Effect of entrepreneurial orientation on sustainable financial practices: The roles of dynamic capabilities and institutional conditions

Abstract

Entrepreneurial orientation (EO) is increasingly recognized as a vital strategic factor, particularly in volatile business environments. While EO can potentially drive superior sustainable financial practices (SFP), there remains a gap in understanding the underlying mechanisms and contextual factors that complement or influence this relationship. This study proposes and tests a moderated-mediation model in which the relationship between EO and SFP is mediated by dynamic capabilities (DC), with institutional conditions (IC) moderating the DC-SFP link. The model was empirically tested using a sample of 217 individuals in managerial positions from 23 commercial banks in Ghana, a developing African economy. The results revealed that DC partially mediated the relationship between EO and SFP. Furthermore, the study found that IC significantly strengthened the indirect effects of EO on SFP through DC. The study contributes to the literature by providing a more nuanced understanding of the micro- and macro-level factors that influence SFP in a developing economy context. Managerially, the findings provide a strategic roadmap for bank managers to leverage EO and develop DC to achieve their sustainable financial goals.