From Risk to Reward: Entrepreneurial Orientation as a Driver for Environmental Innovation and Performance

ABSTRACT We examine the mediating role of environmental innovation in the relationship between entrepreneurial orientation (EO) and firm performance in Chinese manufacturing firms. Drawing on organizational learning theory, we focus on two EO dimensions—entrepreneurial behaviors and risk‐taking attitudes—as key drivers of environmental innovation. Based on survey data from 211 manufacturing firms in China, we apply structural equation modeling and Monte Carlo mediation analysis to test our hypotheses. Results show that entrepreneurial behaviors ( β = 0.712, p < 0.001) and risk‐taking attitudes ( β = 0.856, p < 0.001) positively influence environmental innovation, which, in turn, significantly enhances firm performance ( β = 0.695, p = 0.004). Furthermore, environmental innovation fully mediates the relationship between EO and firm performance. These findings highlight the strategic importance of EO in fostering sustainable innovation and competitive advantage in emerging economies.