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International Journal of Business, Law, and EducationInternational Journal of Business, Law, and Education

This study investigates the influence of green innovation, cost efficiency, and government incentives on the financial sustainability of eco-conscious Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Using a quantitative approach and survey data collected from 200 MSMEs engaged in sustainable practices, the study employs multiple linear regression analysis with SPSS to test three proposed hypotheses. The results reveal that all three independent variables have a positive and significant impact on financial sustainability. Green innovation enables firms to differentiate their products, improve resource use, and access green markets. Cost efficiency enhances financial performance through waste reduction and operational optimization. Meanwhile, government incentives play a vital role in supporting sustainable initiatives by reducing financial and technical barriers. These findings underscore the strategic importance of integrating internal capabilities and external support to achieve long-term sustainability and competitiveness for MSMEs. The study contributes to the theoretical development of sustainable entrepreneurship and provides practical recommendations for managers and policymakers in emerging economies.

The study concludes that green innovation, cost efficiency, and government incentives all significantly and positively contribute to the financial sustainability of eco-conscious MSMEs in Indonesia.These findings highlight the importance of integrating sustainable practices into core business strategies for long-term viability.Therefore, supporting MSMEs through well-designed incentives and fostering internal capabilities in innovation and efficiency are crucial for promoting a resilient and competitive green economy.

Further research should investigate the long-term dynamic relationship between green innovation, cost efficiency, and financial sustainability using longitudinal data to establish causality. Additionally, exploring the mediating role of factors like digitalization and organizational culture could provide a more nuanced understanding of how these variables interact to influence MSME performance. Finally, future studies could examine the effectiveness of different types of government incentives and identify best practices for policy design to maximize their impact on promoting sustainable business practices among Indonesian MSMEs, considering regional variations and specific industry needs. These investigations will contribute to a more comprehensive understanding of the factors driving sustainable entrepreneurship and inform evidence-based policy recommendations for fostering a thriving green economy.

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Pages11
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