Strategic Renewal and Green Innovation for MSME Sustainable Performance in Post-Pandemic Emerging Economies

This study investigates how strategic renewal and green innovation shape sustainable performance among micro, small, and medium enterprises (MSMEs) in Makassar, Indonesia. Grounded in the Resource-Based View and Dynamic Capabilities Theory, we posit that adaptive strategic renewal enhances sustainability both directly and indirectly by nurturing routines that promote eco-efficient products, processes, and resource use. Using a quantitative design with Partial Least Squares Structural Equation Modelling (PLS-SEM), primary survey data from 120 valid MSME respondents were analysed. Results show that strategic renewal significantly improves both green innovation and sustainable performance, while green innovation partially mediates the renewal–performance link, indicating that renewal contributes to sustainability beyond its innovation channel. These findings extend dynamic capabilities arguments to resource-constrained MSME contexts by clarifying how sensing, seizing, and transforming activities translate into sustainability outcomes. Managerially, owners should institutionalise renewal routines, invest in low-cost eco-efficiency, and cultivate partnerships and training that embed green innovation in day-to-day operations. For policy, targeted incentives, capacity-building, and accessible green financing can amplify firm efforts. Limitations include the cross-sectional design and single-city focus; future studies should adopt longitudinal or multi-site designs and test contingencies such as digital readiness, supply-chain pressures, and regulatory support.