An Integrated Green Management Model for Fashion SME Sustainability: Moderating Role of Green Culture Using PLS-SEM

INKUBIS: Jurnal Ekonomi dan Bisnis Volume 8, Issue 1, 461-472 e_ISSN: 2775-3913 https://inkubis.polteksci.ac.id/index.php/ink/index DOI: doi.org/10.59261/inkubis.v8i1.226 An Integrated Green Management Model for Fashion SME Sustainability: Moderating Role of Green Culture Using PLS-SEM Siti Sumiati1* Sri Dewi Wahyundaru2 Sri Wahyuni3 Universitas Islam Sultan Agung Semarang, Indonesia Universitas Islam Indonesia, Indonesia Universitas Islam Sultan Agung Semarang, Indonesia Caroline4 Sekar Langit Nugraheni5 Universitas Sultan Fatah Demak, Indonesia Universitas Islam Sultan Agung Semarang, Indonesia *Corresponding author: Siti Sumiati, Universitas Islam Sultan Agung Semarang, Indonesia. 🖂 Article Info : Article history: Received: April 06, 2026 Revised: May 05, 2026 Accepted: May 07, 2026 Keywords: green knowledge management; organizational green culture; green innovation; fashion SMEs' sustainable development Abstract Background: Organizational green culture as a moderating role in sustainable fashion SMEs. An environmentally friendly strategy is fundamental for the survival of fashion SMEs in emerging industries. Fashion SMEs in Central Java are under considerable environmental pressure; however, little research has examined the integrative role of organizational green culture as a moderator. Objective: This study aims to investigate the impact of green knowledge management and green innovation on SME sustainability and to evaluate green culture as a moderator. Methods: The research model was designed using online questionnaires and SmartPLS, where the samples were selected using stratified random sampling, consisting of 150 fashion SMEs from six regencies in Central Java. Five direct hypotheses and two moderating hypotheses were tested using PLS-SEM with bootstrapping (n = 500 resamples). Results: The findings show that green innovation mediates the relationship between green knowledge management and sustainability, while green culture moderates the effect of green knowledge management. Green knowledge management significantly influences SME sustainability (β = 0.103, p = 0.003) and green innovation (β = 0.093, p = 0.000). Organizational green culture significantly moderates the relationship between green knowledge management and green innovation (p = 0.016), as well as the relationship between green knowledge management and sustainability (p = 0.020). Conclusion: This study provides empirical evidence that organizational green culture is a key factor in improving environmentally friendly knowledge sharing and innovative decision-making effectiveness to support equitable sustainable development for fashion SMEs in developing countries. To cite this article: Sumiati, S., Wahyundaru, S. D., Wahyuni, S., Caroline, & Nugraheni, S. L. (2026). An Integrated Green Management Model for Fashion SME Sustainability: Moderating Role of Green Culture Using PLS-SEM. INKUBIS: Jurnal Ekonomi dan Bisnis, 8(1), 461-472. https://doi.org/10.59261/inkubis.v8i1.226 INTRODUCTION SMEs play a pivotal role in facilitating economic growth and sustainable forms of development. Eco-innovation also plays an important role in the local economy of Indonesia, but adoption among SMEs is still limited (Achmad et al., 2023; Cardoni et al., 2020; Chien, 2023). They are deeply involved in a variety of economic sectors, from job creation to enhancing competitiveness and promoting innovation. SMEs play an important role in sustaining competitive market balance and supporting regional economic growth and the transition toward a circular economy (Novitasari & Agustia, 2023). Participating in markets allows SMEs to enhance 461 | INKUBIS: Jurnal Ekonomi dan Bisnis Siti Sumiati, Sri Dewi Wahyundaru, Sri Wahyuni, Caroline, Sekar Langit Nugraheni An Integrated... consumer welfare and spur greater economic development. SMEs are integral to the sustainable development challenge, as the ability of SMEs to respond innovatively and generate entrepreneurship is key to achieving sustainable development outcomes (Wasiq et al., 2023). Additionally, SMEs promote local economic resilience by utilizing natural resources and maintaining close relationships with neighboring communities (I. S. Khan et al., 2023). Enterprises that respond proactively to environmental issues have a greater chance of establishing a sustainable competitive advantage. In addition to enhancing reputation, incorporating green practices helps firms cope with ecological uncertainty and improve overall operational performance (Li et al., 2023). Environmental innovation can serve as a mechanism to achieve eco-sustainability while also opening new avenues for competitive differentiation (Achmad et al., 2023). Ultimately, sustained competitive positioning is formed through the continuous development of green innovation capabilities (German et al., 2023; Novitasari & Agustia, 2023; C. H. Wang, 2019). As firms implement systematic strategic responses to environmental challenges, one of the most impactful managerial tools has become Green Knowledge Management (GKM). Al-Faouri (2023) stated that institutions proficient in the formation and application of ecological competencies tend to flourish in their sustainability endeavors, reinforcing that green knowledge management is one of the best practices for sustainable development. Thus, promoting environmental expertise opens a pathway toward sustainable ecological advancement and development. Green innovation is a necessity for modern business viability because it is closely linked to employee engagement in clean production practices. A company’s sustainability innovations are reinforced when employees demonstrate a commitment to pro-environmental behaviors in the workplace (Altassan, 2024; Wasiq et al., 2023). Owners of SMEs play diverse roles by promoting sustainable practices, managing green information, and fostering innovation. Research by Sahoo et al. (2023) indicates that implementing green knowledge management helps firms create more environmentally friendly products and services, while increased support from policymakers regarding innovation strategies can assist them in meeting sustainability targets. To address these deficiencies in the literature, Mustafa et al. (2023) explored the function of green knowledge sharing among SMEs in Punjab, Pakistan. There is currently a lack of empirical evidence supporting the relationship between green process innovation and firms’ attainment of environmental competitive advantage, despite indications that such a relationship exists. Most research has focused on conventional technological and managerial innovations, leaving a gap in understanding how green knowledge management contributes to environmental innovation in the processes and management of small fashion enterprises. An increasing number of academics are examining the relationship between environmental intellectual capital and sustainability pursuits in boutique fashion firms. As explai (...truncated)