Determinants of Employee Environmental Performance in Malaysian Small-Medium Enterprises (SMEs)

Chai, Wan Yee (2025) Determinants of Employee Environmental Performance in Malaysian Small-Medium Enterprises (SMEs). Masters thesis, Tunku Abdul Rahman University of Management and Technology.

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Abstract

This study aims to explore the determinants of employee environmental performance in Malaysian small-medium enterprises (SMEs). The environmental, social, and governance (ESG) framework has received increasing attention from businesses, following the introduction of the 17 Sustainable Development Goals (SDGs) and Malaysia’s ambition to achieve net-zero greenhouse gas emissions by 2050. The awareness of ESG in Malaysian SMEs rising to 80% over the past two years, and Malaysia’s government encourages the usage of technology for green practices. However, the employee environmental performance remains weak. Additionally, the employees are not utilising generative artificial intelligence (AI) for environmental performance. This weak performance highlights the urgent need for improvement. With this, the researcher conducts a comprehensive study on the determinants of employee environmental performance and suggests strategies to improve the performance level. The Componential Theory of Creativity and Natural Resource-Based View are the theoretical framework for this research. Based on the literature review, variables such as generative AI adoption, employee green entrepreneurial orientation, green inclusive leadership, green passion, green creativity and green knowledge sharing are studied for their influence on employee environmental performance. The sample for this study consists of employees who are currently working in Malaysian small-medium enterprises (SMEs). Data were collected from 380 respondents using an online self-administered survey method. The data were analysed using the Statistical Package for Social Science (SPSS) and SmartPLS 4.0. The findings support the positive influence of employee green entrepreneurial orientation, green inclusive leadership, and green passion on green creativity. Additionally, the result shows that green creativity and green knowledge sharing have a significant positive relationship with employee environmental performance. The mediating effect of green creativity on the relationship between employee green entrepreneurial orientation, green inclusive leadership, green passion and employee environmental performance is supported. Green passion mediates the relationship between green inclusive leadership and green creativity. However, the direct impact of generative AI adoption on green creativity remains inconclusive. Ultimately, this research highlights that employee environmental performance can be influenced through leadership, individual orientation, knowledge sharing, and emotion in the Malaysian context. The need to focus on industry-specific employee environmental performance is proposed. Keywords: Employee Environmental Performance, Generative AI Adoption, Employee Green Entrepreneurial Orientation, Green Inclusive Leadership, Green Passion, Green Creativity, Green Knowledge Sharing, Smart PLS 4.0.