Wirman SYAFRI, Hadi PRABOWO, Sofyan Ashari NUR, Muafi MUAFI /
Journal of Asian Finance, Economics and Business Vol 8 No 5 (2021) 0365–0374
365
Print ISSN: 2288-4637 / Online ISSN 2288-4645
doi:10.13106/jafeb.2021.vol8.no5.0365
The Impact of Workplace Green Behavior and Green Innovation
on Green Performance of SMEs: A Case Study in Indonesia
Wirman SYAFRI1, Hadi PRABOWO2, Sofyan Ashari NUR3, Muafi MUAFI4
Received: January 15, 2021
Revised: March 21, 2021 Accepted: April 01, 2021
Abstract
Environmental concern has become the focus of various studies, academic research, company policies, and government policies. A business
sector, which has seen a high level of urgency in environmental empowerment are small- and medium-sized enterprises (SMEs). These are
an economic sector, which is imbedded in society and has become one of the largest economic sectors in Indonesia. Therefore, this study
analyzes the relationship between green human resource management (GHRM), workplace green behavior (WGB) and green innovation
(GI), and increasing firm performance (FP). This study is using quantitative research methods. The data is obtained through distributing
questionnaires to 180 culinary SMEs employees from cafes and modern food restaurant in the Special Region of Yogyakarta (DIY),
Indonesia. The data is then analyzed using Structural Equation Modeling (SEM) with Smart-PLS. The results of this study show that GHRM
has significant positive effect on workplace green behavior and firm performance, while workplace green behavior also has significant
positive effect on green innovation and firm performance. In addition, green innovation has significant positive effect on firm performance.
This study contributes to provide and extends the literature related to building green SMEs, which is empirically demonstrated to be able
to improve company performance.
Keywords: Green Human Resource Management, Workplace Green Behavior, Green Innovation, Firm Performance
JEL Classification Code: L20, J13, J30
1. Introduction
Heightened business competition makes companies
compete to provide attractive value, uniqueness, and
novelty for consumers. There are many company’s values,
which are aimed to improve its performance, one of which
is environmentally-based business management. The
issues of globalization and greening have always been hot
topics for society. They push companies to contribute to
1
First Author. Professor, Management Department, Institut
Pemerintahan Dalam Negeri, Jatinangor, Indonesia.
Associate
Professor,
Management
Department,
Institut
Pemerintahan Dalam Negeri, Jatinangor, Indonesia.
3
Junior Researcher, Indo Semesta Consultant, Yogyakarta, Indonesia.
4
Corresponding Author. Professor, Department of Management,
Business and Economics Faculty, Universitas Islam Indonesia,
Indonesia [Postal Address: Jl. SWK Ringroad Utara Condong Catur,
Yogyakarta, 55283, Indonesia] Email: muafi@uii.ac.id
2
© Copyright: The Author(s)
This is an Open Access article distributed under the terms of the Creative Commons Attribution
Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/) which permits
unrestricted non-commercial use, distribution, and reproduction in any medium, provided the
original work is properly cited.
the environment, so it will gain more value and become
attractive to consumers (Unsworth et al., 2020; Goworek
et al., 2018; Norton et al., 2017).
The importance of environmental issues for business
sustainability is economic growth. Economic growth
is one of the factors in climate change (Goworek et al.,
2018). Therefore, companies as economic actors must
responsible to protect the environment (Unsworth et al.,
2016). Environmental control practices must be conducted
by all business actors, ranging from SMEs to corporate
level. Previous studies have analyzed the activities of
environmentally-based companies at the corporate level, but
only a few have discussed environmentally-based business
activities at the SME level. Therefore, this study will analyze
the role of environmentally-based business practices on the
SMEs performance.
Environmentally-based business practices cover various
levels of study from the employee level to the strategy level,
starting with green human resource management (GHRM).
