Entrepreneurship and green growth: The moderating effect of environmental performance in a cross-country analysis

This study examines the effects of entrepreneurship on both environmental and economic performance in the context of green growth, testing four hypotheses. The first hypothesis (H1) posits that entrepreneurship, measured by the Global Entrepreneurship Index (GEI), has a significant effect on environmental performance, while the second (H2) hypothesizes its impact on green economic performance. The third hypothesis (H3) assesses whether environmental performance, captured by the Environmental Performance Index (EPI), moderates the relationship between entrepreneurship and environmental outcomes, and the fourth (H4) tests the moderating role of EPI in the link between entrepreneurship and green economic performance. Using data from 154 countries in 2024 and applying structural equation modeling (SEM) using SemoPy package with excellent model fit indices (CFI = 1.017, RMSEA = 0.000, GFI = 1.000), the results reveal that entrepreneurship alone does not exert a significant effect on repectively environmental or economic performance (Estimate = -0.173, p = 0.049; Estimate = 0.079, p = 0.248). However, EPI has a strong positive influence on sustainability outcomes (Estimate = 0.746, p = 0.000; Estimate = 0.242, p = 0.004) and significantly moderates the effect of entrepreneurship on both environmental performance (Estimate = 0.566, p = 0.023) and green economic growth (Estimate = 0.773, p = 0.000).This study fills a gap in the literature by demonstrating that entrepreneurship is not an independent driver of sustainability but becomes a powerful catalyst for green and blue growth when supported by strong environmental performance. The findings highlight the critical importance of integrating entrepreneurship policies with environmental reforms. For policymakers, this means that supporting entrepreneurial ecosystems without simultaneously enhancing environmental performance will yield limited results. For investors, the interaction between GEI and EPI provides a reliable signal for identifying ecosystems where entrepreneurial activity is most likely to generate both profitable and sustainable outcomes.