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Article

Factors That Affect Digital Innovation Sustainability among SMEs in the Middle East Region

by
Laith T. Khrais
1,* and
Abdullah M. Alghamdi
2
1
Department of Business Administration, College of Applied Studies and Community Services, Imam Abdulrahman Bin Faisal University, Dammam 34212, Saudi Arabia
2
Department of Management Information Systems, College of Applied Studies and Community Service, Imam Abdulrahman Bin Faisal University, Dammam 34212, Saudi Arabia
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(14), 8585; https://doi.org/10.3390/su14148585
Submission received: 16 April 2022 / Revised: 30 June 2022 / Accepted: 11 July 2022 / Published: 13 July 2022
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Abstract

:
Digital innovation in small and medium-sized enterprises (SMEs) has been studied extensively over the past quarter-century. The products, processes, and/or model innovation in businesses that are viewed as novel necessitate significant alterations from consumers and are represented in or facilitated by IT; this is what it means when digital innovation is mentioned. Nonetheless, despite the unique application of digital innovation in different organizations, the factors that lead to its success are still uncertain. Therefore, this study aims at evaluating the various factors that affect the digital innovation of SMEs in the Middle East region. This research used a descriptive research design in which primary data from the SME owners and employees were used to evaluate the research objectives. Descriptive statistics, such as frequencies and structural equation models conducted through SPSS, were used to evaluate the research objectives in showing how various factors such as the Internet of Things (IoT; physical objects and things with sensors, software, and other technological techniques integrated into them for the purpose of exchanging data and connecting with other systems and devices), digital platforms, and digital orientation have influenced digital innovation sustainability in SMEs. Results showed a positive and substantial impact on digital innovation sustainability as a result of the IoT, digital platforms, and digital orientation. In conclusion, the research shows that SMEs should use digital platforms, the IoT, and digital orientation to be digitally stable.

