Startup Success in Hospitality & Tourism SMEs in Emerging Economies: How Innovation and Growth Are Driven by Entrepreneurial Orientation, Networking Strategy, Leadership, and Flexibility

Abstract

This research examines how sustainability driven innovation and performance factors influence Nepali tourism-oriented small and medium enterprises (SMEs) operating with limited resources. It investigates the relationships between entrepreneurial leadership (EL), network orientation (NO), and entrepreneurial orientation (EO) by integrating the Resource-Based View (RBV) and Strategic Fit Theory. The study positions strategic flexibility (SF) as a moderator between EL and NO in shaping startup performance (SP), with technological innovation capabilities (TIC) acting as a mediator. EO plays a critical role in startup success, helping businesses overcome resource constraints and adopt sustainable practices such as green technologies and energy-saving methods. Through TIC, SMEs convert strategic orientations into competitive advantages, enabling them to address environmental and social sustainability challenges. In Nepal’s fragmented tourism sector, NO and EL do not directly affect organizational performance. However, the findings confirm that SF’s adaptive capability bridges EL and SP, underscoring adaptability as a key driver of sustainable growth. The research provides valuable insights into tourism and entrepreneurship in resource-scarce settings, highlighting adaptive strategies and technological advancement as critical for resilience and long-term sustainability. To explain how tourism SMEs in resource-constrained contexts, such as Nepal, achieve sustainable growth, the study integrates the Resource-Based View (RBV) and Strategic Fit Theory. The findings indicate that strategic flexibility (SF) and technological innovation capabilities (TIC) play significant mediating and moderating roles in linking entrepreneurial strategies to performance within fragile ecosystems. While previous research has primarily focused on advanced economies, this study demonstrates how SF and TIC mediate entrepreneurial strategies in fragile environments, offering practical implications for sustainable development in emerging markets.

1. Introduction

Research confirms that small and medium-sized enterprises (SMEs) support economic development and with poverty reduction in developing nations [1]. Small businesses usually experience major market challenges when trying to compete locally and internationally because market resources are typically limited [2]. New economies provide emerging tourism businesses with important market prospects and substantial obstacles to overcome due to dynamic market conditions and changing customer preferences alongside globalization forces [3]. Startups throughout the tourism industry encounter substantial barriers when pursuing their long-term goals because they normally operate with restrained resources. Startups must transform external opportunities through strategic application of their existing capabilities for successful business operation according to Aftab et al. [4]. A shocking worldwide failure rate of 70% among startups in their first year exists due to bad strategic decision-making coupled with inflexibility [5]. A significant number of startups operating in China fail at an 85% rate during their first ten-year cycle [6]. The development of resource-constrained tourism economies, including Nepal, demands immediate focus on startup success factor identification, since few startups survive their first year.

Nepal’s tourism sector presents a unique and compelling case for examining the challenges faced by SMEs in resource-constrained environments. Unlike Bhutan, which operates under a regulated, high-value, low-impact tourism model, or Vietnam, where SMEs benefit from strong digital integration and government support, Nepal’s tourism industry is characterized by fragmented regulations, inadequate infrastructure, and a heavy reliance on informal networks [2]. These constraints intensify resource scarcity and hinder SMEs’ capacity to innovate, scale, and remain competitive [7]. Additionally, political instability and uneven regulatory frameworks further exacerbate these challenges, contributing to an unpredictable business environment [8]. As a result, Nepalese SMEs must adopt adaptive strategies that leverage technological innovation capabilities, network orientation, and entrepreneurial leadership to achieve sustained growth [9]. By focusing on Nepal’s tourism sector, this study provides valuable insights into how SMEs in developing countries with limited institutional support can overcome financial and structural barriers through creative and flexible approaches.

Nepal’s economic growth depends heavily on tourism because this sector creates significant employment opportunities and business activities throughout the nation. Public enterprises as well as small and medium-sized enterprises (SMEs) make up 95 percent of business operators while employing 83 percent of workers within this sector [7,8]. Nepalese tourism SMEs play a vital role in the sector but encounter critical problems because they lack resources and show poor innovation capabilities and insufficient entrepreneurial competencies [9]. The dire situation of this sector intensifies because more than 60% of these enterprises either work at limited capacity or are facing closure [10]. The industry faces limitations in economic development contribution because it lacks both innovative methods and entrepreneurial leadership [11]. Small and medium-sized tourism enterprises (SMEs) in Nepal require sustained success and sustainability which can be achieved by performing research into their fundamental drivers of innovation, along with performance assessments. Research studies need to address current market gaps because they will help SMEs boost growth and adapt to competition better.

