1. Introduction
While enterprises worldwide compete aggressively to produce different types of products and services to earn more revenue, natural resources continue to be overused, leading to many environmental issues and challenges [1,2]. These environmental challenges pose serious risks for individuals [3]. Therefore, many attempts and reforms have been made to protect the environment, reduce carbon emissions and conserve energy, such as introducing sustainable development principles and restricting hazardous products and services [4].
Earlier attempts to protect the environment and ensure sustainable development resulted in the propagation of environmental management awareness, introducing new management practices and increasing competition among enterprises [5]. Accordingly, for enterprises to continue operating successfully, they must adopt available environmental guidelines and practices to improve their performance and image and to achieve a competitive advantage [4]. Enterprises are recommended to produce innovative products and services to avoid any harm to society and the environment and, at the same time, help develop firms’ economic performance [6]. Achieving the economic sustainability of firms and maintaining environmental protection require enterprises to follow environmental protection principles. These principles will ensure a better outcome for enterprises and society. These principles may include integrating innovative ideas and products into their operations to ensure they meet the objectives of protecting the environment and augmenting economic performance [7].The development of such new ideas, products and services has been termed GI, which is the ability of a firm to use innovative resources to reduce the cost of production and ameliorate performance [8]. Enterprises with a GI orientation can achieve many benefits, including better economic performance [9,10,11,12]. Enterprises’ following innovative practices and strategies also allows them to attain a superior market position and financial performance [13,14]. They can also achieve better financial performance for their businesses and contribute positively to achieving sustainable development goals (SDGs) [15].
GI principles are considered beneficial. Still, enterprises might struggle to apply them, especially those tiny firms. This is because small enterprises cannot understand green initiatives and lack funds to finance them. Therefore, education, training, work experience, interpersonal skills and cognitive abilities are required [16,17,18,19,20,21]. Nevertheless, small enterprises must adopt GI because their operations contribute about 70% of the pollution in industry, and they care less about environmental protection [22,23]. In addition, there has been continuous pressure from stakeholders, such as the government and businesses, to apply GI principles and practices in enterprise processes and develop innovative products and technologies [12,16,24,25]. Therefore, Small and medium enterprises (SMEs) should adopt new, innovative technological changes to meet market demands [26], resulting in a competitive advantage [16,26].
GI involves the development of green enterprises [27], and engaging SMEs in the process is considered significant for sustainable development [22]. Sustainable development focuses on benefiting from available resources without jeopardising future generations’ share. Consequently, it is essential to understand the critical antecedents of innovative behaviour to apply GI [4]. The previous literature has noted that the key antecedents that may encourage GI include the perceptions of customers, business owners, capabilities of suppliers, governmental regulations and technological, environmental and organisational determinants [4,28,29,30,31]. A few studies have attempted to examine the unique features influencing GI adoption; however, their findings do not reveal a clear answer [32].
Notably, the focus in the earlier research related to the antecedents of GI has been directed toward understanding the theoretical explanation and definition of innovation [33,34] or discussing institutional factors such as available technology, regulations, organizational determinants [4,28,29,30,31]. These previous studies largely ignored understanding key factors that influence individuals’ behavioural influence and orientation toward GI, which are considered vital factors in people’s behaviour [23,35]. Furthermore, it is also noted that most of the research focused on large organizations rather than small enterprises. Large organizations differ in their available resources, experiences, structure, and capabilities [36]. It is also observed that the focus was on either a single industry only or a sector [36,37]. Accordingly, ignoring the GI effect in the small business industry in general, and particularly the behavioural factors, creates a substantial motive for investigating it and indicates the presence of a clear research gap to be filled. The motive to investigate GI innovation in the small business industry is supported by a continued call to investigate the behavioural factors role in this regard [23,35].
People have many personal characteristics or traits considered essential for guiding their attitudes and behaviour [38,39]. For example, personal characteristics such as the ESE is the intensity of a person’s belief in their ability to carry out a particular job or entrepreneurial activity [39]. At the same time, the EO’s unique feature is the inclination of an individual to act innovatively [40]. These personal characteristics can direct individuals’ behaviour toward achieving specific entrepreneurial behaviour. Thus, exploring their role in promoting green entrepreneurship is essential [41]. It is found that the ESE of an individual may encourage them to act greenly [32]. In contrast, an individual’s high level of EO may also push the individual’s behaviour toward developing innovative ideas [40]. Individual’s characteristics are many, and examining key characteristics, i.e., GESE and GEO on GI, is encouraged [32] as the interaction among them is still unclear [9,10,42]. Furthermore, understanding the effect of these antecedents on GI is beneficial for socio-economic development [43]. It is necessary to discern the cognitive mechanisms and antecedents of green behaviour in a firm [44] to allow them to achieve their goals [26].