It will encourage the creation of workplace green behavior
(WGB) (Dumont et al., 2017; Unsworth et al., 2020) and
green innovation (GI) (Harrington et al., 2016), which
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Journal of Asian Finance, Economics and Business Vol 8 No 5 (2021) 0365–0374
ultimately increase firm performance (FP). Employees have
an important role in shaping environmentally-based business
activities. GHRM is needed to form green employees
(Norton et al., 2017). GHRM covers various aspects,
namely, selection, training, empowerment, and performance
(Sheikh et al., 2019). Empirical studies have documented
that GHRM application have significant effect on the
creation of workplace green behavior (WGB) (Dumont et al.,
2017; Fawehinmi et al., 2020). Workplace green behavior
(WGB) is an individual behavior that contributes to the
sustainability of an organization’s environment (i.e., storing
office supplies, separating waste, open communication, and
sharing environmental sustainability information between
employees) in the company’s work environment (Kim et al.,
2017; Kim et al., 2019).
The implementation of workplace green behavior (WGB)
is also documented by several literatures. WGB encourages
companies to create green innovation (Süßbauer & Schäfer,
2019; Cai et al., 2020; Li et al., 2019; Song & Yu, 2018;
Soewarno et al., 2019; Alhadid & As’ad, 2014). Employees
who are aware of the environment have an added value in
enhancing company’s image (Cai et al., 2020) since employees
are part of company and directly related to consumers. When
a company provides a work environment, which cares about
environmental interests, the innovations created by the
company always raise environmental values (Süßbauer &
Schäfer, 2019; Cai et al., 2020). Therefore, this study analyzes
the role of GHRM, WGB, and GI on SME performance.
2. Literature Review
2.1. Green Human Resource Management
(GHRM) and Workplace Green
Behavior (WGB)
GHRM defines a process of forming an environmentallyfriendly workforce, understanding and appreciating the
culture to protect the environment of the organization.
The main objective of GHRM is to ensure environmental
friendliness throughout the company’s management process
(Sheikh et al., 2019). Companies have a responsibility to
incorporate the GHRM philosophy into corporate strategies
and human resource management policies (Sheikh et al.,
2019; Arqawi et al., 2019; Yong et al., 2019). Fawehinmi
et al. (2020); Dumont et al. (2017) find that GHRM is
able to create green behavior in the company’s work
environment. GHRM includes several company activities
such as recruiting and hiring employees with awareness
and knowledge related to environmental sustainability,
training about environmental protection in the work
environment to develop employee skills, competencies and
environmental knowledge, assessing green performance
for employees, and rewarding employees based on success
implementation of GHRM established by organizations
(Mehta & Chugan, 2015).
The GHRM concept is basically designed to create
workplace green behavior. Dumont et al. (2017) find that
the effect of GHRM on workplace green behavior can be
mediated by psychological green climate and also moderated
by individual green values. These results indicate that creating
a workplace green behavior requires loving environment
character for each employee. There are several reasons why
employees in companies that implement GHRM more easily
create an environmentally-friendly work environment than
companies that do not implement GHRM. First, GHRM
practices like notification and understanding that companies
focus and care about environmental sustainability, green
selection implementation and green values. Green training
also creates recognition of loving environment by employees
(Renwick et al., 2013). Second, GHRM will increase
employee knowledge, skills, and competence, which is
the main process in establishing workplace green behavior
(Fawehinmi et al., 2020; Cherian & Jacob, 2012).
H1: Green human resource management (GHRM) has a
significant effect on workplace green behavior (WGB).
2.2. Green Human Resource Management
(GHRM) and Firm Performance (FP)
Green human resource management (GHRM) is part of
sustainable human resource management. In addition GHRM
is also a social responsibility of the company (Alkerdawy,
2018; Tulsi & JI, 2020). The GHRM application includes
several aspects, which in the end will have a positive and
significant impact on company performance (Alkerdawy,
2018; Teimouri et al., 2014; Velasquez et al., 2011; Das
& Singh, 2016). Environmental problems are important
issues that must be considered by companies, not only large
companies, but also SMEs and corporate level. They must pay
attention to environmental problems because, if the company
were able to reduce the negative impact on the environment,
the company would simultaneously improve its performance
(Mousa & Othman, 2019; Ahmad, 2015). Fernando et al.
