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Exploring Environmental Regulation Instruments and Their Impact on Eco-Innovation Practices Among SMEs: The Mediating Role of Environmental Orientation

College of Business Administration, A’Sharqiyah University, Ibra, Oman, Faculty of Commerce, Kafrelsheikh University, Kafr el-Sheikh, Egypt

E-mail Address: madykhalid2014@gmail.com

Corresponding author.

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Mohamed Battour

https://orcid.org/0000-0003-1700-6487

College of Business Administration, A’Sharqiyah University, Ibra, Oman, Faculty of Commerce, Tanta University, Tanta, Egypt

E-mail Address: mohamedbator@gmail.com

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Sabri Shaker Ashoor Bin-Obaidellah

https://orcid.org/0000-0002-6904-1869

Faculty of Administrative Sciences, Seiyun University, Seiyun, Yemen

Faculty of Business, Economics and Social Development, Universiti Malaysia Terengganu, Kuala Terengganu, Malaysia

E-mail Address: s.bin-obaidellah@seiyunu.edu.ye

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Maha Khamis Al Balushi

https://orcid.org/0000-0002-5897-9800

Department of Marketing, College of Economics and Political Science, Sultan Qaboos University, Muscat, Oman

E-mail Address: maha@squ.edu.om

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, and

Rowan Elodie Kennedy

https://orcid.org/0000-0001-7551-9067

Department of Marketing, College of Economics and Political Science, Sultan Qaboos University, Muscat, Oman

E-mail Address: rowan@squ.edu.om

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https://doi.org/10.1142/S1464333224500108Cited by:1 (Source: Crossref)

Abstract

Despite a vast body of eco-innovation literature investigating the assumption that environmental regulations encourage the implementation of eco-innovative practices, previous research on eco-innovation and environmental regulations has yielded inconsistent findings. By considering the heterogeneity of environmental regulation and eco-innovations, this study sheds light on how different environmental regulation instruments can facilitate and enhance eco-innovation practices, along with the role of environmental orientation in mediating the relationships. The study surveyed 188 managers and owners and utilised the partial least squares-structural equation model as the analytical method. Results showed that environmental regulatory mechanisms have no direct impact on eco-innovation. However, the study has found that environmentally oriented SMEs respond to strict environmental policies and regulations by undertaking eco-innovation practices. Furthermore, market-based instruments provide firms with strong environmental orientation and economic incentives to foster eco-process innovations. The study offers practical insights for policymakers and SME managers, in addition to advancing the knowledge base.

Keywords:

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