Digital Strategy and Green Strategy on Business Sustainability: Exploring the Moderating Role of Innovation

Abstract

The urgency of this study stems from the critical need to understand business sustainability among micro-enterprises in Surakarta, a city characterized by a relatively low density of such businesses within Central Java. Optimizing strategic practices is essential for maintaining competitiveness. This study aims to analyze the direct effects of digital and green strategies on business sustainability, as well as the moderating role of innovation in these relationships. Cross-sectional data were collected from 385 micro-enterprise owners and analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM) approach via SMART-PLS software. Empirical findings indicate that both green strategies and digital strategies have a statistically significant positive direct impact on business sustainability. Conversely, innovation exerts a negative effect on the relationship between green strategies and business sustainability. This suggests that the intensity of innovation, when combined with the implementation of green strategies, imposes a temporary operational burden on enterprises due to resource constraints. These results offer valuable insights for policymakers and micro-enterprise owners regarding the need to balance eco-friendly innovation with available resources.