Linking Entrepreneurial Exposure to Sustainable Outcomes in SMEs: Evidence from Green Orientation and Absorptive Capacity

Abstract

This study has analyzed the impact of entrepreneurial exposure on the environmental performance of Small and Medium-sized Enterprises, with special concern for the increasing significance of sustainability in the current business scenario. Small and Medium-sized Enterprises comprise more than half of the world's economic activities, and with having critical role in environmental concerns. Our study is based on quantitative analysis that establishes the framework to identify the predictors of environmental performance. For empirical analysis structured survey among 358 employees has been used, and the sample is based on Small and Medium-sized Enterprises in Bangladesh. We have tested structural models with the help of Smart PLS in order to identify the relationships between the study variables. The results indicate that the impact of entrepreneurial exposure has a significant positive effect on the environmental performance of SMEs. The analysis further shows that green entrepreneurial orientation works as a mediating factor and reinforces the effect of entrepreneurial exposure on environmental outcomes. Additionally, the moderating role of green absorptive capacity shows that more effective entrepreneurial exposure of SMEs with better learning and adaptation capabilities leads to the transformation into improved environmental practices. The present study adds to the available body of knowledge by addressing a significant gap in the combined effect of entrepreneurial exposure, green orientation, and absorptive capacity on environmental performance. It hints that green-oriented exposure should be encouraged, which can have a very strong influence on the sustainable activities in SMEs. The results are in line with other studies that have focused on the strategic importance of knowledge-based capabilities for better organisational performance.