Does green intellectual capital matter for green innovation adoption? Evidence from the manufacturing SMEs of Pakistan
| DOI | https://doi.org/10.1108/JIC-06-2020-0204 |
| Published date | 17 March 2021 |
| Date | 17 March 2021 |
| Pages | 868-888 |
| Subject Matter | Information & knowledge management,Knowledge management,HR & organizational behaviour,Organizational structure/dynamics,Accounting & finance,Accounting/accountancy,Behavioural accounting |
| Author | Waheed Ali,Jun Wen,Hadi Hussain,Nadeem Akhtar Khan,Muhammad Waleed Younas,Ihsan Jamil |
Does green intellectual capital
matter for green innovation
adoption? Evidence from the
manufacturing SMEs of Pakistan
Waheed Ali , Jun Wen, Hadi Hussain , Nadeem Akhtar Khan,
Muhammad Waleed Younas and Ihsan Jamil
School of Economics and Finance, Xi’an Jiaotong University, Xi’an, China
Abstract
Purpose –In the era of knowledge economy, the significance of intellectual capital has been increasing
globally. Similarly, recent studies have focused on the importance of green intellectual capital in mitigating
environmental degradation. However, only a few studies have analysed green intellectual capital and its
impacts in the specific case of Pakistan. Hence, this study aims to investigate the effects of green intellectual
capital on green innovation adoption in Pakistan’s manufacturing small and medium-size enterprises (SMEs).
Design/methodology/approach –We used a data sample of 235 SMEs, gathered from the four
manufacturing sectors of Pakistan including: textile, chemical, pharmaceutical and steel and analysed using a
multiple regression analysis approach.
Findings –The empirical results of this research indicate that green human capital and green structural
capital significantly increase green innovation adoption. However, it must be noted that green relational capital
has a positive but insignificant impact on green innovation adoption in manufacturing SMEs in Pakistan.
Originality/value –The findings and recommended policy measures of this study are important for the
managers of manufacturing SMEs and policymakers to mitigate environmental destruction and achieve
sustainable development through green intellectual capital.
Keywords Green intellectual capital, Green innovation adoption, Environmental protection, Competitive
advantage, SMEs, Pakistan
Paper type Research paper
1. Introduction
Academics and practitioners are prioritising environmental concerns. Due to increased
pressure from customers, societies and government manufacturing firms are now more
conscious on green practices for mitigating environmental damage and achieving
competitive advantage (Yasmeen et al., 2019;Zameer et al., 2020). In the era of
environmental awareness, the concept of green intellectual capital (GIC) has been
developed by academic circles for promoting corporate environmentalism (Chen, 2008a;
Huang and Kung, 2011). GIC is proven to enhance a firm’s environmental performance
(Yadiati et al., 2019) and competitive advantage (Yusliza et al.,2020).Therefore, creating a
green environment requires firms to have both physical capital and GIC. Due to this, the
significance of GIC has increased globally. Despite its growing importance, limited
attention has been paid by researchers to the GIC in developing economies. In the existing
literature, only a few studies examined GIC inspecificcaseofPakistan.Thestudiesof
Malik et al. (2020) and Chaudhry et al. (2016) are worth mentioning; however, there is no
study that specifically analyses how GIC impacts green innovation adoption (GIA) in
Pakistan’s manufacturing small and medium-size enterprises (SMEs). Thus, this study
JIC
22,5
868
Authors are thankful to anonymous reviewers and editor for their insightful comments that has
significantly improved the quality of this paper. Jun Wen is grateful to National Natural Science
Foundation of China for the grant number 72074176.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1469-1930.htm
Received 21 June 2020
Revised 25 August 2020
18 November 2020
2 January 2021
31 January 2021
Accepted 22 February 2021
Journal of Intellectual Capital
Vol. 22 No. 5, 2021
pp. 868-888
© Emerald Publishing Limited
1469-1930
DOI 10.1108/JIC-06-2020-0204
aims at filling up the knowledge gap in existing literature. Moreover, this study provides
evidence that, among other factors, GIC is a major driver of GIA in Pakistan’s
manufacturing SMEs.
In literature, intellectual capital (IC) is defined as intangible resources, such as the stock of
information and, in general, an organisation’s capacity to enhance its value (Masoulas, 1998).
Stewart (1994) characterises IC as the stock of information, data, learning, relations, licensed
innovation rights and brand name, which makes the company’s worth and value. IC has been
categorised into three types: human capital, organisational capital and social capital
(Johnson, 1999;Bontis, 1999). Human capital is characterised as the stock of trained workers,
ingenuity and capacities of representatives to achieve corporate objectives. Organisational
capital is defined as hierarchical assets, such as licenses, trademarks, organisational culture,
programming and databases (Edvin sson and Malone, 1997). Unlike hum an capital,
organisational capital cannot be transferred by employees from one organisation to
another. Social capital is considered the total of goodwill, client dedication, trust and
relationships with different organisations and suppliers (Johnson, 1999;Bontis, 1999). A
company’s market value is not only tied to its financial capital but also to its IC (Johnson,
1999). Therefore, the significance of intangible resources has been increased in today’s
information and knowledge economy (Mart
ın-De Castro et al.,2019;Soewarno and
Tjahjadi, 2020).
The counterpart of IC is GIC, which is described as the stock of knowledge, abilities,
connections and other impalpable resources utilised for ecological protection at the individual
or organisational level (Chen, 2008a). Another researcher, Liu (2010), defined GIC as the
incorporation of a firm’s environmental information and capacities to expand the competitive
advantage. GIC is divided into three parts, i.e. green human capital (GHC), green structural
capital (GSC) and green relational capital (GRC) (Chen, 2008a). Moreover, green innovation is
defined as using the latest procedures/processes in production plants or technologies to
reduce environmental risk through pollution control and emission reduction (Cainelli and
Grandinetti, 2015). In other words, green or ecological innovation implies a modern or novel
product, procedure or system wherein environmental protection can be guaranteed (Beise
and Rennings, 2005;Singh et al., 2020). Literature has proven that green innovation is
positively related to a firm’s environmental performance (Singh et al., 2020), financial
performance (Tariq et al., 2019;Hassan et al., 2013) and corporate competitive advantage
(Chen et al., 2006). Therefore, for manufacturing firms, green innovations are highly essential
not only for minimizing negative impacts on the environment but also for economic
performance. Researchers have discussed the impact of GIC on different factors such as
business sustainability (Malik et al., 2020;Yusoff et al., 2019a,b), firm competitive advantage
(Chen, 2008a;Yahya et al., 2019;Chaudhry et al., 2016), green human resources management
(HRM) practices (Yong et al., 2019) and company performance (Khanlarov et al., 2020).
However, the relationship between GIC and GIA has rarely been highlighted.
In the literature, various physical factors pertaining to GIA have been identified, and so
have intangible factors that may affect GIA in the manufacturing industry, such as GIC.
Therefore, this study explores how GIC affects the GIA in Pakistan’s manufacturing SMEs.
This study may get the attention of corporate and institutional policymakers towards the role
of GIC in GIA in Pakistan’s manufacturing SMEs. Moreover, the findings of this research can
serve as a reference for other developing or emerging economies which are facing similar
environmental challenges.
The following objectives have been set to investigate and answer the research question of
this study:
(1) To explore the impact of environmental-related IC on environmental innovation
adoption in manufacturing SMEs.
GIC matter for
green
innovation
adoption
869
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