The Effect of Innovation Ability and Green Innovation on Business Performance Moderated by Competitive Advantage
DOI:
https://doi.org/10.37641/jimkes.v14i1.5049Keywords:
Business Performance, Competitive Advantage, Green Innovation, Housing Developers, Innovation CapabilityAbstract
Indonesia’s property sector grapples with fierce competition and rising expectations for sustainable practices, making it tough for housing developers to boost business performance. Developers must sharpen innovation skills and embrace green approaches to stay ahead. This study investigates how innovation capability and green innovation affect business performance among housing developers under Real Estate Indonesia’s West Java branch, with competitive advantage acting as a potential moderator. Using a quantitative explanatory design, data came from online questionnaires completed by 144 purposively selected managers. Partial Least Squares–Structural Equation Modeling analyzed the responses via SmartPLS. Results show that innovation capability significantly and positively drives business performance. Green innovation has a positive yet insignificant impact. Competitive advantage strongly and directly enhances performance. However, it does not meaningfully moderate the links from innovation capability or green innovation to performance. Superior performance hinges mainly on strong internal innovation and a solid competitive edge. Green initiatives need deeper strategic embedding to unlock their full potential. These insights equip West Java developers with clearer paths to craft smarter innovation strategies and build lasting advantages in a demanding market.
Downloads
References
Achmad, F., & Wiratmadja, I. I. (2025). Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management. Journal of Open Innovation: Technology, Market, and Complexity, 11(2), 100-132.
Akhtar, S., Li, C., Sohu, J. M., Rasool, Y., Hassan, M. I. U., & Bilal, M. (2024). Unlocking green innovation and environmental performance: The mediated moderation of green absorptive capacity and green innovation climate. Environmental Science and Pollution Research, 31(3), 4547–4562.
Ali, S., Degan, M., Omar, A., & Mohammad, A. J. (2024). Just go green: The effect of green innovation on competitive advantage with the moderating role of ‘access to finance’. Brazilian Journal of Operations & Production Management, 21(2), 1815–1815.
Alshammari, K. H., & Alshammari, A. F. (2023). Green innovation and its effects on innovation climate and environmental sustainability: The moderating influence of green abilities and strategies. Sustainability, 15(22), 158-178.
AL-Shboul, M. D. A. (2023). Fostering comparative advantage: The roles of data-driven competitive sustainability, green product innovation and green process innovation through moderated-mediation model. Business Process Management Journal, 29(7), 2228–2254.
Andayani, E., Dhyanasaridewi, I. G. A. D., & Suryana, A. (2025). Influence of business intelligence, environmental instability, and eco-innovation on financial outcomes with cultural moderation in digital age. Jurnal Ilmiah Manajemen Kesatuan, 13(3), 1523–1534.
Anik, S., & Sulistyo, H. (2021). The role of green intellectual capital and green innovation on competitive advantage of SMEs. International Journal of Learning and Intellectual Capital, 18(1), 28-44.
Awan, U., O. Alshaghdali, N., Chotia, V., Sahore, N., & Walsh, S. (2025). Leveraging global knowledge integration for advancing sustainable product design and green innovation in upstream supply chains. Journal of Knowledge Management, 29(9), 2964-2985.
Baquero, A. (2024). Examining the role of ambidextrous green innovation and green competitive advantage in stimulating sustainable performance: The moderating role of green absorptive capacity. Sage Open, 14(4), 2156-2170.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.
Chen, J., & Liu, L. (2018). Profiting from green innovation: The moderating effect of competitive strategy. Sustainability, 11(1), 15-24.
Creswell, J. W., & Creswell, J. D. (2021). Research design: Qualitative, quantitative, and mixed methods approaches (6th ed.). London: Sage Publications.
Fatiha, K. S., & Linda, M. R. (2025). Green product innovation increases competitive advantage, mediated by green dynamic capability. Journal of Management and Administrative Provisions, 5(1), 166–176.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2022). Partial least squares structural equation modeling: Rigorous applications, better results and higher acceptance. London: Wiley.
Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986–1014.
Hart, S. L., & Dowell, G. (2011). Invited editorial: A natural-resource-based view of the firm: Fifteen years after. Journal of Management, 37(5), 1464-1479.
Hayat, K., & Qingyu, Z. (2024). The synergistic effects of green innovation strategies on sustainable innovative performance with the mediation of green innovative competitive advantage. Corporate Social Responsibility and Environmental Management, 31(5), 4172–4189.
Idrees, H., Xu, J., & Andrianarivo Andriandafiarisoa Ralison, N. A. (2025). Green entrepreneurial orientation and knowledge creation process as enablers of green innovation performance: The moderating role of resource orchestration capability. European Journal of Innovation Management, 28(3), 754–782.
Jaenudin, J., Rizqona, A., & Musadad, M. (2023). The influence of green innovation and financial performance on competitive advantage and firm value. Proceedings of the Business Adaptability, Change Management and Technopreneur Conferences. Jakarta: Lembaga Penelitian & Pengabdian Masyarakat Universitas Bina Bangsa.