Saudi Arabia, a developing country, is among the world’s primary oil producers; it is believed to face many environmental challenges, such as water and air pollution and energy waste [16,45]. The small enterprises’ sector in Saudi Arabia hosts about 892,063 micro, small and medium enterprises [46]. These enterprises doubtlessly negatively affect pollution and lead to other environmental challenges similar to the global situation. It is reported that SMEs globally are responsible for approximately 80% of industries’ destructive environmental problems and more than 60% of waste generated [22,47]. In Saudi Arabia, the negative influence of small enterprises is understudied and explored. Notably, studying GI and small enterprises depends on the background of the region where small firms operate. Therefore, it is essential to study the drivers for green innovation in each region separately [48].
Correspondingly, to promote an innovative economy and deal with these environmental challenges in Saudi Arabia, the country developed a long-term plan called Saudi Vision 2030 to build a prosperous economy and a vibrant society and homeland. Saudi Vision 2030 also aims to support the SME sector and entrepreneurship, as the SME sector in Saudi Arabia generates about 22% of the country’s GDP and hosts about 34% of entrepreneurs in the country [49,50,51]. The support provided for SMEs in Saudi Arabia aims to reduce poverty, develop innovative products and services, create new job opportunities and empower individuals [38,40,52,53,54]. SMEs are also assisted in transforming the economy, stimulating innovation in the country, and developing eco-friendly manufacturing processes [16].Therefore, to achieve the goals of Saudi Vision 2030, it is essential to provide a supportive atmosphere for ground-breaking activities that will protect the environment and provide more sustainability for businesses, which will be achieved through GI and entrepreneurial behaviour [44]. The development of a good atmosphere would require various necessary infrastructures in addition to necessary recommendations in this regard for policymakers. Accordingly, this research supports the Saudi Arabia 2030 vision by exploring the critical antecedents for GI practices among small enterprises.
This research is one of the minimal studies discussing the concept of GI for small enterprises in Saudi Arabia. It has been observed that few studies have discussed the concept of GI and its antecedents among small enterprises. This study examines the influence of selected personal characteristics, GESE and GEO, on GI and GI’s relationship with the EP of small enterprises. This influence is examined in line with the Saudi 2030 vision to transform the economy and create a vibrant society. Therefore, it is also interesting to fill the gap in understanding the key factors contributing to implementing GI, which is considered an intangible asset among small enterprises in Saudi Arabia. The study concluded that GESE and GEO have a positive relationship with GI. It is further noted that GI mediates the relationship between GESE, GEO and EP. The study confirms to the policymakers the significant role the GESE and GEO played in developing green innovative products and services among Saudi small enterprises. It further confirms GI’s positive role in improving small enterprises’ EP. Hence, necessary measures, such as providing green entrepreneurial training and spreading awareness about environmental protection and behaviour, should be provided to small entrepreneurs. These measures will help develop their GESE and GEO and direct them to act innovatively and develop innovative ideas, products and services.
Finally, this study is organised as follows: It starts with the introduction, moves to the literature review and development of hypotheses and then discusses the research methodology. Subsequently, this article discusses the results, discussion and implications.
2. Literature Review and Hypothesis Development
2.1. Theoretical Foundation
This research is based on the resource-based view (RBV) theory, which argues that enterprises may have resources that are rare, valuable and inimitable. Enterprises’ resources can heighten business performance and defeat competitors by creating sustainable competitive advantages [55,56,57]. The study is also grounded on self-efficacy [58] and entrepreneurial orientation theory, both of which focus on the confidence, belief and ability of individuals to develop innovative ideas and take inimitable actions. Thus, this study argues that GESE and GEO are essential to enable small enterprises to develop innovative products and services. Green products and services are considered intangible resources for enterprises and will lead to a sustainable competitive advantage and better economic performance, according to the RBV theory [12,32]. For an enterprise to achieve business sustainability, it should adopt green knowledge and advanced technology in its operations [7,16]. The study is also based on the sustainable development concept, which emphasises benefitting from current resources and protecting future generations’ resources. Hence, achieving an enterprise’s economic performance is an important goal in applying green innovation.
