THE INFLUENCE OF ENTREPRENEURIAL CAPABILITY AND INSTITUTIONAL ENVIRONMENT ON SUSTAINABLE ORGANIZATIONAL PERFORMANCE OF ENTREPRENEURIAL ENTERPRISE IN VIET NAM: ROLE OF INNOVATION CAPABILITY

Abstract

This study examines the influence of entrepreneurial capability and institutional environment on the sustainable organizational performance of entrepreneurial enterprises in Vietnam, while elucidating the mediating role of innovation capability in these relationships. Drawing on dynamic capability theory and institutional theory, the study proposes that both entrepreneurial capability and a conducive institutional environment not only directly foster sustainable organizational performance but also exert indirect effects by enhancing the innovation capability of entrepreneurial enterprises. Data were collected through a survey of managers and founding members of entrepreneurial enterprises across Vietnam and analyzed using partial least squares structural equation modeling (PLS-SEM). The findings demonstrate that entrepreneurial capability and institutional environment each exert a significant positive effect on sustainable organizational performance, with innovation capability serving as a critical mediating mechanism that converts internal competencies and institutional advantages into measurable sustainable outcomes. This study contributes empirical evidence on the value-creation pathways underlying sustainable performance in entrepreneurial enterprises operating within an emerging market context, and offers policy implications aimed at strengthening the institutional environment, developing entrepreneurial capability, and promoting innovation to enhance the sustainability of entrepreneurial enterprises in Vietnam.