Luthfiyah, N. N., & Moko, W. (2024). Competitive advantage due to green innovation readiness: The mediating role of sustainable business model innovation. Journal of Entrepreneurship and Innovation, 3(3), 691–705.
Mu’min, H., Kaihatu, T. S., & Bernardus, D. (2025). Dynamic capabilities, technological capability, and green innovation performance in Indonesian manufacturing industries. Jurnal Ilmiah Manajemen Kesatuan, 13(5), 3803–3814.
Novitasari, M., & Agustia, D. (2023). Competitive advantage as a mediating effect in the impact of green innovation and firm performance. Business: Theory and Practice, 24(1), 216–226.
Nuryakin, N., & Maryati, T. (2022). Do green innovation and green competitive advantage mediate the effect of green marketing orientation on SMEs’ green marketing performance?. Cogent Business & Management, 9(1), 206-228.
Owusu, E. A., Zhou, L., Kwasi Sampene, A., Sarpong, F. A., & Arboh, F. (2024). Fostering environmental performance via corporate social responsibility and green innovation initiatives: Examining the moderating influence of competitive advantage. Sage Open, 14(2), 2143-2156.
Pradana, B. I., Putri, A. N. A., & Meivianto, M. T. (2024). Green practices: upaya meningkatkan keunggulan bersaing dan kinerja bisnis pada industri kuliner lokal di Kota Malang. Jurnal Ilmiah Manajemen Bisnis dan Inovasi Universitas Sam Ratulangi., 11(3), 1826-1842.
Pratiwi, N. H., & Rodiah, S. (2024). The influence of green competitive advantage and green innovation on sustainable performance. Journal of Business Accounting, 22(2), 155–173.
Putri, N. F., & Khusnah, H. (2025). The influence of green innovation and financial performance on competitive advantage and company value (2015–2020). Media Mahardhika, 20(2), 346-357.
Putri, V. P., & Riyanto, D. W. U. (2023). Green innovation and green competitive advantage mediate the influence of green marketing orientation on green marketing performance in SME Indonesia. International Journal of Economics, Business and Accounting Research (IJEBAR), 7(4), 220–235.
Rachmawati, S. (2023). The new model: Green innovation modified to moderate the influence of integrated reporting, green intellectual capital toward green competitive advantage. International Journal of Energy Economics and Policy, 13(2), 61–67.
Riaz, M., Jie, W., Sherani, Ali, S., & Chang, S. (2024). Assessing the role of organizational strategic factors in stimulating green innovation performance: Moderating effects of green absorptive capacity. Business Process Management Journal, 30(4), 1013–1043.
Richards, S. (2023). McKinsey & Company: People and organizational performance strategic analysis. Journak National Management, 7(5), 56-78.
Shehzad, M. U., Jianhua, Z., Naveed, K., Zia, U., & Sherani, M. (2024). Sustainable transformation: An interaction of green entrepreneurship, green innovation, and green absorptive capacity to redefine green competitive advantage. Business Strategy and the Environment, 33(7), 7041–7059.
Soesetio, Y., Rudiningtyas, D. A., Rakhmad, A. A. N., & Wiliandr, R. (2024). Entrepreneurial orientation, innovation, competitiveness, and performance of ultra-micro and micro enterprises in Indonesia. Global Business & Finance Review, 29(10), 55-65.
Sugiharto, R., & Alhazami, L. (2023). The influence of green innovation and green organizational culture on company performance through green competitive advantage (case study of XYZ coffee shop). Journal of Civil Management and Business, 5(2), 57–82.
Takyi, K. N., & Asamoah, C. A. (2024a). Green dynamic capacity as moderator between green innovation and performance. Journal of Business Economics and Management, 25(6), 1238–1259.
Takyi, K. N., Gavurova, B., & Asamoah, C. A. (2024b). A contextual model for assessing the nexus between green innovation practices and enterprise performance. Journal of Business Economics and Management, 25(6), 1238-1259.
Tariq, A., Badir, Y., & Chonglerttham, S. (2019). Green innovation and performance: Moderation analyses from Thailand. European Journal of Innovation Management, 22(3), 446–467.
Teece, D. J. (2017). Dynamic capabilities and strategic management. Oxford: Oxford University Press.
Wang, C. H. (2019). How organizational green culture influences green performance and competitive advantage: The mediating role of green innovation. Journal of Manufacturing Technology Management, 30(4), 666–683.
Wang, H., Khan, M. A. S., Anwar, F., Shahzad, F., Adu, D., & Murad, M. (2021). Green innovation practices and its impacts on environmental and organizational performance. Frontiers in psychology, 11(4), 553-575.
Wijaya, N. S., Rahmayanti, P. L. D., Darsana, I. M., & Wardana, M. A. (2024). The importance of innovation capabilities in improving business performance. Ekuitas: Jurnal Pendidikan Ekonomi, 11(2), 200–215.
Zameer, H., Wang, Y., Yasmeen, H., & Mubarak, S. (2022). Green innovation as a mediator in the impact of business analytics and environmental orientation on green competitive advantage. Management Decision, 60(2), 488–507.
