IMPACT OF GREEN INNOVATION ADOPTION AS A COMPETITIVE STRATEGY ON SME PERFORMANCE IN OGUN STATE, NIGERIA

Abstract

Small and medium-sized enterprises (SMEs) are the backbone of Nigeria’s economy, contributing significantly to employment and GDP, yet they face mounting environmental pressures, resource constraints, and competitive challenges. This study investigates the impact of green innovation adoption as a competitive strategy on SME performance in Ogun State, Nigeria’s primary industrial hub. The research examines whether green innovation (product, process, marketing, and organizational dimensions) enhances multi-dimensional performance (financial, operational, market, cost efficiency, and growth/sustainability) through the mediating role of competitive strategy (differentiation, cost leadership, focus, and strategic flexibility). A quantitative cross-sectional survey design was adopted, targeting 500 registered SMEs in manufacturing, agro-processing, construction, and selected services across key industrial clusters (Agbara, Sango-Ota, Mowe, Abeokuta). Data were collected using a structured questionnaire with 5-point Likert scales, adapted from validated instruments (Chen et al., 2006; Porter, 1985; Kaplan & Norton, 1996; Elkington, 1997). The sample was drawn through multi-stage sampling (purposive selection of LGAs, stratified by sector, simple random within strata). Analysis was conducted using SPSS 27 for descriptive statistics and SmartPLS 4 for PLS-SEM to test direct effects, mediation, and model fit. Findings indicate that green innovation adoption positively influences SME performance, with competitive strategy partially mediating the relationship. Process and organizational innovations show particularly strong effects on cost efficiency and operational performance, while product and marketing innovations drive market and financial outcomes. In Ogun’s high-pollution, high-cost industrial environment, green adoption strengthens resilience and competitiveness. The study recommends policy interventions (green finance, training, incentives) and cluster-level collaboration to accelerate adoption among Ogun SMEs. These insights contribute localized evidence to the literature and offer practical guidance for sustainable SME development in Nigeria’s industrial heartland.