Empowering Small to Medium-Sized Forest Enterprises: Unveiling the Impact of Financial Literacy and Entrepreneur Knowledge on Sustainable Development in Developing Countries

Small and medium-sized forest enterprises (SMFEs) play a crucial role in the economic growth of developing countries. Previous studies have identified financial literacy and entrepreneurial knowledge as essential elements for the sustainable development of businesses; however, insufficient attention has been paid to investigating the role of entrepreneurship knowledge and financial literacy in the SMFE sector in these countries. Drawing on a knowledge-based view, this study is aimed at addressing this gap by exploring the impact of financial literacy and entrepreneurship knowledge on the sustainable development of SMFEs. Using a time-lagged data collection approach, the authors collected data from 350 SMFEs in China and used structural equation modeling (SEM) to analyze the model. The results showed that financial literacy and entrepreneurship knowledge have a direct and indirect positive impact on the growth of SMFEs. It was also found that access to finance mediates the relationship between financial literacy, entrepreneurship knowledge, and the growth of SMFEs. The findings contribute significantly to the existing body of knowledge in this area, with implications for academics, researchers, and governments focused on sustainable forest enterprise development, financial literacy, entrepreneurship, supporting green innovation, and preparing for future challenges.