Driving Green Innovation to Enhance Competitive Advantage: Thailand’s Manufacturing Sector

Abstract

One of the various strategies a firm can implement to enjoy a competitive advantage is green innovation. This study seeks to examine both the direct and indirect effects of green innovation on competitive advantage by extending the research framework based on the strategic choice theory. Utilizing cluster sampling, data was collected among manufacturers operating in the six regions of Thailand. The direct effect of the three components of green innovation (green product innovation, green process innovation, and green managerial innovation) and the moderating effect of a green orientation were analyzed using the OLS Regression and PROCESS model 1. The findings reveal that (i) the three components have a positive impact on competitive advantage, and (ii) each conditional effect (a strong or a weak green orientation) has a positive impact on the linkage between green innovation and its three components and competitive advantage. Surprisingly, the interaction of green product innovation and weak green orientation provides a greater effect on competitive advantage than a strong one. This is because most executives are concerned with the high costs of eco-friendly raw materials. Ignoring environmental issues, however, can negatively impact the image a firm and cause it to miss opportunities. It is recommended that an executive opts for a certain level of green orientation in order to minimize unforeseen business risks and enjoy a competitive advantage.