(2019) find that the company’s efforts in preserving the
environment are directly proportional to the company’s
performance. The amount of corporate responsibility for
environmental sustainability can be triggered by green human
resource management (Tulsi & JI, 2020)
GHRM covers several aspects within the company,
including green recruitment and selection, green job
analysis and design, green training and development, green
performance management, and green reward management
(Mwita, 2019; Mehta & Chugan, 2015). GHRM involves
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Journal of Asian Finance, Economics and Business Vol 8 No 5 (2021) 0365–0374
environmentally-friendly human resource policies and practices.
It will help organizations achieve their financial goals through
environmental branding and protect the environment from any
negative impacts that may be caused by organizational policies
and actions (Uddin & Islam, 2015; Mwita, 2019). Based on
the definition and implementation function of GHRM, it is
clear that GHRM improves company performance (Dumont
et al., 2017; Sheikh et al., 2019; Alkerdawy, 2018; Fernando
et al., 2019; Mousa & Othman, 2019; Mwita, 2020; Yusoff
et al., 2018). GHRM practice is an organizational resolution,
which involves every part of the organization to increase
environmental awareness and concern through programmed
and sustainable activities (Yusoff et al., 2018).
H2: Green human resource management (GHRM) has a
significant effect on firm performance (FP).
2.3. Workplace Green Behavior (WGB) and
Green Innovation (GI)
Workplace green behavior (WGB) is individual behavior
that contributes the sustainability of an organization’s
environment (i.e., storing office supplies, separating waste,
open communication, and sharing environmental sustainability
information between employees) under employee’s will (Kim
et al., 2017; Kim et al., 2019). This behavior can be increased
through the application of an environmental care mindset
at all levels of the company, from employees to leaders. In
order to create an environmentally-friendly work atmosphere
and innovation, three main strategies are needed, namely,
opportunity, experimentation, and stabilization (Süßbauer &
Schäfer, 2019). These three strategies can be implemented if the
company applies green behavior at the level of organizational
structure and goals (Süßbauer & Schäfer, 2018;). Cai et al.
(2020) emphasize that green behavior, especially that applied
by organizational leaders, will be able to have significant effect
on the creation of green innovation, which includes green
product innovation and green process innovation. Workplace
green behavior (WGB) is implemented in the environmental
protection form in the workplace, recycling waste, paperless,
and adopting renewable energy (Uwem et al., 2021). The
application of WGB increases a sustainable competitive
advantage in terms of producing environmentally-friendly
products and services. (Uwem et al., 2021).
Therefore, the literature emphasizes the importance of
green behavior in the work environment because it has an
important role in building a company image (Afsar et al.,
2016; Cai et al., 2020). Previous research has specifically
positioned green behavior in the workplace to create
environmentally-based corporate innovations (Ozaralli
& Rivenburgh, 2016; Robertson & Barling, 2013; Afsar
et al., 2016; Cai et al., 2020; Li et al., 2019; Alhadid
& As’ad, 2014). Green behavior can be in the form of
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promoting the information exchange about environmental
issues, emphasizing recycling activities, and encouraging
the supply of environmental friendly companies. This allows
employees to realize the importance of green behavior during
the innovation process (Kim et al., 2017; Cai et al., 2020).
H3: Workplace green behavior (WGB) has a significant
effect on green innovation (GI).
2.4. Workplace Green Behavior (WGB) and
Firm Performance (FP)
Sustainable competitive advantage can be achieved
through an environmentally-friendly work. Growth of
population levels and new cities development increase
three times the pressure on the environment (Iqbal et al.,
2018). Increase of public awareness about economic growth
results in environmental pollution, so that business actors
have the responsibility to reduce the negative impact of
business activities on the environment (Uwem et al., 2021).
In addition, people are faced with serious challenges due
to the overexploitation of human resources, environmental
degradation, and unsustainable living standards (Uwem et al.,
2021). On the other hand, recent environmental disasters are
the result of unreasonable tree cutting, burning fossil fuels,
and the release of carbon monoxide due to organizational
and human activities (Fawehinmi et al., 2020).
