The effect of sustainable manufacturing on environmental performance through government regulation and eco-innovation

PurposeThe study aims to determine the impact of sustainable manufacturing on environmental performance through government regulation and eco-innovation in Indonesian small and medium-sized enterprises (SMEs).FindingsThe results indicate sustainable manufacturing plays a significant role in SMEs' environmental performance and regulations, and eco-innovation can moderate it. It also reveals that government regulation has a positive and significant effect on environmental performance. Moreover, eco-innovation has a positive and significant effect on environmental performance.Practical implicationsThe findings of this study indicate that SMEs can embrace sustainable manufacturing practices and achieve their long-term sustainability goals by adhering to regulations, collaborating with stakeholders and implementing eco-friendly innovations.Originality/valueThis research uncovers ground-breaking perspectives on the evolution of scientific knowledge about the impact of eco-innovation, regulatory measures and sustainable manufacturing practices on the environmental performance of SMEs.