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Is digital transformation the Deus ex Machina towards sustainability transition of the European SMEs?

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  • Chatzistamoulou, Nikos

Abstract

The 2030 Digital Compass aligned with the European Green Deal prioritize transparency through the digital transformation of the European SMEs paving the way to a more sustainable production paradigm. Thus, a twin transition is in motion facilitated by the New Industrial Strategy supporting the adoption of green business strategies across industrial ecosystems. This paper investigates whether the digital transformation and the decision to participate in public procurement as a transparent external funding source support adoption of business actions fostering sustainability transition. Data over more than 20,000 SMEs in the EU-28 over the period 2015–2019 complemented by country-specific attributes towards sustainability and institutional business environment are combined. Econometric results indicate that digital transformation fosters sustainability transition. Although participation in public tenders exerts a positive and systematic effect on the adoption of a sustainability supporting strategy, the two decisions appear independent indicating that SMEs are determined to shift the production paradigm irrespectively. Business operational problems affect but not deter sustainability transition. Business corruption in countries of low levels of sustainability impedes sustainable business actions, yet evidence favors higher transparency. The latter highlights the necessity towards building a coherent although adaptable institutional framework. This study contributes to SDGs 7, 12, 13 and 16.

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  • Chatzistamoulou, Nikos, 2023. "Is digital transformation the Deus ex Machina towards sustainability transition of the European SMEs?," Ecological Economics, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:ecolec:v:206:y:2023:i:c:s0921800923000022
    DOI: 10.1016/j.ecolecon.2023.107739
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    4. Aurelija Burinskienė & Jolanta Nalivaikė, 2024. "Digital and Sustainable (Twin) Transformations: A Case of SMEs in the European Union," Sustainability, MDPI, vol. 16(4), pages 1-24, February.
    5. Broccardo, Laura & Tenucci, Andrea & Agarwal, Reeti & Alshibani, Safiya Mukhtar, 2024. "Steering digitalization and management control maturity in small and medium enterprises (SMEs)," Technological Forecasting and Social Change, Elsevier, vol. 204(C).
    6. Ahmed Al-Omush & Munther Talal Momany & Azzam Hannoon & Muhammad Anwar, 2023. "Digitalization and Sustainable Competitive Performance in Small–Medium Enterprises: A Moderation Mediation Model," Sustainability, MDPI, vol. 15(21), pages 1-22, November.
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    8. Abhishek Tripathi & Ajay Singh, 2024. "SMEs Awareness and Preparation for Digital Transformation: Exploring Business Opportunities for Entrepreneurs in Saudi Arabia’s Ha’il Region," Sustainability, MDPI, vol. 16(9), pages 1-28, May.
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