A Framework for Sustainable Business Model Innovation in Small and Medium Enterprises

Thesis Abstract

In the evolving landscape of small and medium enterprises (SMEs), the need for sustainable business practices and innovative models has become critical to ensuring long-term viability amidst economic, environmental, and social challenges. Despite the increasing recognition of sustainability as a core strategic imperative, limited theoretical frameworks exist specifically tailored to guide SMEs through sustainable business model innovation (SBMI). This study aims to develop a comprehensive framework that delineates key components, processes, and contextual factors facilitating SBMI within SMEs, with an emphasis on integrating sustainability principles into core business operations. To achieve this, the research adopts a qualitative multiple case study design, focusing on 15 SMEs across manufacturing, retail, and service sectors within a metropolitan region, selected through purposive sampling to capture diversity in industry, size, and maturity. Data collection methods include semi-structured interviews with 45 business owners and managers, supplemented by reviewing relevant company documents and sustainability reports. Thematic analysis, supported by NVivo software, forms the primary analytical technique, allowing for identification of emergent themes and patterns relative to operationalizing sustainable innovation in SME contexts. The study is also guided by theoretical foundations from the Diffusion of Innovations theory and the Business Model Canvas framework, which enable an integrative and dynamic understanding of how SMEs adopt, adapt, and implement sustainable innovations. Expected findings include identifying critical success factors, barriers, and enablers of SBMI at the organizational and environmental levels, as well as delineating the stages and pathways SMEs follow in transitioning toward sustainable business models. The research anticipates revealing that organizational leadership, resource flexibility, stakeholder engagement, and external policy support significantly influence SBMI processes. Moreover, the study is expected to demonstrate that contextual factors such as industry type and firm size modulate the effectiveness of innovation strategies, thereby necessitating tailored approaches. The contribution to knowledge lies in proposing a theoretically informed and empirically validated framework that SMEs can utilize to systematically embed sustainability into their core business models, fostering resilience and competitive advantage. This framework aims to bridge the gap between existing generic innovation models and the specific needs of SMEs seeking sustainable transformation, thus extending the theoretical discourse on sustainable business model innovation. The main conclusion underscores the importance of a structured, stakeholder-inclusive, and context-sensitive approach to SBMI, emphasizing that sustainable innovation is both a strategic process and a transformative organizational capability. The study recommends policy interventions to enhance access to resources and information, capacity-building initiatives for SME managers, and the development of industry-specific guidelines to accelerate adoption. It also advocates for further longitudinal research to examine the long-term impacts of SBMI on SME performance and sustainability outcomes. Overall, this research advances understanding of how SMEs can systematically innovate towards sustainability, providing actionable insights and a practical framework to guide theory and practice in business model development.