1. Introduction

Digital innovation and technological emergence have the ability to catalyze social and economic progress [1]. According to Bukht et al. [2], the old commercial economy has been transformed into a digital one by digital innovation, and the economy’s digital transformation is heavily reliant on modern digital technology. Software firms are no longer distinguished by their digital innovation; in fact, the world’s top-valued businesses are all in the digital sector [3]. Nonetheless, they indicated that it is difficult to develop digital innovation in the digital economy due to its complexity and technical dynamism. These are issues that affect all types of organizations, particularly SMEs. In addition, technical advancement has the potential to significantly increase the options available to SMEs [4]. Nonetheless, the changes to an organization’s business model brought about by digital technology are a significant problem for all enterprises, particularly for SMEs [5,6]. In developing countries such as Saudi Arabia, Cataldo et al. [7] indicated that SMEs have a stronger impact on the economy than in industrialized nations. In addition, Ntwoku et al. [8] indicated that small businesses are the heart and soul of many economies, such as that of Saudi Arabia, since they are considered more effectual in the creation of high-quality job opportunities, better innovation, and growth at a quicker pace than huge corporations. According to Quinton et al. [6], whenever digital transformations offer a possibility or a challenge for SMEs, their strategic response is critical. SMEs participating in the digital economy require digital innovation to overcome significant obstacles and enhance their technological expertise [9]. On the other hand, the term digital innovations refers to new products [10], processes, or business strategies enhanced by technology [11].
Digital innovation sustainability contributes to the economy’s digitization process in an organic and greener manner in the longer term [12]. As such, it satisfies the requirement for a sustainable future for organizations such as SMEs. However, multiple studies have examined the factors, including aspects of the digital orientation, the IoT, and digital platforms, that have contributed to its success. For instance, Quinton et al. [6] evaluated the influence of digital orientation on supporting SMEs’ performance in the digital economy. They found that a company can adopt a digital orientation to better serve its customers by using cutting-edge technologies such as mobile apps, computerized procedures, and social media networks. In addition, Beutel et al. [13] examined how intangible value drivers and digital orientation are associated. The results showed that with this strategic digital orientation in mind, the utilization of proactive innovation plays a supporting role in digital innovation. Therefore, organizational digital orientation design is just as critical to a company’s value development as the technology it employs. In addition, a study by Kane et al. [14] investigated the roles played by digital orientation in aligning the digital organization. The researchers concluded that organizations are concentrating their efforts on fostering digital innovation through a digital orientation to separate themselves from rivals and have a competitive advantage. To back the findings of Brenner [15], Khin and Ho [16] investigated the application of different digital strategies to the SMEs’ digital innovation sustainability and noted that if businesses are capable of incorporating digital strategies into their operations, they may be able to achieve digital innovation through new technology means. The research by Bican and Brem [17] backed those of Linton and Solomon [18] by stating that SMEs must embrace a digital orientation to accelerate sustainable digital innovation, which will demand significant investment.
On the contrary, Al-Emran et al. [19] argued that the digital orientation in SMEs should be ready, when facing the associated costs and risks, to attain the objectives of digital innovation sustainability and assist in the process of traditional innovation transformation to digital innovation. As a result, a strong digital orientation is necessary for sustainable digital innovation. In addition, when a company is capable of adopting innovation in a variety of ways, it can attain a positive impact on productivity. Based on the studies reviewed above, it can be concluded that whenever businesses adopt a digital orientation, there will be an improvement in the productivity of digital innovation. On the other hand, the applications of IoT continue to have a significant effect on both society and the economy. For example, De Vass et al.’s [20] study on how the IoT has impacted the supply chain performance noted that the advent of technology has enabled continuous communication and connectivity throughout the world via the internet and associated gadgets; this improves the supply chain. In another study, Kupriyanovsky et al. [21] evaluated the application of IoT in the different digital sectors; they concluded that IoT has been the most disruptive technology ever as it has increased production and efficiency across multiple sectors and service sectors such as SMEs. In addition, Ebersold and Glass [22] investigated the effect of IoT on the societal digital sector and noted that adopting IoT provides various benefits to an enterprise, including cost reductions, product and service enhancements, and risk avoidance. A study conducted by Botta et al. [23] evaluated how the IoT has been integrated into businesses. The results showed that IoT acceptance and use are expected to increase, which makes it a critical element of the Future Internet. Roy et al. [24] investigated how disadvantaged urban communities are embracing IoT-based technologies. The researchers discovered that an invention must deliver exceptional service composed of three aspects: the system’s value to users, user assistance, and user training on system use. In another research, Singh et al. [25] indicated that perceived usefulness and simplicity of use benefit a company’s ability to use IoT for various purposes within the organization. As a result, the studies discussed above suggest that the IoT is critical for fostering long-term digital innovation sustainability across all businesses, particularly SMEs.
Digital platforms refer to the contact between suppliers and clients interested in the activities of businesses and commercials online [26]. They provide an online forum for enterprises to engage with one another, whether they be business associates, rivals, consumers, or suppliers [27]. Tarakanov et al. [28] evaluated the implications of digital platforms on business. They established that digital platforms enable businesses to improve their performance through the use of digital platforms and technical breakthroughs. As a result, digital platforms connect consumers, partners, and developers, enabling the creation of massive markets with tremendous economies of scale and efficiency. In support of the results mentioned above, Li et al. [29] discussed how SMEs are transforming into a digital ecosystem through digital platforms. The researchers concluded that digital platforms incentivize SMEs by giving training on platform use, facilitating social interaction and knowledge exchange among SMEs, enhancing tools development to remove trading hurdles, and motivating SMEs to undergo transformation strategically. Similarly, Eaton [30] investigated the effect of digital platforms on digital innovation sustainability in businesses, and the study’s results showed that digital platforms enable individuals and businesses to engage via digital technology and, thus, provide the latest in digital innovation. To back up these results, Ruggieri et al. [31] examined how digital platforms have impacted models in business that are digitally innovative. Results showed that digital platforms positively impact sustainability because they enable the possibility of business innovation provided by digital platforms. In another study, Nambisan [32] demonstrated that digital technology, when subjected to an effective factor of digital platforms, leads to the continuous evolution and development of entrepreneurial prospects and the sustainability of digital innovation.
In support, Li et al. [33] conducted a study to evaluate digital platforms’ effectiveness on the sustainability of digital innovation. Results showed that digital platforms link individuals and businesses via digital technology and provide the most recent digitally enhanced innovation. The exchange of innovative information and ideas has also expanded and become even more convenient, thanks to digital platforms. Therefore, digital innovation brings about development and improvement, especially when integrated using digital platforms. Similarly, Bharadwaj et al. [33] did a quantitative study to assess whether the achievement of optimized resources for sustainable enterprises can be accomplished using digital technologies, for example, digital platforms, which are the foundation of sustainable digital innovations. In conclusion, as a result of Google’s digital platforms, such as the Google search engine and other Google goods and services, enterprises are constantly innovating to increase productivity and opportunities for people and organizations since digital platforms enable companies to engage with potential clients in an effective and efficient manner. Table 1 explains the innovative factor associated with comparative studies.
Therefore, the research problem under investigation is that despite the digital innovation in SME businesses being the subject of a large amount of research over the last four decades, the factors that influence this digital innovation in the creation of effective SMEs are still not well studied [34,35]. Digital technologies open up new possibilities for SME businesses, which include easier access to talent, expanded market reach, increased financial resources, improved communication and collaboration, and increased accessibility to technologies and applications. Additionally, when it comes to competing with larger companies, digital technologies also level the playing field for SME enterprises. According to Al-Kwifi et al. [36], in middle-developed countries such as Saudi Arabia, digital technologies have been heralded as the solution since they allow SMEs to accelerate their development. In addition, businesses in middle-developed countries can increase their productivity and competitiveness by implementing this new technology [32]. However, many SMEs are hesitant or fail to reap the benefits of digital innovation, despite the potential advantages. Moreover, there is a lot of confusion regarding what is known about digital innovation in SME enterprises despite numerous studies of the broader literature on digital sustainability [37]. According to Andersen et al. [38], digital applications, especially in SMEs, have been neglected by past studies; this creates a research hurdle to supporting the link between these digital strategies and digital innovation sustainability.
In addition, Fichman et al. [4] indicated that developing digital innovation in the digital world is challenging due to its complex nature and technical dynamism. These issues affect all sorts of enterprises, and SMEs are no exception. Technical advancement has the potential to increase opportunities for small and medium enterprises [39]. However, the changes in company models that are produced by digital technology are a serious problem for all firms, especially SMEs [40]. In addition, current research on sustainable digital innovation has a deficit that needs additional digital-technology-related studies. In providing the definition of innovation sustainability in a digitally evolving world and within the digital economy context, there is a significant gap between the previously conducted research. However, since digital innovation is viewed as a potential component of digital economic progress in many countries, more research into the major characteristics and factors of digital innovation sustainability is needed. Thus, this research aims to evaluate the factors affecting SMEs’ digital innovation sustainability. The following research hypotheses guide this research:
  • Digital platforms positively and significantly affect digital innovation sustainability among SMEs.
  • The IoT positively and significantly affects digital innovation sustainability among SMEs.
  • Digital orientation positively and significantly influences digital innovation sustainability among SMEs.
The results of this study will be important to stakeholders and employees of digitally innovative SMEs in order to understand the best factors required for effective digital innovation sustainability of their enterprise. In addition, the study’s findings will be an essential addition to the field of literature on the role of digital platforms, the IoT, and digital orientation in affecting the organization and enhancing digital innovation sustainability among SMEs.

