Green entrepreneurial orientation and small and medium-sized enterprises’ performance: The role of innovation capabilities and regulatory forces

Abstract

Financial performance of small and medium-sized enterprises (SMEs) is investigated in this study as a dependent variable, with green entrepreneurial orientation (GEO) as the independent variable, green innovation capabilities (GIC) as the mediating variable and regulatory framework as the boundary condition. The study draws on the resource-based view, dynamic capability theory and institutional theory to fill this gap and provide a more integrated explanation of how SMEs translate their environmental orientation into measurable outcomes in the business (Coelho et al., 2024; Anin et al., 2024). The theoretical framework used was the tool of data collection, which was carried out by a structured questionnaire and analyzed with SPSS 26.0 and SmartPLS 4.0 for SME owners and managers in Zhengzhou, China, with a total of 384 subjects. The results show that GEO has positive effects on enterprise performance and that this effect is partially mediated by GIC. Further results indicate that the GEO-performance relationship is enhanced by supportive regulatory conditions. The study adds to the literature by connecting the concepts of green strategic orientation, innovation capability and institutional support in one empirical model. It provides practical directions for SME managers who are looking for performance improvements as a result of eco-innovation, and for policymakers responsible for creating the policy environment for sustainable entrepreneurship.