IDEAS home Printed from https://ideas.repec.org/a/wly/sustdv/v33y2025is1p873-884.html

Empowering SMEs for Sustainable Development: The Role of Digital Transformation and Employee Well‐Being

Author

Listed:
  • Huang Honglei
  • Ali Nawaz Khan
  • Khurram Shahzad
  • Mohsin Ali Soomro

Abstract

This study explores the critical role of digital transformation in driving sustainable development within small and medium‐sized enterprises (SMEs) in China, with a particular focus on employee psychological well‐being and green innovation. Leveraging the diffusion of innovation theory, we examine how digital transformation positively influences employee well‐being, which in turn fosters the adoption of green innovation—key to achieving sustainable development goals (SDGs). Data from 278 SMEs were analyzed using structural equation modeling (SEM), revealing that digital transformation enhances employee well‐being, which acts as a catalyst for sustainable innovation. Furthermore, the study highlights the moderating role of risk management culture, demonstrating that a strong risk culture amplifies the positive effects of digital transformation on employee well‐being and, consequently, on green innovation. These findings offer valuable insights for policymakers, business leaders, and academics, providing a strategic framework for aligning digital transformation with sustainability objectives in SMEs. Our research contributes to the discourse on sustainable development by emphasizing the importance of human and organizational factors in achieving SDGs.