2. Materials and Methods

2.1. Research Design and Approach

The current study used a descriptive research design to gather data from the participants. This research design is used in a study to fully assess and synthesize the information gathered from primary data to appreciate the research topics being investigated. Additionally, a descriptive research design is utilized by researchers while developing an epistemological or philosophical position on a study issue that is generally available. As a result, this study design is also effective in describing the characteristics of the research variables, which is in line with the current research aim, which is to determine how innovative factors affect digital innovation sustainability among SMEs. The dependent variable was digital innovation sustainability, and the independent variables were the digital platforms, the IoT, and the digital orientation. The data were collected using multiple-choice questions, where participants were requested to tick answers that accurately represented their views and experiences from seven options on the Likert scale, ranging between strongly agreeing and strongly disagreeing.
The research used a quantitative deductive research approach. According to Aspers and Corte [41], this research approach is aimed at improving the collection of data and considering the inferences formed based on preexisting assumptions. In addition, McCusker and Gunaydin [42] noted that researchers may replicate and generalize their results with numerical accuracy by employing a deductive research approach. Due to the fact that this research approach is used to determine whether or not there is an available association between the involved variables, this approach is the most appropriate research approach to determine factors that affect digital innovation sustainability among SMEs in the Middle East. In addition, the technique was also used so that the study’s results could be related to the findings of prior studies when drawing conclusions about the research aim.

