An Empirical Analysis of Green Absorptive Capacity, Green Innovation, and Enterprise Performance: A Green Entrepreneurship Orientation Approach

Abstract

In an era of a knowledge-based economy, identifying, acquiring, and internalizing the external valuable knowledge is key to the development of enterprises. Given that few studies have adequately evaluated this phenomenon using a green entrepreneurship orientation perspective. The study employs green absorptive capacity, green innovation to access its impact on enterprise performance. Thereafter, a theoretical model depicting the impact of green absorptive capacity and green innovation on enterprise performance was constructed. To buttress the veracity of this study’s hypotheses, a survey of 219 enterprises of the Yangtze River Delta (YRD) and Pearl River Delta (PRD) of China was conducted. The empirical tests support that green absorptive capacity significantly improves green innovation capability, financial and environmental performance of enterprises in the region. More so, the findings of the study are confirmed that green technology innovation and green process innovation partially mediate the relationship between green absorptive capacity and the financial performance and environmental performance of firms. Consequently, enterprises should continuously absorb exogenous green knowledge, integrate green knowledge and technology into product design and production processes, as well as carry out innovative activities in green product development and pollution control, to sustainably improve the environmental and financial performance of relevant organizations over time.