Suggested Citation

  • Huang Honglei & Ali Nawaz Khan & Khurram Shahzad & Mohsin Ali Soomro, 2025. "Empowering SMEs for Sustainable Development: The Role of Digital Transformation and Employee Well‐Being," Sustainable Development, John Wiley & Sons, Ltd., vol. 33(S1), pages 873-884, November.
    • Handle: RePEc:wly:sustdv:v:33:y:2025:i:s1:p:873-884
    DOI: 10.1002/sd.70048
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/sd.70048
    Download Restriction: no
    File URL: https://libkey.io/10.1002/sd.70048?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Farzana Parveen Tajudeen & Devika Nadarajah & Noor Ismawati Jaafar & Ainin Sulaiman, 2021. "The impact of digitalisation vision and information technology on organisations' innovation," European Journal of Innovation Management, Emerald Group Publishing Limited, vol. 25(2), pages 607-629, February.
    2. Araújo, José & Pestana, Gabriel, 2017. "A framework for social well-being and skills management at the workplace," International Journal of Information Management, Elsevier, vol. 37(6), pages 718-725.
    3. Le Sun & Tze San Ong & Boon Heng Teh & Assunta Di Vaio, 2024. "Sustainable performance measurement through digital transformation within the sustainable development framework: The mediating effect of supply chain concentration," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(6), pages 5895-5912, December.
    4. William Black & Barry J. Babin, 2019. "Multivariate Data Analysis: Its Approach, Evolution, and Impact," Springer Books, in: Barry J. Babin & Marko Sarstedt (ed.), The Great Facilitator, pages 121-130, Springer.
    5. Malodia, Suresh & Mishra, Mahima & Fait, Monica & Papa, Armando & Dezi, Luca, 2023. "To digit or to head? Designing digital transformation journey of SMEs among digital self-efficacy and professional leadership," Journal of Business Research, Elsevier, vol. 157(C).
    6. Nasiri, Mina & Ukko, Juhani & Saunila, Minna & Rantala, Tero, 2020. "Managing the digital supply chain: The role of smart technologies," Technovation, Elsevier, vol. 96.
    7. Antonio Thomas & Giuseppe Scandurra & Alfonso Carfora, 2021. "Adoption of green innovations by SMEs: an investigation about the influence of stakeholders," European Journal of Innovation Management, Emerald Group Publishing Limited, vol. 25(6), pages 44-63, March.
    8. André Hanelt & René Bohnsack & David Marz & Cláudia Antunes Marante, 2021. "A Systematic Review of the Literature on Digital Transformation: Insights and Implications for Strategy and Organizational Change," Journal of Management Studies, Wiley Blackwell, vol. 58(5), pages 1159-1197, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jinxin Liu & Mengli Zhao & Kun Wang, 2025. "Professional connections and digital innovation of SMEs," The Journal of Technology Transfer, Springer, vol. 50(6), pages 2896-2927, December.
    2. Bora Ly, 2024. "The Interplay of Digital Transformational Leadership, Organizational Agility, and Digital Transformation," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 4408-4427, March.
    3. Merín-Rodrigáñez, Joan & Dasí, Àngels & Alegre, Joaquín & Hughes, Mathew, 2025. "Dynamic managerial capabilities for digital transformation in innovative SMEs: What are the effects on new product development performance?," Journal of Business Research, Elsevier, vol. 201(C).
    4. Patrick Held & Tim Heubeck & Reinhard Meckl, 2026. "Boosting SMEs’ digital transformation: the role of dynamic capabilities in cultivating digital leadership and digital culture," Review of Managerial Science, Springer, vol. 20(5), pages 1687-1715, May.
    5. Maseda, Amaia & Iturralde, Txomin & Arzubiaga, Unai, 2025. "Unpacking the role of entrepreneurial orientation in the digital transformation of family SMEs: The importance of leadership structure and generational involvement," Technological Forecasting and Social Change, Elsevier, vol. 219(C).
    6. Huynh Thi Thuy Giang & Luu Tien Dung, 2025. "Sharing economy and retailer sustainable performance: the mechanisms via business model innovation and digital capabilities," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-33, December.
    7. Muhammad Bilal & Zhao Xicang & Wu Jiying & Jan Muhammad Sohu & Sadaf Akhtar & Muhammad Iatzaz Ul Hassan, 2025. "Digital Transformation and SME Innovation: A Comprehensive Analysis of Mediating and Moderating Effects," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 1153-1182, March.
    8. Piyush Ranjan & Preeti Narwal, 2025. "Investigating Organizational Unlearning and Agility in Digital Transformation for improved Innovation Performance in an Emerging Economy: Moderating Roles of Digital Business Intensity and Firm Sizes," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 26(3), pages 601-623, September.
    9. Merín-Rodrigáñez, Joan & Dasí, Àngels & Alegre, Joaquín, 2024. "Digital transformation and firm performance in innovative SMEs: The mediating role of business model innovation," Technovation, Elsevier, vol. 134(C).
    10. Ali Nawaz Khan & Huang Honglei & Mohsin Ali Soomro, 2026. "Dynamic Capabilities for Circular Economy: Leadership, Eco‐Innovation, and the Mediating Role of Digital Transformation," Business Strategy and the Environment, Wiley Blackwell, vol. 35(3), pages 4484-4494, March.
    11. Yu Sang & Kannan Loganathan & Priya Sukirthanandan, 2025. "A Study on the Impact of Corporate Digital Transformation on Environmental, Social, and Governance (ESG) Performance: Mechanism Analysis Based on Resource Allocation Efficiency and Technological Gap," Sustainability, MDPI, vol. 17(8), pages 1-31, April.
    12. Zhou, Qiwei & Huang, Ran & Mao, Jih-Yu, 2025. "A serial mediation effect of digital transformation on employee performance: An ability-motivation-opportunity framework and employee unlearning," Journal of Business Research, Elsevier, vol. 201(C).
    13. Annosi, Maria Carmela & Capo, Francesca & Appio, Francesco Paolo & Bedetti, Ivan, 2023. "Unveiling micro-foundations of digital transformation: Cognitive models, routines, and organizational structures in agri-food SMEs," Technological Forecasting and Social Change, Elsevier, vol. 197(C).
    14. Liu, Qinxian & Kamioka, Taro, 2025. "The effects of employees' digital growth mindset and supervisors’ coaching behaviour on digital self-efficacy," Technology in Society, Elsevier, vol. 81(C).
    15. Guo, Bin & Zhang, Jiale & Tan, Ziyan, 2024. "Firm digitalization as strategic response: An integrated model based on the awareness-motivation-capability (AMC) framework," Technological Forecasting and Social Change, Elsevier, vol. 205(C).
    16. Nizar Abdulwahab Ali Al-Moaid & Senan Ghaleb Almarhdi, 2024. "Developing dynamic capabilities for successful digital transformation projects: the mediating role of change management," Journal of Innovation and Entrepreneurship, Springer, vol. 13(1), pages 1-26, December.
    17. Lin, Qin, 2025. "A meta-analytic investigation of digital transformation: Antecedents, consequences, and contingencies," Journal of Business Research, Elsevier, vol. 200(C).
    18. Yang (Eric) Zhou & Jingjun (David) Xu & Zhiying Liu, 2024. "The impact of digital transformation on corporate innovation: Roles of analyst coverage and internal control," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(1), pages 373-393, January.
    19. Liu, Jia & Jin, Chenyu & Zhu, Xinyue & Le Sun,, 2026. "Environmental policy, green governance, and institutional investor divestment," Research in International Business and Finance, Elsevier, vol. 81(C).
    20. Fabio Matteis & Mario Angelelli & Fabrizio Striani & Angelo Corallo, 2025. "Managerial implications of blockchains in the public sector: elements for the development of a conceptual framework for innovation," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(3), pages 777-813, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:sustdv:v:33:y:2025:i:s1:p:873-884. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-1719 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.