Do green practices drive business excellence in SMEs? Investigating how green entrepreneurial orientation improves firm’s performance

Due to growing environmental concerns and sustainability issues, firms have to rely on green practices to overcome these challenges, and they should not be reluctant that it will adversely affect their financial performance. Some studies hold that a green entrepreneurial orientation is vital for achieving performance. However, scant research has empirically tested the underlying mechanisms and boundary conditions under which green entrepreneurial orientation affects firm performance. Therefore, this study aimed to explore the influence of green entrepreneurial orientation on firm performance via green (‘product and process’) innovation. Additionally, multiple moderation effects: a). Corporate social responsibility moderates green entrepreneurial orientation and green (‘product and process’) innovation nexuses, and b). Differentiation strategy moderates green (‘product and process’) innovation influence on firm performance was also investigated. The hypotheses were empirically tested with primary data collected from 576 Italian small and medium-sized enterprises using the survey method and analyzed through structural equation modeling. On the foundation of the resource-based view, the results demonstrate that green entrepreneurial orientation directly and indirectly, through green (‘product and process’) innovation, influences firm performance. Evidence also confirms that corporate social responsibility and differentiation strategies positively moderate the proposed relationships. These results provide a new perspective on green entrepreneurial orientation, underlying mechanisms, and boundary conditions under which firms can improve their performance.