When Does Environmental Awareness Lead to Business Sustainability? The Moderating Effects of Gender and Business Scale

ABSTRACT This study aims to examine the influence of environmental awareness capability on business sustainability by integrating green innovation as a mediating mechanism and gender and business scale as boundary conditions. Grounded in the literature on business strategy and development, this study uses a quantitative design. It used survey data from 132 owners and managers of micro, small, and medium enterprises (MSMEs) in West Java, Indonesia. The analysis employs Partial Least Squares Structural Equation Modeling (PLS‐SEM). The findings show that environmental awareness capability strongly drives green innovation and directly improves business sustainability. Green innovation also partially mediates this relationship. Business scale negatively impacts the link between environmental awareness and green innovation. This suggests that sustainability‐oriented strategies are more effective for smaller firms, while gender does not moderate their effectiveness. This study provides new empirical evidence from a subnational developing economy context. It clarifies how strategic capabilities interact with organizational scale to affect sustainability outcomes. The findings offer actionable insights for MSME strategists and policymakers aiming to develop context‐sensitive sustainability strategies.