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

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  • 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
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