Strategic Thinking as a Catalyst: Linking Green Competency to Green Innovation in the Malaysian Manufacturing Sector

Abstract

This study examines the mechanisms through which employee green competency (GC) translates into green innovation (GI) within the Malaysian manufacturing sector. It specifically investigates the dual role of strategic thinking (ST) as a mediator and moderator in the relationship between GC and GI. A quantitative, cross-sectional survey was conducted among 300-350 employees in Malaysian manufacturing firms with ISO 14001 or other green certifications. The collected data were analysed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to test the proposed hypotheses concerning the direct, indirect, and conditional effects among the variables. The results confirm that Green Competency positively influences both Green Innovation (β = 0.409) and Strategic Thinking (β = 0.319). Strategic Thinking, in turn, is a strong predictor of Green Innovation (β = 0.431). Crucially, the findings support the dual role of Strategic Thinking. It acts as a significant mediator, with an indirect effect of 0.137, suggesting it is a key pathway through which GC influences GI. Furthermore, Strategic Thinking positively moderates the GC-GI relationship (β = 0.227), indicating that the effect of green competencies on innovation is amplified when employees possess higher levels of strategic thinking. For manufacturing firms aiming to enhance sustainability, this research underscores the need to cultivate not only green skills but also strategic thinking capabilities among their employees. Fostering a workforce that can anticipate long-term environmental trends and align sustainability goals with innovative actions is critical for maximizing the return on investment in green competencies. This study provides a nuanced understanding of the GC-GI link by being one of the first to empirically validate the dual role of strategic thinking as both a cognitive bridge (mediator) and an amplifier (moderator). It offers a comprehensive model grounded in the Resource-Based View and Dynamic Capabilities Theory, providing actionable insights for the Malaysian manufacturing sector.