Green Human Resource Management and Business Sustainability Performance: The Mediating Role of Competitive Advantage among MSMEs in Depok City

Abstract

The sustainability of Micro, Small, and Medium Enterprises (MSMEs) is increasingly influenced by their ability to integrate environmental considerations into business activities while maintaining competitiveness. Green Human Resource Management (GHRM) offers an approach to embedding environmental values ​​into human resource practices; however, its contribution to business sustainability performance may depend on the competitive advantage developed by the firm. This study aims to analyze the impact of GHRM on competitive advantage and business sustainability performance, as well as to examine the mediating role of competitive advantage among MSMEs in Depok City. A quantitative approach utilizing a survey method was employed. Data were collected via questionnaires distributed to 100 MSME owners or managers in Depok City and analyzed using SEM-PLS. The results indicate that GHRM has a positive and significant influence on competitive advantage, with a contribution of approximately 0.42. Competitive advantage also exerts a positive and significant influence on business sustainability performance, contributing around 0.38. Furthermore, GHRM has a positive and significant direct effect on business sustainability performance, albeit with a smaller contribution of approximately 0.21. Mediation analysis reveals that competitive advantage partially mediates the relationship between GHRM and business sustainability performance. These findings suggest that environmentally oriented human resource practices can contribute to MSME sustainability not only through direct improvements in business operations but also by strengthening the firm's competitive position.