This study aims to examine the impact of green innovation (GI) on business performance (BP) and the moderating role of environmental regulation (ER) in this relationship within Indonesia’s automotive industry.
This study surveyed 248 managers from automotive dealerships representing various brands across Indonesia. The data were analyzed using partial least squares structural equation modeling.
The findings indicate that GI has a significant positive effect on BP, and ER positively moderates this relationship, thereby strengthening the positive impact of GI on BP.
This study advances the literature by empirically demonstrating how ER strengthens the effect of GI on BP, revealing a novel conditional mechanism that links sustainability initiatives to firm performance. Theoretically, the study extends the resource-based view (RBV) and institutional theory by positioning GI as an internal capability and ER as a formal institutional factor driving BP. Practically, it offers strategic insights for policymakers to promote GI and supports automotive firms in leveraging ER to enhance sustainability and BP.
