Greening Hospitality: The Transformational Impact of Environmental Initiatives and Customer Eco-Pressure on Operational Excellence in Malaysia

Abstract

The growing global emphasis on sustainability has led to an increasing integration of eco-friendly practices in various industries, including hospitality, where understanding how environmental initiatives and eco-friendly customer pressure influence operational performance has become essential for businesses aiming to remain competitive. This study examined the impact of environmental initiatives and eco-friendly customer pressure on operational excellence in Malaysia's hospitality sector. As sustainability became a global trend, understanding how green practices influenced operational performance was essential for businesses aiming to remain competitive. The research employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to analyse data from 288 respondents, offering a comprehensive view of how various environmental practices affected operational outcomes. The findings revealed that environmental performance incentives, green product innovation, and eco-friendly customer pressure significantly influenced operational performance. Environmental performance incentives were found to improve operational performance by encouraging more efficient, sustainable practices. Green product innovation emerged as a main factor, positively impacting operational performance by promoting creativity and differentiation through environmentally conscious offerings. Additionally, eco-friendly customer pressure was identified as a critical driver, with increasing consumer demand for sustainability pushing businesses to enhance operational practices. These results have both practical and theoretical implications. Practically, they emphasised the importance of integrating environmental initiatives into operations, showing that sustainability could improve operational performance, customer satisfaction, and competitive advantage. Theoretically, the study enriched the literature by providing empirical evidence of the connection between environmental initiatives and operational excellence in Malaysia's hospitality industry. This research offered valuable insights for practitioners and researchers exploring the relationship between sustainability and business performance. Ultimately, the study suggested that hospitality businesses must not only meet but also anticipate customer demands for eco-friendly practices to ensure long-term success and contribute to broader environmental goals.