Advancing Sustainable Development Through Green Innovation: The Role of Environmental Regulations, Green Core Competencies, and Absorptive Capacity

ABSTRACT This study examines how environmental regulations and green innovation influence sustainable business performance in Vietnam's hospitality industry. Drawing on the resource‐based view and natural resource‐based view frameworks, the study investigates how regulatory pressure and internal green capabilities contribute to economic, social, and environmental sustainability. Data were collected through a structured survey of 357 managers and board members from hotels and resorts across major tourist destinations in Vietnam. The results reveal that environmental regulations play a significant role in driving green innovation, which in turn enhances sustainable business performance. Green innovation also serves as a key driver of competitive advantage, operational efficiency, and long‐term profitability. These findings highlight the strategic importance of integrating green innovation and sustainability practices to meet regulatory requirements, strengthen market positioning, and support holistic business success. The study provides actionable insights for policymakers, business leaders, and researchers seeking to advance sustainable development within the hospitality sector.