen, Saki, S. I., Nizum, M. A., & Rahman, M. I. (2025). Crafting Greener Future - Strengthening Sustainable Environmental Performance of SME Sector Through Green Practices: the Mediating Role of Green Innovation. https://doi.org/10.20944/preprints202511.0902.v1
Schrank, J., & Kijkasiwat, P. (2024). Impacts of green innovation on small and medium enterprises performance: The role of sustainability readiness and firm size. Business Strategy & Development, 7(3). https://doi.org/10.1002/bsd2.407
Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the Business Cycle. Harvard University Press.
Setyaningrum, R. P., Kholid, M. N., & Susilo, P. (2023). Sustainable SMEs Performance and Green Competitive Advantage: The Role of Green Creativity, Business Independence and Green IT Empowerment. Sustainability (Switzerland), 15(15). https://doi.org/10.3390/su151512096
Shahzad, M., Qu, Y., Rehman, S. U., & Zafar, A. U. (2022). Adoption of green innovation technology to accelerate sustainable development in manufacturing industry. Journal of Innovation & Knowledge, 7(4), 100231. https://doi.org/10.1016/j.jik.2022.100231
Sugiyono. (2019). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Alfabeta.
Sugiyono. (2021). Statistika untuk Penelitian. Alfabeta.
Theo, K., Nugroho, A., & Natasari, N. (2025). Dampak Orientasi Pasar Hijau Dan Inovasi Hijau Terhadap Kinerja Bisnis UMKM Kawasan Pariwisata Situ Buleud Purwakarta. Jurnal Minfo Polgan, 14(2), 1680–1688. https://doi.org/10.33395/jmp.v14i2.15133
Tornatzky, Fleischer, L. G., Chakrabarti, M., & Alok K. (1991). The processes of technological innovation. The Journal of Technology Transfer, 16(1), 45–46. https://doi.org/10.1007/BF02371446
Wang, M., Li, Y., Li, J., & Wang, Z. (2021). Green process innovation, green product innovation and its economic performance improvement paths. Journal of Environmental Management, 297, 113282. https://doi.org/10.1016/j.jenvman.2021.113282
Widjajanti, K., & Sugiyanto, E. K. (2023). Impact of Traditional Environmental Management Measures and Ecological Product Diversification on MSME Performance: Evidence of the Batik Industry in Central Java, Indonesia. Jurnal Manajemen Bisnis, 14(2), 378–393. https://doi.org/10.18196/mb.v14i2.19301
Wu, S., Cheng, P., & Yang, F. (2024). Study on the impact of digital transformation on green competitive advantage: The role of green innovation and government regulation. PLOS ONE, 19(8), e0306603. https://doi.org/10.1371/journal.pone.0306603
Yayan, B., & Hendayana, R. I. and. (2024). Sustainability and Technology Use in SMEs: A Pathway to Green Innovation. International Journal of Sustainable Business, 12(2), 88–101.
Yudawisastra, H. G., Mardiana, S., Suparjiman, S., & Suarsa, A. (2024). The Role of the Green Economy in The Correlation to The Circular Economy and Sustainable Business : A Case Study on The MSMEs of The GRI Community. Indonesian Journal of Sustainability Accounting and Management, 3. https://doi.org/10.20448/ijsam.v9i1.7279
Zhang, Q., & Ma, Y. (2021). The impact of environmental management on firm economic performance: The mediating effect of green innovation and the moderating effect of environmental leadership. Journal of Cleaner Production, 292, 126057. https://doi.org/10.1016/j.jclepro.2021.126057
Zhang, X., Sun, J., & Liu, H. (2021). Green innovation and firm performance: Evidence from manufacturing enterprises. Journal of Cleaner Production, 312, 127682. https://doi.org/10.1016/j.jclepro.2021.127682
Published
2026-03-24
How to Cite
Firdaus teguh Wicaksono, Fazlurrahman, H., Abrori, N. H. H., & Rahman, M. F. W. (2026). THE ROLE OF PRODUCT INNOVATION AS A MEDIATOR WITH GREEN TECHNOLOGY ON BUSINESS PERFORMANCE IN BATIK MSMES. Eksis: Jurnal Riset Ekonomi Dan Bisnis, 20(2), 87 - 104. https://doi.org/10.26533/eksis.v20i2.1568
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