The Influence of Financial Technology Innovation and Green Transformational Leadership on Green Innovation and Corporate Environmental Performance in Service-Sector MSMEs

Abstract

The growing necessity for sustainability has made environmental performance a vital concern for Micro, Small, and Medium Enterprises (MSMEs), especially within the service industry. This research explores the impact of Fintech Innovation and Green Transformational Leadership on Corporate Environmental Performance (CEP), with Green Innovation acting as a mediator. A quantitative method was employed to gather data from 180 MSMEs in the service sector in Indonesia, which were then analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings suggest that Fintech Innovation greatly improves Green Innovation, yet has no direct impact on CEP. Green Transformational Leadership has a beneficial effect on both Green Innovation and Corporate Environmental Performance (CEP). Additionally, Green Innovation entirely mediates the connection between Fintech Innovation and CEP, while it partially mediates the relationship between Green Transformational Leadership and CEP. These results highlight the significance of combining digital resources with leadership-focused environmental dedication to promote sustainable methods. The research enhances Ecological Modernization Theory and the Ability-Motivation-Opportunity (AMO) framework, providing actionable insights for MSMEs, policymakers, and Fintech providers to facilitate green transformation.