As a result, an increase in the number of people and
industrial waste have severe consequences for humanity
and business (Iqbal et al., 2018). Some literature finds that
workplace green behavior improves company performance
(Kim et al., 2017; Dumont et al., 2017; Kim et al., 2019).
Especially for SMEs, the consumers in this pandemic era
really tend to pay attention to cleanliness and environmental
sustainability, which makes SMEs who care about the
environment have a good image in consumers’ eyes. Employee
awareness regarding environmental sustainability is the key
to the company’s sustainability (Süßbauer & Schäfer, 2019).
Dumont et al. (2017) emphasize that an environmentallyfriendly culture in the company will provide motivation
and satisfaction for employees. Likewise, Kim et al. (2017);
KolaLawal (2015) find that the creation of green behavior
in the work environment increases employee satisfaction, so
that company performance is getting better.
H4: Workplace green behavior (WGB) has a significant
effect on firm performance (FP).
2.6. Green Innovation (GI) and
Firm Performance (FP)
Green innovation is a company innovation that is
based on environmental concern (Harrington et al., 2016).
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Green innovation for SMEs is not only related to company
orientation and goals, but also supply chains, services, and
waste management. Small companies show a higher return
on green innovation investment than large companies,
which shows that small companies are more likely to seek
variety and visibility to access better resources. Some
previous research has shown that green innovation has
a significant effect on company performance (Xie et al.,
2019; Lin et al., 2019; Rezende et al., 2019; Zhang et al.,
2019; Rodriguez et al., 2017; Tariq, 2018; Arfi et al., 2017;
El-Kassar, 2018).
Green innovation can be described as green process
innovation and green product innovation, both able to
improve company performance (Xie et al., 2019). Lin et al.
(2019) state that green strategic innovation positively affects
the company’s financial performance. On the other hand, Lin
et al. (2019) find that company size negatively moderates
the relationship between green strategic innovation and
company financial performance. Mehta et al. (2021) found
that innovation, especially those supported by technology,
is the key to business success, especially for SMEs, and
the technology that should be used in innovating is green
technology (Saifullah et al., 2017).
Different results are found by Rezende et al. (2019). There
is no significant relationship between the intensity of green
innovation and the company’s financial performance in the
short term, but it will provide a significant relationship in the
long term. Other findings reveal that green innovation has a
significant effect on the company’s financial performance.
The higher green innovation, the higher company’s
profitability, and the lower the company’s financial risk. In
addition, study findings also support the statement that the
higher the intensity of market resources, market turmoil, and
technology turmoil, the more it strengthens green innovation
and company financial performance (Tariq, 2018).
questionnaire sources are adopted successively: GHRM
(Dumont et al., 2017) and firm performance (FP) (Anwar
et al., 2018).
4. Results and Discussion
4.1. Respondents’ Profile and Characteristics
Respondents’ characteristics in this study include
gender, age, education, and income, which can be seen in
Table 1. The majority of respondents are women (52.5%),
aged 15–30 years (45%), undergraduate education (75%),
with an income of Rp1 million to Rp5 million (55.5%).
4.2. Validity and Reliability Testing
4.2.1. Outer Model Evaluation
Outer model evaluation determine the validity and
reliability of measurement instruments in the research
model. The first outer model analysis is to see the convergent
validity test, which can be done by looking at the value of
each loading factor. The loading factor value describes the
magnitude of the correlation between each measurement
item and the latent variable (its construct). An item fulfills
the convergent validity if the loading factor score on each
path between the component (latent variable) and the
manifest variable is ≥ 0.7.
Table 1: Respondents’ Characteristic
Gender
Male
Female
Frequency
Percentage
95
47.5%
105
52.5%
Age
H5: Green innovation (GI) has a significant effect on
firm performance (FP).
