Driving Sustainable Rural Enterprise: The Integrated Effects of Green Entrepreneurial Orientation, Good Governance, and Green Finance

Abstract

Abstract:

Research aims: This study examines the effects of Green Entrepreneurial Orientation (GEO), Good Governance (GG), and Green Finance (GF) on Sustainability Performance (SP) in Village-Owned Enterprises (BUMDes) in Kampar Regency, Riau Province.

Design/Methodology/Approach: Data were collected through questionnaires distributed to BUMDes managers. Of 213 questionnaires distributed, 200 were returned and 192 valid responses were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4.

Research findings: The results indicate that GEO, GG, and GF have positive and significant effects on sustainability performance. GEO emphasizes environmentally oriented innovation, proactiveness, risk-taking, and autonomy; GG reflects participation, transparency, accountability, and rule of law; while GF encompasses green lending, carbon financing, and climate financing.

Theoretical contribution/Originality: This study extends the Resource-Based View by integrating green entrepreneurial capabilities, governance mechanisms, and green financial resources to explain sustainability performance in BUMDes as rural economic institutions.

Practitioner/Policy implication: The findings highlight the importance of strengthening green innovation, governance quality, and access to appropriate green financing to improve BUMDes sustainability.

Research limitation/Implication: The study is limited to BUMDes in Kampar Regency, and the model explains 47.8% of the variance in sustainability performance. Future studies should examine additional determinants and broader regional contexts.

Keywords: Green entrepreneurial orientation, governance, green finance, sustainability performance, and Village-Owned Enterprises (BUMDes)