In addition, tourism businesses must balance economic development with preserving nature and serving society due to increasing demands for sustainability. Tourism normally produces extensive environmental damage that results from resource utilization, waste outputs, and greenhouse gas emissions [12]. The urgent need for sustainable practices in Nepal remains crucial due to its role as a leading national economic sector in this developing economy [13]. Small and medium-sized enterprises operating as core components of tourism maintain an essential responsibility to foster sustainability through green management systems and environmental footprint reduction while carrying out community development work [14]. Research is needed to identify strategies which will help SMEs overcome their barriers to implementing sustainable innovations because they lack necessary resources and capabilities [15].

The research bases its framework on two established theoretical constructs: Resource-Based View (RBV) and the Theory of Strategic Fit. RBV identifies exceptional valuable resources as crucial when companies aim to gain competitive advantage [16], and Strategic Fit Theory shows how internal capabilities must match external environmental elements to reach maximum performance [17]. Businesses operating in the tourism sector need to demonstrate strategic flexibility through prompt strategic changes and resource redistribution to handle unpredictable market developments, since tourism operates in an unpredictable external environment [18]. Tourism SMEs desperately require the harmonious union between resource management and adaptable systems because they experience quick consumer preference changes and regulatory shifts as well as technological advancements [12].

The research investigates how network orientation and entrepreneurial leadership affect performance and innovation capabilities together with entrepreneurial orientation in small and medium-sized tourism enterprises of Nepal. These elements act together to boost operational effectiveness and innovative performance of such businesses according to the research. Network and entrepreneurial orientations assist businesses to access emerging market chances and develop necessary resource alliances while entrepreneurial leadership directs organizations toward successful achievements [13,14,15]. Strategic adaptability creates the mechanism which turns strategic orientations into performance productivity and performance results. Past research lacks a proper examination of technological innovation capabilities (TIC) and it needs to align multiple strategic orientations with superior performance results. The implementation of TIC drives creative solutions, operational improvement, and fast response capabilities in dynamic market environments [17].

The study establishes its unique position by investigating TIC as a central instrument which establishes links between competitive advantage in Nepal’s tourism SMEs and their strategic orientations toward innovation and entrepreneurship. The relationship between startup orientations in emerging tourism economies has not received adequate attention from previous research despite studying orientation effects separately. The research examines strategic flexibility as a minor-studied influence which shapes the dependence between performance results and strategic directions when businesses operate in highly dynamic resource-constrained environments. There is insufficient knowledge regarding the precise effects of strategic flexibility on developing tourism SMEs operating in Nepal despite its importance for sustaining unpredictable markets. The unique challenges that Nepalese companies encounter differ significantly from problems in advanced economies based on research on this topic, thus emphasizing such findings.

The study develops a combined theoretical framework that uses empirical testing to address vital literature gaps between entrepreneurship research and strategic management. The study revealed fresh knowledge about how constrained tourism SMEs can tackle obstacles for long-lasting business expansion through their creative methods, proactive approaches, and flexible business models. The study yields practical outcomes which business executives, together with policymakers, can use to establish sustainable business systems through identifying essential components that assist SMEs in dealing with resource limitations and market instability. Technological innovation combined with entrepreneurial sustainability approaches drive sustainable long-term economic, social, and environmental development according to the study results [19].

1.1. Theoretical Background

1.1.1. Resource-Based Theory

From the perspective of the Resource-Based View theory, a firm’s distinctive resources and competencies form the basis for sustaining its competitive edge in the market. Originally introduced by Wernerfelt [19] and later refined by Barney [20,21], RBV posits that firms operate more effectively when they acquire, manage, and utilize resources that are scarce, highly valued, difficult to replicate, and non-substitutable—a framework known as the VRIN criterion. While some scholars [22] consider RBV a valuable complement to Porter’s competitive advantage model, others [23] trace its origins to Penrose’s [12] theory of firm growth.

