SME Survival Dynamics: Interactions Between Sustainability Drivers and Effectuation Strategies

This study provides a systemic analysis of how Tanzanian SMEs are embedding sustainable practices in alignment with national environmental regulations. It investigates how small and medium-sized enterprises (SMEs) build resilience under uncertainty by leveraging effectual decision-making and integrating sustainability into their strategic orientation. By employing the concepts of effectuation, this study provides a novel perspective. We established specific indicators to assess effectual behaviors, analyzing 529 SMEs from Tanzania through insightful interviews. This contribution enriches the existing literature on entrepreneurial success by introducing an adaptive approach that underscores the dynamic relationship between effectuation and sustainability drivers in the decision-making framework. Importantly, the findings indicate that SMEs who adopt an effectual logic—leveraging available resources, embracing uncertainty, and engaging with self-selected partners—do not directly enhance the resilience of their enterprises. Rather, resilience is fostered through the strategic integration of sustainability practices, such as environmental certifications, ecological adaptation, and responsible innovation. The findings offer valuable insights for policymakers aiming to strengthen SME engagement in climate action. Furthermore, we aim to deepen the conversation on performance and resilience in the context of effectuation. We have also created sustainability indicators that facilitate the observation and analysis of the process, opening avenues for future research into diverse performance strategies. Moreover, the research contributes to enhancing policy coherence by underscoring the need to integrate environmental regulation with digital transformation. The proposed framework thus supports the development of holistic and adaptive policies capable of guiding SMEs through the complexities of climate and regulatory transitions.