Geographical Location, Green Technology Commercialization, and Sustainable Innovation

Abstract

This study investigates how geographical location influences firms' sustainable innovation through the mediating role of green technology commercialization potential and the moderating effect of legal inefficiency. Drawing on a two-wave, multi-informant survey of 280 small and medium-sized enterprises (SMEs) in Vietnam, we test our research model utilizing structural equation modeling (SEM) with the maximum likelihood method. We find that firms located in large towns and urban conurbations demonstrate higher levels of green technology commercialization potential compared to those in small towns. This commercialization potential, in turn, enhances sustainable innovation outcomes. However, our findings reveal that the positive effect of green technology commercialization on sustainable innovation is significantly weakened in environments with high legal inefficiency. Furthermore, we establish that green technology commercialization mediates the relationship between geographical location and sustainable innovation. The results underscore the importance of spatial and institutional contexts in shaping environmental innovation outcomes. This study contributes to the literature by explaining the mechanisms and boundary conditions through which location and legal institutions jointly influence sustainable innovation performance in emerging market contexts.