Technological Innovation and MSME Performance: Mediating Roles of Green Entrepreneurship and Green Marketing

Abstract

The growing emphasis on sustainable development has encouraged micro, small, and medium enterprises (MSMEs) to integrate environmental considerations into their business strategies. However, empirical evidence is limited on how technological innovation contributes to MSME performance through sustainability-oriented mechanisms. This study aims to examine the direct effect of technological innovation on MSME performance, as well as its indirect effects through green entrepreneurship and green marketing. Using a quantitative research design, primary data were collected from MSME owners and analyzed through Structural Equation Modeling to evaluate both measurement and structural models, including mediation effects. The results indicate that technological innovation positively and significantly influences green entrepreneurship, green marketing, and MSME performance. Green marketing demonstrates a positive and significant effect on MSME performance, whereas green entrepreneurship, although positive, does not show a statistically significant direct effect. Mediation analysis reveals that both green entrepreneurship and green marketing mediate the relationship between technological innovation and MSME performance, with green marketing exhibiting a stronger mediating role. These findings suggest that technological innovation enhances performance not only directly but also by strengthening sustainability-oriented marketing and entrepreneurial practices. The study concludes that innovation capability constitutes a strategic foundation for improving MSME competitiveness, particularly when aligned with effective green marketing strategies. These insights contribute to the sustainability and innovation literature and provide practical guidance for MSME managers and policymakers seeking to promote environmentally responsible business development.