The Role of Sustainability and Innovation in Small Business Transformation in Saudi Arabia

Abstract

This paper explores the crucial role of sustainability and innovation in the transformation of Small and Medium-sized Enterprises (SMEs) in Saudi Arabia, within the ambit of Saudi Vision 2030. The objective is to analyze how environmental sustainability, social sustainability, responsible consumption, and perceived innovativeness influence the relative attractiveness of SMEs to consumers, and how this, in turn, impacts perceived value and customer satisfaction. Employing a quantitative research methodology, a survey was conducted with 45 respondents who had interacted with SMEs in Saudi Arabia. The data were analyzed using multiple regression analysis, revealing significant positive relationships between the constructs. The findings suggest that sustainability and innovation are not only vital for improving customer perceptions but are also crucial for SMEs’ competitive advantage and alignment with national economic diversification goals. Managerial implications highlight the need for SMEs to integrate sustainability and innovation into their business strategies to enhance customer satisfaction and contribute to the broader objectives of economic transformation in Saudi Arabia. The study acknowledges limitations, including sample size and generalizability, and suggests avenues for future research, including longitudinal studies and broader sampling techniques. This research contributes to the literature on SMEs, sustainability, and innovation, providing empirical evidence from the context of an emerging economy undergoing significant economic and social transformation.