The effects of absorptive capability, digital transformation on green entrepreneurial orientation and international business performance: preparing to go green by Vietnamese SME manufacturing exporters

Abstract

In the context of the Fourth Industrial Revolution and increasing environmental concerns, manufacturing firms are actively adapting their business models to meet evolving customer demands, improve business outcomes, and minimize environmental impact. Small and medium-sized enterprises (SMEs) face various resource constraints-including financial, human, structural, managerial, and asset limitations-that challenge their pursuit of green strategies. Nonetheless, several drivers such as managerial environmental concern, institutional pressure, organizational resilience, and big data analytical capabilities influence their green initiatives. Drawing on the resource-based view, this study highlights absorptive capacity and digital transformation as two critical capabilities that foster green entrepreneurial orientation (GEO) and enhance international business performance (IBP) among manufacturing SMEs. Using data from 187 Vietnamese manufacturing firms across diverse industries and analyzed via Smart PLS 3.0, the findings demonstrate that the dual impact of absorptive capability (ACAP) and digital transformation (DT) fosters the development of GEO, thereby significantly enhancing SMEs’ international business performance. Moreover, GEO partially mediates the relationship between absorptive capacity and IBP, and fully mediates the link between digital transformation and IBP. While ACAP directly and positively affects IBP, the direct impact of DT on IBP was found to be statistically insignificant. These insights underscore the importance for policymakers and practitioners to support SMEs in integrating green strategies and leveraging technological advancements to strengthen their international competitiveness