15–30 years old
90
45%
31–40 years old
62
31%
3. Research Methods
41–50 years old
48
24%
Education
The population in this quantitative study is all employees
of SME culinary in DIY. The quantitative data comes from
primary data obtained through distributing questionnaires
to 250 employees. The number of questionnaires returned
and filled completely is 180 so the response rate of this
study is 72%. Then, the questionnaires are analyzed with
the Structural Equation Model using Smart-PLS (Partial
Least Square) software. This study uses four variables
with one exogenous variable, namely, green human
resource management (GHRM) and three endogenous
variables, namely, workplace green behavior (WGB), green
innovation (GI), and firm performance (FP). The respective
Elementary School
0
Junior High School
15
Senior High School
Bachelor
35
150
7.5%
17.5%
75%
Income
< 1.000.000
1.000.000–5.000.000
> 5.000.000
Total Respondent
30
15%
111
55.5%
59
29.5%
200
100%
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Table 2: Loading Factor Value
Item questionnaire
FP
Sales growth
0.719
Customer satisfaction
0.769
Employees satisfaction
0.772
Product/service quality
0.772
Employee loyalty
0.774
GHRM
Company sets green goals for its employees
0.841
Company provides green training for employees to promote environmental values
0.844
Company provides green training for employees to develop employee’s knowledge
and skills for environmental based management
0.881
Company considers green behavior in the employee’s workplace when conduct
performance assessment
0.901
Company links green behavior in employees’ workplaces with rewards and
compensation
0.873
GI
WGB
Employees are looking for new technologies, processes, techniques, and / or
product ideas related to the environment
0.847
Employees generate creative ideas based on the environment.
0.888
Employees promote and fight for environmentally based ideas with others
0.916
Employees develop adequate plans and schedules for implementing new green
ideas
0.907
Employees complete assigned tasks in an environmental friendly manner
0.878
Employees fulfill the responsibilities defined in job description in environmental
friendly manner
0.893
Employees take the initiative act in environmental friendly manner in the workplace
0.883
Employees take the opportunity to be actively involved in environmental protection
in the workplace
0.859
Table 2 describes that all items have an outer loading
value greater than 0.7 with a significance level < 0.05. So, the
questionnaire items are valid and have a good outer model.
Table 3: AVE and Composite Reliability (CR)
4.2.2. Construct Validity, Composite Reliability and
Discriminant Validity
Construct validity is validity that indicates the extent
to which a test measures the theory construct, which form
the basis of the test. The construct has a good validity if the
average variance extracted (AVE) value is ≥ 0.5, while the
reliability test can be seen from the value of Cronbach’s
Alpha and composite reliability. A construct is reliable
if it has a Cronbach’s Alpha value ≥ 0.6 and a composite
reliability value ≥ 0.7.
Table 3 describes that there are no measurement errors
in the outer model and all latent variables are used to
predict structural functions in the inner model because all
Cronbach’s
Composite
Alpha
rho_A Reliability
Average
Variance
Extracted
(AVE)
FP
0.82
0.826
0.873
0.58
GHRM
0.919
0.937
0.939
0.754
GI
0.912
0.913
0.938
0.792
WGB
0.901
0.902
0.931
0.772
variables have AVE values > 0.5, CR > 0.7 and Cronbach’s
Alpha ≥ 0.6. Likewise, Table 4 shows that all variables are
valid because the √AVE value is higher than the correlation
between the variables.
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The results of the inner model test as listed in Table 5 are
as follows:
4.3. Inner Model Evaluation
Furthermore, Table 5 shows the calculation of R Square
and finds that the firm performance (FP) variable can be
explained by other variables in this model for 51.5%. Green
innovation (GI) can be explained by other variables in this
model for 71.6% and workplace green behavior (WGB) can
be explained by other variables in this model for 12.3%.
4.4. Structural Equation Models Interpretation
This study tests five hypotheses in the inner model.
Hypothesis test results are shown in Figure 1 and Table 6.
Table 4: Discriminant Validity
FP
GHRM
GI
FP
0.762
GHRM
0.352
0.868
GI
0.657
0.315
0.89
WGB
0.699
0.351
0.846
WGB
0.879
Table 5: R-Square
R Square
R Square Adjusted
FP
0.515
0.507
GI
0.716
0.715
WGB
0.123
0.118
1. Green human resource management (GHRM) has
positive and significant effect on workplace green
behavior (WGB). This result can be seen from
T-statistic value more than 1.96, namely, 4.345 and
P-value less than 0.05, namely, 0.000 (H1 accepted).
