ROLE OF GREEN INNOVATION AND GREEN ENTREPRENEURSHIP IN SMEs DEVELOPMENT WITH MODERATING ROLE OF MARKET TURBULENCE AND GOVERNMENT SUPPORT

Abstract

Continuous environment deterioration and climate change call for practical measures to curb the factors responsible for this unfortunate situation. Reducing the production of goods detrimental to the environment and developing alternate eco-friendly and green solutions for the manufacturing industry have become more necessary than ever. Encouraging SMEs to incorporate green innovation leading towards green entrepreneurship is one of the most promising ventures due to the large network of SMEs worldwide. One of the hurdles for SMEs to move towards green innovation is the fear of its possible negative impact on their productivity and development. It is vital to empirically evaluate the impact of eco-friendly solutions on their businesses to make their transition to green innovation easier. This study analysed the impact of green innovation and green entrepreneurship on SMEs development with the moderating role of market turbulence and government support, which are two of the most vital factors affecting the adoption of eco-friendly solutions in SMEs. The study used the theory of economic development to explain the relationship between innovation and the development of businesses in developing countries. 500 SMEs in Islamabad, Pakistan were reached out via email, and their responses were collected using Google Forms. The study confirmed the positive relationship between green innovation and SME development even in turbulent conditions in the market. However, in the context of Pakistan, this study established that government support has a negative impact on the development of SMEs striving to inculcate green innovation into their businesses.