The Role of Green Human Resource Management in Driving Green Business: Evidence from Indonesian SMEs

Abstract

As the global market increasingly demands sustainability, Small and Medium Enterprises (SMEs) face the critical challenge of transitioning into green businesses. While technology and financial capital are vital, the role of human capital management remains a decisive factor. This study investigates the strategic role of Green Human Resource Management (GHRM) as a unified construct in driving green business outcomes among Indonesian SMEs. Specifically, it examines how the integration of environmentally conscious HR practices influences overall green business performance and organizational sustainability. Utilizing a quantitative survey method with structural equation modeling (SEM), data were gathered from 406 SMEs in Indonesia. The empirical findings demonstrate that GHRM acts as a powerful driver that effectively aligns employee capabilities with the firm’s ecological goals, thereby accelerating green business transformation. This research underscores that adopting GHRM is no longer optional but a strategic necessity for SMEs to build resilience and foster sustainable growth in a changing economic landscape. The implications offer practical insights for SME owners and policymakers, particularly BRIDA, in leveraging human resources to advance the local green economy.

Keywords:  Green Human Resource Management (GHRM), Green Business, SMEs, Indonesia