Determining Factors of Green Competitive Advantage and Its Impact on Stock Return: Evidence from Industrial Companies in Indonesia
DOI:
https://doi.org/10.1229/tecempresarialjournal.v21i1.757Keywords:
Green Competitive Advantage, Green Innovation, Green Environmental Ethics, Stock Returns.Abstract
The objectives of this study are to analyze (1) the effect of the Green Innovation, and Green Environmental Ethics on green competitive advantage, (2) how social responsibility moderates the effect of Green Innovation, and Green Environmental Ethics on green competitive advantage, and (3) how green competitive advantage affects stock returns. The quantitative research method uses content analysis and secondary data. The population in this study are companies listed on the Indonesia Stock Exchange (IDX-IC) that publish sustainability reports and annual reports during the 2022-2023 period. Non-financial industry companies, where companies publish annual reports audited by independent auditors and sustainability reports of companies listed on the Indonesia Stock Exchange for 2022-2023, are taken from the IDX-IC (IDX Industrial Classification). Using a purposive sampling method, 375 data sets were obtained over two years of research, resulting in a total of 750 panel data observations. Data processing used Stata with Moderated Regression Analysis. The results of this study indicate that Green innovation and green environmental ethics have a significant positive effect on green competitive advantage. Social responsibility strengthens the influence of green innovation, and green environmental ethics on green competitive advantage. Green competitive advantage has a significant positive effect on stock returns. Sensitivity tests demonstrate that innovation is superior to legacy models, indicating the need for additional green innovation. The expansion test for green process innovation did not significantly impact green competitive advantage. This study confirms that Green competitive advantage has been shown to increase stock returns, thus providing financial value for environmentally-oriented strategies. The government needs to focus on monitoring the implementation of environmental innovation and ethics, while investors can use green competitive advantage as an indicator in fundamental stock analysis. This study has several limitations, including the use of content analysis, which poses potential subjectivity, as data interpretation depends on the researcher's understanding. The presence of outliers also reduces the number of valid samples. Furthermore, the use of linear regression has certain assumptions and results are sensitive to changes in the data or model. This research contributes to the development of Green Innovation measurements that support corporate sustainability.
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