2.2. GESE and GI
The concept of self-efficacy can be traced to [58] social cognitive theory, which argues that self-efficacy is an essential determinant of behaviour. ‘Self-efficacy’ is an individual’s ability and confidence to execute particular behaviours to attain a specific performance [59]. The same applies to the GESE concept, in which an individual believes that he or she has the ability and capability to perform tasks primarily related to entrepreneurial behaviour and innovation [60,61]. In other words, GESE indicates that individuals have the strength, confidence and ability to remedy environmental issues and challenges [32,43].
Individuals with a high level of GESE believe more in developing innovative ideas, designing creative green products and services and social responsibility that results in protecting the environment and allows enterprises to develop a competitive advantage that results in better economic performance and more profit [43]. Those entrepreneurs with more GESE can efficiently complete their desired innovative tasks and successfully manage related difficulties [62]. Furthermore, individuals with GESE are more ready to accept new changes or customer demands, thus adding value to the firm.
Those working in enterprises, firm owners and business leaders with higher GESE and positive beliefs about green entrepreneurship tend to have environmental awareness. They also develop more creativity, encourage entrepreneurial behaviour, enhance enterprises’ operations and direct them towards better performance [32,63]. More specifically, when an individual believes in his or her ability to implement and develop green initiatives, this will lead to better business performance, reducing the cost of operations, maximally utilising the available resources and minimising the negative effect on the environment. Hence, employees must often be provided with the mindset to encourage green thinking and innovation [32]. Employees’ green behaviour can be stimulated by setting policies and rules for green behaviour [64]. Business owners and leaders can also benefit from a high GESE by developing their business’s green vision, which will fulfil the goals of the business [64]. Notably, individuals’ green behaviour can be either increased or decreased by factors such as gender, beliefs, values, social norms, age and educational background [65,66,67].
In short, the tendency towards green entrepreneurship and innovation depends on GESE and the ability to act in a green fashion [32,68], which has been empirically examined earlier and has shown positive results [32,65,68]. In this study, we assume that GESE influences the attitudes of SME entrepreneurs and directs their behaviour to develop green innovative products and services. Accordingly, we assume the following hypothesis:
GESE has a positive effect on small entrepreneurs’ GI.
2.3. GEO and GI
The concept of GEO can be traced to an entrepreneurial orientation and green entrepreneurship theory [12,32]. An entrepreneurial orientation, in general, combines competitive aggressiveness, risk taking, autonomy, proactiveness and innovativeness [40,69]. The GEO concept indicates the orientation to develop novel strategies capable of exploiting available opportunities and developing a sustainable competitive advantage. The EO concept includes the proactiveness of developing new and innovative products and services before competitors [52].
Enterprises aim to develop GEO to maximise available resources and meet the social goals of reducing negative environmental impacts [70]. The more business enterprises develop an EO, the likelier they are to achieve sustainable business performance [9,71,72]. GEO contributes to GI and leads to exceptional enterprise financial performance, minimising production costs and resources. Enterprises with GEO tend to dominate the market as they initiate green strategies and innovative ideas [73,74].
A sustainability orientation and education can help develop a green entrepreneurial inclination among individuals [75], resulting in preferable sustainable development and compelling competitive advantage development [76]. The sustainability orientation directs individuals’ entrepreneurial intentions and acts as inspirational and emotional constituents in the entrepreneurial context [77]. Consequently, those with a sharper entrepreneurial orientation can develop greater entrepreneurial intentions, including developing innovative products and services with competitive advantages [78]. Furthermore, individuals with an innovation orientation can overcome obstacles and encourage their enterprises to adopt new processes, products and systems [79]. Individuals with higher entrepreneurial orientation tend to act innovatively [80], so enterprises are required to provide a creative atmosphere. This creative atmosphere encourages employees to act creatively and innovatively [4]. Empirically, a positive relationship has been reported between GEO and GI [12,71,72,77].
We argue that GEO can act as a strategic resource and a key antecedent for green innovation among small entrepreneurs, allowing them to create innovative, green products and services. This resource results in superior economic performance for enterprises and the economy. Consequently, we assume the following:
GEO has a positive effect on small entrepreneurs’ GI.
2.4. GI and EP
The concept of GI refers to the processes and use of innovative resources to reduce production costs and increase the overall economic performance of enterprises [9,81,82]. GI is also defined as those technologies used to reduce costs, minimise waste and pollution and optimise energy [16,76,83] and which lead to sustainable development. GI is also used to help enterprises attain a more desirable market position [13,14]. The influence of GI on enterprise performance can be observed in aspects such as financial indices, suppliers, clients and government [12]. Enterprise performance is measured by dimensions including the economic aspect [9], which is a significant measure of an enterprise’s success [84].
