Addressing Resource Scarcity: The Role of Responsible Innovation and Resilience in SMEs' Competitive Advantage and Sustainability Performance

Abstract

In light of intensifying resource scarcity, fostering sustainable development through innovation has become a strategic imperative, particularly for resource-constrained small and medium-sized enterprises (SMEs). However, not all forms of innovation are responsible. Grounded in the resource-based view and dynamic capability perspective, this study examines how responsible innovation contributes to sustainability performance via the sequential mediating roles of organisational resilience and sustainable competitive advantage. Data were collected from 179 Malaysian SMEs using a two-wave time-lagged design and analysed through partial least squares hierarchical component modelling. The findings reveal that responsible innovation significantly enhances organisational resilience, which in turn strengthens competitive advantage and leads to improved sustainability performance. Both responsible innovation and sustainability performance are modelled as higher-order constructs. The proposed framework demonstrates substantial predictive power and clarifies the internal mechanisms through which SMEs can translate responsible innovation into sustainable outcomes. This study contributes to the literature by linking theoretical insights with empirical evidence and offers practical guidance for SMEs seeking to align with the Sustainable Development Goals.