Thriving in uncertainty: examining the relationship between perceived environmental uncertainty and corporate eco-innovation through the lens of dynamic capabilities

Introduction: Objective environmental uncertainty has important impacts on entrepreneurial decision-making, but entrepreneurs' perception of uncertainty may be a more crucial factor. This is because objective environmental uncertainty may need to be filtered through entrepreneurs' perceptions to influence their decision-making. Therefore, exploring how entrepreneurs' perceived environmental uncertainty (PEU) affects their corporate eco-innovation behavior has significant theoretical and practical implications.Methods: Drawing on the dynamic capability view, we utilize data from the 2016 China Private Enterprise Survey (CPES) on 2,733 small and medium-sized enterprises (SEMs) to highlight the impact of entrepreneurs' PEU on corporate eco-innovation. We also examine the moderating effect of government intervention (government subsidies and government official visiting) on this relationship.Results: Our study reveals a positive impact of entrepreneurs' PEU on corporate eco-innovation, confirming the critical role of dynamic capability in corporate strategic adjustment under uncertain conditions. Additionally, we find that government intervention (government subsidies and official visits) has a positive moderating effect on this relationship, with entrepreneurs' PEU and eco-innovation being mediated by corporate dynamic capability.Discussion: The study contributes to the literature on environmental uncertainty, dynamic capabilities, and eco-innovation, and provides practical implications for SMEs in developing countries. The findings highlight the importance of subjective perceptions of environmental uncertainty over objective uncertainty. The study also demonstrates that environmental uncertainty is not inherently negative, but can be managed strategically with dynamic adjustment and government support.