GI not only focuses on cost reduction, but also on developing innovative and inimitable products and services to give the enterprise a better position in the market. It also increases the possibility of obtaining clients and building well-known brands for the enterprise [85], resulting in heightened performance [86]. Organisations with a tendency towards GI also tend to have better operational performance and economic success [9,87]. Additionally, when GI principles are followed, an enterprise is expected to outperform competitors, produce a range of innovative products and services, meet clients’ new demands and maximise sales and returns [16,88].
Furthermore, applying GI will help enterprises obtain a competitive advantage and economic advancement. This will reduce the business penalties imposed on enterprises due to environmental violations [9,89,90]. The process of maintaining the enterprise’s profits, improving its flexibility and growing its operations can be achieved by applying GI to enterprise operations [35]. GI further allows the enterprise to design user friendly products and services that satisfy clients and utilise available resources effectively [32], [76,91]. Finally, GI will improve the quality of products and services and a business’s competitiveness. In conclusion, we argue here that SMEs can heighten their economic performance, a significant aspect of enterprise success [9], if they apply green innovation principles to their operations [36] due to the benefits discussed above. Correspondingly, we assume the following:
GI has a positive effect on SME EP.
2.5. Mediating Influence of GI on the Relationship between GESE, GEO and EP
As explained earlier, GI is the applicability of new technology advancement that will help reduce the cost of production and pollution and increase an enterprise’s market share. It also develops innovative products and services, builds well-known brands and achieves a competitive advantage [16,85,86,90]. Most studies have targeted factors encouraging GI, such as the limited perceptions of customers, business owners, capabilities of suppliers, governmental regulations and technological, environmental and organisational determinants [4,28,29,30,31].
However, minimal research has examined intangible resources and critical factors, such as GESE and GEO and their impact on GI and EP [32]. In this work, we fill this gap. We argue that GESE and GEO play a significant role in encouraging individuals to act in a green manner and to direct their behaviour towards developing innovative products and services. Once individuals develop more refined skills, beliefs, readiness, confidence and the ability to act in a green fashion, they can develop innovative ideas. They will implement them in their businesses innovatively and creatively, developing a better competitive advantage and economic return [32,38,43,67,68]. More specifically, individuals possessing more GESE enjoy better strength, readiness, abilities, beliefs, ecological values and confidence to develop innovative products and services and to act in a green way [32,38,43,67,92]. A green innovation tendency means that individuals have more confidence and trust in themselves. Therefore, they will reduce operational costs, save available resources, overcome potential challenges, and finally, protect the environment and improve the overall performance of the enterprise [43,67].
Furthermore, individuals with higher-level GEO can better use available resources, reduce the negative environmental impact and develop innovative ideas [70,78] that will lead to sustainable business performance [71,72,76]. Empirically, there has been some confirmation of the connection between the GESE and GI [32,43,68,77]. In addition, researchers have confirmed the positive relationship between GEO and GI, such as [12,39,71,93]. Some evidence has also been reported on the role played by GI and EP [9,72,82]. Based on the review above, we believe that GESE and GEO can lead to GI, while GI can contribute to GP among SMEs in the study context. Thus, we assumed the following hypotheses:
GI mediates the relationship between GESE and EP.
GI mediates the relationship between GEO and EP.
2.6. Hypothesised Model
Figure 1 describes the model of the study; it indicates that both GESE and GEO are the study’s independent variables. Furthermore, GI is the mediation variable, and EP is the dependent variable. The model was developed based on previous studies and the gap in the literature.
3. Research Methodology
3.1. Data Collection and Participants of the Study
This study is quantitative and based on primary data and secondary information. Secondary information was collected from sources such as earlier studies, reports and books. Simultaneously, the primary data were collected from a sample of small entrepreneurs operating in Saudi Arabia through an online questionnaire sent to the target respondents. The sampling technique used was nonprobability convenience [81]. The total sample included 284 small business entrepreneurs working in different parts and business types of Saudi Arabia. The original questions used in the study were in English. As the respondents were non-English speakers, it was essential to translate these measures into Arabic language to allow them to understand them. After the measures were translated, the questionnaire was sent to a sample of 15 respondents to check the quality of the questionnaire and its content. As there was no problem with the questionnaire and its items, it was sent to the subjects and kept online from September to October 2022.
