Indonesia’s commitment to realizing the target of the 2030 Sustainable Development Goals implies the need for the involvement of several parties, including industry, which contributes significantly to the economy, society and environment. Several regulations have been released as proof of Indonesia’s commitment to promoting industry participation. This regulation must be followed, particularly by publicly traded companies whose operations run the risk of contributing to pollution and environmental harm. By this regulation, companies are implicitly required to be able to develop an innovation strategy within their business practices. The policy of implementing green innovation at the corporate level will be determined mainly by the executive level, which plays a role in making business decisions. Several studies have discussed the executive’s role in green innovation.
Generally, some of these studies use the upper echelons theory paradigm to investigate executive characteristics based on level of education, experience, age, nationality, gender and other characteristics. However, few scholars have studied the role of policymakers in corporate governance toward green innovation from the angle of resource dependence theory. Based on the setting of corporate governance characteristics in Indonesia, we examine whether training with the theme of green/environment/sustainability attended by the directors and boards of commissioners significantly contributes to implementing green innovation. By using the resource dependence theory, training can be seen as a way to add insight and knowledge to the boards, both the boards of directors and the boards of commissioners, to make decisions and resource policies related to green innovation.
This study works at 524 firm-year observations from 2017 to 2020, we used industry samples from three distinct groups in Indonesia
(1) the manufacturing industry;
(2) the mining, quarrying and oil and gas extraction industry; and
(3) the agriculture, forestry, fishing and hunting industry.
Green innovation concept
Green innovation, which is also called eco-innovation, environmental innovation or sustainable innovation in the literature (Barforoush et al., 2021), refers to the innovation with green strategies to make sure that a company’s business practices are sustainable and good for the environment (Asni and Agustia, 2022b) Green product innovation will help companies produce environmentally friendly products with added economic and environmental value (Chen and Cao, 2023).
Board’s perspective in Resource Dependence Theory
Resource dependence theory is predicated on the idea that all organizations depend highly on the resources provided by other groups and organizations for organizational survival, and this dependence is frequently reciprocal (Sommerfeldt, 2018).Directors, in their capacity as intermediaries between the organization and the external environment, are in a position to make these resources available ( Hillman and Dalziel, 2003).
Board’s green training and green innovation
Education in resource dependence theory is the leading resource for organizations (Issa et al., 2022). Education can be obtained in various ways, including through training. Training as an element of human capital can encourage organizations to achieve strategic environmental objectives, such as reducing pollution caused by organizational operations (Rae et al., 2015).
Based on the arguments and logic that we built, we hypothesize that
H1. The board of directors’ green theme training positively and significantly impacts the adoption of green innovation.
H2. The board of commissioners’ green theme training positively and significantly impacts the adoption of green innovation
H3. Independent commissioners’ green theme training positively and significantly
impacts the adoption of green innovation.
The data comes from several sources, thai is annual reports, sustainability reports and corporate social responsibility reports to investigate information on items associated with green innovation at process and product levels. Green theme training from the boards of directors, boards of commissioners and independent commissioners are collected using content analysis in the annual report. We assess the given hypotheses using the ordinary least square method (OLS), Hausman test to see which model was appropriate between the random effect model and the fixed effect model. Finally, the linear regression with panel-corrected standard errors (PCSEs) is used to overcome the serial correlation problem in the model.
Conclusion and implication
The findings of statistical testing demonstrate that green theme training at each board level positively and significantly impacts green innovation. This implies that the board of directors, board of commissioners and independent commissioners’ training in environmental issues can promote green innovation. In theory, this study highlights the significance of resource dependence theory as a theoretical framework for investigating organizational governance. The board’s crucial function in providing resources for the advancement of organizational innovation, including green innovation, can be elucidated through the lens of resource dependence theory.
Nur Asni, Universitas Halu Oleo, Kendari, Indonesia, and
Wiwiek Dianawati, Universitas Airlangga, Surabaya, Indonesia
