Attaining sustainable business performance under resource constraints: Insights from an emerging economy

Abstract

Abstract Rapid economic growth, intense competition, and rising environmental concerns are compelling businesses to attain sustainable performance and preserve long‐run interests. Considering the lack of EO in small and medium enterprises (SMEs) in the emerging context of Pakistan, the present study investigates the impact of entrepreneurial orientation (EO) on sustainable business performance (economic, environmental, and social) by drawing perspective from dynamic capabilities and resource‐based views. The mediating role of innovation capabilities between EO‐sustainable performance and the moderating effect of technology dynamism on the EO‐innovation capabilities link is also examined. Data from 408 Pakistani SMEs was analyzed using the structural equation modeling. The findings reveal a direct positive influence of EO on sustainable performance. Furthermore, innovation capabilities are found to mediate the EO‐sustainable performance relationship, while technology dynamism positively moderates the EO‐innovation capabilities link. These results emphasize the importance of aligning EO with innovation capabilities to adapt to technological changes in the industrial regime. The theoretical contributions emphasize the importance of promoting EO‐innovation capabilities. Practical contributions imply that entrepreneurs should create an enabling environment that fosters innovation capabilities within SMEs to enhance sustainable performance, especially in resource‐constrained emerging settings. The study also offers researchers a foundation for further investigations in this area.