Exploring the effect of environmental orientation on financial decisions of businesses at the bottom of the pyramid: Evidence from the microlending context

Abstract Existing research has accumulated substantial evidence on the effect that an environmental orientation has on businesses' economic performance. Yet this research does not cover small businesses from bottom‐of‐the‐pyramid (BOP) markets. In fact, despite increasing interest in research on BOP markets, the effect of environmental orientation on the financial decision‐making of small businesses from BOP markets has gone largely unexplored. Using a large multicountry data set from a microlending platform, we investigate how the environmental orientation of BOP businesses impacts their financial decisions related to microlending, which ultimately shapes their economic performance. The results indicate that an environmental orientation necessitates BOP businesses to request a higher level of financial capital and ask for longer time to pay it back. Surprisingly, environmental orientation increases the odds of BOP businesses paying back the borrowed capital. These results show that environmental orientation gives rise to both challenges and opportunities for sustainable development in BOP markets.