2.2. Sample and Data Collection

Quantitative research methods were used in this study, given that the study’s focus was on collecting and analyzing numerical data rather than abstract data. In this study, data collection was done through a survey questionnaire. The questionnaires were sent to a number of employees in SMEs through the LinkedIn platform and emails. Questionnaires are beneficial since they give respondents more time to reflect on their responses before providing them. The research questionnaire covered numerous areas, focusing on personal data and measures representing digital platforms, the IoT, and digital orientations, as well as digital innovation sustainability among SMEs. The demographic data of each respondent was also taken into consideration: level of education, gender, and level of experience.
Employees and owners of the SMEs that use digital innovation were requested to participate in the research. Managers and general employees were all represented among the participants. To ensure fairness and neutrality in the included SMEs, managers and general employees were randomly picked from a broad pool of potential employees using a simple random sampling design. Since each respondent has an equal chance of being randomly selected, this sampling strategy eliminates biases [43]. This random sampling design can be used to get accurate and trustworthy data on the effects of various factors on digital innovation sustainability by selecting employees and managers from a variety of SMEs. A total of one hundred (100) participants were included in the study’s sample.

2.3. Data Analysis

Prior to doing descriptive and inferential statistical analysis, data from the survey were aggregated into an Excel spreadsheet and examined for missing values and outliers. The final data set was analyzed using SPSS. Quantitative approaches can be used to analyze and objectively evaluate data while utilizing statistical software such as SPSS to determine the link between the variables considered [44]. The data were analyzed using a frequency test to determine the participants’ demographics. Additionally, correlation analysis and an advanced statistical technique, the structural equation model, were used to demonstrate how factors such as digital platforms, the IoT, and digital orientation are associated with digital innovation sustainability. The flow chart for the methodological study is depicted in Figure 1.

3. Results

3.1. Demographics Information

The frequency distribution of this information was used to assess the demographic information, as shown in Table 2 below.
Most of the respondents were male, representing 53.0% of the sample, while females accounted for 47.0%, as illustrated in Table 1. Since technological innovations require a lot of expertise, the results imply that both genders, males and females, can apply digital and technological innovations in their SMEs. Additionally, most respondents reached a higher level of schooling: 24% with a degree/diploma (n = 24) and 50% with a BA/BSC (n = 50). Twenty-six (26) of the respondents, representing 26%, had a master’s degree and above. As illustrated in the above results, most participants had a diploma and above, and these findings imply that they were familiar with what digital innovation entails and could offer concise feedback concerning the identified factors influencing digital innovation sustainability, which improves the validity of the results. Lastly, research findings revealed that of the 100 respondents, a majority of 40% (n = 40) had 2–4 years of working experience in SMEs, followed by 21% (n = 21) with 5–8 years of experience, and 20% (n = 20) with experience between 9 and 15 years. In addition, 19 (19%) of the participants had below 2 years of working experience in the selected organization. Therefore, these results mean that due to their experience, most respondents have gained an understanding of the daily undertaking in the SMEs that apply digital innovation and have the ability to provide the required information on how various digital components affect digital innovation sustainability.

3.2. Inferential Statistics (Research Hypothesis Evaluations)

This part seeks to convey the findings from the data gathered in order to address the research hypothesis. The specified study hypothesis was examined using inferential statistics.

3.2.1. Goodness-of-Fit Index

To determine the fitness of the model, three different models were examined; the findings are illustrated below in Table 3.
The findings of the three-factor model were fitted to the data since the results showed RMSEA = 0.07; χ2 = 122.35; df = 100; χ2/df = 1.224; GFI = 0.93; CFI = 0.92.

