The environmental agenda has become the most crucial topic in the global manufacturing industry. Consequently, the development of technologies that reduce or prevent pollution in the production processes is becoming a necessary condition for survival. Green innovation has emerged as one of the solutions to this growing economic and environmental pressure [
7,
12,
13]. Many manufacturers’ concerns have recently changed from “How do we produce products efficiently?” to “How do we develop more eco-friendly materials or reduce the generation of pollutants in the production process?” [
14]. Manufacturing companies have begun to perceive themselves as an entity that faithfully performs the needs of society, and the societal expectations have increased as manufacturing companies are perceived to contribute in improving the environment or quality of life within society [
15,
16]. There are various assessments of green innovation among manufacturing companies, but the action required to harmonize with significant economic, environmental, and social targets has become a prominent concern. It began in 1992 with the discussion of reducing environmental pollution in the manufacturing process of manufacturing companies initiated at the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro and is in line with sustainable manufacturing [
17]. This study seeks to discuss how these green innovations can be better represented in the product production process and the relationship with open innovation that enables innovation together.
In the knowledge-based view, an entity seeks to grow through the creation, diffusion, and utilization of knowledge and to innovate through continued investment to obtain new competitive knowledge to respond to the changing environment [
18,
19]. However, due to the accelerated pace of the expansion of knowledge, rapid obsolescence in the value of existing knowledge, frequent turnover among knowledge workers, and firms having difficulties in creating innovative ideas have become unfortunate consequences [
20]. These changes in the knowledge environment make a variety of ways in which organizations can acquire new ideas when they attempt to innovate. In the past, a single entity had to invest vast amounts in order to develop innovation into new opportunities [
21], but now it has become a situation where it has to consider the access to and organization of these knowledge sources beyond the efforts of a single company alone because the knowledge sources of the enterprise have become more diversified.
With this notion, existing studies on innovation emphasized that an organization’s strategy to disclose its innovation process to the outside world can strengthen the competitiveness of the organization. Chesbrough [
22] suggested that many organizations that have succeeded in innovating, such as IBM, Intel, and AT&T, continue to innovate and achieve high results through open innovation that opens their internal innovation processes to the outside world and actively absorbs and utilizes the knowledge that exists outside. Indeed, P&G has overcome the limitations of growth faced by market saturation and depletion of ideas through the Connect and Development Program, which utilizes external ideas. Through this program, P&G expanded its share of new products from 15 to 50% and increased R&D productivity by 60% [
22]. South Korea’s Hyundai Motor recently established next generation vehicle (NGV), an industry-academic cooperation company, to develop future eco-friendly vehicles, and successfully developed a new concept hybrid system by pursuing research on electronics, machinery, chemicals, materials and convergence technologies [
3]. Therefore, the importance of external knowledge activities of an enterprise is being emphasized and increasing the knowledge exploration activities of enterprises that explore ideas and opportunities for innovation through a variety of external knowledge and sources of information are being prioritized [
23].
Recently, we believe that exploring innovative ideas with the potential to become commercialized as one of the most critical knowledge exploration processes to achieve innovation plays an important role [
24,
25]. Organizations spend significant amounts of time and money, discovering opportunities for innovation, which increases their ability to create innovation through a combination of existing and new knowledge held by the firm [
26,
27]. Many previous studies have empirically analyzed that such repeated internal knowledge exploration and cumulative innovation capabilities play an essential role in the achievement of innovation [
28,
29]. However, empirical verification was somewhat sluggish for open innovation, which recognized the economic value of external knowledge and emphasized the importance of commercially applicable external innovation activities by understanding this knowledge. If the focus of the empirical studies in which the existing studies have validated the open innovation is primarily focused on how to improve the performance of innovation, this study will look at the relationship between the two types of open innovation and the types of green innovation that result from it. Companies will innovate to address a variety of pollution caused by the inefficient use of resources, and most of them will have to make efforts to reduce such environmental costs through green innovation [
12]. Porter and van der Linde [
30] argued that pioneers who created green innovation early might have a first mover advantage that would give consumers a premium price over competitors who produce the same product. Behind the consumer’s willingness to pay a little high price is the premise that environmentally immoral companies may be subjected to harsh trials. Furthermore, for companies that continue to promote green innovation, the potential for attracting investment from home and abroad increases, which can then result in competitive advantage [
12,
31].