Wernerfelt [19] categorizes a company’s resources as both tangible and intangible assets, including financial capital, technical expertise, skilled labor, strategic partnerships, proprietary technologies, and brand reputation. Expanding on this, Barney [21] emphasizes that long-term success depends on a company’s capacity to integrate these resources with firm-specific competencies such as managerial expertise, innovation, and operational efficiency. Azevedo and Ferreira [23] further distinguish between resources, which constitute the fundamental building blocks of a firm, and capabilities, which represent the ability to effectively utilize these resources to generate value.

This perspective is particularly relevant for startups with limited resources, as it underscores the importance of leveraging internal strengths, maintaining strategic flexibility, and prioritizing innovation to ensure sustainable growth. RBV helps to explain why firms operating within the same industry often exhibit varying levels of performance by emphasizing the uniqueness and immobility of resources [24]. This highlights the necessity of acquiring and developing strategic assets to sustain a competitive advantage.

1.1.2. Entrepreneurial Orientation and Startup Performance

Entrepreneurial orientation (EO) defines a company’s strategic inclination to actively seize possibilities, embrace risk in the search of new market ventures, and follow innovation [25]. This strategic mindset is essential for startups to overcome resource constraints and navigate rapidly evolving environments to achieve sustainable growth. Big data analytics and cloud computing, among other digital technologies, have transformed business processes, therefore accelerating industry changes and increasing market volatility [26,27]. In this dynamic landscape, EO enables startups to identify new opportunities, embrace innovation, and effectively manage risks, allowing them to maintain a competitive edge [28].

Beyond driving market expansion, EO plays a crucial role in reshaping business models and enhancing strategic flexibility. This is particularly important in developing economies, where resource limitations necessitate the adoption of digital tools for improved decision-making and adaptability [29]. Startups that embrace an entrepreneurial orientation (EO) mindset are more inclined to pursue high-risk, high-reward initiatives, enabling them to enter competitive markets and achieve sustained growth over time. [30,31]. Given EO’s substantial influence on startup success, this study presents the following hypothesis:

H1a. 

Startups with a strong entrepreneurial orientation tend to achieve better performance outcomes.

1.1.3. Strategic Networking Approach and New Venture Success

Network orientation represents a strategic approach that fosters external connections to acquire essential resources, shaping entrepreneurial behavior and accelerating startup growth [32]. Startups often face the liabilities of newness and smallness, and challenges such as inadequate organizational structures, limited resources, and low market awareness, that hinder their ability to compete effectively [32]. By actively cultivating network partnerships, startups can strengthen their market position and mitigate these constraints.

In the digital age, network orientation has become increasingly significant, as technology enables real-time interactions with stakeholders, dismantles organizational barriers, and enhances resource flow [33]. Digital ecosystems facilitate growth and innovation by providing startups with access to capital, knowledge, talent, and market insights [34].

Furthermore, digital communication fosters collaborations with industry peers, research institutions, and government agencies, equipping startups with the knowledge and resources necessary to capitalize on emerging opportunities [35]. By effectively integrating these resources, startups can refine their strategic objectives, align their tactics, and enhance overall performance. Based on these insights, this study puts forward the following hypothesis:

H1b. 

A strong network orientation contributes to improved performance in startups.

1.1.4. Entrepreneurial Leadership and Startup Performance

Entrepreneurial leadership, which speaks to the ability to successfully lead and inspire staff members toward achieving key entrepreneurial objectives such as risk-taking, opportunity recognition, innovation, and competitive advantage, is crucial in shaping startup dynamics and performance [36]. It plays a pivotal role in aligning organizational efforts with the firm’s vision, connecting successful entrepreneurship with effective leadership techniques [37].

Ensley et al. [38] emphasize that leadership significantly impacts both strategy and performance in startups, owing to their flexible organizational designs and less formalized operational norms. Within SMEs, leaders typically hold more significant control and flexibility in shaping organizational outcomes, discretionary power, and amplifying their impact on strategic decisions and performance outcomes. However, while most studies focus on larger enterprises, exploring the influence of entrepreneurial leadership in SMEs remains limited [39,40]. The existing literature underscores the significance of entrepreneurial leadership in driving startup success [41,42,43].

The lack of research in this area emphasizes the importance of further investigation into entrepreneurial leadership and its effects on startup performance. The study establishes this hypothesis based on the presented findings:

H1c. 

Entrepreneurial leadership positively influences the performance of new ventures.

