Green Supply Chain Management as a Response to Coercive and Normative Institutional Pressures on Green Innovation

Abstract

Concerns over the depletion of natural resources and the resulting environmental degradation caused by rapid industrialization continue to intensify. In response, many companies are increasingly pressured to adopt Green Supply Chain Management (GSCM) practices as part of their environmental strategies to enhance green innovation. However, empirical evidence on the actual impact of GSCM practices on green innovation within the palm oil sector in West Sumatra, Indonesia, remains limited. Thus, further research is required to verify the extent to which GSCM implementation can effectively drive green innovation in this sector. Grounded in institutional theory, this study examines how coercive and normative pressures influence the adoption of GSCM as an organizational response to strengthen green innovation. In addition, the study evaluates the mediating role of GSCM in this relationship. Using PLS-SEM and data from 250 palm oil companies in West Sumatra, the results demonstrate that coercive and normative institutional pressures significantly affect both GSCM implementation and green innovation. Furthermore, GSCM positively contributes to green innovation and functions as a mediator in these relationships. These findings provide valuable academic and practical insights by offering a deeper understanding of the drivers of GSCM and their effects on green innovation. The study also supports managerial efforts to enhance operational efficiency and foster sustainability-oriented innovation within the palm oil sector.