Sustainability, Vol. 11, Pages 2315: The Mediating Role of Environmental Innovation on Knowledge Acquisition and Corporate Performance Relationship--A Study of SMEs in China (Sustainability)

Open innovation theory believes that external knowledge acquisition is the key to gaining competitive advantage. This research aimed to examine the relationship between external knowledge acquisition, environmental innovation, and performance of small and medium-sized enterprises (SMEs). This study divides the external knowledge acquisition of enterprises into external technical knowledge acquisition and external market knowledge acquisition, and examines this theoretical framework with environmental innovation as a mediator. Using a sample of 416 Chinese SMEs, empirical results revealed that high levels of technical knowledge acquisition and market knowledge acquisition were positively related to SMEs’ performance. The positive impact of technical knowledge acquisition is mainly embodied through economic performance; the positive impact of market knowledge acquisition is mainly embodied through environment performance. Meanwhile, environmental innovation plays a significant mediating role in the relationship between external knowledge acquisition and enterprise performance; environmental performance plays a significant mediating role in the relationship between environmental innovation and economic performance. This paper provides several managerial implications for managers and policy makers to improve SMEs’ performance.