Islamic Ethical Principles, Green Entrepreneurial Orientation, and Resource Stewardship as Drivers of Sustainable Business Performance: The Mediating Role of Environmental Innovation

Abstract

This study investigates how Islamic ethical principles, green entrepreneurial orientation, and resource stewardship influence sustainable business performance, with environmental innovation acting as a mediating mechanism. Drawing on Qur’anic concepts of balance (mīzān), responsibility (amanah), and avoidance of waste (israf), the study develops a sustainability-driven behavioral model for firms. A quantitative design was adopted, and data were collected from small and medium enterprises engaged in environmentally conscious business activities. Results show that all three independent variables significantly enhance sustainable performance, and environmental innovation partially mediates these relationships. The findings highlight how faith-based ethical commitments can strengthen sustainability-oriented business practices. The study contributes to integrating Islamic sustainability perspectives with contemporary management research. The study also offers practical insights for policymakers and SME managers by demonstrating how integrating Islamic ethical values into strategic decision-making can promote innovation-led sustainability. Furthermore, it extends the sustainability and entrepreneurship literature by providing an indigenous, values-based framework that bridges religious ethics with modern environmental management practices.