Promoting Business Sustainability through Green Entrepreneurship: Do Green Human Capital and Innovative Activities Matter?

Abstract

Although green entrepreneurship has been widely recognized as a driver of sustainable development, the mechanisms through which it enhances business sustainability remain insufficiently understood, particularly in developing economies where institutional and organizational capabilities continue to evolve. This study investigates how green entrepreneurship contributes to business sustainability by examining the mediating role of green human capital and the moderating role of innovative activities among entrepreneurial firms in Pakistan. A quantitative, cross-sectional research design was employed using data collected from 122 respondents through a structured online questionnaire. The proposed relationships were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The findings indicate that green entrepreneurship significantly enhances business sustainability, while green human capital serves as a significant mediating mechanism by transforming environmentally oriented entrepreneurial practices into sustainable organizational outcomes through employees' environmental knowledge, skills, and competencies. In contrast, innovative activities do not significantly moderate the relationship between green entrepreneurship and business sustainability, suggesting that innovation alone is insufficient to strengthen sustainability performance without complementary environmental capabilities and organizational alignment. These findings contribute to the sustainability and entrepreneurship literature by demonstrating that human capital is a more critical strategic resource than innovation in translating green entrepreneurial initiatives into sustainable business performance. The study further provides practical insights for managers and policymakers by emphasizing the importance of investing in green employee competencies, environmental training, and supportive institutional policies to strengthen firms' long-term sustainability and competitive resilience while advancing sustainable development objectives.