Innovate, Connect and Communicate to Sustain: The Digital Harmony of Technologies, Capabilities and Platforms

Small and Medium Enterprises (SMEs) in pollutive industries exhibit varying levels of digital transformation activities. Given their substantial impact on the environment and society, these SMEs face government and public pressure to adopt environmental protection measures and implement sustainable innovation strategies. This study examines the relationships among digital technologies, dynamic capabilities, and sustainable digital innovation within SMEs in China, specifically investigating the mediating role of digital platforms and the moderating role of the digital divide in these connections. The study was based on a quantitative research design, and data were collected from 386 respondents. Employing a novel methodological approach, the study combines structural equational modelling (SEM) and fuzzy set qualitative analysis (fsQCA) to address a notable gap. Through the combined use of SEM and fsQCA, this research offers a richer, dual-layered understanding of how individual and configurational factors together enhance sustainable digital innovation. The findings reveal the positive impacts of digital technologies and dynamic capabilities on sustainable digital innovation, emphasizing the mediating role of digital platforms. Moreover, the research recognizes the digital divide as a catalyst for sustainable digital innovation, where greater disparities in access, resources, and external forces correlate with increased advancements in sustainable practices. In configurational analysis, five distinct configurations reveal novel pathways to sustainable digital innovation, emphasizing the importance of specific combinations. The findings guide SMEs, policymakers, and practitioners in leveraging digital technologies, dynamic capabilities, and digital platforms to foster sustainable practices. Moreover, by acknowledging and addressing the digital divide, there is potential for more inclusive and impactful sustainable digital innovation, contributing to broader societal goals of environmental sustainability and technological equity.