Eco-Innovation as a Bridge between Green Economy Practices and Sustainable Performance of Tourism MSMEs in Lake Toba

Radempta Elfrida Panjaitan; Roy Sahputra Saragih; Hendri Abdiel Simbolon; Hengki Mangiring Parulian Simarmata

doi:10.55606/makreju.v4i3.4464

Authors

Radempta Elfrida Panjaitan Politeknik Bisnis Indonesia
Roy Sahputra Saragih Politeknik Bisnis Indonesia
Hendri Abdiel Simbolon Politeknik Bisnis Indonesia
Hengki Mangiring Parulian Simarmata Politeknik Bisnis Indonesia

DOI:

https://doi.org/10.55606/makreju.v4i3.4464

Keywords:

Eco-Innovation, Green Economy Practices, Lake Toba, Sustainable MSME Performance, Tourism-Based MSMEs

Abstract

Environmental pressures have increased the need for tourism-based micro, small, and medium enterprises (MSMEs) to translate green economy practices into sustainable business outcomes. However, the mechanism through which such practices improve Sustainable MSME Performance’ remains insufficiently understood in emerging tourism destinations. This study examined whether eco-innovation mediated the relationship between green economy practices and sustainable MSME performance in Lake Toba, Indonesia. A quantitative cross-sectional survey was conducted among 300 owners and managers of culinary, local craft, and tourism-service MSMEs. The proposed relationships were tested using partial least squares structural equation modeling (PLS-SEM). Green economy practices were positively associated with eco-innovation (β = 0.719, p < 0.001) and sustainable MSME performance (β = 0.337, p < 0.001), while eco-innovation was positively associated with sustainable MSME performance (β = 0.620, p < 0.001). Eco-innovation significantly mediated the relationship between green economy practices and Sustainable MSME Performance’ (β = 0.446, p < 0.001), indicating complementary partial mediation. The model explained 79.8% of the variance in sustainable MSME performance. Although its cross-sectional and destination-specific design limited causal inference and broader generalizability, the study identified eco-innovation as a conversion mechanism through which environmentally responsible practices generated economic, social, and environmental value. The findings extend sustainable entrepreneurship research by integrating the Natural Resource-Based View and Dynamic Capabilities Theory and provide practical guidance for MSME owners, destination managers, and policymakers in developing sustainable tourism destinations.

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