The Corporate Social Responsibility Influences Green Innovation through Company’s Ability in companies in Indonesia
Abstract
Introduction: This study examines the mediating role of organizational capacity in the relationship between CSR and green innovation. This study is important for understanding how CSR can encourage environmentally friendly innovation through the strengthening of internal organizational capacity. Methods: Data from structured online questionnaire (distributed digitally) comprising 151 recycling firms from 13 regions in Indonesia was used in this quantitative study. PLS-SEM was performed with SmartPLS to test the mediating role of company capabilities in the CSR-to-green innovation relationship. Analyses included confirmatory factor analysis (CFA), correlation analysis, multicollinearity tests, reliability analysis, predictive relevance (Q²) for the model, common method bias tests, and structural model (bootstrapped path coefficients) tests. Results: Our empirical findings confirm that company capabilities serves as an essential mediation for CSR and green innovation relationships in the recycling sector in Indonesia. These findings underscore the urgent need for long-term commitment and strategic alignment to tackle the high upfront costs and barriers to changes in sustainable practices among recycling firms in developing economies, particularly Indonesia. Conclusion and suggestion: CSR has a positive and significant effect on green innovation, with company capabilities acting as a mediator that strengthens this relationship. These findings confirm that CSR can serve as a strategic resource for fostering environmentally friendly innovation and improving firm competitiveness. This study is limited to green innovation as a mediating variable and uses cross-sectional data. Therefore, future research is recommended to include additional mediating variables, such as economic, environmental, and technological factors, and to adopt a longitudinal design to examine the relationships among variables more comprehensively and dynamically