1.1.5. The Connection Between Startup Performance and Technological Innovation Capabilities (TIC)

Technological innovation capabilities (TIC) play a crucial role in driving business performance across all sectors [44,45,46,47,48]. Among TIC dimensions, both process and product innovations are essential for enhancing performance. Product innovation enables businesses to differentiate their offerings, strengthen market positioning, and gain competitive advantages [49,50]. From a resource-based perspective, firms with strong product innovation capabilities sustain their competitive edge by developing unique, hard-to-replicate products [51,52].

Process innovation, on the other hand, enhances internal production and distribution systems, improving efficiency and operational effectiveness [50]. These advancements often stimulate new product ideas, creating a continuous cycle of innovation and improvement. Furthermore, the relationship between product innovation and business performance receives mediation from process innovation, which creates this harmonious effect. Guided by this framework, the study suggests the following hypothesis:

H2. 

Startups with strong technological innovation capabilities (TIC) tend to achieve better performance outcomes.

1.1.6. Entrepreneurial Mindset, Network-Driven Strategies, Leadership in Entrepreneurial Ventures, and Innovation Capabilities in Technology (TIC)

Key entrepreneurial elements like entrepreneurial leadership, network orientation, entrepreneurial orientation, and technological innovation capabilities (TIC) are crucial for improving business performance and fostering innovation. Entrepreneurial orientation, as defined by Miller [53], comprises risk-taking, inventiveness, and foresight that propels innovation and market positioning [16]. Risk-taking reflects a company’s commitment to high-risk ventures [54], proactiveness emphasizes seizing emerging opportunities [55], and innovativeness underscores a business’s focus on new ideas, product design, and implementation [56]. Collectively, these factors enable businesses to adapt and sustain competitive advantages in dynamic environments [57].

Entrepreneurial leadership, particularly transformational leadership, further reinforces entrepreneurial orientation by encouraging employees to take initiative and assume ownership [58,59]. According to Khan et al. [18], such leaders foster innovative problem-solving, proactive transformation, and a culture of innovation within organizations.

For startups facing legitimacy challenges and resource constraints, network orientation is especially critical. This is particularly relevant in developing economies, where it enables businesses to establish strategic connections and secure essential resources such as capital, technology, and knowledge [30,60]. By integrating into broader business ecosystems, startups can overcome resource limitations and adopt innovative strategies [61,62]. Given the influence of these factors on TIC, this study puts forward the following hypotheses:

H3a. 

Technological innovation capabilities (TIC) are significantly improved by entrepreneurial orientation.

H3b. 

Network orientation contributes positively to the development of technological innovation capabilities (TIC).

H3c. 

The presence of entrepreneurial leadership significantly boosts technological innovation capabilities (TIC).

1.1.7. The Role of Technological Innovation Capabilities (TIC) as a Mediating Factor

Innovation-driven technological competencies include two essential elements: product innovation capabilities, which involve activities aimed at introducing and enhancing products [63,64], and process innovation capabilities, which focus on leveraging manufacturing technologies to develop innovative processes and production techniques [65]. TIC encompasses both product and process innovations, enabling firms to improve manufacturing efficiency, develop new offerings, and enhance existing products [66].

The importance of strengthening TIC has grown as product life cycles shorten and global competition intensifies [67,68]. TIC is particularly crucial for startups, as it provides a competitive edge and drives growth [34]. A startup’s ability to use TIC effectively is greatly influenced by its entrepreneurial orientation (EO). EO fosters technological discovery and business expansion by reflecting a startup’s pursuit of novel insights and ideas. Moreover, it enables entrepreneurs to take risks, identify opportunities, and anticipate trends while utilizing existing technologies and exploring new frontiers [35,69]. This dual focus on exploitation (leveraging existing resources) and exploration (seeking new opportunities) helps startups navigate uncertainty, ultimately enhancing performance and ensuring sustainable growth. Building on this perspective, the current study suggests that TIC mediates the relationship between startup performance and entrepreneurial drivers. The following hypotheses are formulated based on this:

H4a. 

Technological innovation capabilities (TIC) serve as a crucial mediating factor in the link between entrepreneurial orientation and startup success.

H4b. 

The relationship between a company’s network orientation and its overall startup performance is significantly mediated by its technological innovation capability.

H4c. 

The ability to drive technological innovation (TIC) serves as a crucial intermediary factor in the connection between entrepreneurial leadership and the performance of startups.

