Green Manufacturing: Green Dynamic Capabilities and Absorptive Capacity Matter

Abstract

Various environmental issues have attracted the attention of many parties, including manufacturing companies. This encourages manufacturing companies to implement green manufacturing into their business operations. Implementation of green manufacturing is not easy to do. For this reason, companies must have the capability to be able to adapt to the rapidly changing business environment. This paper discusses how the green dynamic capability affects the implementation of green manufacturing in manufacturing companies. The study was conducted on 34 manufacturing companies regardless of their industrial sector. The research model describes the relationship between green manufacturing, green dynamic capabilities, and absorptive capacity. The results of model testing (measurement models and structural models) showed that green dynamic capability has a positive and significant effect on green manufacturing practices in manufacturing companies. Absorptive capacity directly affects green dynamic capability, and indirectly affects green manufacturing. This shows that the green dynamic capability plays an important role in the implementation of green manufacturing and must be a concern for the company’s management, especially in the implementation of green manufacturing. Keywords: Green Manufacturing, Green Dynamic, Environmental Issue.