3.2.2. Correlation Analysis

The analysis is useful for comprehending the association between variables and indicates the degree of link. Therefore, Pearson’s correlation test in Table 4 below shows how digital innovation sustainability is associated with digital orientation, the IoT, and digital platforms, which are the explanatory variables. The results illustrate that digital innovation sustainability and digital platforms are positively and significantly associated with a moderately strong strength (rho = 0.650, p < 0.01). Additionally, digital innovation sustainability and the IoT also had a positive and significant correlation with very strong strength (rho = 0.826, p < 0.01). Moreover, the results illustrate that digital innovation sustainability and digital orientation are positively and significantly associated with a stronger strength (rho = 0.758, p < 0.01). The results imply that the digital innovation sustainability of SMEs with digital platforms, the IoT, and digital orientation move in a similar direction. This means that when these digital platforms, IoT, and digital orientation change, there is an increase in SMEs’ digital innovation sustainability.

3.3. Hypothesis Testing

Structural equation modeling (SEM) was applied to test the hypotheses of this research. The hypothesis results demonstrate that all paths had a significant and positive association with one another (see Table 5).
From the analysis findings shown above, digital platforms had a β-value of 0.542 and a p-value of <0.001. The results imply that digital platforms have a positive and significant relationship with digital innovation sustainability, and, keeping other factors constant, a unit increase in digital platforms produces a 0.542 change in the digital innovation sustainability of SMEs. Therefore, based on these results, hypothesis 1 was accepted, and it was concluded that digital platforms had a positive and significant effect on digital innovation sustainability among SMEs. These findings indicate that whenever SMEs use digital platforms as a means of either advertising or selling, the digital platforms will act as an improvement in digital innovation sustainability.
The results above (Table 5) indicate that the IoT significantly and positively influences digital innovation sustainability (β = 1.580, p < 0.001). The results suggest that when there is a unit change in the IoT, the digital innovation sustainability of SMEs changes by 1.580. Therefore, these results led to the acceptance of hypothesis 2, and we concluded that the IoT has a positive and significant influence on digital innovation sustainability among SMEs. These findings imply that when SMEs are subjected to the internet or use the internet in their daily undertaking, they will improve their digital innovation sustainability.
The findings also illustrate that digital innovation sustainability is positively and significantly influenced by digital orientation (β = 0.671, p < 0.001). The results suggest that when digital orientation changes by a unit, the degree of digital innovation sustainability changes by a value of 0.671. Hence, these findings led to us accepting hypothesis 3 and concluding that digital innovation sustainability among SMEs is positively and significantly influenced by digital orientation.
As shown in Figure 2 below, the SEM model employs multiple variables in its statistical analysis to enhance the understanding of how structures relate to one another. Using this method, analysts can examine the structural association between the factors they quantify and the latent variables they are trying to uncover. In particular, the results show that digital orientation, the IoT, and digital platforms have a direct effect size of 0.67, 1.58, and 0.54, respectively. These results imply that the IoT has a higher contribution to digital innovation sustainability compared to other innovative factors. Therefore, the SEM model was able to estimate how digital innovation sustainability was interrelated with digital orientation, the IoT, and digital platforms in a single analysis. In addition, Table 6 shows a summary of the tested hypotheses.

4. Discussion

This section illustrates the connection between the objectives of the study and the collected and analyzed data. This research resulted in the design of educational materials to evaluate the impact of various factors on the sustainability of digital innovation among SMEs. Thus, this section compares and contrasts the aforementioned research results with previous research.

