A Systematic Literature Review on The Critical Determinants of Green Innovation Adoption in Small and Medium-Sized Enterprises: Evidence-Based Recommendations for Promoting Green Entrepreneurship in Emerging and Developed Economies

Abstract

Eco-innovation (EI), green innovation (GI), and sustainable innovation (SI) are key drivers of sustainable development and competitive advantage for small and medium enterprises (SMEs) in emerging and developed economies. In this study, we aim to show how SMEs can pursue eco-friendly innovation in a constantly changing business landscape and develop the methodological skills and research expertise necessary for future doctoral studies. This study was conducted in Scotland, and the specific objectives were to: (1) identify the determinants driving GI adoption; (2) compare GI adoption patterns in emerging and developed economies; (3) examine the interactions and relationships among the identified determinants in SMEs; (4) assess the effectiveness of strategies deployed; and (5) provide practical recommendations for promoting GI adoption. Using the PRISMA framework, we conducted a comprehensive thematic analysis of 47 peer-reviewed articles, and NVivo software was used to analyse the data qualitatively through an interpretive lens. We used four theoretical perspectives to guide our analysis and foster a deeper understanding of how business strategies interact: Resource-Based View (RBV), which focuses on how firms leverage their internal resources and capabilities to gain competitive advantage; stakeholder theory, which emphasises how firms balance the interests and expectations of various stakeholders; resource dependency theory (RDT), which examines how firms manage their dependencies on external resources and actors; and institutional theory (INT), which explores how firms conform to or resist the institutional pressures and norms in their environment. Our findings reveal that SMEs should establish sustainable relationships with various organisations to overcome resource constraints and environmental uncertainties related to GI adoption. In addition, this study proposes a comprehensive strategy for SMEs on how to adopt GI practises based on the integration of the four theoretical perspectives. Our study contributes to the literature on GI adoption in SMEs by providing a systematic review of the existing evidence and offering practical recommendations for SMEs, policymakers, and researchers.