The players in the sector are responsible for the issue of natural resource utilization and consideration of the situation. As a regulator, the government is obligated to direct industry actors to incorporate sustainable concepts into their operations. One of them is eco-innovation, which is a cutting-edge concept based on the concept of sustainability. Indonesia is an example of a country that relies on natural resources for industrial development and needs eco-innovation as a foundation. Industrial activities produce environmental concerns ranging from damage upstream, such as illegal logging, to damage downstream, such as manufacturing waste emanating from the industry.
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In the last 45 years, environmental issues have become a major political issue. Interest has shifted over time, but the contemporary emphasis on global climate change has pushed environmental issues to the forefront of the worldwide political agenda. With the introduction of greening in the market during the previous 1015 years, we've seen a comeback of greening as a commercial problem. The issue of natural resource utilization and environmental consideration is a duty that all stakeholders in the sector must bear. As a regulator, the government is obligated to direct industry actors to incorporate sustainable concepts into their operations. One of them is eco-innovation, which is a cutting-edge concept based on the concept of sustainability. Indonesia
However, many environmental issues arise as a result of the industry's non-compliance with industrial operational activities. Meanwhile, the concept of eco-innovation is not new in industrialized countries, as it has long been employed as a barometer of better competitive performance (Gable et al., 2015). Eco-innovation, in general, differs from traditional and “normal” innovation in two key ways; (1) Stresses environmental impact reduction, (2) social conditions and institutional structure, as well as products, processes, and organizational ways (OECD, 2009; Kemp, 2010).
The National Innovation Committee (KIN) was established by the Indonesian government with the mission of assisting in the building of the national innovation system by offering input and suggestions on program goals and action plans. Energy, food, water, education, health, medicine, marine, military and weapons technology, transportation, information and communication technology, and the creative economy industry are among the areas where KIN has focused on eco-innovation.
Various trend innovations to circular economy (CE) are paving the way for the transition, which can be classified as technology push (centralized production decentralization and reusable and more durable material) and market pull (social sharing, cultural exchange, repair cafe, green consumption, etc.) (Stahel, 2019). Designing existing production and consumption patterns to be more cyclical presents a variety of issues in terms of limiting production’s environmental impact and ensuring successful product reuse (Bocken et al., 2017; Geissdoerfer et al., 2017; Ghisellini et al., 2016).
SMEs that use the notion of eco-innovation have a higher financial grade than SMEs who do not. This is due to a variety of causes, including a lack of external investment for eco-innovation as a result of high-risk profiles, both politically and technically, as well as asymmetry (Criscuolo & Menon, 2015; Mrkajic et al., 2017; Petkova et al., 2013; Randjelovic et al., 2003).
In addition, this eco-innovation activity is also very much in line with and supports the efforts to achieve the SDGs which are a global action plan agreed by world leaders to end poverty, reduce inequality and protect the environment. As a new concept, the eco-innovation concept is more exclusive, not only related to the technical aspects of the environment, but also in the realm of management, policy and social innovation. Therefore, implementing of eco-innovation should create a supporting system which hoped that it will become a spur to develop and implement the green technology innovations as well as creating sustainable development.