Exploring eco-innovation capability and operational performance of energy service companies: Does ownership structure make a difference?

Abstract

Eco-innovation capability's enhancement of the operational competitiveness of Energy Service Companies (ESCOs) remains under explored in emerging markets. Furthermore, limited evidence exists on the influence of ownership structure on eco-innovation capability and operational performance. This study therefore examines the relationship between eco-innovation capability, ownership structure and operational performance of ESCOs. Questionnaires are electronically distributed to Operations Managers of 287 ESCOs registered by the Energy Commission in Malaysia. To test the direct and moderating effects, Partial Least Square-Structural Equation Modeling (PLS-SEM) is applied on 136 valid responses. Results suggest Eco-innovation Capability significantly enhances ESCOs operational performance, with the model explaining 66% (R² = 0.656) of the variance. Furthermore, a concentrated ownership structure resulted in higher eco-innovation capability and operational performance. These results provide pathways for industry practitioners to improve sustainable development contributions and operational performance whilst providing policymakers with a benchmark towards evaluating the effectiveness of the National Energy Policy.