2.1. Open Innovation and Green Process Innovation
Green innovation can be defined as new or modified processes, technologies, systems, and products to reduce or avoid environmental problems. Green innovation is divided into two types: green process innovation and green product innovation [
7,
32,
33,
34]. Green process innovation (GPI) refers to green process technologies such as clean production, pollution control, pollution prevention, environmental efficiency, and recirculation, with new or improved activities contributing from an environmental perspective to the production of goods or services. Green product innovation means that the nature or purpose of an enterprise’s goods or services is new or noticeably improved in terms of the environment. In this study, we will focus on the green process innovation as a result of green innovation. Green process innovation has recently gained much attention in that manufacturing companies are making great efforts to minimize waste and pollution generated in the production process and optimize resource utilization. Such efforts are required by businesses because in many cases, including the domestic market, strict environmental standards are applied when entering foreign markets, and consumers purchasing them are also becoming more focused on reducing pollutants rather than the characteristics of the finished products.
Existing studies on green process innovation first addressed the fundamental question of why companies should respond to environmental regulations [
12]. More specifically, the question of “do we need corporate social responsibility or corporate social response to environmental issues?” In fact, a number of companies recognized it as an unnecessary investment in environmental management, but, in contrast, products completed through green process innovation were able to offer higher prices to customers [
35], with the effect of improving their corporate image [
10]. Furthermore, by pioneering new markets, it was a means to gain competitive advantage for the enterprise [
28]. Moreover, the government’s environmental policies in corporate management and environmental regulations in the international community are increasingly influential not only in local management but also in the management paradigm in the overseas markets [
12]. In response, companies are forced to carry out environmental protection activities to respond to international regulations and pressures [
36,
37].
In terms of the institutional aspect, green process innovation functions as institutional pressure that companies cannot easily avoid. Even 20 years ago, environmental regulation was not a change that could cause punitive damages for not acting, because it was considered as an alternative for companies. However, due to the emergence of environmental issues such as climate change, the global issue has been ignited by the fact that the most CO2 emissions-driven entity is not a matter of choice but a need for justification for survival. This series of processes can also be understood as changes in the homomorphism that are emphasized in the theory of institutionalization.
However, if green innovation is a necessity, we must think about one important issue, the methodology of how to achieve green process innovation. In the past, many companies doubted the effectiveness of green innovation and dismissed it as an unnecessary investment because of the costs required for green innovation and the question of whether knowledge and technology can be obtained through green innovation and connected to actual business performance [
38]. Therefore, if all companies that are required to perform green innovation are burdened with the cost and cost–benefit effects of achieving green innovation, they should “work together” more to ensure sustainable development is possible [
5,
39]. Kim, Kim and Foss [
39] suggested that companies that have decided to actively introduce environmental management for green innovation should consider ways to integrate within a company or utilize inter-company environmental management and technology to achieve the goal of achieving environmental regulations. Also, Ma, et al. [
14] stated that compared to other types of innovation, green innovation was highly likely to cooperate because it was better to be together than to be alone. Cooperation on environmental issues provides companies with opportunities to reduce costs and allows businesses and societies to move together in a better direction [
40]. Above all, green innovation must be sustainable in that it contributes to environmental issues globally and, therefore, has significant external effects than other types of innovation.
Open innovation between companies or between companies and organizations will make green innovation efficient and sustainable. Corporate innovation is an integral part of competitive advantage and sustainable survival [
41]. Moreover, comprehensive innovation that can contribute to the environment while jumping over existing technologies is a momentous challenge for companies. Therefore, it is vital to discover and realize the source of this innovation. The recent rapid changes in the market environment and the increasing complexity of technology have led to increased activities to gain new knowledge not only within the enterprise but also from the outside [
28]. International firms should work with business partners to promote the relevance of business participation to improving and enriching the delivery of products and services, and to work with trusted partners to engage partners in the process of creating ideas and enabling rapid response to safe data sharing, business strategies and development and market intelligence and trends [
42]. Activities to obtain new knowledge from the outside can be accomplished through open innovation [
22]. Open innovation occurs on the premise of continuous interaction and openness with other organizations, which include clients, suppliers, competitors, or related research institutes and government agencies. Previous research on R&D cooperation and knowledge diffusion focused mainly on a variety of external R&D sources, but little effort was made to investigate the impact of competitive and non-competitive R&D cooperation on innovation at the same time. Lazzarotti and Manzini [
43] argue that the difference between organizational and management expertise and firm strategy and competence can lead to other forms of open innovation, even if firms operate in the same industry. In response, Huang and Yu [
44] demonstrated that both non-competitive R&D cooperation and competitive R&D cooperation bring a positive adjustment effect to the relationship between R&D and innovation within the enterprise, but non-competitive R&D cooperation is more favorable than competitive R&D cooperation. As a result, the knowledge gained from these non-competitive partners can be interpreted as being helpful because research institutes and universities are not direct competitors and are not willing to compete with companies that cooperate in the same market in the foreseeable future, which further strengthens and complements the company’s in-house efforts for innovation [
45].
