Received: 11 November 2021 Revised: 30 May 2022 Accepted: 12 June 2022

DOI: 10.1002/bse.3187

RESEARCH ARTICLE

How to convert green entrepreneurial orientation into green

innovation: The role of knowledge creation process and green
absorptive capacity

Chao Wang1 | Xiu-e Zhang2 | Xinyu Teng2

1
Business School, Northeast Normal
University, No. 2555 Jingyue Street, Abstract
Changchun, 130117, China Based on the resource advantage theory and knowledge-based theory, this study
2
Business and Management School, Jilin
explores the impact of green entrepreneurial orientation (GEO) on green innovation,
University, No. 2699 Qianjin Street,
Changchun, 130012, China the moderating role of green absorptive capacity (GAC), and the mediating role of
knowledge creation process. Through the survey of 173 middle-senior managers, this
Correspondence
Xiu-e Zhang, Business and Management study finds that GEO significantly affects green innovation, and GEO has a positive
School, Jilin University, No. 2699 Qianjin
impact on knowledge exchange (KE) and knowledge integration (KI). Furthermore,
Street, Changchun 130012, China.
Email: [email protected] GAC strengthens the positive impact of GEO on knowledge creation process. Addi-
tionally, KE and KI have positive impacts on green product innovation and green pro-
Funding information
The National Social Science Found of China, cess innovation. KE and KI play the mediating roles in the relationship between GEO
Grant/Award Number: 20BGL059;
and green innovation. These results expand the theoretical basis of green entrepre-
Fundamental Research Funds for the Central
Universities, Grant/Award Number: neurship, provide a more comprehensive understanding of how to carry out green
2412022QD021
innovation for enterprises, and contribute to the improvement of the research on
green entrepreneurship.

KEYWORDS
green absorptive capacity, green entrepreneurial orientation, green innovation, knowledge
exchange, knowledge integration

1 | I N T RO DU CT I O N ecological environment. The government provides green subsidies as

economic incentives to encourage enterprises' green behavior,
At present, the contradiction between environmental protection and including government R&D support, policy funds, and discount loans
economic growth has become serious, and the issue of environmen- (Xie et al., 2019). For example, China officially implemented the
tal sustainability has become increasingly prominent (Quan Environmental Protection Tax Law in September 2018, indicating
et al., 2018). To realize the development of ecological civilization that more support should be given to the green, low-carbon, and
and ensure the complete green transformation of economic society, circular economy.
the Chinese government pays much attention to the balanced As the government and society pay more and more attention
development between ecological environment construction and to solving environmental problems, a lot of enterprises begin to
economic growth. The 19th National Congress of the Communist focus on how to obtain competitive advantages through green
Party of China made it clear that we must establish and implement product or process innovation (Song & Yu, 2018). Many studies
the belief that lucid water and lush mountains are invaluable assets, have explored the factors influencing green innovation (Lisi
adhere to the basic state policy of conserving resources and et al., 2020). Some of these studies have explored the impact of
protecting the environment, develop a mode of green development external organizational factors on green innovation, such as
and lifestyle, and firmly follow the road of civilized development institutional pressure (Chen et al., 2018), customer demand (Lin
with increased production, improved living standards and a good et al., 2013), and environmental policy (Zhang et al., 2019). External

1260 © 2022 ERP Environment and John Wiley & Sons Ltd. wileyonlinelibrary.com/journal/bse Bus Strat Env. 2023;32:1260–1273.
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WANG ET AL. 1261

