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Purpose This study aims to explore how corporate culture influences green environmental innovation and assesses its impact on Shariah financial performance within Islamic financial institutions. Design/methodology/approach A survey of 270 managers from institutions in Banten, Jakarta and West Java, Indonesia, was conducted. Data were analyzed using Partial Least Squares Structural Equation Modelling (PLS-SEM) to test relationships between four culture types – clan, adhocracy, hierarchy and market – green innovation dimensions (organizational practices, processes and products), and financial performance. Findings The results indicate that adhocracy and market culture significantly promote green innovation, while clan culture has a weaker yet positive effect. Conversely, hierarchy culture negatively affects all innovation dimensions. Green organizational practices, processes and products positively contribute to Shariah financial performance, suggesting that flexible and market-oriented cultures help align sustainability with financial objectives. Practical implications From a practical perspective, managers are encouraged to foster innovation-friendly environments, align market-driven incentives with environmental goals and revise rigid internal structures. Recommended mechanisms include cross-functional green teams, eco-compliance key performance indicators and integrating maqashid-al-shariah principles into environmental strategies. Originality/value This study advances the Islamic finance and sustainability literature by empirically connecting culture, innovation and performance, and offers practical strategies for embedding environmental innovation within Shariah-compliant financial operations.
Soleh et al. (Tue,) studied this question.