ORCHESTRATING TECHNOLOGY INNOVATION FOR SUSTAINABILITY: THE ROLE OF GREEN DYNAMIC CAPABILITIES

Abstract

Small and medium enterprises (SMEs) in Khyber Pakhtunkhwa face increasing pressure to improve their sustainable performance while maintaining profitability. However, translating technological capabilities into sustainable outcomes remains a challenge for many SMEs. Based on the resource-based view and dynamic capabilities theory, the study explores the intervening role of green dynamic capabilities (GDCs) between technology innovation capability (TIC) and sustainable performance (SP). A total of 312 SME owners and managers were surveyed and analyzed using partial least squares structural equation modeling (PLS SEM). The results reveal that TIC positively influences SP (β = .430, p < .001) and GDCs (β = .252, p < .001). GDCs also positively influence SP (β = .374, p < .001). Additionally, the indirect effect of TIC on SP via GDCs is positive and significant (β = .094, p < .001), providing complementary partial mediation. The findings indicate that the technology innovation capabilities indirectly affect sustainable performance by creating green dynamic capabilities and directly affect by sustainable performance. Therefore, the sustainable performance of SMEs can be improved if they are able to develop and reconfigure their resources and processes to meet environmental challenges alongside their technological capacity. This research has revealed that the green dynamic capabilities play a significant role in the explanation of how technological innovation capabilities can translate into sustainable performance of SMEs