pressure forces enterprises to be responsible for the environment knowledge, which enables enterprises to adapt to the constantly
by developing green products and improving green processes (Li, changing environment (Gluch et al., 2009). We regard GAC as a
Zheng, et al., 2017). In addition, other studies have explored the contingency factor that links GEO, knowledge creation process,
internal factors that promote organizational green innovation. For and green innovation. When GEO is enhanced, organizations will
example, Song and Yu (2018) found that green innovation strategy pay more attention to the opportunities related to green
affects green innovation through green creativity and green organi- innovation.
zational identity. The existing literature shows that there are more Knowledge creation process makes enterprises expand the
studies on external factors affecting green innovation than on inter- knowledge embedded inside and transfer the knowledge to business
nal organizational factors (Song & Yu, 2018). activities to create business value (Nonaka et al., 2000). This process
Recent studies have shown that green entrepreneurial orientation includes knowledge exchange with the external environment, as well
(CEO) plays a pivotal role in facilitating green innovation and reducing as the integration of new knowledge and existing knowledge (Shu
the negative impacts on the environment (Shafique et al., 2021). How- et al., 2012). GEO drives enterprises to internalize resources and gen-
ever, the existing studies have paid less attention to the mechanism erate professional knowledge to promote green innovation through
by which GEO strengthens green innovation. GEO is defined as a KE and KI (Lim et al., 2017), which indicates that knowledge creation
tendency to pursue potential opportunities that generate economic process plays a mediating role in the relationship between GEO and
and ecological benefits by initiating green activities (Jiang et al., 2018). green innovation.
As a crucial internal factor affecting green innovation, GEO reflects This study contributes to the research of GEO and green
the tendency of green innovation, proactiveness, and risk-taking in innovation in three aspects. First, this paper offers a direction for
their business activities (Jiang et al., 2018). With the help of GEO, it is the theoretical development and practical implications of green
of great significance to guide enterprises to actively carry out entrepreneurship. Previous studies suggested that GEO is condu-
green product development and green process innovation to realize cive to solving the contradiction between economic development
economic growth and environmental protection (Orazalin & and environmental protection (Jiang et al., 2018; Shafique
Baydauletov, 2020). However, the lack of investigation into how GEO et al., 2021), but they ignored the relationship between GEO and
affects green innovation may have constrained researchers from green innovation. This paper strengthens the understanding of the
understanding the benefits of GEO. In order to make up for this relationship between GEO and green innovation from an empirical
deficiency, this paper attempts to explore the influence mechanism of perspective, which can help enterprises improve their green aware-
GEO on green innovation. ness and promote green innovation in response to environmental
This paper explores the relationship between GEO and green problems.
innovation from the perspective of knowledge creation. According Second, this study extends the existing literature by examining
to the knowledge-based theory, as an effective knowledge creation whether knowledge creation process plays a mediating role in the
organization, enterprises may have the ability to transfer, reorga- relationship between GEO and green innovation, which provides a
nize, and create knowledge efficiently (Shu et al., 2012). Knowledge comprehensive and novel perspective for understanding the anteced-
creation process is divided into two independent dimensions: ents of green innovation. Knowledge creation is widely regarded as a
knowledge exchange (KE) and knowledge integration (KI) (Shu crucial capacity, which is crucial to KE and KI (Shu et al., 2012). It is
et al., 2012). KE is defined as the exchange of knowledge and infor- beneficial to process and create the value of new external knowledge
mation between members and sub-units of different organizations and exploit it to achieve commercial purposes. By highlighting the
(Shu et al., 2012). KI includes integrating prior knowledge and mediating effect of knowledge creation process, this study enriches
creating new ways to integrate prior knowledge, so as to gradually the understanding of the process of transforming GEO into green
or thoroughly create new knowledge (Nahapiet & Ghoshal, 1998). innovation.
GEO is based on three sets of organizational processes: green Third, this study suggests that the degree of transformation
innovation, green proactiveness, and green openness to risk (Jiang from GEO to knowledge creation process depends on GAC, which
et al., 2018). GEO drives enterprises to internalize resources and deepens the understanding of green knowledge exchange and inte-
generate professional knowledge to promote green innovation gration. The existing studies have paid less attention to how the
through KE and KI (Lim et al., 2017). Therefore, this study suggests benefits of GEO can be used in the green innovation stage and its
that knowledge creation process plays a mediating role between possible boundary conditions (Jiang et al., 2018). Given that GAC
GEO and green innovation. may facilitate the effective exploitation of GEO, this study
The process under which GEO influences green innovation strengthens the understanding on GEO and knowledge creation by
through knowledge creation process may be varied under different investigating whether the link between GEO and knowledge crea-
conditions. The existing research agrees that the effect of tion process is contingent upon GAC in the context of emerging
knowledge transformation from outside to inside depends on the economies. The results provide managerial and theoretical implica-
specific resources and capabilities within the enterprises, that is, tions for Chinese enterprises on how to improve green innovation
knowledge absorptive capacity (GAC) (Pacheco et al., 2018). GAC through green entrepreneurial orientation and knowledge creation
is defined as the ability to understand, absorb, and exploit new process.
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1262 WANG ET AL.

2 | T H E O R Y B A C KG RO UN D (Jiang et al., 2018). Entrepreneurs' attitudes and behaviors are critical

A N D H Y P O T H E S E S D E V E LO P M E N T for new ventures to facilitate the exploration and exploitation of
knowledge to identify new opportunities (Li et al., 2009). Knowledge
2.1 | Green entrepreneurial orientation and green creation process allows enterprises to exchange and transform knowl-
innovation edge continuously and dynamically (Jiang et al., 2018). Enterprises
could exchange and integrate green knowledge and capabilities to
Green innovation, defined as the development or improvement of reduce environmental pollution of their products and processes (Kong
products or processes aimed at reducing negative environmental et al., 2020). KE and KI are two important processes of knowledge
impacts, usually includes green product innovation (GPUI) and green creation (Nahapiet & Ghoshal, 1998).
process innovation (GPOI) (Chen et al., 2006). GPUI refers to creat- Some scholars have indicated that entrepreneurial orientation is a
ing new products, and taking environmental factors into consider- high-level organizational learning mechanism, which encourages and
ation when making decisions at each design stage, thus helping to supports exploration and risk-taking behaviors in the process of tech-
reduce the negative effects of environmental pollution and resource nological innovation (Teng, 2007). From the perspective of green
waste (Kong et al., 2020). GPOI can be defined as an effort to entrepreneurship, GEO encourages cooperation and promotes knowl-
integrate environmental issues and green technologies into existing edge exchange and integration among different enterprises (Dean &
processes or new processes to reduce resource waste and achieve McMullen, 2007). First, GEO enhances the atmosphere of green
environmental improvement (Kong et al., 2020). Green innovation entrepreneurship in organizations, thus prompting KE to acquire tech-
improves environmental performance and reduces the negative nology and market knowledge (Smith et al., 2005). Second, GEO
impact of economic activities on the environment and resource by makes enterprises tend to actively integrate and transform green
developing and utilizing new products, processes, and services knowledge and capabilities (Shan et al., 2016), which can stimulate
(Borghesi et al., 2015). As environmental problems become increas- enterprises to actively carry out green practices to meet the chal-
ingly prominent, enterprises must make great efforts in green lenges from customers and stakeholders who pay much attention to
innovation. environmental sustainability at present and in the future (Kong
Prior studies have found that entrepreneurial orientation may et al., 2020). Therefore, the following hypotheses are proposed:
have a direct or indirect impact on enterprise innovation (Li, Zheng,
et al., 2017), and innovation may be the essence of entrepreneurial H2a. GEO positively influences KE.
orientation (Covin & Miles, 1999). GEO is defined as a tendency to
pursue potential opportunities that generate economic and ecologi- H2b. GEO positively influences KI.
cal benefits by initiating green activities (Jiang et al., 2018).
Specifically, enterprises with high GEO should not only follow the
principle of environmental protection based on the triple bottom 2.3 | The moderating role of green absorptive
line but also follow the entrepreneurial direction based on business capacity
development. As an organizational strategy, GEO can make enter-
prises form an internal organizational force to stimulate GPUI and GAC is the ability of understanding and absorbing new knowledge
GPOI. Enterprises with GEO would like to discover and exploit (Gluch et al., 2009), while KE and KI are the important process of cre-
opportunities for green production and process innovation to pre- ating knowledge (Nahapiet & Ghoshal, 1998). GAC allows enterprises
vent environmental pollution, reduce waste, and save energy (Guo to acquire external information and turn it into internal knowledge
et al., 2020; Kong et al., 2016). Therefore, the following hypotheses capital, thus affecting the ability of enterprises to identify, absorb, and
are proposed: utilize external information in the environment (Pacheco et al., 2018).
When enterprises have a high-level GAC, they can transform external
H1a. GEO positively influences GPUI. knowledge into valuable input of business strategy and promote the
coordination between internal resources and the environment (Naja
H1b. GEO positively influences GPOI. et al., 2016). In addition, GAC makes it possible to combine new
knowledge with the existing knowledge base, which opens up a new
way to develop new green products and processes (Zhang
2.2 | Green entrepreneurial orientation and et al., 2019). Therefore, when GAC is strong, enterprises would
knowledge creation process develop and identify more available knowledge under the guidance of
GEO and turn it into internal knowledge and resources for exchange
According to the knowledge-based theory, market and technical and reorganization to cope with environmental pressure. On the con-
knowledge are the key factors that affect the competitive advantages, trary, when GAC is weak, the organization's understanding and appli-
and there are differences in knowledge among different enterprises cation of the knowledge would be incomplete or even insufficient,
(Grant, 1996). It is very important for enterprises to generate which will lead to the organization's indifference to external knowl-
new ideas by strengthening KE and KI to create new knowledge edge and lack of resources to capture and process this knowledge. It
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WANG ET AL. 1263

