From Entrepreneurial Orientation to Environmental Performance: Dynamic Capabilities and Institutional Weaknesses in an Emerging Economy

ABSTRACT This study examines how entrepreneurial orientation is associated with environmental performance in manufacturing firms, focusing on the mediating roles of dynamic managerial capabilities and dynamic technological capabilities and the conditioning role of institutional weaknesses. Drawing on dynamic capabilities theory and institutional theory, the study adopts a capability‐based and context‐sensitive perspective to explain how entrepreneurial strategies translate into environmental outcomes in an emerging economy. Survey data were collected from 320 manufacturing firms located predominantly within Ghana's Southern industrial zone and analysed using a two‐step approach involving confirmatory factor analysis and regression‐based bootstrapped estimation of direct, indirect and conditional indirect associations. The results show that entrepreneurial orientation is positively associated with environmental performance, primarily through dynamic managerial and technological capabilities. Moreover, the indirect associations are stronger under higher levels of institutional weakness, indicating that internal capabilities become more salient in challenging institutional environments. The study contributes to the entrepreneurship and sustainability literature by demonstrating that entrepreneurial orientation is associated with environmental performance mainly through capability‐based mechanisms and that institutional context shapes the strength of these mechanisms. The findings offer context‐specific insights for managers and policymakers seeking to enhance environmental performance among manufacturing firms operating in weak institutional settings, although the geographic concentration of the sample requires caution in generalising the results to less industrialized and resource‐constrained regions.