Various studies have shown that collaboration with external networks facilitates innovation activities and reduces the costs and risks of innovation, particularly for innovation with high technological opportunities but high complexity, such as green innovation, preferring open innovations with access to a wide range of external ideas, knowledge, and resources [
44,
46]. Thereby, the following hypotheses were derived:
Hypothesis 1: Open innovation with firms will be positively related to green process innovation.
Hypothesis 2: Open innovation with organizations will be positively related to green process innovation.
2.2. Open Innovation and Green Consumer Innovation
Green innovation can be seen as an introduction or implementation of new or radically improved products (services), processes, organizational methods, and marketing methods to increase environmental contributions. Among these, this study defines green consumer innovation (GCI) as a firm’s contribution to the environment that the ecological loss of its products and services used by consumers has been reduced. Enhancing the understanding of eco-friendly consumer behavior is vital in both environmental and business aspects [
15]. In order for the international community to achieve its stated goals, it is not only essential to reduce the negative impact on consumers, but also to lay the groundwork for a good consumption [
47]. In the past, there was a level of mimetic isomorphism that saw other companies develop green technologies. However, as coercive isomorphism has progressed, or if images that harm nature are delivered to consumers, the company may find it challenging to survive [
16].
As the environmental consciousness of customers who feel this global warming issue is evolving, green process innovation is not only pressure in terms of corporate management, but also terms of customers [
31]. For example, the perception of so-called “good consumption” appears to be growing, with customers opting for eco-friendly products and willing to pay relatively high prices for eco-friendly products [
48]. From a green consumer innovation perspective, companies are forced to carry out environmental protection activities to counter consumer awareness of environmental issues and the regulatory pressure of the international society [
36].
If an understanding of eco-friendly consumer behavior is imperative, there is a need to look at the motives behind creating eco-friendly consumer behavior. Among studies that have been conducted on eco-friendly consumer behavior, the study of Stern [
49] is representative. He suggested four factors that lead to eco-friendly consumer behavior: contextual pressures, attitude factors, habits or routines, and personal capacity, and cited these as the most important psychological and strategic factors. Eco-friendly consumers have a higher level of awareness of the environment in advance and, in fact, consumers’ green options have been shown to reduce the use of cars even for personal consumption [
50], reduce energy consumption in the eco-friendly production process [
51] or prefer products with processes favorable to the preservation of natural resources [
52]. Thus, from a business and strategic point of view, the development of environmentally friendly products can hardly be expected to cause an effect unless eco-friendly technologies are linked to consumers and their lifestyle. Indeed, it has been argued that the eco-friendly production process in the product production phase has the potential to reduce and even eliminate environmental damage in the later stages of the consumption cycle [
53]. Reducing the environmental impact of companies, such as energy conservation and recycling, has drawn much more attention than consumers buying eco-friendly products [
15]. As a result, companies need higher capabilities to meet the needs of eco-friendly consumers, need external capabilities to supplement limited time and resources, as well as inter-organizational connectivity to develop existing knowledge into new types of knowledge or to develop new products, processes, and services [
7]. In particular, external R&D cooperation has been recognized as a focal source of technological learning when an entity has limited resources. As a result, the knowledge gained from competitive or non-competitive partners is expected to have a positive impact on meeting the requirements of eco-friendly consumers. Subsequently, Hypothesis 3 and 4 are posited below:
Hypothesis 3: Open innovation with firms will be positively related to green consumer innovation.
Hypothesis 4: Open innovation with organizations will be positively related to green consumer innovation.
Based on the above review, the theoretical model set up by this study is shown in
Figure 1.