will hinder the transformation of green entrepreneurial orientation H5b. KI has a positive impact on GPOI.
into knowledge creation process. Therefore, the following hypotheses
are proposed:
2.5 | The mediating role of knowledge creation
H3a. GAC positively moderates the relationship process
between GEO and KE.
Green innovation usually refers to mastering knowledge related to the
H3b. GAC positively moderates the relationship changes of raw materials or elements used and the redesign of prod-
between GEO and KI. ucts or processes (Arfi et al., 2018). Based on the knowledge-based
view, green innovation depends on the exchange and integration of
green knowledge (Kong et al., 2020). Enterprises have to transfer
2.4 | Knowledge creation process and green knowledge across functions and exchange knowledge with external
innovation partners throughout the supply chain to successfully carry out green
innovation. GEO makes enterprises attach importance to acquiring
The goal of green innovation is not only to improve production effi- green knowledge and skills and transforming green knowledge into
ciency but, more importantly, to pay attention to environmental pro- GPUI and GPOI.
tection (Kleindorfer et al., 2005). Green innovation helps enterprises First, building on the resource advantage theory, knowledge is
promote technological innovation in green products or processes and difficult to transfer and spread (Grant, 1996; Hunt & Arnett, 2006).
form advanced environmental management systems for energy sav- GEO stimulates enterprises to explore new knowledge, exchange
ing, emission reduction, and product recycling, thus improving their knowledge through social networks, and convert knowledge into
competitive advantages (Chen, 2008). Especially in the face of business activities. KE promotes enterprises to learn from each
increasing external regulatory pressure, enterprises need to emphasize other, making different knowledge and information spread among
the goal of environmental protection in the process of innovation the organizations (Smith et al., 2005). Additionally, KE can transform
(Chen & Hung, 2014). The effects of entrepreneurial behaviors mainly knowledge into GPUI and GPOI through internal processes
depend on the knowledge resources owned by the enterprises (Albort-Morant et al., 2016). According to this logic, KE plays a
(Bagozzi & Yi, 2012). According to the knowledge-based theory, it is mediating role in the relationship between GEO and green product
necessary to continuously exchange knowledge with the external and process innovation.
environment and exploit green knowledge inside enterprises through
KI to create green products and services (Kong et al., 2020). Enter- H6a. KE mediates the relationship between GEO
prises can reduce environmentally harmful products or processes and and GPUI.
promote green innovation through KE and KI (Chen & Hung, 2014).
KE and KI both play the important roles in reducing the uncer- H6b. KE mediates the relationship between GEO
tainty of green innovation and promoting successful green innovation and GPOI.
(Arfi et al., 2018). Through KE and KI, the cross-functional transfer of
knowledge within enterprises will promote the aggregation and coor- Second, knowledge creation can help organization members con-
dinated development of resources and skills, thus stimulating innova- nect new knowledge with their existing knowledge through the inte-
tion (Akgün et al., 2007). Therefore, sufficient green knowledge gration process, thus creating new knowledge (Collins & Smith, 2006;
exchange can help organizations understand environmental require- Nonaka, 1994). Enterprises with high GEO are committed to acquiring
ments, improve the success probability of green innovation, and then green knowledge and capabilities (Guo et al., 2020). The newly
promote enterprises to formulate specific green innovation plans acquired green knowledge will be combined with existing knowledge
(Chen & Hung, 2014). KI enables enterprises to combine valuable through knowledge creation process (Ryoo & Kim, 2015), which is
green knowledge acquired from the external environment with the conducive to green product and process innovation (Kong
existing knowledge of employees, so as to develop the most effective et al., 2020). Namely, GEO could be converted into GPUI and GPOI
green knowledge combination (Kong et al., 2020). These new combi- via KI. Therefore, the hypotheses are proposed:
nations of green knowledge will provide fertile ground for GPUI and
GPOI; namely, KE and KI are crucial to GPUI and GPOI. Therefore, the H7a. KI mediates the relationship between GEO
following hypotheses are proposed: and GPUI.