4.1. The Effect of Digital Platforms on Digital Innovation Sustainability among SMEs

When assessing how digital platforms have affected digital innovation sustainability among SMEs, the results show that digital platforms such as Google significantly affect SMEs’ digital innovation sustainability. The results imply that when SMEs adopt digital platforms to acquire knowledge on how to market their goods or when selling them, this will improve their digital innovation sustainability. These results support previous studies conducted by Tarakanov et al. [28] that examined the business effects of digital platforms. In the current study, it was found that digital platforms and technological advancements can help firms to improve their performance. Eaton [30] studied the influence of digital platforms on firms’ sustainability of digital innovation. Results showed that digital platforms enable consumers and organizations to interact via digital technology, this being the most recent digital innovation. These findings were in line with those of a study conducted by Ruggieri et al. [31], who found that digital platforms have had a significant impact on innovative company strategies in the digital sphere. Nambisan [32] has shown that when digital technology is subjected to the influential factor of digital platforms, it leads to the ongoing growth and development of entrepreneurial possibilities and the sustainability of digital innovation. To back the results of the current study, Li et al. [33] analyzed the effectiveness of digital platforms on the sustainability of digital innovation. The findings revealed that digital platforms connect consumers and organizations through digital technology and provide the most recent digitally enhanced innovation. The interchange of new information and ideas has also broadened and become more convenient as a result of digital platforms. This means that all kinds of information and knowledge can be found on digital platforms. Thus, digital innovation brings about progress and advancement, especially when combined with digital platforms. In conclusion, the current results and those of the past studies demonstrate that digital platforms have a beneficial impact on digital innovation sustainability because they enable the possibility of innovation and new ideas for firms.

4.2. The Effect of the IoT on Digital Innovation Sustainability among SMEs

When investigating the impact of the IoT on SMEs’ digital innovation sustainability, the findings illustrate that the IoT positively and significantly impacts SMEs’ digital innovation sustainability. These results imply that using the internet to learn how to handle various things will enable SMEs to be digitally innovative. The findings are supported by Botta et al. [23], who looked at how the IoT has been implemented in organizations. The study found that IoT adoption and use are anticipated to rise, making it a crucial component of these digitally innovative organizations. The present results are in line with those of Kupriyanovsky et al. [21], who assessed IoT use in various digital domains. According to the findings of the study, the IoT has been the most disruptive technology ever since it has enhanced productivity and efficiency in a wide range of industries and service sectors, including SMEs. The results mentioned above were supported by Roy et al. [24], who explored how disadvantaged urban areas are embracing the IoT in their technological innovation. This research showed that the IoT significantly affects technological innovation, and inventions must provide excellent service in three areas: the system’s value to users, user help, and user training on system use. The current study’s findings were also supported by Singh et al. [25], who noted that perceived utility and simplicity of use positively affect a company’s ability to employ the IoT for various objectives within the organization. Nonetheless, in support of the current study’s findings, De Vass et al. [20] examined how the IoT has impacted supply chain performance. The authors noted that the advancement of technology has permitted constant interconnectivity throughout the world through the internet and connected gadgets, increasing supply chain performance and indicating that IoT significantly impacts the sustainable supply chain. Additionally, the findings were also consistent with those by Ebersold and Glass [22], who noted that IoT adoption offers many advantages for businesses, including cost savings, product and service advancements, and risk mitigation since IoT improves these businesses’ innovation when they rely on the internet. Therefore, based on the current findings and past studies, it is crucial to conclude that the IoT is a key factor that enables digital innovation sustainability.

