Underlying Factors of Green Innovation Adoption Among Indonesian Batik Enterprises

Abstract

The literature on innovation management indicates the rise of the green innovation topic recently, which emphasises how companies adopt and implement advanced friendly technology to achieve environmental sustainability as a part of sustainable development goals. Most of the studies were conducted in the context of large manufacturing companies. Little attention has been paid to the setting of small and medium-sized enterprises (SMEs) as the backbone of the economy in many countries (e.g. Takalo et al. 2021). In Indonesia, the contribution of SMEs is significant for absorbing 97% of the total workforce and generating 60.4% of total investment, according to the Coordinating Ministry for the Economy in 2021. Our study uses institutional theory as a point of reference. It aims to understand various factors that drive organisations to seek legitimacy or social fitness when they want to adopt or make a decision (Dimaggio and Powell, 1983; Oliver, 1991), which in this context is adopting green innovation. The study deployed qualitative multiple case studies by conducting in-depth interviews for 11 SMEs (14 participants) in batik sectors in Indonesia who were already implementing green innovation (from only green, a combination of brown and green and green until brown to green). SMEs in the batik sector were selected as a sample because batik is well known as traditional clothing from Java and is considered the original cultural heritage of Indonesia by UNESCO (Wang, 2019). Batik faces fierce competition due to mass and fast production from larger companies and the issue of chemical dyes and synthetic colours (Raya et al., 2021). Validity in this research was supported by the triangulation method combined with member checking. Data were analysed using a content analysis method referring to the procedure by Miles et al. (2014) to answer the research question. The current study shows the pressure of external forces, namely regulatory/coercive force, cognitive pressure and normative pressure, are the motives for organisational decisions and actions to adopt green innovation. Our findings substantiate and broaden the institutional theory (Bruton et al. 2010; Rui and Lu, 2020) by providing empirical evidence regarding SMEs in the batik sector in Indonesia. Limitations of the study are highlighted, which align with suggestions for future research avenues. Potential practical implications are also discussed.