H4a. KE has a positive impact on GPUI. H7b. KI mediates the relationship between GEO
and GPOI.
H4b. KI has a positive impact on GPUI.
Therefore, based on the resource advantage theory and
H5a. KE has a positive impact on GPOI. knowledge-based theory, this study proposed the theoretical
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1264 WANG ET AL.

framework that explains a crucial issue that GEO has a positive impact We obtained a list of companies by contacting local MBA and
on green innovation via knowledge creation process. At the same EMBA alumni, associations of industry and commerce, cooperative
time, GAC creates conditions for the operation of this mechanism. enterprise training institutions, and personal social networks. Then,
Figure 1 depicts the relationships. we distributed questionnaires to the middle and senior managers of
enterprises through field visits, telephone surveys, and E-mail. To pre-
vent common method variance (CMV), we have taken some actions.
3 | M E TH O DO LO GY First, we collected the data twice at different time cut-off points in
this study. Specifically, the dependent variables were collected
3.1 | Sample and data collection 6 months after the independent variable data collection. We have
designed a longitudinal survey to minimize the threat of endogenous
The samples are enterprises committed to green economic activities simultaneity problems (Yang et al., 2020). Then, we sent the question-
in China. Before collecting data, we asked respondents whether their naire with a letter of introduction explaining the ethical issues of this
enterprises had participated in green innovation activities in the past study and the confidentiality and use of the data. We also asked
3 years. Under such circumstances, this study can provide implications
for other emerging countries for the following reasons. First, the
TABLE 1 Respondents' characteristics
Chinese government attaches great importance to the role of green
innovation in environmental protection, and the factors affecting Respondents' characteristics Frequency Percentage (%)

green innovation are attracting more and more attention from aca- Region
demics and practitioners. The report of the 19th National Congress Shanghai 39 22.5%
outlined the roadmap for green development. Second, the Chinese Guangdong 40 23.1%
government has begun to implement strict environmental laws and Jilin 67 38.7%
regulations to manage increasingly serious environmental pollution Shanxi 27 15.7%
problem (Huang et al., 2016). Under the pressure of such regulations,
Industry
Chinese enterprises are undertaking green innovations to reduce the
Agriculture 48 27.7%
negative impact on the natural environment (Chan et al., 2016; Zhao
Manufacturing 32 18.5%
et al., 2018).
Service sector 67 38.7%
To acquire representative samples, we selected some provinces
High-tech sector 12 6.9%
and cities located in different economic zones of China (Shanghai,
Guangdong, Jilin, and Shanxi) to collect data. Given that the regional Others 14 8.1%

economic, social, and cultural development in China is different, we Firms age

selected Shanghai, Guangdong, Jilin, and Shanxi provinces or munici- ≤5 years 43 24.9%
palities to conduct a survey. Shanghai is in the Yangtze River Delta 5–10 years 55 31.8%
economic zone of China, and Guangdong is in the Pearl River Delta 11–20 years 43 24.9%
economic zone of China, which are the economically developed ≥20 years 32 18.5%
regions with rapid economic growth and economic development, Number of employees
while Jilin and Shanxi provinces are relatively slow in economic Less than 100 38 22%
development. Jilin province is located in the Northeast of China,
101–500 83 48%
which is a traditional industrial base, and Shanxi reflects the level of
501–1,000 35 20.2%
economic development in the central region of China. Collecting
1,001–2,000 10 5.8%
data from these areas allowed us to include different levels of eco-
More than 2,000 7 4%
nomic development.

FIGURE 1 Proposed theoretical framework

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WANG ET AL. 1265

TABLE 2 Measurement items and validity assessment

Constructs and items Factor loading AVE CR Cronbach's α

Green innovation (Chen et al., 2006)
Green product innovation 0.659 0.885 0.824
1. Our company chooses the least polluting product materials 0.823
for product development or design
2. Our company chooses the product materials that consume 0.723
the least energy and resources for product development or
design
3. Our company uses minimal materials to construct products 0.828
for product development or design
4. Our company will carefully consider whether the product is 0.867
easy to recycle and decompose for product development or
design
Green process innovation 0.679 0.894 0.837
1. Our company's manufacturing processes recycle waste and 0.859
emissions for treatment and reuse
2. Our company's manufacturing processes effectively reduce 0.746
the discharge of hazardous substances or waste
3. Our company's production processes reduce the 0.818
consumption of hydro-electric coal or oil
4. Our company's production processes reduce the use of raw 0.868
materials
Green entrepreneurial orientation (Jiang et al., 2018) 0.691 0.917 0.887
1. When facing with uncertainty, we have an aggressive 0.862
attitude towards green projects
2. We attach great importance to green research and 0.856
development and green technology innovation
3. Our company has a tendency to become market leader and 0.775
always takes the lead in introducing green products, services
or technologies
4. We usually start green initiatives before our competitors 0.814
5. Our company has the attitude to “beat their competitors” 0.845
Knowledge creation process (Kong et al., 2020)
Knowledge exchange 0.647 0.880 0.810
1. Our company provides on-the-job training to help 0.815
employees exchange and refine their ideas
2. Top managers emphasizes information exchange and sharing 0.714
3. Middle managers are empowered and often trained to 0.818
communicate with their supervisors and subordinates
4. Our employees receive extensive training to assist in 0.863
personal interaction and communication
Knowledge integration 0.602 0.883 0.831
1. Employees are encouraged to combine or recombine ideas 0.728
to solve problems or create opportunities
2. Employees are encouraged to combine external and internal 0.796
knowledge to generate new ideas
3. Employees are encouraged to acquire and recombine 0.796
information from different sources
4. Our company often reorganizes existing knowledge to meet 0.791
new demands
5. Employees are encouraged to share and learn from their 0.766
experiences and failures

(Continues)
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1266 WANG ET AL.

