From scarcity to sustainability: how entrepreneurial microfoundations and dynamic capabilities shape green innovation in emerging economies

Purpose This study examines how green entrepreneurs in Vietnam build and legitimize innovation under conditions of institutional incompleteness. This explains how resource scarcity can catalyze sustainability-oriented innovation by enabling entrepreneurs to develop dynamic capabilities through entrepreneurial identity reconfiguration, local resource circularity, and local ecological empowerment. Design/methodology/approach This study employs an inductive multiple-case design involving four Vietnamese green ventures. Drawing on secondary qualitative data, it applies Gioia's methodology and Cheong's seven-step hybrid secondary qualitative approach to trace how sensing, seizing, and reconfiguring unfold in a theory-revealing context of emerging countries. Findings Institutional incompleteness creates a legitimacy bottleneck for green ventures. Entrepreneurs respond by reconfiguring their identities to sharpen ecological opportunity recognition, mobilizing circular local resources to seize opportunities, and empowering ecosystem actors to sustain reconfiguration and diffusion. Collectively, these microfoundations enable green innovation and scaling under certain constraints. Originality/value This study extends the dynamic capabilities theory by specifying how green innovation is built and legitimized under institutional incompleteness in Vietnam. It also contributes to sustainable entrepreneurship research by showing that, in emerging-market green transitions, capability formation depends less on resource abundance than on identity, circularity, and ecosystem empowerment.