2. Green human resource management (GHRM) has a
positive and significant effect on firm performance
(FP). This result can be seen from T-statistic value
of more than 1.96, namely, 1.996 and P-value less
than 0.05, namely, 0.046 (H2 is accepted).
3. Workplace green behavior (WGB) has a positive and
significant effect on green innovation (GI). This result
can be seen from T-statistic value more than 1.96,
namely, 24.706 and P-value less than 0.05, namely,
0.000 (H3 accepted).
4. Workplace green behavior (WGB) has a positive and
significant effect on firm performance (FP). This
result can be seen from T-statistic value of more
than 1.96, namely, 4.716 and P-value less than 0.05,
namely, 0.000 (H4 accepted).
5. Green innovation (GI) has a positive and significant
effect on firm performance (FP). This result can be
seen from T-statistic value, which is more than 1.96,
which is 2.419 and P-value less than 0.05, namely,
0.016 (H5 is accepted).
4.5. Discussion
This study analyzes the relationship between green
human resource behavior (GHRM), workplace green
Figure 1: The Result of Green SMEs Performance: The Role of Workplace Green Behavior and Green Innovation
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371
Table 6: Path Coefficient
GHRM → WGB
Original
Sample (O)
Sample
Mean (M)
Standard Deviation
(STDEV)
T Statistics
(|O/STDEV|)
P Values
Conclusion
0.351
0.352
0.081
4.345
0.000*
H1. accepted
GHRM → FP
0.117
0.123
0.059
1.996
0.046*
H2. accepted
WGB → GI
0.846
0.849
0.034
24.706
0.000*
H3. accepted
WGB → FP
0.469
0.469
0.099
4.716
0.000*
H4. accepted
GI → FP
0.223
0.218
0.092
2.419
0.016*
H5. accepted
*sign = significant with alpha 0.05.
behavior, and green innovation in improving the culinary
SMEs performance in Yogyakarta. The GHRM role is
being analyzed in creating green innovation and company
performance. The first hypothesis in this study states that
green human resource management is able to have significant
effect on workplace green behavior. The results show that
there is a significant effect of GHRM on workplace green
behavior, so the first hypothesis is accepted. It supports
several previous studies by Fawehinmi et al. (2020);
Dumont et al. (2017). GHRM is a concept that is able to
create environmentally-friendly recognition by employees
(Renwick et al., 2013) and GHRM will increase employee’s
knowledge, skills, and competencies, which are the main
processes in forming workplace green behavior (Fawehinmi
et al., 2020). Therefore, the GHRM application, especially
in culinary SMEs, must be a priority in order to create a
workplace green behavior. If culinary SMEs care about
their special environment, from the aspect of cleanliness and
beauty, it would have an impact on the company’s image so
that visitors will repeat purchase and employees will be more
active in working.
The second hypothesis in this study states that GHRM
has a positive effect on company performance. The results
of the analysis show that there is a significant effect of
GHRM on company performance, so the second hypothesis
is accepted. The effect of GHRM on company performance
is in line with Dumont et al. (2017); Sheikh et al. (2019);
Alkerdawy (2018); Fernando et al. (2019); Mousa and
Othman (2019); Mwita (2020); Yusoff et al. (2018). This
means if the company is able to reduce its negative impact
on the environment, the company would simultaneously
improve its performance (Mousa & Othman, 2019; Ahmad,
2015). People today have a tendency to be more concerned
about cleanliness and hygiene, especially on food and
places to eat. This is due to the spread of the coronavirus
over the world, which requires people to comply with health
protocols. This condition requires business people to provide
services that give more healthy impression, one of which is
by creating a green behavior.