TABLE 2 (Continued)

Constructs and items Factor loading AVE CR Cronbach's α

Green absorptive capacity (Gluch et al., 2009) 0.653 0.938 0.924
1. Our company has regulations in place to ensure compliance 0.805
with environmental requirements and laws
2. All the employees in our company have participated in an 0.828
environmental training program
3. Our company has set up measurable environmental goals 0.818
4. Our company has conducted a preliminary environmental 0.826
audits
5. Our company has an action plan on how to achieve our 0.821
environmental goals
6. Our company has implemented life cycle analysis as a means 0.816
of identifying the environmental impacts from our products/
services
7. Our company has performed environmental audit 0.785
8. Our company has implemented environmental declarations 0.765
as a means of identifying the environmental impact from our
products/services

Abbreviations: AVE, average variance extracted; CR, composite reliability.

respondents to participate in the survey based on their interests and employees accounted for 48% of the sample, followed by firms with
intentions. It helped to reduce possible selection bias as the letter of ≤100 employees (22%) and 501–1,000 employees (20.2%)
introduction promised complete confidentiality of all individual
responses. In addition, we selected the managers as the respondents
because they are familiar with the variables and they have been in a 3.2 | Measurements
relatively senior position with responsibility for green innovation and
sustainable management for many years. To decrease the CMV, we We use the existing scales to measure all the variables and use trans-
put the adjacent variables in different parts of the questionnaire. The lation and reverse translation to ensure the accurate description of
design for the order of scale items can decrease the CMV in self- the contents of the scales. One professor of management, three doc-
reporting (Podsakoff et al., 2003). toral candidates of management, and three business managers were
From March 2020 to May 2020, respondents were asked to invited to check the questionnaire. After several revisions, the final
report their demographic characteristics, enterprise characteristics, questionnaire was formed (see Table 2). The data were collected
GEO, knowledge creation process, and GAC at the first stage. We through a 7-point likert scale ranging from 1 = (strongly disagree) to
sent out 500 questionnaires, 212 of which were deemed invalid for 7 = (strongly agree).
failing to meet the research requirements, with a valid response rate
of 42.4%. Six months later, the managers who responded at the first
stage were invited to answer questions about green innovation at the 3.2.1 | Dependent variable
second stage. The second survey was conducted over 2 months from
November 2020 to December 2020. We used the scale of green inno- We measured green innovation based on the study of Chen et al.
vation from the study of Chen et al. (2006). To ensure a match (2006) with two dimensions: GPUI and GPOI (see Table 2). GPUI was
between the two measurements, participants were asked to indicate measured using four items, which aimed to measure how an enter-
their personal email address or contact number during the first survey. prise converts the green idea into their new products. GPOI was also
Finally, 173 valid questionnaires were collected, with a response rate measured using four items, which evaluated the degree of improving
of 81.6%. the process to reduce pollution and resource waste.
Table 1 describes the respondents' characteristics. In terms of
industry, 38.7% were in the service sector, 27.7% were agricultural
enterprises, and 18.5% were in the manufacturing sector. In terms of 3.2.2 | Independent variable
firm age, 31.8% of the sampled firms had been in business for
5–10 years, while 24.9% had existed for ≤5 and 11–20 years and GEO was measured by five items adopted from Jiang et al. (2018) to
18.5% for ≥20 years. Thus, the sample distribution was relatively uni- reflect an enterprise's strategic orientation in order to promote sus-
form in terms of firm age. In this study, firms with 100–500 tainable development.
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
WANG ET AL. 1267

3.2.3 | Mediating variables First, we used item order randomization, reverse problem, and anony-
mous filling to reduce CMV in programming. Second, we sent our
Knowledge creation process was measured with two dimensions: questionnaires at two cut-off time points. Third, Harman's one-factor
KE and KI, adopted from Kong et al. (2020). KE was measured using test was performed in this study, and the results showed that the first
four items to evaluate the exchange of knowledge and information factor accounted for 28.857% of the total variance, less than half of
between members and sub-units of different organizations. KI was all factors. Therefore, CMV does not affect the results. Fourth, we
measured using five items to reflect an enterprise's ability to com- conducted confirmatory factor analysis (CFA) to further test CMV
bine the external knowledge with internal knowledge to create new (see Table 3). We assessed a model wherein all items corresponding
ideas. to dependent and independent factors were linked to a single factor
and found that this alternative model did not fit the data well
(χ 2 = 2,105.312, df = 405, χ 2/df = 5.198, TLI = 0.368, CFI = 0.411,
3.2.4 | Moderating variable IFI = 0.417, RMSEA = 0.156). Finally, we used the single-common-
method-factor approach to examine CMV (Podsakoff et al., 2003).
We adopted an eight-item scale from Gluch et al. (2009) to measure The results (χ2 = 607.394, df = 360, χ2/df = 1.687, TLI = 0.897,
GAC. GAC can reflect an enterprise's ability to acquire external infor- CFI = 0.914, IFI = 0.917, RMSEA = 0.063) were not significantly bet-
mation and then convert it into internal knowledge capital, which ter than the proposed model. Accordingly, these results suggest CMV
affects the ability of enterprises to identify, absorb, and utilize exter- was not a serious concern.
nal information in the environment.

4.2 | Validity and reliability

3.2.5 | Control variables
SPSS 22.0 and Amos 21.0 were used to examine the reliability and
We controlled for the influence of firm-level variables on green inno- validity of the measurements. The results show that Cronbach's α of
vation. Prior studies have found that firm size, firm age, and industry GEO, KE, KI, GAC, GPUI, and GPOI are 0.887, 0.810, 0.831, 0.924,
type all play the crucial role in green innovation (Kong et al., 2020) 0.824, and 0.837, indicating all scales exhibited satisfactory reliability.
and knowledge acquisition (Wang et al., 2020). Therefore, based on The factor loading values of each scale were all higher than 0.50, aver-
the relevant studies, we used firm size, firm age, and industry type as age variance extracted (AVE) values were all bigger than 0.50, and
control variables. composite reliability (CR) values were all higher than 0.70, indicating
that all scales had good convergent validity (see Table 2). Through
CFA, the theoretical model has the best fitting index, and each indica-
4 | RESULTS tor exceeds the standard threshold value, indicating good discriminant
validity (see Table 3). The square roots of the AVE estimates were
4.1 | Common method variance test and compared to pairwise correlations between constructs. The square
multicollinearity test root of the AVE estimate of each individual construct was greater
than the correlation coefficient between the two latent constructs,
To control for and reduce CMV, we adopted two methods: procedural indicating that each scale had sufficient discriminative validity
control and post-mortem statistical control (Podsakoff et al., 2003). (see Table 4).

