The relationship between green innovation & firm performance: The mediating role of cost leadership competitive advantage

Abstract

The purpose of this study is to examine the relationship between green innovation and firm performance with the participation of cost leadership competitive advantage as the role of mediating. The study used structural equation modeling employing the partial least squares method (PLS-SEM) to examine the hypotheses. Results based on a survey data collected from 121 middle and senior managers of firms that engage in manufacturing in Vietnam show that both dimensions of green innovation including green product innovation and green process innovation improve performance of manufacturers in Vietnam. Further, cost leadership competitive advantage fully mediates the relationship between green process innovation and firm performance but does not act as a mediator in the relationship between green product innovation and firm performance. The study’s findings contribute to the extant literature of how green innovation affects firm performance. These findings also suggest practical implications for green innovation management in order to enhance firm performance