4.3. The Influence of Digital Orientation on Digital Innovation Sustainability among SMEs

Lastly, the results showed that there are significant associations and that digital orientation positively affects the digital innovation sustainability of SMEs. These results indicate that the people operating in such environments may continue to be motivated to be digitally innovative whenever SMEs are digitally oriented. These results back the findings of Quinton et al. [6], who explored the impact of digital orientation on SMEs’ performance in the digital economy and discovered that by leveraging cutting-edge technologies such as mobile apps, automated processes, and social media networks, a business could adopt a digital orientation to serve its clients effectively. Additionally, the current results were in line with those of Garcia De Lomana et al. [15], who stated that in today’s changing environment, a digital orientation complements businesses; organizations can only succeed by embracing the most innovative and cutting-edge practices, implying digital orientation positively enhances digital innovation sustainability. In support of the aforementioned results, Beutel et al. [13] investigated the link between intangible value drivers and digital orientation. The findings revealed that with this strategic digital orientation in view, the use of proactive innovation plays a supporting role in digital innovation. As a result, organizational digital orientation design is as important to a company’s value creation as the technology it deploys. Furthermore, the present finding also backed a study by Kane et al. [14] that examined the significance of digital orientation in aligning the digital organization. The authors concluded that organizations are focusing on encouraging digital innovation through a digital orientation in order to differentiate themselves from competitors and obtain a competitive edge. In addition, the current results also support the findings of a previous study by Brenner [15], who observed that studying the function of digital capabilities and internal resources within the context of a digital orientation offers a more detailed understanding of the potential for digital innovation. Therefore, from the discussion, it is important to conclude that digital orientation improves organizations’ digital capabilities, which leads to them being digitally sustainable.
This study provides a beneficial understanding of the most influential aspects influencing SMEs’ sustainability of digital innovation. Additionally, the research adds to the literature by empirically establishing a novel model of sustainability of digital innovation and bridging the gap across SMEs on the effects of digital platforms, the IoT, and digital orientation. Based on the results presented, there are deductions of significant importance. For example, the findings are important to SME owners; if they apply the digital platform-enhanced capabilities that the IoT and digital orientation have prompted, they can attain long-term digital innovation. The results are advantageous to managers of SMEs since they can reap digital economy benefits when they enhance their digital inventiveness by utilizing digital platforms and other technological innovations. However, this study has a few drawbacks that may act as guidance for future studies. For instance, the research has focused solely on how new technologies have affected digital innovation. These technological innovations, such as digital orientation and digital platform skills, might have an impact on a company’s overall performance, not only on digital innovation. Another disadvantage of this study is that it only looked at small and medium enterprises. It did not take a comprehensive view of huge corporations. Furthermore, the research did not address any specific SME. Moreover, the current study was conducted in the Middle East region, where the market conditions for SMEs differ from those in other countries where the digital economy is more developed. Therefore, additional research can be conducted to examine whether these digital dimensions affect digital innovation’s sustainability. Additionally, this study concentrated on digital platforms, digital orientation, and the IoT, which are just three of the numerous digital enhancers that can be examined when studying the sustainability of digital innovation. Thus, future studies should use aspects of virtual reality, analytic tools, artificial intelligence, or cognitive robots to have a bigger variation on digital innovation sustainability when these digital dimensions are incorporated together. In addition, future researchers can expand this study and focus on a particular sector.

5. Conclusions

Digital technologies have enabled new organizations to embrace new technology as an integral component of their marketing strategies and operations. As such, customer–organization associations are built and maintained through the use of mobile applications, which enhances the customers’ experience when using them for the functions of e-commerce. This continued advancement has substantially altered the competitive landscape and revamped established corporations’ strategies, structures, and procedures. This study aimed to determine the direct and indirect effects of various factors such as the IoT, digital platforms, and digital orientation on SMEs’ digital innovation sustainability. This study established that digital orientation, digital platforms, and the IoT have a major impact on digital platforms. The use in this study of digital platforms, the IoT, and digital orientation resulted in the creation of a digital innovation sustainability model that showed that these variables positively affect digital innovation sustainability. Therefore, these are significant results for SMEs that are digitally stable since they require digital platforms, the IoT, and digital orientation to address the significant difficulties associated with the developing digital economy and to enhance their technical knowledge.

Author Contributions

Writing—original draft, L.T.K.; Writing—review & editing, A.M.A. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