T A B L E 3 Results of confirmatory
Model χ2 Df χ2/df RMSEA TLI CFI IFI
factor analysis
Theoretical model 650.441 390 1.668 0.062 0.899 0.910 0.911
Five-factor model 722.591 395 1.829 0.069 0.875 0.887 0.888
Four-factor model 898.030 399 2.251 0.085 0.812 0.827 0.829
Three-factor model 1,284.406 402 3.195 0.113 0.669 0.694 0.698
Two-factor model 1,328.798 404 3.289 0.115 0.655 0.680 0.683
Single-factor model 2,105.312 405 5.198 0.156 0.368 0.411 0.417

Notes: N = 173; the theoretical model includes GEO, KE, KI, GAC, GPUI, and GPOI. Five-factor model:
combine KE and KI into one factor; four-factor model: combine KE and KI into one factor, combine GPUI
and GPOI into one factor; three-factor model: GEO, KE, and KI were combined as one factor, and GPUI
and GPOI were combined as one factor; two-factor model: GEO, KE, KI, GPUI, and GPOI were combined
into one factor; single factor model: All items were grouped into one factor.
Abbreviations: CFI, comparative fit index; IFI, incremental fit index; RMSEA, root mean square error of
approximation; TLI, Tucker–Lewis index.
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1268 WANG ET AL.

4.3 | Analysis and results supported. To verify the moderating role of GAC, we added GAC
into Models 4 and 8. The results suggest that GAC positively moder-
Table 4 summarizes descriptive statistics and correlations for all the ated the positive effect of GEO on KE (β = .144, P < .05) and KI
key variables. According to the cut-off value suggested by the litera- (β = .206, P < .01). Thus, H3a and H3b were supported.
ture, the biggest variance expansion factor in regression analysis is <2. To better understand the moderating effects of GAC, we plotted
It indicates that multicollinearity was not a serious concern. We used the pictures of moderation of GAC using mean ± 1 SD for the vari-
a hierarchical regression analysis to test our hypotheses (see Table 5). ables (see Figures 2 and 3). The results indicated that, compared with
This study verified the change in the regression results after adding low GAC, the effects of GEO on KE and KI were enhanced at a high
variable by variable. We compare the two regression coefficients to level of GAC, supporting H3a and H3b.
verify whether the variables are effective in improving the model. If In Models 10 and 16, the results showed that GEO had
2
the R becomes larger, the power of the model becomes better, and significant positive impacts on GPUI (β = .274, P < .001) and GPOI
the role of the new variable is effective. In Model 2, the findings show (β = .524, P < .001), indicating that H1a and H1b were supported. In
that GEO has a significant positive influence on KE (β = .248, P < .01). Models 11 and 13, we found that KE (β = .596, P < .001) and KI
In Model 6, the results show that GEO has a significant positive (β = .475, P < .001) both had significant positive impacts on GPUI.
impact on KI (β = .217, P < .01), indicating H2a and H2b were Thus, H4a and H4b were supported. In addition, we found that KE

TABLE 4 Descriptive statistics and correlations

Variables 1 2 3 4 5 6 7 8 9
1. Industry
2. Firm age
0.301***
3. Firm size
0.115 0.481***
4. GEO 0.048 0.142 0.036 0.831
5. KE 0.011 0.263*** 0.147 0.286*** 0.804
6. KI
0.089 0.397*** 0.254*** 0.267*** 0.628*** 0.776
7. GPUI
0.117 0.309*** 0.159* 0.306*** 0.628*** 0.520*** 0.812
8. GPOI
0.009 0.276*** 0.113 0.555*** 0.460*** 0.495*** 0.445*** 0.824
9. GAC
0.239** 0.158* 0.067 0.146 0.347*** 0.115 0.145 0.053 0.808
Mean 2.682 2.370 2.220 5.266 5.749 5.512 5.662 4.811 4.421
Standard deviation 1.279 1.052 0.987 0.876 1.022 0.833 1.268 1.205 0.980

Note: N = 173. Bolded diagonal elements are the square root of average variance extracted (AVE).
Abbreviations: GAC, green absorptive capacity; GEO, green entrepreneurial orientation; GPOI, green progress innovation; GPUI, green product innovation;
KE, knowledge exchange; KI, knowledge integration.
*p < .05. **p < .01. ***p < .001.

TABLE 5 Regression results

Knowledge exchange Knowledge integration

Variables Model1 Model 2 Model3 Model4 Model 5 Model 6 Model 7 Model 8

Industry 0.098 0.073 0.144 0.149* 0.031 0.009 0.016 0.023
Firm age 0.281** 0.233** 0.211* 0.175* 0.368*** 0.325*** 0.323*** 0.271***
Firm size 0.023 0.035 0.034 0.049 0.081 0.091 0.091 0.112
GEO 0.248** 0.201** 0.206** 0.217** 0.212** 0.218**
GAC 0.316*** 0.281*** 0.031
0.019
GEOxGAC 0.144* 0.206**
2
R 0.078 0.138 0.229 0.247 0.164 0.209 0.210 0.249
4R2 0.060 0.206 0.220 0.045 0.186 0.220
F 4.784** 6.712*** 9.928*** 9.078*** 11.026*** 11.112*** 8.884*** 9.067***

Note: N = 173.
Abbreviations: GAC, green absorptive capacity; GEO, green entrepreneurial orientation; GPOI, green progress innovation; GPUI, green product innovation.
*p < .05. **p < .01. ***p < .001.
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
WANG ET AL. 1269

