Political connection as a moderator in the relationship between green innovation and firm value: The mediating role of financial performance in Indonesia

Siti Rochmah; Putri Aulia  Emha; Nadila Deryza  Syofrin

doi:10.55942/pssj.v6i2.1225

Authors

Siti Rochmah Politeknik Negeri Banjarmasin
Putri Aulia Emha Politeknik Negeri Banjarmasin
Nadila Deryza Syofrin Politeknik Hasnur

DOI:

https://doi.org/10.55942/pssj.v6i2.1225

Keywords:

green innovation, politic connection, firm value, financial performance, sustainable strategy

Abstract

This study aims to analyze the influence of green innovation on the value of companies with financial performance as mediators and political connections as moderation variables in the energy sector listed on the Indonesia Stock Exchange for the period 2020–2024. Using the purposive sampling method of 50 observations, the data was analyzed through Partial Least Square (PLS-SEM) with the help of SmartPLS 4.0. The results of the study revealed that green innovation had a significant positive effect on financial performance (β=0.252; p=0.031), but has no direct effect on the company's value (β=0.051; p=0.681). Financial performance was also found to fail to mediate the relationship (β=0.017; p=0.672), indicating that the capital market has not appreciated internal efficiency based on the environment independently. The most crucial finding is that political connections act as the main differentiating factor. Green innovation significantly improves financial performance (β=0.304; p=0.050) and company value (β=0.244; p=0.042) only in entities with political networks. The implications of this study confirm that in emerging markets, the technical capabilities of innovation must synergize with political institutional assets to achieve optimal market performance; therefore, the government needs to design a more transparent and inclusive energy transition incentive scheme for all industry players.

Author Biographies

Siti Rochmah, Politeknik Negeri Banjarmasin

Siti Rochmah is a lecturer at Politeknik Negeri Banjarmasin specializing in financial management and strategic management. Her research interests include sustainability issues, particularly how environmental initiatives and strategic decision-making influence corporate financial outcomes. She frequently conducts empirical studies related to firm performance, green innovation, and corporate strategies within regulated industries. Her recent works include research on the interaction between institutional factors and financial indicators in assessing firm value.

Putri Aulia Emha, Politeknik Negeri Banjarmasin

Putri Aulia Emha is a lecturer at Politeknik Negeri Banjarmasin with expertise in entrepreneurship and sustainable business development. Her academic interests focus on how entrepreneurial behavior, innovation capability, and business adaptation contribute to long-term sustainability. In recent years, she has actively explored the integration of sustainability principles into entrepreneurial ecosystems, including the role of green practices in enhancing competitive advantage. Her work often involves mapping research gaps and strengthening theoretical frameworks in sustainability-oriented studies.

Nadila Deryza Syofrin, Politeknik Hasnur

Nadila Deryza Syofrin is a lecturer at Politeknik Hasnur specializing in management and organizational behavior. His research primarily examines behavioral dynamics within organizations, including leadership, employee responses to strategic change, and organizational readiness for innovation. His focus on organizational behavior provides important insights into how internal structures and human factors influence the adoption of sustainability initiatives, such as green innovation, within Indonesian companies.

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