Sustainable Innovation and Financial Performance: The Roles of Green Process and Product Strategies

Abstract

This study aims to examine the effect of green process innovation, green product innovation, and green image on financial performance, with firm size, financial constraints, total asset turnover, and firm age as control variables. The research focuses on consumer non-cyclical companies listed on the Indonesia Stock Exchange during the period 2021–2022. The data employed are secondary data derived from companies’ annual financial statements and sustainability reports. The sampling technique applied was purposive sampling, resulting in a final sample of 164 firm-year observations across two years. The findings reveal that green process innovation significantly influences green product innovation. However, green process innovation does not directly affect financial performance. Instead, green product innovation mediates the relationship between green process innovation and financial performance. Furthermore, green image is found to have no significant effect on financial performance, nor does it moderate the relationship between green product innovation and financial performance in consumer non-cyclical firms.

Keywords: financial performance, green process innovation, green product innovation, green image