The Impact of Green and Product Innovations on Competitive Advantage: A Case Study of Medium and Small-Scale Distilleries in Thailand

Abstract

This study investigates the interrelationships among green innovation, product innovation, competitive advantage, and business survival in Thailand’s small and medium-sized distillery sector. Drawing on the Resource-Based View and Dynamic Capabilities Theory, the research explores how environmentally sustainable practices serve as a strategic foundation for product differentiation and long-term viability in a heavily regulated market. The study employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyze survey data collected from SME distilleries across Thailand. The findings confirm that green innovation has a strong positive effect on product innovation, which in turn significantly influences competitive advantage and SME survival. Product innovation also independently impacts survival outcomes, highlighting its dual strategic role. Competitive advantage is shown to be a critical mediator linking innovative efforts to long-term business resilience. These results underscore the need for SMEs to embed sustainability and innovation into core strategies while also highlighting the importance of regulatory reform to support local entrepreneurial ecosystems. The study contributes to the literature on SME innovation in emerging economies and offers practical recommendations for policymakers, including easing production quotas and investing in green technology support systems. The findings suggest that fostering a policy environment conducive to small-scale innovation can enhance the competitiveness and sustainability of Thailand’s craft distillery industry.