Environmental Sustainability Orientation, Dynamic Capability, Entrepreneurial Orientation, and Green Innovation in Small- and Medium-sized Enterprise

Abstract

Environmental sustainability orientation has emerged to drive firms into eco-friendly production. Yet, the consequence of this new strategic thinking on firms’ green innovations, especially small- and medium-scale enterprises (SMEs), remains unresolved. Recognizing that the connection between environmental sustainability orientation and green innovation may not always be direct, the study theorizes that dynamic capability and entrepreneurial orientation may form part of the boundary conditions that strengthen its effect on small enterprises’ green innovation. The study adjoins the dynamic capability theory with the entrepreneurial orientation theory to test this relationship among small businesses within a developing economy. Results from the partial least squares–structural equation modeling (PLS-SEM) suggest that environmental sustainability orientation will result in green innovation when the SME’s dynamic capability can develop a creative reconfiguration of knowledge and new distinctive resources to support this new strategic direction. Similarly, findings from the study suggest that environmental sustainability orientation will translate into better green innovation outcomes when the SME entrepreneurial orientation has a solid attraction to protect the ecosystem and does not perceive green innovation as a risky enterprise.

Citation

Asante, K., Novak, P. and Kwarteng, M.A. (2024), "Environmental Sustainability Orientation, Dynamic Capability, Entrepreneurial Orientation, and Green Innovation in Small- and Medium-sized Enterprise", Andersen, T.J. (Ed.) Sustainable and Resilient Global Practices: Advances in Responsiveness and Adaptation (Emerald Studies in Global Strategic Responsiveness), Emerald Publishing Limited, Leeds, pp. 55-79. https://doi.org/10.1108/978-1-83797-611-920241004