Humane Entrepreneurship in the Circular Economy: The Role of Green Market Orientation and Green Technology Turbulence for Sustainable Corporate Performance

By inergency On Mar 19, 2024

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1. Introduction

In recent years, there has been a rise in scholarly interest in environmental issues in both developed and developing countries (e.g., [1,2]). Specifically, conserving the national environment has emerged as a serious issue. As a result, there is a growing concern regarding how stakeholders fulfill their entrepreneurial responsibilities concerning their business operations to promote sustainable environmental, societal, and economic values [3].

Within the circular economy (CE) system, entrepreneurs are considered one of the primary subjects of interest [4] and are considered focal players in entrepreneurial ecosystems [5]. From this standpoint, entrepreneurs perform an essential function in the circular economy where a wide range of innovations are needed, particularly their propensity to recognize opportunities arising from wastes that have been disregarded by traditional entrepreneurs [6,7]. Further, entrepreneurs play a crucial role in establishing a network of partnerships with firms that promote energy conservation, resource efficiency and successful business development [8]. From this perspective, entrepreneurship is required to prioritize sustainability and blend with the sustainable development objectives of the country of operation and the global community [9,10]. Given the current circumstances, academics have begun to theorize a novel approach, human entrepreneurship [11], which proposes that traditional entrepreneurship should be improved by integrating a human element. Humane entrepreneurship advocates the generation of prosperity both in economic and human dimensions while adhering to ecological and social development principles.

The current literature highlights that humane entrepreneurship integrates the implementation of efficient human resource management practices (HRMPs) with positive innovation, employee engagement and growth [12]. However, humane entrepreneurship transcends the usual studies of employees and the firms; it aims to gain insights into how stakeholders’ characteristics and behaviors at a deeper level influence societal and economic development and their effect on society [12]. Further, entrepreneurship is positioned at the core of the CE, with particular emphasis on modern entrepreneurship that can accelerate the transition into a CE, which is attracting scholarly attention. Based on the concept of CE, entrepreneurship and human resource management represent key aspects of the CE and play a crucial role in promoting corporate performance [9,13]. Despite this, the current literature on the mechanisms through which humane entrepreneurship plays this crucial role is still ambiguous. Additionally, empirical research on how humane entrepreneurship improves sustainable social–economic growth is rare in the current body of knowledge [9]. Green market orientation (GMO) relates to the firm recognition of crucial environmental issues confronting the firm [14]. The advent of green customers has altered the competitive dynamics in the business field [15]. Therefore, in the current landscape of green business, firms must pay attention to environmental initiatives to improve performance, particularly in the CE context. GMO drives firms to embrace sustainable business practices due to its role in increasing public awareness regarding the need to protect the environment, ultimately affecting business performance [16,17]. From this perspective, the link between humane entrepreneurship and sustainable corporate performance may be mediated by GMO.

While emerging empirical research has suggested humane entrepreneurship influences sustainable corporate performance [9], studies have rarely explored the contextual conditions under which humane entrepreneurship will be more or less likely to be related to sustainable corporate performance, particularly in the CE context. The concept of green technology turbulence refers to the dynamic nature of the industrial environment or market, characterized by uncertainty and potential risks associated with adopting and implementing green technologies [18]. Since organizations are subject to the influence of environmental conditions, which can impact their business operations [19], this study builds a moderated mediation model by drawing on a natural resource-based view and stakeholder theory to investigate the impact of humane entrepreneurship on sustainable corporate performance by exploring the GMO as a mechanism (mediator) and green technological turbulence as a contextual condition (moderator) in the context of manufacturing SMEs in Turkey. Specifically, the current research aims to provide answers to the following questions:

How does humane entrepreneurship influence green market orientation and sustainable corporate performance in the context of SMEs?
Does green market orientation mediate the link between humane entrepreneurship and sustainable corporate performance in the context of SMEs?
Does green technology turbulence strengthen the link between humane entrepreneurship, green market orientation and sustainable corporate performance?

Taken together, we aim to advance the emerging literature on humane entrepreneurship and sustainable performance literature in at least three different ways. First, most of the current reports in the literature on humane entrepreneurship are case studies (e.g., [11,20,21]; by investigating the effect of humane entrepreneurship on sustainable corporate performance in the context of Turkish SMEs (an emerging economy that has so far received limited attention), we advance the emerging empirical research in this research area. In addition, we aim to theoretically and empirically advance the humane entrepreneurship literature in the environmental management context by exploring the relationship between humane entrepreneurship and green market orientation. Second, the current research bridges the missing link between humane entrepreneurship and sustainable corporate performance by uncovering green market orientation as a mediating mechanism. Third, we aim to uncover the role of green technology turbulence as a crucial environmental factor (contingency) that moderates the mediation link. Lastly, we advance the applicability of NRBV theory and stakeholder theory by offering new knowledge into the crucial role of humane entrepreneurship in the circular context.

5. Insights and Impact: Theory to Practice

5.1. Theoretical Contributions

This study offers various theoretical contributions that are not available in the current literature. First, the current research is among the initial efforts that contribute to the existing literature of empirical knowledge on humane entrepreneurship via a new perspective on the facilitative role of corporate green efforts through its enhancing impact on market orientation for circular economy towards achieving sustainable benefits for stakeholders. However, scholars have just recently started to explore strategic orientations and the implementation of circular economy practices in SMEs [93,94]. Specifically, the current study extends the empirical understanding of entrepreneurship for circular economy in SMEs, which so far has received limited attention in the current body of knowledge. The findings of the current research underscore the need for an entrepreneurial vision transition from profit-centric to sustainability-centric. Here, entrepreneurial vision prioritizes collective stakeholder values over individual benefits. To this end, corporate values can be delivered by generating values for stakeholders sustainably.

