Leaders’ Support of Sustainable Innovation and Business Sustainability in Developing Countries: Evidence from Small and Medium Food Processing Enterprises

Abstract

Business sustainability has become obligatory in small and medium enterprises (SMEs). To remain competitive and survive in the market, sustainable innovation is the key. However, SMEs, especially in food processing in emerging markets, still lack resources to become more innovative. The objective of the article is to analyze factors affecting sustainable innovation in food processing SMEs and their impact on business sustainability. Cross-sectional quantitative research builds on a sample of 157 owners of food processing SMEs in Indonesia. The results show that organizational sustainable innovation in food processing SMEs depends on employees’ innovation potential and an organization’s innovation culture; meanwhile, both variables are influenced by leaders’ support of sustainable innovation. Promisingly, organizational sustainable innovation increases business sustainability. Thus, our research highlights the important role of leaders’ support in achieving organizational sustainable innovation and, finally, long term business success. Furthermore, this study uncovers the underlying mediatory mechanisms, which deepen our theoretical understanding and guide practitioners with a concise and comprehensive framework for sustainable innovation in SMEs.