3.2. Measures of the Study
The measures of the study were adopted from earlier authentic studies. For instance, the items for the GESE construct were adopted from [51]. An example of the items of this construct was “I can find a way to help solve environmental problems”. The secondary items of the construct, namely the GEO, GI and EP, were adopted [12]. An example of GEO constructs included “Our organisation has a tendency to be a market leader, always first in introducing green products, services or technologies”. Samples of GI and EP items were “Our organisation uses eco-labelling” and “Our organisation has a decrease in cost for energy consumption”. All measures are shown in Appendix A.
4. Data Analysis and Results
4.1. Description of the Respondents
The descriptive information is revealed in Table 1. The respondents of the study were 91.5% male and 8.5% female. About 66.2% of the respondents were married, 28.9% were single, and 4.9% were neither married nor single. Furthermore, 37.3% of individuals were aged 31–40 years. Other classifications for age revealed that 35.6%, 15.5%, 8.5% and 2.8% of respondents were in the age category of 21–30 years, 41–50 years, less than 20 years and more than 50 years, respectively. Concerning educational qualifications, 43% of respondents had a diploma degree, 28.2% had a bachelor’s degree, 22.2% had a secondary school degree, 6% had a higher education degree, and less than 1% had primary education. Finally, the study’s distribution of small enterprise sectors included 19.4% for those small enterprises operating in the wholesale and retail sale sector and 18.66% for those producing small productive and industrial products. The classification further included 40.49% for those small enterprises offering service and 21.5% for those small enterprises operating with other activities not mentioned.
4.2. Assessment of PLS-SEM Results
The study’s data was analysed with the partial least squares structural equation modelling (PLS-SEM) technique. PLS-SEM was deemed suitable because it can deal with small sample sizes and precisely estimates the estimation model of the study. The PLS-SEM has been used in this research because it has many features over other analysis strategies. According to [94,95,96], PLS-SEM can be used with a low sample size; it is flexible and has no parametric test. It is used to predict and identify relationships between constructs (Exploratory). It also can deal with complicated models. Accordingly, PLS-SEM requires two steps: the measurement and the structural models [97].
4.2.1. Measurement Model
The first step in assessing the reflective measurement model was to investigate indicator loadings. An indicator loading of 0.70 and above indicates that the construct in the study can explain more than 50% of the variance in indicator reporting and, hence, has good reliability [98]. The loading results in Table 2 meet the specified threshold, illustrating that the indicators have acceptable reliability in the study. The second step after the indicator loadings is to examine the constructs’ internal consistency. This test is generally conducted with the help of the composite reliability test [99]. Composite reliability values between 0.70 and 0.95 are considered satisfactory to good and indicate satisfactory reliability [100].
According to our study results, all composite reliability values were in the range of 0.70 and 0.95, indicating a good degree of reliability. The second measure to examine the internal consistency of the constructs is Cronbach’s alpha, which assumes the same thresholds used in composite reliability. However, Cronbach’s alpha results are less precise in their findings, unlike composite reliability [95]. The Cronbach’s alpha results in Table 2 all indicate good internal consistency reliability. The third step, after measuring the constructs and items’ reliability and internal consistency, is to examine the convergent validity of constructs. Convergent validity was assessed using the average variance extracted (AVE). It has a threshold value of 50% or higher, indicating a construct’s ability to explain 50% of the variance in its items [98]. The AVE results in Table 2 indicate good convergent validity.
The multicollinearity test was assessed last. When several independent variables are correlated, multicollinearity exists. Accordingly, the variance inflation factor (VIF) value for each indicator should be less than 3. Table 3’s result demonstrates no collinearity among the study’s predictor constructs, as all values were less than 3 [95,97]. The next step was to evaluate the discriminant validity of the study’s constructs. In the discriminant validity test, we evaluated the extent to which one construct differed from the others. The discriminant validity is evaluated by [101], and according to them, all model constructs’ shared variances should not exceed their AVEs. In Table 3, this condition is met, which indicates the presence of excellent discriminant validity among the study’s constructs.
4.2.2. Structural Model
Table 4 presents the results of the hypothesis testing and path analysis.
Table 4 reveals that the coefficient value of GESE on GI (H1) is 0.404, with a p-value of 0.000 at 5% significance, indicating that GESE among small Saudi entrepreneurs has a positive and significant relationship with GI. The R2 value, which considers the endogenous variation components, shows that GESE and GEO can explain 0.569 of the variance in GI, which is considered a substantial predictor of the model in the endogenous variable [102]. Furthermore, Table 4 discloses the result of F2, which represents the effect size of the exogenous latent variables. The F2 results reported was 0.16, which signifies the medium effect of an exogenous latent variable [98]. The table further reveals the t-value, confirming that the GESE can explain 5.950 of the variance in the GI. Finally, yet importantly, the outcome of Q2, which denotes the predictive relevance, revealed values higher than zero. Therefore, all values are deemed in good condition, and the model has adequate predictive significance [95].