0.449***

0.347***

26.636***
Model 20
0.026
0.099

0.035

0.444
0.096
0.460***

14.704***
Model 19
0.068
0.145

0.066

0.256
0.173
0.450***
0.296***

24.586***
Model 18
0.008
0.143

0.014

0.424
0.076
F I G U R E 2 Moderating effect of GAC between GEO and
KE. GAC, green absorptive capacity; GEO, green entrepreneurial
orientation; KE, knowledge exchange

0.413***

13.271***
Model 17
0.042
0.198

0.038

0.240
0.157
Green progress innovation

0.524***

22.465***
Model 16

0.212**
0.029

0.004

0.348
0.265
0.314***
Model 15

5.075**
0.082

0.028

0.083
0.429***

15.321***
Model 14

0.181**
F I G U R E 3 Moderating effect of GAC between GEO and KI. GAC,

Abbreviation: GEO, green entrepreneurial orientation; KE, knowledge exchange; KI, knowledge integration.

0.058
0.101

0.011

0.314
0.145
green absorptive capacity; GEO, green entrepreneurial orientation; KI,
knowledge integration

0.475***

16.702***
Model 13

(β = .413, P < .001) and KI (β = .460, P < .001) had significant positive

0.042
0.119

0.023

0.285
0.189
effects on GPOI in Models 17 and 19, indicating that H5a and H5b
were supported (see Table 6).
Then, we verified the mediating effects of KE and KI between
0.561***

26.249***
Model 12

0.135*

GEO and GPUI in Models 12 and 14. When including KE in Model

0.095
0.110
0.008

0.440
0.271

12, the impact of GEO on GPUI was reduced (β = .135, P < .05), and
KE has a positive effect on GPUI (β = .561, P < .001). The results indi-
cate that KE plays a partial mediating role in the relationship between
0.596***

30.865***
Model 11

GEO and GPUI, and H6a was supported. When including KI in Model

0.085
0.126
0.001

0.424
0.328

14, the impact of GEO on GPUI was reduced (β = .181, P < .01), and
KI has a positive effect on GPUI (β = .429, P < .001). The results indi-
cate that KI plays a partial mediating role in the relationship between
Green product innovation

0.274***

8.533***
Model 10

0.240**

GEO and GPUI, and H7a was supported.

0.054

0.028

0.169
0.073

Finally, we verified the mediating effects of KE and KI between

Regression results

GEO and GPOI in Models 18 and 20. When including KE in Model

*p < .05. **p < .01. ***p < .001.

18, the impact of GEO on GPOI was reduced (β = .450, P < .001), and
0.294**

5.998**

the KE has a positive effect on GPOI (β = .296, P < .001). The results
Model9

0.027

0.015

0.096

indicate that KE plays a partial mediating role in the relationship

between GEO and GPOI, and H6b was supported. When including KI
Note: N = 173.

in Model 20, the impact of GEO on GPOI was reduced (β = .449,

Variables
TABLE 6

Firm size
Firm age
Industry

P < .001), and KI has a positive effect on GPOI (β = .347, P < .001).
GEO

4R2

The results indicate that KI plays a partial mediating role in the rela-
KE

2
KI
R

tionship between GEO and GPOI, and H7b was supported.

 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1270 WANG ET AL.

4.4 | Robustness test However, they have paid less attention to the role of GEO in facili-
tating green innovation. GEO, as the key internal organizational strat-
Robustness test was conducted to ensure the reliability of the results. egy, is an important prerequisite and foundation for enterprises to
First, we divided the independent variable into two groups according implement environmental management strategy, which reflects the
to the median value and virtualized independent variable instead of trend of the enterprise's green innovation, proactiveness, and risk-
using the original variable. Thus, the theoretical model remained taking (Jiang et al., 2018). Enterprises with high GEO are proactive in
unchanged. The results were consistent with the original version implementing green innovation strategies, which will strengthen the
except for a slight change in the regression coefficient. Second, the cooperation among employees within the organizations and provide
Bootstrap method was further adopted using the PROCESS module new ideas for pursuing green product and process innovation
(an SPSS plug-in) to verify the mediating effect and moderating effect (Song & Yu, 2018). This study suggests that GEO has a positive
(Hayes, 2013). The results show that the moderating effect of GAC on impact on green innovation, which is consistent with the point that
the relationship between GEO and KE is significant (β = .037, 95% GEO plays a pivotal role in organizational innovation (Hunt &
bias-corrected confidence interval [95% CI] = [0.006, 0.068]), and the Morgan, 1996).
moderating effect of GAC on the relationship between GEO and KI is Second, prior studies have primarily investigated that GEO is con-
significant (β = .047, 95% CI = [0.021, 0.074]). In addition, the indi- ducive to exploring green knowledge and improving green organiza-
rect effect of GEO on GPUI (β = .195, 95% CI = [0.109, 0.316]) and tional ability (Haber & Reichel, 2005). However, less attention was
GPOI (β = .103, 95% CI = [0.041, 0.193]) through KE are significant. paid to exploring how GEO is converted into green innovation from
The indirect effect of GEO on GPUI (β = .146, 95% CI = [0.061, the perspective of knowledge creation process. The existing studies
0.265]) and GPOI (β = .110, 95% CI = [0.044, 0.204]) through KI is reveal that knowledge creation is generally considered to be the pre-
statistically significant. Thus, the conclusions were consistent with the requisite of innovation (Arfi et al., 2018; Chen & Hung, 2014). An
original results. enterprise's innovation capability largely depends on its ability to cap-
ture and extract value from knowledge creation process (Smith
et al., 2005). Therefore, consistent with this point, we verified the
5 | CONCLUSIONS AND DISCUSSION mediating effect of knowledge creation process between GEO and
green innovation. We found that GEO can promote knowledge crea-
5.1 | Conclusions tion process and GEO has an indirect influence on green product and
process innovation via knowledge creation process. It is necessary for
This study explores the relationship between GEO and green inno- the enterprises committed to green development to acquire,
vation from the perspective of knowledge creation process. First, exchange, integrate, and exploit new knowledge. Specifically, with the
GEO positively promotes GPUI and GPOI. GEO can help enterprises increasingly regulation pressure of environmental protection, it is
improve their awareness of green innovation and stimulate green urgent that enterprises should reduce environmental pollution and
innovation. Second, this study verifies that GEO has positive resource waste through green innovation to acquire sustainable
impacts on KE and KI, complementing and improving the research advantages. Therefore, enterprises should create new knowledge to
on the relationship between GEO and knowledge creation process convert GEO into GPUI and GPOI. This study highlights the mediating
in the context of China. Third, GAC enhances the positive effects of effect of knowledge creation process between GEO and green inno-
GEO on KE and KI, enriching the literature on knowledge creation vation, which expands the theoretical basis of green entrepreneurship
theory. Fourth, KE and KI positively affect green innovation. This and provides a more comprehensive understanding of how enter-
study finds that knowledge creation process, including KE and KI, is prises develop green innovation, thus contributing to enriching green
the key driving factor of GPUI and GPOI. By exchanging and inte- entrepreneurship literature.
grating external and internal knowledge, enterprises can create Third, one of the main contributions of this study is to verify the
environment-friendly products and services. Fifth, GEO has indirect moderating effect of GAC on the relationship between GEO and
influences on GPUI and GPOI through the mediating roles of KE knowledge creation process. GAC helps enterprises to cope with the
and KI. The findings suggest that GEO acquires, internalizes, and environmental pressure by understanding, absorbing, and exploiting
integrates external resources and knowledge via knowledge creation new knowledge. The ability to identify and absorb new knowledge
process to create green products and green process, thus forming and apply it to commercial purposes is a necessary condition for
green competitiveness. implementing a successful environmental management strategy. GEO
makes enterprises pay attention to external green knowledge, but
how to integrate external knowledge into internal knowledge depends
5.2 | Theoretical contributions on GAC. GAC is the ability of understanding and absorbing new
knowledge (Gluch et al., 2009), which would promote enterprises'
First, this study highlights the effects of GEO on GPUI and GPOI. actions of exchanging and integrating knowledge. Although prior liter-
Prior studies have found that external environmental regulation plays ature identified that absorptive capacity is the crucial issue to trans-
a crucial role in promoting green innovation (Li, Zheng, et al., 2017). form and create knowledge, the explanation of GAC on the
 10990836, 2023, 4, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3187 by Fatima Jinnah Women University, Wiley Online Library on [13/03/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
WANG ET AL. 1271

