Entrepreneurial leadership and resource management efficiency as necessary conditions for SME sustainability: A moderated mediation analysis of digital readiness and financial inclusion

Abstract

Small and medium enterprises (SMEs) are central to employment and value creation, yet pressures from sustainability transition expose endemic financing frictions and uneven digital readiness (DR), particularly in emerging markets. This study examines how SME capabilities viz.: entrepreneurial leadership (EL) and resource management efficiency (RME) associate with triple-bottom-line (TBL) sustainability across economic (ECOS), environmental (ENVS), and social (SOCS) pillars, whether firm-level financial inclusion (FI) statistically mediates capability-to-TBL associations, and whether DR conditions these associations. Using survey data from 429 Malaysian SMEs, we apply a sequential analytics design: Partial Least Square-Structural Equation Modelling to test direct, mediated, and interaction effects; followed by Necessary Condition Analysis (NCA) and Importance-Performance Map Analysis in the bid to identify bottlenecks and practical priorities. Results show that EL is positively associated with ECOS, ENVS, and SOCS; whereas RME is strongly positively associated with ECOS and ENVS but is not significant for SOCS. FI is TBL pillar-asymmetric: it bolsters ENVS and SOCS but exhibits a negative effect on ECOS, and the mediated effects through FI mirror the pattern. DR significantly strengthens the FI to TBL pathways, yet conditional indirect effects indicate that high DR can neutralise FI's economic drag without reliably improving ECOS. NCA sharpens the conclusion: high ECOS is unattainable without RME, while high ENVS and SOCS require EL-RME-FI jointly; DR is not a robust necessity condition. Practically, SMEs should tighten efficiency routines first, mobilise leadership for adoption, channel finance through verified upgrading milestones and invest in DR only where it improves monitoring, traceability and compliance.