Leveraging metaverse technologies for a sustainable future: The role of knowledge management practices and technology readiness

The world is experiencing severe climate change impacts, making environmental sustainability a global concern, demanding immediate solutions and global action. Digital technology has excellent potential for supporting environmental sustainability. Using Technology-Organization-Environment framework and Resource-based View Theory, this study identified the factors of environmental performance of Small and Medium-sized Enterprises. This study investigates how organizations can harness metaverse and AI-driven insights to enhance environmental performance. A hybrid PLS-SEM and ANN approach was employed to measure the hypotheses and predict the level of their importance toward environmental performance. This study collected data from 364 respondents from Chinese SMEs to explore the role of technology adoption and Knowledge Management practice toward firms’ environmental performance. Our findings reveal that AI-driven predictive analytics coupled with informed decision making and real-time collaboration in the metaverse, significantly enhance sustainability outcomes for SMEs. By shifting operations from physical to digital spaces, businesses can reduce their carbon footprint while fostering innovation and resilience. Results of ANN showed that informed-decision making is the most influential variable determining the adoption of the metaverse in SMEs. This study positions the metaverse as a digital frontier for sustainability, offering a roadmap for organizations looking to align technology adoption with environmental responsibility.