Organizational Inertia and Firm Performance: Mediating Role of Green Business Model, and Open Innovation in Manufacturing SMEs of Emerging Markets

Abstract

This study explores the relationship between Organizational Inertia (OI) and Firm Performance (FP) and how this relationship is mediated by Green Business Model Innovation (GBMI) and Green Open Innovation (GOIN) for manufacturing small & medium enterprises (SMEs) in emerging markets. The data were collected from 465 managers of 465 SMEs in 2021. The OI was found to have an indirect relationship with FP, and this relationship is negative and significant. Further, the two direct relationships between OIN and BMI with FP consecutively were found to be positive and significant. The contribution of this study has significant implications in the field of OI, OIN, and BMI. This study examines how adversely OI affects business innovation, particularly OIN, and BMI. In addition, this study provides a mechanism for sustaining and improving FP by promoting open innovation and developing innovative business models in the organization. This transformation leads to flexibility in the organization. This study implies how SMEs can overcome OI by focusing on managerial actions such as organizational learning, cross-functional groups, and reflective practices that generate open innovation and BMI to become sustainable and provide insights to business practitioners, entrepreneurs, and organizational directors.