mechanism how GEO influences knowledge creation process is still 5.4 | Limitations and future research
not clear. Given that the importance of GAC, we verified that GAC
positively moderates the relationship between GEO and knowledge This study has several limitations, which also provides the directions
creation process. When an enterprise has a high level of GAC, the for future research. First, in this study, hierarchical regression and
positive impact of GEO on knowledge creation process is enhanced. bootstrap methods are used to reveal the mechanism of GEO's influ-
GEO will lead to the heterogeneity of knowledge creation practices, ence on green innovation through knowledge creation process, and
which is contingent on GAC. Therefore, this study contributes to GAC's moderating role in this process. The effectiveness of hierarchi-
strengthening the understanding of green knowledge creation process cal regression analysis in the field of management has been widely
and expanding the knowledge base regarding contingency theory in verified in previous studies, which is suitable for exploring the
the entrepreneurship field. Our research has provided novel insights influencing mechanisms among variables in the model (Gefen et al.,
to the green entrepreneurship literature by investigating the influence 2000). However, the hierarchical regression cannot test all the rela-
mechanism of GEO on green innovation. tionships in a single statistical test, and it is necessary to use several
separate regressions to test the model fully. It may not be conducive
to understanding the conceptual model as a whole. Therefore, future
5.3 | Practical implications study can adopt the SEM to explore the influencing path of the model
overall. Second, the data collected from a single respondent of each
This study has three practical implications. First, managers should enterprise may lead to self-cognition bias. Despite using procedural
pay attention to the importance of knowledge creation process in and statistical methods to ensure CMV was not problematic, it could
the relationship between GEO and green innovation. Green knowl- still present limitations. Thus, future research should better control
edge exchange and integration can support green entrepreneurial CMV via diversified data sources to ensure the persuasiveness of our
activities and help enterprises identify opportunities for green inno- findings. Third, this study paid attention to the enterprises in different
vation. Knowledge is one of the most important resources for enter- economic regions in China, which indicates that these findings are not
prises to acquire sustainable competitive advantages. Market applicable to other contexts since the results are not derived from a
knowledge has been proved to be an important source of under- statistical test that supports causality and generalization. The differ-
standing customer demand and preferences. Enterprises create ences between local and international regulatory and business envi-
green knowledge and ability to carry out green innovation to meet ronment may lead to changes in GEO. Therefore, future research can
customer needs through GEO. Therefore, an enterprise's knowledge investigate the differences of GEO between different enterprises at
creation process can provide guidance on how to better respond to home and abroad and their impact on green innovation.
customer demand.
Second, managers should establish a friendly environment for ACKNOWLEDG MENTS
green innovation, where employees share and exchange knowledge We would like to thank the Fundamental Research Funds for the
and create new knowledge. Enterprises should also be alert to the Central Universities (2412022QD021) and the Chinese National
external environment by developing absorptive capacity. In addition, Social Science Foundation (20BGL059) for supporting this research.
enterprises should also promote KE and constantly capture changes in
external environmental laws and regulations. The transformation from CONFLIC T OF INT ER E ST
GEO to green innovation requires employees to make use of their The authors declare no conflict of interest.
learning ability, so that enterprises can absorb and create new knowl-
edge and form knowledge advantages. It can improve green innova- OR CID
tion performance, so as to meet the requirements and regulations of Chao Wang https://orcid.org/0000-0003-0757-0025
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