Second, the current study is the first to examine and provide empirical evidence for the study’s integrated conceptual model. In the current literature, most of the studies on humane entrepreneurship are case studies (e.g., [11,20]), and empirical research on humane entrepreneurship is still in its infancy. This study significantly extends the scientific knowledge of NRBV and stakeholder theory by expanding these theories’ validity and adaptability. Particularly, using NRBV theory and stakeholder theory as theoretical foundations, the current study considers humane entrepreneurship as an organization-specific resource to nurture a firm’s green practice capability and offers empirical evidence that humane entrepreneurship is a critical enabler of green market orientation and ultimately superior sustainable corporate performance.

Third, although the emerging literature found that humane entrepreneurship is critical to achieving sustainable corporate performance [9], how this relationship develops has not been firmly established. This study explores and verifies that green market orientation is an important mediating mechanism of the humane entrepreneurship–sustainable corporate performance relationship. Thus, this study demonstrates that green market orientation can fuel environmentally sustainable business practices toward achieving sustainable performance in the case of circular economy practices. As environmental and competitive pressures mount, firms increasingly recognize the effect of their operations on the natural environment and explore green practices to obtain a competitive advantage [56]. Based on stakeholder theory, adopting green market orientation will not only promote a systematic approach to pursuing environmental targets (internal green practices) but also require extending these efforts to other stakeholders, such as suppliers, to tackle environmental concerns towards achieving sustainable corporate performance. Thus, we advance prior insights by offering evidence that supports that green market orientation is a complementary mechanism. By providing empirical evidence that green market orientation explains the link between humane entrepreneurship and sustainable corporate performance, the present study findings help clarify how this effect occurs in the extant literature. Thus, we fill the void in the literature identified by Le et al. [9].

Fourth, this study enriches the human entrepreneurship and environmental management literature by uncovering under what conditions the effect of humane entrepreneurship on sustainable corporate performance works. Green technology turbulence further strengthens the humane entrepreneurship–sustainable corporate performance relationship. The ever-changing business environment of green technology makes humane entrepreneurship more effective in enhancing sustainable corporate performance. Thus, we answer commonly asked questions in the literature regarding under what conditions it pays to be green. Lastly, the indirect positive effect of humane entrepreneurship on sustainable corporate performance through green market orientation is the strongest when green technology turbulence is high. In a highly green technology turbulent environment, it is crucial for firms seeking to improve their sustainable corporate performance to do it through green market orientation.

5.2. Implications for Practice and Policy Makers

The findings of this study offer crucial insights for managers in emerging economies, particularly in Turkey, regarding how they can best employ their entrepreneurial posture to foster sustainable values. First, SMEs in Turkey should acknowledge and promote entrepreneurial vision in a competitive and uncertain environment to enable green market orientation. The current research findings suggest that the management of SMEs should integrate green practices and management initiatives for internal and external stakeholders because green market orientation is a crucial complementary mechanism enhancing the impact of humane entrepreneurship on sustainable corporate performance.

Second, considering the role of employees in the realization and implementation of firms’ strategic goals and objectives, from a corporate governance perspective, firms need to adopt a proactive approach by offering necessary coaching, training and developmental initiatives that align with employees’ status and contribute to the enhancement of their values and the refinement of their philosophy. This alignment is crucial to ensure congruence with the values and philosophy the organizational leaders uphold. This is crucial because employees serve as a crucial resource in the initiation of ideas and the generation of value, as they actively implement the strategies and goals set forth by the organization.

Third, it is crucial for the management of SMEs to carefully consider the mechanism regarding how humane entrepreneurship and green market orientation collectively drive sustainable performance. To this end, the business model should be adapted accordingly. The empirical findings indicate green market orientation is a crucial mediating mechanism of the humane entrepreneurship–sustainable corporate performance relationship. Managers should develop a strong green market orientation-based strategy that enhances their firm capabilities to obtain current and relevant market intelligence necessary to acquire precise insights into customers’ and other stakeholders’ green requirements and preferences. Because stakeholders such as customers from emerging markets are currently demonstrating a growing interest in environmentally friendly practices, it is of utmost importance for managers to actively observe market trends and developments, allowing for adequate satisfaction of such needs [32]. Hence, practitioners should dedicate more resources to promoting green market orientation to improve sustainable corporate performance.

Fourth, green technology turbulence strengthens both the direct and indirect effect of humane entrepreneurship on sustainable corporate performance. Hence, practitioners should pay attention to the interaction effects of humane entrepreneurship and green technology turbulence on sustainable performance. The findings indicate that high technology turbulence helps managers to integrate their circular entrepreneurship transformation more efficiently and effectively in promoting sustainable performance. Hence, to completely achieve the benefits of humane entrepreneurship practices on green market orientation and sustainable performance, SME managers should pay attention to shifts in customers’ preferences and technological advancements. Doing so will facilitate their effort to achieve superior sustainable performance.

Innovation in the system and technological innovation are required by businesses to realize sustainable development targets both at the national and global levels [9,95]. Resources, including financial resources, are needed for this. Therefore, policymakers should assess the current situation to develop timely and practical policies to help firms execute innovation as required. Accordingly, policymakers should take a strategic stance in encouraging circular economies by setting off initiatives at the corporate level.

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