Fenny Veliana Prasetya, Sri Hastuti, Fahmi Poernamawatie, Mitha Endah Aprillia, Alvia Intan Magroaini

Green Competitive Advantage as a Mediator of Green Strategy in Indonesia's Financial Performance

Introduction

Green competitive advantage as a mediator of green strategy in indonesia's financial performance. Green competitive advantage mediates green strategy & financial performance in Indonesian raw material firms. No short-term financial impact without core business integration.

Abstract

This study investigates the influence of green accounting, eco-innovation, and environmental performance on corporate financial results, with green competitive advantage as a mediating variable. The research subjects included companies in the raw materials sector listed on the Indonesia Stock Exchange for the 2022-2023 period. The method used was a quantitative approach with secondary data from the annual and sustainability reports of 46 companies, analysed using the partial least squares (SEM-PLS) structural equation modelling method. The results showed that the three main variables contributed significantly to the formation of green competitive advantage, but had no direct or indirect effect on financial performance. This finding suggests that a desire strategy does not have a short-term financial impact if it is not involved in a company's core activities. This novel research lies in the use of green competitive advantage as a mediating variable in the context of the raw materials industry sector, which has not been widely discussed in previous research in Indonesia. The implications of this research provide policy guidance for management and regulators in developing applicable green strategies. Limitations lie in the limited indicators, so it is recommended that future research use more diverse measures.   Abstrak - Penelitian ini mengeksplorasi pengaruh akuntansi hijau, inovasi ramah lingkungan, dan kinerja lingkungan terhadap hasil keuangan perusahaan, dengan keunggulan kompetitif hijau sebagai variabel mediasi. Objek penelitian mencakup perusahaan sektor bahan baku (bahan dasar) yang terdaftar di Bursa Efek Indonesia periode 2022-2023. Metode yang digunakan adalah pendekatan kuantitatif dengan data sekunder dari laporan tahunan dan keberlanjutan 46 perusahaan, dianalisis menggunakan metode structural equation modeling berbasis partial least squares (SEM-PLS). Hasil penelitian menunjukkan bahwa ketiga variabel utama memberikan kontribusi yang signifikan terhadap pembentukan keunggulan kompetitif hijau, namun tidak memiliki pengaruh langsung maupun tidak langsung terhadap kinerja keuangan. Temuan ini menunjukkan bahwa strategi keinginan belum memberikan dampak finansial jangka pendek jika tidak terlibat dalam aktivitas inti perusahaan. Penelitian baru ini terletak pada penggunaan keunggulan kompetitif hijau sebagai variabel mediasi dalam konteks sektor industri bahan baku, yang belum banyak dibahas dalam penelitian sebelumnya di Indonesia. Implikasi penelitian memberikan arahan kebijakan bagi manajemen dan regulator untuk menyusun strategi hijau yang aplikatif. Keterbatasan terletak pada indikator yang terbatas, sehingga disarankan penelitian selanjutnya menggunakan ukuran yang lebih beragam.

Review

This study presents a timely investigation into the intricate relationship between green strategies and financial performance within Indonesia's raw materials sector, a context often overlooked in existing literature. The authors aim to discern how green accounting, eco-innovation, and environmental performance influence corporate financial results, with green competitive advantage posited as a crucial mediating variable. The paper's novelty is explicitly highlighted by its focus on this specific mediation model within an industry known for its significant environmental footprint, offering a fresh perspective on the challenges and opportunities for green initiatives in a developing economy. Employing a quantitative approach, the research meticulously analyzes secondary data from the annual and sustainability reports of 46 companies listed on the Indonesia Stock Exchange for the 2022-2023 period. The application of Structural Equation Modeling based on Partial Least Squares (SEM-PLS) provides a robust analytical framework for testing the proposed relationships. The findings reveal a significant contribution of green accounting, eco-innovation, and environmental performance to the formation of green competitive advantage. However, strikingly, the study concludes that these variables, including green competitive advantage, exert no direct or indirect effect on financial performance. This counterintuitive result suggests that green strategies may not yield short-term financial benefits if not deeply embedded within a company's core operational activities. The research makes a valuable contribution by empirically examining a novel mediation model in a specific industrial and geographical context. Despite the absence of a direct link to financial performance, the findings provide critical policy guidance for management and regulators, underscoring the need for strategic integration of green initiatives rather than superficial adoption. The authors candidly acknowledge limitations, particularly regarding the restricted indicators used, and wisely recommend future research to incorporate a more diverse array of measures. Overall, this paper offers a significant empirical insight, challenging conventional assumptions about the immediate financial returns of green strategies and setting a foundation for more nuanced investigations into their long-term and indirect impacts.

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