The study does not report any data.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 14 08585 g001 550
Figure 1. Flowchart of the procedure of methodology.
Figure 1. Flowchart of the procedure of methodology.
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Sustainability 14 08585 g002 550
Figure 2. The structural model for hypotheses testing.
Figure 2. The structural model for hypotheses testing.
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Table
Table 1. Comparison studies.
Table 1. Comparison studies.
Innovative FactorStudiesRemarks
Digital Orientation(a) Quinton et al. [6]
(b) Beutel et al. [13]
(c) Kane et al. [14]
(d) Khin and Ho [16]
(e) Bican and Brem [17]		This factor helps improve the productivity of digital innovation (positive effect). Digital orientation is becoming increasingly important; companies need to focus on digital innovation to gain a competitive advantage over their competitors. SMEs with digital orientations help lower the costs and risks associated with achieving the aims of digital innovation sustainability and enhance the success of a traditional innovation transition to digital innovation.
Internet of Things (IoT)(a) De Vass et al. [20]
(b) Kupriyanovsky et al. [21]
(c) Ebersold and Glass [22]
(d) Botta et al. [23]
(e) Singh et al. [25]		IoT is a crucial factor for fostering long-term digital innovation sustainability. In particular, when applied to a broad range of related industries such as SMEs, IoT is the most transformative technology ever. Additionally, the advent of modern technology has made it possible for people all over the world to stay in touch and stay connected via the internet and other connected devices, which has improved the supply chain in business sectors.
Digital Platforms(a) Tarakanov et al. [28]
(b) Li et al. [29]
(c) Eaton [30]
(d) Nambisan [32]
(e) Bharadwaj et al. [33]		Digital platforms enhance constant innovation and sustainability to increase productivity. Additionally, connecting customers, partners, and developers via digital platforms creates a vast and efficient market with enormous economies of scale and cost-effectiveness. In addition to expanding and becoming more convenient, digital platforms have facilitated the dissemination of innovative knowledge and information.
Table
Table 2. Demographic information of participants.
Table 2. Demographic information of participants.
FrequencyPercentCumulative Percent
Gender
ValidMale5353%53%
Female4747%100%
Total100100%
Level of Education
ValidDiploma2424%24%
BA/BSC5050%74%
Master and above2626%100%
Total100100%
Level of Experience
ValidBelow 2 years1919%19%
2–4 years4040%59%
5–8 years2121%80%
9 years and above 2020%100%
Total100100%
Table
Table 3. Results of confirmatory factor analysis.
Table 3. Results of confirmatory factor analysis.
Model Detail χ2 Df χ2/df RMESA GFI CFI
Hypothesized three-factor model 122.35 100 1.224 0.07 0.93 0.92
Two-factor model 115.58 100 1.156 0.22 0.71 0.72
Single-factor model 103.21 100 1.032 0.26 0.62 0.63
Table
Table 4. Correlations coefficients test.
Table 4. Correlations coefficients test.
Digital Innovation SustainabilityDigital PlatformsInternet of ThingsDigital Orientation
Digital innovation sustainabilityPearson Correlation10.650 **0.826 **0.758 **
Sig. (2-tailed)000
N100100100100
Digital platformsPearson Correlation0.650 **10.395 **0.675 **
Sig. (2-tailed)0 00
N100100100100
Internet of ThingsPearson Correlation0.826 **0.395 **10.537 **
Sig. (2-tailed)00 0
N100100100100
Digital orientationPearson Correlation0.758 **0.675 **0.537 **1
Sig. (2-tailed)000
N100100100100
** Correlation is significant at the 0.01 level (2-tailed).
Table
Table 5. Weights of regression.
Table 5. Weights of regression.
EstimateSE.CR.p
Digital innovation sustainability<---Digital platforms0.5420.0975.597***
Digital innovation sustainability<---Internet of Things1.5800.10714.786***
Digital innovation sustainability<---Digital orientation0.6710.0887.644***
*** Correlation is significant at the 0.001 level (2-tailed).
Table
Table 6. Summary of the hypotheses.
Table 6. Summary of the hypotheses.
Hypothesis Detail Effects Coefficient Remarks
(H1) Digital innovation sustainability <-- Digital platforms+0.542 ***Accepted
(H2) Digital innovation sustainability <-- Internet of Things+1.580 ***Accepted
(H3) Digital innovation sustainability <-- Digital orientation+0.671 ***Accepted
*** Correlation is significant at the 0.001 level (2-tailed).
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Khrais, L.T.; Alghamdi, A.M. Factors That Affect Digital Innovation Sustainability among SMEs in the Middle East Region. Sustainability 2022, 14, 8585. https://doi.org/10.3390/su14148585

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Khrais LT, Alghamdi AM. Factors That Affect Digital Innovation Sustainability among SMEs in the Middle East Region. Sustainability. 2022; 14(14):8585. https://doi.org/10.3390/su14148585

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Khrais, Laith T., and Abdullah M. Alghamdi. 2022. "Factors That Affect Digital Innovation Sustainability among SMEs in the Middle East Region" Sustainability 14, no. 14: 8585. https://doi.org/10.3390/su14148585

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