Jul 2026· Ilomata International Journal of Management· 0 citations· 53 references
Abstract
Sustainability transitions in small and medium-sized enterprises (SMEs) depend on more than innovation intent — they require business models capable of translating that intent into product-level outcomes. This study tests an integrated model linking sustainability-oriented innovation (SOI), sustainable business model innovation (SBMI), barriers to the circular economy (B-CE), and sustainable product innovation performance (SPIP), with market performance (MP) as the downstream outcome. B-CE is positioned as both a suppressor of business model renewal and a moderator of the link between renewal and product-level output. Survey data from 280 Indonesian SMEs across sectors were analyzed using PLS-SEM. All eight hypotheses were supported (p < 0.001), with large effect sizes across the endogenous constructs (R² = 0.646–0.719). The study's principal contribution lies in empirically specifying SBMI as a necessary mediator between innovation orientation and product outcomes — a relationship prior literature had proposed conceptually but never tested within an integrated, SME-level model. B-CE operates in a dual capacity: as a direct suppressor of SBMI (β = −0.519) and as a moderator weakening the SBMI–SPIP relationship (β = −0.288), with the conditional slope falling from 0.717 under low-barrier conditions to 0.141 under high-barrier conditions. Structural relationships remained broadly consistent across sectors — manufacturing, service, and trading — and firm size, with only two of eighteen multigroup comparisons reaching significance. For managers and policymakers, cultivating sustainability orientation without reconfiguring value architecture is unlikely to yield measurable gains, and reducing circular economy barriers matters as much as direct innovation investment.
Sustainability is increasingly positioned as a strategic imperative for internationally active small and medium-sized enterprises (SMEs). However, international growth is often assumed to require scale, creating a paradox between expansion and sustainability performance. This study aims to examine the relationship between digital transformation (DT) and sustainable transformation (ST) exploring the role of organizational capabilities as a structural foundation for this dual transformation and to assess how organizational capabilities structurally enable sustainability outcomes independent of firm size among internationalizing SMEs.
The study adopts a quantitative research design based on data collected from 148 firms. Structural equation modeling (SEM) was applied using the SEMLj module in Jamovi. Organizational capabilities were operationalized through four categorical dimensions: quality certifications (QC), output, experience and firm size. A leave-one-out sensitivity analysis was conducted to test the robustness of structural paths.
The results indicate an excellent model fit (χ2 = 8.75, df = 8, p = 0.364) and confirm that digital maturity is a significant predictor of sustainability performance. The sensitivity analysis identifies QC as the critical anchoring capability, as their exclusion leads to a loss of model convergence. Despite only 38.5% of firms holding formal QC, this dimension emerges as the primary driver enabling the integration of digital strategies with environmental and social responsibility. Importantly, sustainability performance is found to be independent of firm size, while digital infrastructure scales with organizational growth.
These findings reveal a paradox of “sustainability without scale,” showing that sustainability performance in internationalizing SMEs is anchored in disciplined organizational capabilities rather than firm size. The findings contribute to capability-based and paradox perspectives by demonstrating that sustainability is strategically accessible to both SMEs and larger firms, offering actionable insights for entrepreneurs, policymakers and practitioners seeking sustainable international growth.
Small- and medium-sized enterprises (SMEs) increasingly need to reconfigure how they create, deliver, and capture value in response to digitalisation, sustainability demands, and environmental uncertainty. This study systematically reviews 162 English-language articles published in SSCI-indexed journals to integrate fragmented research on business model innovation (BMI) in SMEs. Descriptive analysis, keyword co-occurrence analysis, and article-level qualitative content analysis are combined. The findings identify four broad knowledge domains and show that 41 studies treat BMI primarily as an outcome, 44 as an organisational process, 17 as an antecedent of subsequent outcomes, and 36 as part of a combined causal relationship; a further 24 studies are descriptive or typological. Across these roles, the literature explains BMI through resource mobilisation, entrepreneurial action logics, absorptive and dynamic capabilities, experimentation, and network mobilisation. Its effects on performance, growth, resilience, internationalisation, and sustainability depend on complementary resources, implementation capabilities, stakeholder alignment, and environmental conditions. The evidence supports an adaptive and iterative interpretation of SME BMI, but direct evidence of recursive feedback remains limited. Resource constraints also have conditional effects, stimulating bricolage and focused experimentation in some circumstances while inhibiting substantive change when shortages become severe. The review provides an integrative synthesis specific to SMEs and advances digital business model innovation research by explaining how digital pressures are translated into changes in value proposition, value creation and delivery, and value capture through organisational and relational mechanisms.
