Green innovation strategies in ecotourism: the role of knowledge sharing, digital adoption, and government policies on sustainable financial performance

Abstract

Ecotourism in Bali is undergoing a transition to digital and sustainable practices, but sustainability implementation remains constrained by uneven access to resources and capabilities. This study aims to examine the relationship between knowledge sharing, digital adoption, green innovation and sustainable financial performance in the ecotourism sector. A quantitative approach was used using structural equation modeling (SEM) with data collected from 200 respondents, including managers, employees and tourists involved in ecotourism activities in Bali. The effect of mediation was assessed using the Sobel test procedure. Results show that knowledge sharing and digital adoption have a significant positive effect on green innovation and sustainable financial performance. But digital adoption and government policies have not shown a significant influence on financial performance. Green innovation shows an inability to mediate, while the moderation effect of government policies is not supported. This study is limited by its cross-sectional design and reliance on self-reported data, which may introduce common method bias. The focus on ecotourism small and medium enterprises (SMEs) in Bali may also limit generalizability to other sectors or regions. Future research should adopt longitudinal approaches, incorporate objective performance measures and explore different geographical contexts. The findings imply that knowledge sharing and digital adoption can directly enhance financial performance, while green innovation may require longer time horizons. Practically, managers should integrate knowledge management, digital strategies and sustainability initiatives to maximize long-term value creation in ecotourism. The findings suggest that ecotourism managers should prioritize knowledge sharing and digital adoption to enhance financial performance and operational efficiency. Developing digital platforms, such as online booking systems and data-driven marketing tools, can improve market reach and service quality. Managers should also foster collaborative knowledge-sharing cultures involving local communities to strengthen innovation capacity. Although green innovation does not show immediate financial impact, it should be strategically integrated as a long-term investment. Policymakers should provide more practical support, including training, incentives and infrastructure, to bridge the gap between policy design and implementation in ecotourism SMEs. This study highlights the importance of collaborative knowledge sharing in strengthening social cohesion among stakeholders in ecotourism, including local communities, businesses and government institutions. By integrating local wisdom such as Tri Hita Karana, ecotourism development can promote balanced relationships between humans, nature and culture. Digital adoption further enhances inclusivity by enabling wider participation and access to information. Although green innovation shows limited immediate financial impact, it contributes to long-term environmental sustainability and community well-being. Therefore, fostering socially embedded innovation practices is essential for achieving inclusive and sustainable tourism development. This study provides empirical evidence on the important role of digital knowledge networks in supporting ecotourism transformation. It highlights the importance of a collaborative approach between governments, businesses and local communities to accelerate sustainable development in the context of ecotourism.