Testing of hypotheses.

In the era of the green economy, the Chinese government has advocated for natural environmental protection and innovation in rural areas, making the sustainable development of small rural businesses into a focal point. Currently, whether natural environmental protection promotes the sustainable development of small rural businesses remains debatable, and the roles of regional innovation climate, entrepreneurs’ cognition of green development, and technological innovation in production on the sustainable development of small rural businesses are often overlooked. Addressing this gap, this study draws inspiration from Upper Echelons Theory and Sustainable Development Theory to construct a structural equation model (SEM) and proposes 10 hypotheses. Primary data was collected from rural entrepreneurs across 17 provinces in China, yielding 439 valid samples. The data were analyzed using AMOS 28.0, SMARTPLS 4.0, and SPSS 28.0. The findings revealed that natural environmental protection did not positively influence the sustainable development of small rural businesses (β = 0.104, p > 0.05). In contrast, the regional innovation climate (β = 0.189, p = 0.001) and rural small business entrepreneurs’ cognition of green development (β = 0.261, p