Bi Zhang, Nurul Atasha Jamaludin, Shanshan Yue et al.· Future Business Journal· 0 citations
This study aims to examine the mediating role of sustainable‐oriented innovation (SOI) in the relationship between knowledge management practices (KMP), corporate social responsibility (CSR), organizational green creativity (OGC), and government financial incentives (GFI) with the financial and environmental performance of SMEs in Pakistan. Using a quantitative approach, data were collected through a self‐administered survey distributed to SME owners and top managers. Partial least square SEM (PLS‐SEM) employed to test the relationship between hypotheses. The findings reveal that CSR, KMP, and OGC significantly influence SMEs' performance, while GFI primarily affects environmental outcomes, with limited direct financial impact. Notably, the findings recognized SOI as a robust mediator, translating internal resources and external incentives into measurable sustainability outcomes. The results validate the Resource‐Based View (RBV) by highlighting the importance of intangible assets and dynamic capabilities in sustaining competitiveness, while also reinforcing Stakeholder Theory by acknowledging the role of external institutional pressures. The study offers novel insights into the integrated role of SOI in driving dual performance outcomes and contributes to the limited empirical literature in emerging markets. Practically, it provides SME managers and policymakers with actionable directions for leveraging innovation to align financial objectives with environmental sustainability. The study is limited by its cross‐sectional design, geographic focus on Pakistan, and reliance on self‐reported data, which should be considered when generalizing the findings.
Yasir Aziz, Z. Ullah, Said Wali· Knowledge and Process Manage...· 0 citations
Background: SIVM is conceptualized as a firm’s ability to transform sustainability pressures into value creation. Despite the exponential growth of ESG adoption globally, with over 90% of S&P 500 companies publishing sustainability reports, empirical evidence on the ESG–performance nexus remains inconclusive, signaling the need for a capability-based construct that bridges this theoretical gap.
Objective: This study addresses inconsistent findings regarding the relationship between Environmental, Social, and Governance (ESG) disclosure and corporate performance by introducing Sustainability Innovative Value Maximization (SIVM) as a novel strategic capability.
Methods: This research employs a construct development approach using Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) on data from 187 respondents drawn from firms operating in industries with high ESG exposure in Indonesia (mining, palm oil, and tobacco). Data were collected between January and May 2025 through purposive sampling.
Results: The results confirm that SIVM is a valid, reliable, and multidimensional construct that is distinct from ESG disclosure and Sustainability-Oriented Innovation (SOI). Structural model analysis reveals that ESG significantly influences SIVM, which, in turn, has a strong positive effect on corporate performance, both directly and indirectly through Corporate Political Activity (CPA). Meanwhile, SOI does not significantly affect performance, indicating the limitations of innovation-centric explanations.
Conclusion: This study contributes to the literature by positioning SIVM as a critical internal capability that bridges sustainability pressures and value creation, thereby extending stakeholder and agency perspectives. Practically, the findings suggest that firms should move beyond disclosure and focus on developing capabilities for converting sustainability pressures into value.
A. Junaedi, Christian Herdinata, Murpin Josua Sembiring Gurky· Inkubis Jurnal Ekonomi dan B...· 0 citations
This study aims to examine the mediating role of green innovation in the relationship between environmental sustainability, sustainability performance, and financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Jakarta, Indonesia. Using a quantitative approach and Partial Least Squares Structural Equation Modeling (PLS-SEM), the findings indicate that environmental sustainability significantly influences green innovation, which subsequently enhances sustainability performance and financial performance. These results support the Resource-Based View (RBV) framework, which posits that environmental sustainability can generate intangible resources such as organizational knowledge and capabilities that drive green innovation as a competitive advantage. Additionally, the outcomes reinforce the Triple Bottom Line (TBL) framework, emphasizing the importance of integrating social, environmental, and economic aspects to achieve holistic organizational sustainability. Specifically, green innovation acts as a vital mediator that strengthens the positive relationship between environmental sustainability and both sustainability and financial performance. The sample consists of 198 MSMEs in Jakarta, selected through stratified and simple random sampling techniques. The findings suggest that adopting green innovation strategies is essential for fostering comprehensive sustainability transparency and improving the financial performance of MSMEs in Indonesia.
Apollo Daito, Swarmilah Hariani, Lusia Sri Arini et al.· JURNAL ECONOMINA· 0 citations
Digital tools are changing how entrepreneurs across Asia start, scale, and sustain their ventures. Drawing together recent work on digital transformation, financial technology (fintech), and sustainable entrepreneurship, this conceptual paper asks how information technology (IT) adoption helps small and medium enterprises (SMEs) and start-ups pursue economic, environmental, and social goals at once. Building on studies of entrepreneurial orientation, organizational resilience, and green finance, it proposes an integrated framework — tested through eight hypotheses (H1–H8) — in which digital adoption operates as a mediated, moderated pathway to sustainable performance rather than a direct cause of it. The review indicates that IT adoption expands market reach, financial inclusion, and resource efficiency, yet its sustainability payoff hinges on entrepreneurial competencies, infrastructure maturity, and policy support that differ sharply across the region. The paper closes with a proposed empirical design, literature-grounded expectations for each hypothesis, and implications for researchers, entrepreneurs, and policymakers.
Dr. Deepti Sharma, Dr. Archana B.Saxena· Journal of Asia Entrepreneur...· 0 citations
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