1.1.8. The Moderating Influence of Strategic Flexibility

The rapid adoption of digital innovations across industries in emerging economies has significantly accelerated industrial evolution, making the external environment increasingly complex for startups. Strategic Fit Theory suggests that a company’s success is determined by how well its strategy aligns with the external environment [31]. Strategic flexibility, or the ability of an organization to dynamically adapt by reallocating resources and changing strategic choices in reaction to shifts in the external conditions, is a critical component of this alignment [70]. Strategic flexibility facilitates the seamless integration and coordination of both internal and external resources, helping startups, which are inherently new and vulnerable, mitigate environmental risks [71].

Through two main mechanisms, strategic adaptability enhances the effect of EL and EO on new venture success in developing nations. First, the digital economy introduces both opportunities and challenges with the ongoing acceleration of technological advancements and product innovations [72]. Compared to established firms, startups often operate with fewer resources; therefore, strategic flexibility enables them to realign and allocate resources efficiently, capitalize on emerging opportunities, and mitigate risks [17]. Their agility allows them to experiment and take calculated risks, fostering a proactive approach to innovation [73]. Second, new ventures typically lack a well-defined corporate culture. The influence of an entrepreneurial mindset is enhanced by strategic flexibility and by fostering an innovation-driven culture, which is critical for sustained startup growth [6]. Entrepreneurial leadership is characterized by visionary thinking, adaptability, a willingness to take risks, and the capacity to direct resources toward innovative outcomes [36]. However, the presence of EL leads to performance improvements only when organizations are capable of adjusting to changing external pressures. Strategic flexibility (SF) empowers leaders to implement entrepreneurial strategies by enabling rapid resource adaptation and timely strategic adjustments [71]. This dynamic capability is particularly beneficial for startups, given their exposure to high environmental volatility and limited resource slack [17,72]. SF enhances this capability by allowing startups to reallocate resources and modify strategic directions in response to environmental shifts [70,71]. In emerging economies, where startups often contend with uncertainty and constrained resources, SF enables entrepreneurial leaders to experiment, take calculated risks, and respond swiftly to new opportunities [72,73]. Furthermore, SF fosters an innovative organizational culture, thereby amplifying the impact of EL on organizational performance [6].

Furthermore, according to Aftab et al. [4], startups usually have a lower absorptive capacity than established businesses, which restricts their potential to incorporate outside resources for long-term growth. This is addressed by strategic flexibility, which improves the connection between startup performance and network orientation [17,74]. It makes it possible for new businesses to effectively integrate and use outside resources, increasing resource efficiency and cutting expenses [31]. Additionally, by speeding up the transformation process, strategic flexibility lowers the time and expense involved in resource integration. More strategic flexibility makes startups more likely to grow their external network connections, which improves their overall performance [75]. Building on this conceptual foundation, the following hypotheses are formulated:

H5a. 

The favorable influence of entrepreneurial orientation on the performance of startups is substantially strengthened through the presence of strategic flexibility.

H5b. 

The beneficial impact of network orientation on startup performance is greatly increased when strategic flexibility is present.

H5c. 

The presence of strategic flexibility significantly enhances the positive effect of entrepreneurial leadership on startup performance.

Strategic flexibility improves the technical capabilities necessary for innovation, even while it has no direct impact on innovation outcomes [4]. It enables startups to experiment with new product formulas and technologies, overcome rigid technological processes, and explore or refine alternative solutions [76]. By promoting adaptive resource allocation, strategic flexibility fosters an open corporate culture that facilitates knowledge absorption, technological adaptation, and enhanced innovation potential [77]. In emerging economies, where uncertainty is high, strategic flexibility accelerates innovation by rapidly transforming resources into novel products. Based on this reasoning, the following hypothesis is formulated:

H6. 

Strategic flexibility significantly moderates and strengthens the positive link between the capabilities of technological innovation and the performance of startups.

Based on all hypotheses presented above, a conceptual model is proposed (Figure 1).

1.1.9. Comparative Perspectives on SME Development in Emerging Economies

Comparative studies of SME expansion in emerging markets provide valuable insights into the strategic adaptations companies undertake to overcome resource constraints and institutional barriers. While highlighting common challenges such as policy instability, inadequate infrastructure, and limited access to financial resources, research on Bangladesh [25], India [29], and Kenya [3] also reveals distinctive approaches to addressing these issues. In India, digital transformation has played a critical role in enabling SMEs to overcome financial and operational barriers and achieve sustainable growth. In Bangladesh, entrepreneurship education and policy support significantly influence SMEs’ adaptive strategies in resource-constrained environments. Meanwhile, Kenyan SMEs enhance market entry and circumvent regulatory obstacles by forming strategic alliances and leveraging informal networks.