Table 4 further disclosed that the coefficient value of GEO on GI (H2) is 0.400, with a p-value of 0.000 at 5% significance, indicating that GEO among small Saudi entrepreneurs has a positive and significant relationship with GI. Concerning the R2 result, Table 4 demonstrates that GESE and GEO can explain 0.569 of the variance in GI, which is considered a substantial prediction of the model for the endogenous variable [102]. The result of F2 is also disclosed for H2, and its result is reported as 0.15, which indicates a medium effect of the exogenous latent variable [98]. The t-value for H2 is also reported as 6.364, confirming that GEO can explain 6.364 of the variance in GI. The Q2 for H2 was examined, and the results found that all the values obtained were more significant than zero, indicating the satisfactory predictive ability of the model [100].
Concerning H3, Table 4 reports that the coefficient value of GI on EP is 0.726, with a p-value of 0.000 at 5% significance, indicating that GI has a positive and significant relationship with EP. Regarding the R2 findings, Table 4 reveals that GI can explain 0.527 of the variance in EP, which is also considered a substantial prediction of the model in the endogenous variable [102]. The findings of F2 are also reported for H3, and the results showed an effect size of more than 1, indicating a substantial effect of the exogenous latent variable [98]. Finally, for H3, the t-value was reported as 26.592, confirming that GI can explain 26.592 of the variance in EP. Finally, when examining the Q2 for H3, it was discovered that all the values obtained are more than zero, indicating that the model’s predictive ability is sufficient [97]. Regarding the mediation analysis, Table 4 reports the ability of GI to mediate the relationship between the GESE and EP and between GEO and EP with a p-value of 0.000 and a 5% significance level for both H4 and H5. The study also tested the common method bias (CMB) with Harman’s single-factor test. The study reported a value of less than 50%, the recommended threshold for confirming the nonexistence of CMB in the study [103].
4.2.3. Path Coefficient Representation
Figure 2 provides a pictorial representation of the path model generated from the analysis.
5. Discussion
Protecting the environment and improving the economic performance of enterprises, particularly small ones, are considered essential goals for stakeholders today. This goal can be achieved by implementing certain principles that lead to the development of innovative products and services that protect the environment and enhance the economic performance of enterprises. Consequently, this study helps fulfil this objective by exploring the key factors that may lead to the development of innovative products and services that are attributed to green innovation and by examining their effects on the GP of small enterprises. Correspondingly, the study developed five hypotheses, examined them and found interesting results.
The first hypothesis (H1) examined the relationship between GESE and GI among small enterprises in Saudi Arabia. The result found β = 0.404 and p < 0.000, indicating that GESE has a positive and significant relationship with GI, confirming the alternative hypothesis. The H1 result is logical, as those with higher GESE will have more confidence, ability, strength and belief in themselves. They will believe in their ability to develop innovative products and services that contribute to environmental protection and augment economic performance. They further believe that they can deal with challenges and difficulties and meet continuous customer changes and requirements. The finding of H1 corroborates previous empirical studies and literature confirming the existence of a positive effect of GESE on GI [32,38,43,68].
The second hypothesis (H2), which investigated the connection between GEO and GI, also revealed an exciting finding. The hypothesis result (β = 0.400, p > 0.000) reported a significant relationship between GEO and GI. This result is also logical, as individuals with a tendency or orientation towards green innovation or towards developing innovative products and services will tend to act in a greener fashion. Indeed, those with a sustainability orientation can develop more emotions and constituents towards green entrepreneurial behaviour [77]. Individuals with higher EO can also develop unique products and services [40] and overcome challenges hindering them from adopting new systems and processes [79]. This finding aligns with previous findings from other researchers [12,71,72,77,93].
The third hypothesis (H3), which explored the relationship between GI and EP, also reported the existence of a positive and significant relationship between GI and EP (β = 0.726, p > 0.000). This is rational, as enterprises employing green innovation systems and developing innovative products and services tend to ameliorate their economic performance. Enterprises can improve their economic performance because of their ability to innovate ideas, meet clients’ continuous changes, override competitors, obtain a better position in the market and develop a competitive advantage that will allow them to sustain themselves in the market. This finding of H3 is in line with [9,12,13,72,82].
