Sustainability Innovation in Small Medium Enterprises (SMEs): A Qualitative Analysis

Prior research suggests that today, sustainability is an important key in innovation. While the integration of sustainability into innovation in large enterprises has been widely studied, research on small-medium enterprises (SMEs) is still lacking. The aim of this study is to understand the sustainability innovation practices in SMEs. We interviewed 30 SME owners and managers in Indonesia and analyzed the data using thematic analysis to understand how SMEs practice sustainability innovation. The findings show that sustainability innovation in the form of product innovation is commonly practiced through the use of more environmentally friendly raw materials and packaging materials. As for process innovation, the practices include local sourcing and empowerment of the surrounding community as well as small-scale waste treatment to help reduce the damaging impact on the environment.