These findings support the argument that network-driven resource acquisition, entrepreneurial orientation, and internal capabilities can strengthen the competitive positioning of Nepalese startups. Moreover, they align with the principles of the Resource-Based View (RBV) theory. Drawing on these comparative contexts, this study underscores the vital role of tailored policy interventions and institutional support in fostering entrepreneurial success in Nepal.

1.1.10. Integrating Resource-Based View (RBV) and Strategic Flexibility

The Resource-Based View (RBV) provides a theoretical framework for understanding how companies generate and preserve competitive advantages through unique, valuable, and non-replicable resources [19,21]. RBV does not address how firms adjust to shifting external conditions, despite its historical emphasis on the creation and use of firm-specific resources. This limitation is addressed by strategic flexibility, which enables companies, particularly startups, to reallocate resources and reorganize in response to changing market conditions [31]. Strategic flexibility enhances RBV by tying static resource possession to dynamic resource adaptation. In volatile contexts, firms that merely possess valuable resources may struggle to maintain a competitive advantage unless they can reallocate these resources to meet emerging threats and opportunities [4]. This dynamic capability is particularly critical for startups in emerging economies, where environmental uncertainties and resource constraints demand agile strategic responses [3].

Empirical research suggests that strategic adaptability amplifies the impact of resource-based advantages on business performance. Startups exhibiting high levels of strategic flexibility are better equipped to optimize internal resources—such as leadership experience, digital capabilities, and innovation potential—while also leveraging external networks to access supplementary resources [29]. This synergistic interaction enhances firms’ capacity to navigate uncertainty and achieve sustained growth.

By integrating RBV with the concept of strategic flexibility, this study argues that the effective deployment of unique resources by startups necessitates adaptive mechanisms. Accordingly, it posits that strategic flexibility serves as a moderating variable, strengthening the relationship between startup performance and entrepreneurial competencies such as leadership, networking, and entrepreneurial orientation.

2. Materials and Methods

2.1. Measurement Items

Consistent with previous studies, this research employs a 7-point Likert scale to assess key indicators. The model comprises six elements: startup performance, network orientation, entrepreneurial leadership, technological innovation capabilities, and strategic flexibility. All of the measurement variables were taken from pre-existing scales in order to ensure content validity, and were modified as necessary to align with the objectives and context of this research.

Four items revised measures derived from research by Bui et al. [78] and Cao et al. [79] were used to evaluate startup performance. Six items taken from Aftab et al. [4] were used to measure entrepreneurial orientation. Additionally, five items modified from Yang’s [48] and Fuentelsaz et al.’s works were used to assess network orientation [80]. To assess entrepreneurial leadership, the study employed five items from Chen [81] and Aljanabi [82]. A set of five items drawn from the writings of Tuominen and Hyvönen [83] and Camisón and López [84] was used to assess innovative behavior. Six items measuring strategic flexibility and five measuring technological innovation capabilities were taken from Sen et al.’s study [31]. These scales have been validated across various industries in prior research; however, minor adaptations were made to reflect the specific entrepreneurial context of Nepal’s tourism sector. For example, Chen’s [81] items on entrepreneurial leadership were modified to better capture the leadership dynamics within small tourism enterprises, where resource constraints and reliance on local networks play a critical role. Similarly, the items measuring strategic flexibility were refined to account for the seasonality and unpredictability characteristic of Nepal’s tourism market. All modifications were carefully implemented to preserve the theoretical integrity and robustness of the original constructs. In line with prior studies [32,33,85,86], both firm age and organizational size were incorporated as control variables to account for their potential influence.