The third hypothesis states that workplace green behavior
has a significant effect on green innovation. The results of the
analysis show that there is a significant effect of workplace
green behavior on green innovation, so the third hypothesis is
accepted. Previous research has specifically positioned green
behavior in the workplace to create environmentally-based
corporate innovations (Robertson & Barling, 2013; Afsar
et al., 2016; Cai et al., 2020; Li et al., 2019; Alhadid & As’ad,
2014). Creating green behavior in the workplace is the best
step in fostering employees to realize the importance of green
behavior during the innovation process (Kim et al., 2017;
Cai et al., 2020). Green behavior applied by employees,
especially in the culinary business, will build a company’s
image in the eyes of consumers as a green SME because
employees are the link between the company and consumers.
Employee attitudes determine the image and mindset of
consumers regarding the company.
The fourth hypothesis states that workplace green
behavior has a significant effect on company performance.
The results of the analysis show there is a significant effect of
workplace green behavior on company performance, so the
fourth hypothesis is accepted. Some research supports the
results of this study and states that workplace green behavior
improves company performance (Kim et al., 2017; Dumont
et al., 2017; Kim et al., 2019). Employee awareness regarding
environmental sustainability is the key to the company’s
sustainability (Süßbauer & Schäfer, 2019). It is hoped that
this awareness will create an environmental friendly work
environment. An environmental friendly work environment
is a concept capable of producing beautiful, comfortable
workplace, and increasing employee motivation and morale.
For SMEs, environmental friendly work environment is very
helpful in increasing market share. SMEs will be able to
seize the large corporate market if they are consistent with
the environmental friendly concept.
The fifth hypothesis states that green innovation has a
significant effect on company performance. The results of
the analysis show that there is significant effect of green
innovation on company performance, so the fifth hypothesis
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Journal of Asian Finance, Economics and Business Vol 8 No 5 (2021) 0365–0374
in this study is accepted. Green innovation at SME is the
result of creating green behavior in the workplace. With
green innovation, SME will provide its own uniqueness so
that it attracts consumer interest. Some studies have shown
that green innovation is able to have a significant effect on
company performance (Xie et al., 2019; Lin et al., 2019;
Rezende et al., 2019; Zhang et al., 2019; Rodriguez et
al., 2017; Tariq, 2018; Arfi et al., 2017; El-Kassar, 2018).
Rezende et al. (2019) and have different results that there
is no significant relationship between the intensity of green
innovation and the company’s financial performance in the
short term, but will provide a significant relationship in the
long term.
This study provides a green SME concept, which
combines GHRM, workplace green behavior, and green
innovation in improving the performance of SMEs. The
combination of these three variables and their implementation
in the company is one of the main keys to the company’s
sustainability. SMEs must be able to design businesses to be
environmental friendly and have employees who care about
the environment and are able to create environmental based
innovations.
5. Conclusion
Competition among business actors, especially SMEs,
requires them to provide added value to consumers, one of
which is by managing an environmentally-based business.
This study analyzes the relationship between GHRM,
workplace green behavior, and green innovation on company
performance and produced several findings:
1. Green human resource management (GHRM) has a
significant effect on workplace green behavior.
2. Green human resource management (GHRM) has a
significant effect on firm performance.
3. Workplace green behavior has a significant effect on
green innovation.
4. Workplace green behavior has a significant effect on
firm performance.
5. Green innovation has a significant effect on firm
performance.
This study results have theoretical implications that
there is very strong relationship pattern between GHRM,
workplace green behavior, and green innovation on company
performance. This study proposes three aspects in building
a green SME, namely, green human resource management
(GHRM), workplace green behavior, and green innovation.
These findings also provide enrichment for GHRM theory in
relation to workplace green behavior, green innovation, and
company performance. The managerial implication of this
study is that green behavior has big positive impact on SMEs,
namely, employee health, comfort, workplace cleanliness
and safety, and company performance. Regarding the
implementation of GHRM, it can be done by designing green
goals for employees, holding green training, and creating an
environmental friendly work environment. The workplace
green behavior is realized by ensuring that all company
activities are environmentally-friendly ways and green
innovation can be triggered by green ideas from employees
and management. These aspects are recommended for SMEs
so that they can improve their performance. This study also
provides new evidence related to building green SMEs,
which empirically proves to be able to improve company
performance.
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