Concerning (H4) and (H5) in the study, the possibility of the mediation effect of GI on the relationship between GESE, GEO and EP was examined. H4 found that GI can positively mediate the relationship between GESE and EP (β = 0.291, p < 0.000). In addition, H5 was tested, and the GI was found to have a positive and significant mediation effect on the relationship between GEO and EP, as β = 0.294, p > 0.000. These findings are rational, as individuals with higher GESE and GEO can develop innovative products and services with the help of their ability, strength and confidence. Accordingly, these newly developed green ideas can enhance an enterprise’s economic performance by obtaining a superior market share and competitive advantage. These findings are in line with many studies emphasising the role of innovation in the betterment of enterprises’ performance [36,68,72,104,105].
6. Practical Implications of the Study
Due to the importance of innovative small enterprises’ economic performance, the economy generally protects the environment. It was then deemed essential to understand the significance of selected strategic resources, namely GESE and GEO, on GI and the influence of GI on EP. The research also attempted to understand if the GI could mediate between the GESE, GEO and EP. Thus, this research is one of the few that discusses GESE, GEO and EP. This research supplies a new contribution to the theory on the importance of encouraging GESE and GEO among small entrepreneurs to ensure the better development of innovative products, services and ideas. It also emphasises the significant role GI plays in heightening small enterprises’ EP. GI improves the EP of small enterprises by allowing them to obtain a competitive advantage, develop creative ideas, obtain a more significant market share and override competitors [4,11,23]. The study also confirms the role of GI in mediating the relationship between GESE, GEO and EP. The article emphasises that individuals who enjoy better self-efficacy, confidence and belief in themselves can develop more creative ideas and innovative products and services, which help reduce production costs, increase enterprises’ revenue and protect the environment. The study also provides a new path for other researchers to continue investigating key antecedents that can contribute to GI and EP. It also confirms the applicability of the model in this study in the Saudi context.
Furthermore, the study supplies guidelines to policymakers to enhance small entrepreneurs’ GESE and GEO to ensure more GI and better EP for small enterprises in Saudi Arabia. Enhancing these strategic resources (GESE and GEO) can be done with training centres, organisational development, universities and research institutions. These organisations can provide training courses, self-confidence enhancement programmes and entrepreneurial orientation programmes. There could be some knowledge enrichment programmes about green innovation and environmental protection for small entrepreneurs. Small entrepreneurs must understand the negative impact that their business might generate and how to minimise it. They must also know how they benefit from developing innovative products and services and their reflections on economic performance.
7. Conclusions
Even though small enterprises play a vital role in developing economies, creating new job opportunities, mitigating poverty and empowering people, their operations still contribute to environmental issues. Hence, it is essential to inculcate the culture and attitude of small entrepreneurs in developing innovative products and services capable of creating a competitive advantage, protecting the environment and increasing returns. Therefore, this article aims to explore the key factors that could contribute to developing innovative and green products and services among small enterprises and how these innovative ideas can be targeted to enhance their economic performance. The study collected a sample of small Saudi Arabian entrepreneurs with different activities. The findings confirmed the importance of GESE and GEO in developing GI behaviour that will enhance the EP of entrepreneurs’ enterprises. The study also revealed GI’s ability to mediate the relationship between GESE, GEO and EP. The study also provides guidelines for policymakers and other Saudi Arabian stakeholders to enhance the GEO and GESE of small entrepreneurs to develop innovative and green products and services.
8. Limitations and Future Studies
The study has some limitations. For example, the study has a small sample size, does not use control variables, and has a limited number of female respondents that might influence the generalization of the findings. Therefore, it is recommended that future research increase the sample size of respondents, expand the study area and expand the study’s model with more concepts and consider analysing some control variables. It is further recommended to use training and support as moderators and collect more samples from female respondents.
The study was conducted according to the guidelines of the Declaration of Helsinki and approved by the Ethics Committee of King Faisal University.
Informed consent was obtained from all subjects involved in the study.
Not applicable.
The author declares that he has no conflict of interest.
