Strengthening Sustainable Development Through Innovation‐Led and Financially Supported Entrepreneurship

ABSTRACT Amid growing global emphasis on sustainable development, this study explores how entrepreneurship—shaped by innovation and financial development—serves as a transformative force for economic, social, and environmental progress in Saudi Arabia. Drawing on Schumpeterian and institutional theories, entrepreneurship is disaggregated into opportunity‐driven and necessity‐driven types, with effects examined across economic (GDP growth, employment), social (quality of life, standard of living), and environmental (CO 2 emissions, ecological footprint) dimensions. Using the Dynamic Ordinary Least Squares estimator, results show that opportunity‐driven entrepreneurship significantly enhances GDP growth, employment, and social well‐being but is associated with moderate increases in environmental degradation. In contrast, necessity entrepreneurship demonstrates negligible economic and social benefits while exacerbating environmental pressures. Innovation, both technological and environmental, enhances the positive effects of opportunity entrepreneurship on economic and social outcomes, while also mitigating environmental harms. Financial development similarly boosts economic and social gains but tends to worsen environmental impacts unless guided by sustainable finance principles. Robustness checks employing a composite Sustainable Development Index confirm the consistency of these results, reinforcing the integrated role of entrepreneurship, innovation, and financial development in achieving balanced sustainability. These findings suggest that promoting opportunity‐driven entrepreneurship alongside innovation systems and green financial frameworks is critical for advancing Saudi Arabia's Vision 2030 and the Sustainable Development Goals. The study offers empirical evidence supporting ecosystem‐based strategies to maximize the contributions of entrepreneurship to holistic sustainable development.