Footnotes
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Descriptive Statistics of Respondents.
| Range/Type | Frequency | Percentage (%) | |
|---|---|---|---|
| Gender | Male | 260 | 91.5 |
| Female | 24 | 8.5 | |
| Total | 284 | 100 | |
| Marital Status | Married | 188 | 66.2 |
| Single | 82 | 28.9 | |
| other | 14 | 4.9 | |
| Total | 284 | 100 | |
| Age | 20 and Less | 24 | 8.5 |
| Between 21–30 | 101 | 35.6 | |
| Between 31–40 | 107 | 37.7 | |
| Between 41–50 | 44 | 15.5 | |
| More than 50 | 8 | 2.8 | |
| Total | 284 | 100 | |
| Education | Secondary School | 63 | 22.2 |
| Diploma | 122 | 43 | |
| Bachelor | 80 | 28.2 | |
| Higher Education | 17 | 6 | |
| Elementary | 2 | 0.7 | |
| Total | 284 | 100 | |
| Sector | Small retail and wholesale commercial enterprises. | 55 | 19.4 |
| Small productive and industrial enterprises. | 53 | 18.66 | |
| Small service enterprises. | 115 | 40.49 | |
| Other small enterprises. | 61 | 21.5 | |
| Total | 284 | 100 |
Source: Primary data.
Reliability and Convergent Validity.
| Construct | Loadings | Cronbach’s Alpha |
Composite |
Average Variance Extracted (AVE) | VIF |
|---|---|---|---|---|---|
| EP | 0.827 | 0.885 | 0.659 | ||
| EconP1 | 0.767 | ||||
| EconP2 | 0.837 | ||||
| EconP3 | 0.816 | ||||
| EconP4 | 0.824 | ||||
| GEO | 0.856 | 0.897 | 0.635 | 2.348 | |
| GEO1 | 0.771 | ||||
| GEO2 | 0.834 | ||||
| GEO3 | 0.821 | ||||
| GEO4 | 0.806 | ||||
| GEO5 | 0.749 | ||||
| GI | 0.795 | 0.867 | 0.619 | 1 | |
| GI1 | 0.752 | ||||
| GI2 | 0.818 | ||||
| GI3 | 0.784 | ||||
| GI4 | 0.793 | ||||
| GESE | 0.788 | 0.876 | 0.703 | 2.348 | |
| GESE1 | 0.826 | ||||
| GESE2 | 0.856 | ||||
| GESE3 | 0.833 |
Source: Primary data.
Fornell–Larcker Criterion.
| EP | GEO | GI | GSE | |
|---|---|---|---|---|
| EP | 0.812 | |||
| GEO | 0.675 | 0.797 | ||
| GI | 0.726 | 0.707 | 0.787 | |
| GSE | 0.679 | 0.758 | 0.708 | 0.838 |
Source: Primary data.
Hypothesis Testing.
| Hypotheses | Association | Coefficient (β) | t-Value | p-Value | Decision | R2 | F2 | Q2 |
|---|---|---|---|---|---|---|---|---|
| H1 | GESE -> GI | 0.404 | 5.950 | 0.000 | Accepted | 0.569 | 0.162 | EP = 0.413 |
| H2 | GEO -> GI | 0.400 | 6.364 | 0.000 | Accepted | 0.158 | ||
| H3 | GI -> EP | 0.726 | 26.592 | 0.000 | Accepted | 0.527 | 1.116 | |
| Mediation Analysis | ||||||||
| H4 | GEO -> GI -> EP | 0.291 | 6.155 | 0.000 | Mediation | |||
| H5 | GSE -> GI -> EP | 0.294 | 5.526 | 0.000 | Mediation | |||
Source: Primary data.
Appendix A
| Code | Measuring Items |
| Economic Performance (EP) | |
| EP1 | Our organization has achieved important environment-related certifications. |
| EP2 | On average, the overall environmental performance of our organization has improved over the past five years. |
| Ep3 | The resource consumption in our organization, e.g., water, electricity, and gas has been decreased during the last 3 years. |
| Ep4 | Our organization has improved on environmental compliance. |
| Green Innovation (GI) | |
| GI1 | Our organization uses less or non-polluting/toxic materials. |
| GI2 | Our organization improves environmentally friendly packaging for existing and new products. |
| GI3 | Our organization recovers end-of-life products and recycling. |
| GI4 | Our organization uses eco-labeling. |
| Green entrepreneurial self-efficacy (GESE) | |
| GESE1 | I believe that if I do it with my heart, I can contribute to the environment. |
| GESE2 | I can find a way to help solve environmental problems. |
| GESE3 | Solving environmental problems is a contribution that each of us can make. |
| Green entrepreneurial orientation (GEO) | |
| GEO1 | Our organization uses less or non-polluting/toxic materials. |
| GEO2 | Our organization has a strong tendency for high-risk green product development |
| GEO3 | Our firm/organization has a strong emphasis on green R&D, technological leadership, and innovation. |
| GEO4 | Our firm/organization has a tendency to initiate green actions for competitors to respond to. |
| GEO5 | Our organization has a tendency to be a market leader, always first in introducing green products, services, or technologies. |
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