2.2. Data Gathering and Sampling Methods

This study used a quantitative approach grounded in post-positivist theory. Small and medium-sized businesses (SMEs) involved in Nepal’s hospitality and tourism sector were the focus of a survey. The study included small and medium-sized enterprises as participants because such organizations represent the majority of businesses in this sector and exhibit particular entrepreneurial traits, while making a substantial contribution to the national tourism sector [87]. To enhance the representativeness of the sample and ensure comprehensive coverage of Nepal’s geographically diverse tourism industry, where entrepreneurial activity is concentrated in key hubs, a stratified random sampling technique was employed. The sample was stratified based on three major tourist destinations: Chitwan (a center for wildlife and eco-lodge tourism), Pokhara (an adventure and ecotourism hub), and Kathmandu (the capital and commercial center). This approach enabled the inclusion of SMEs from various tourism subsectors, thereby capturing differences in strategic behavior and entrepreneurial orientation across distinct market contexts. By encompassing these critical tourist regions, the study increases the generalizability of its findings and contributes to a more nuanced understanding of entrepreneurial strategy development within Nepal’s tourism sector.

The survey targeted owners, senior management, and middle management within SMEs operating in the hospitality and tourism sectors. Data were collected from 313 respondents using an online survey designed in Google Forms. This platform was chosen due to its accessibility, efficiency, clear and user-oriented design, allowing participants to complete the survey at their convenience.

The questionnaire was disseminated via email invitations, social media links, and QR codes distributed at industry events and business hubs in major cities across Nepal. Data collection spanned eight months from April 2024 to November 2024, ensuring a diverse and representative sample. Google Forms facilitated real-time response tracking, automated data storage, and seamless data export for analysis, minimizing data handling errors and streamlining the statistical analysis process. The dataset used in the study can be found in Supplementary Materials (Dataset S1) and the demographic profile of participants in

Table 1. Demographic profile of participants (n = 313).

Attributes	Value	Proportion (%)
Business nature
State-owned company	79	25.2
Private company	199	63.5
Foreign/joint venture	35	11.1
Business tenure
<3 years	54	17.2
3–5 years	70	22.3
6–10 years	105	33.5
>10 years	84	26.8
Firm size
<20 employees	133	42.5
20–50 employees	93	29.7
51–100 employees	46	14.7
100–250 employees	41	13.1
Sector
Hotels and homestays	76	24.2
Spa and ayurveda	55	17.5
Cafes, food and beverage	68	21.7
Tour operator and guiding	50	15.9
Souvenirs and handicrafts	47	15.0
Other	17	5.7
Participant’s position
Owner	120	38.3
Top management	136	43.4
Middle management	57	18.2
Level of education
High school and above	40	12.7
Junior college	31	9.9
College undergraduate	143	45.6
Graduate (master’s and PhD)	99	31.6
Gender
Male	160	51.1
Female	153	48.9

.

2.3. Data Analysis

This study employed the PROCESS macro and SPSS 29.0 to analyze mediating and moderating effects [88]. Before data processing, the dataset was examined for outliers and missing values, but no issues were identified. Kurtosis and skewness tests were conducted to assess data normality, ensuring its suitability for further analysis. Additionally, the research used common method variance evaluation to validate the data quality for subsequent analysis.

The measurement model was evaluated by performing reliability testing and confirmatory factor analysis (CFA) using SPSS. Assessments of convergent validity and reliability were integrated to determine whether any modifications to the model were necessary. Following the measurement model’s validation, by enabling the simultaneous evaluation of multiple interconnected components, SEM was used to statistically analyze the research framework. The bootstrap method was used to examine these pathways in order to take into consideration possible multiple mediation and moderation effects. In the analysis, technological innovation capabilities were considered mediators, while strategic flexibility was treated as a moderator.

3. Results

3.1. Measurement Model

The researcher measured questionnaire validity and reliability through Cronbach’s Alpha assessment. The research results demonstrated high internal consistency because Cronbach’s Alpha and composite reliability values exceeded a 0.7 threshold, which confirmed that latent constructs displayed reliable measurement. By looking at the factor loadings (shown in

Table 2. Factor loadings for individual items (n = 313).

Characteristics	Factor Loading (λ)	Alpha (α)	CR	AVE
Startup performance (SP)		0.887	0.922	0.747
The company outperforms every other business in its industry sector in terms of sales growth.	0.847
The firm demonstrates superior net profit growth performance in comparison to its industry competitors.	0.873
The company demonstrates a higher employee growth rate compared to its competitors in the same industry.	0.867
The company exhibits a faster rate of market share expansion compared to other firms operating within the same industry.	0.871
Entrepreneurial orientation (EO)		0.906	0.927	0.680
The company prioritizes advancement, technological excellence, and research and development.	0.759
The company has introduced substantial innovations in its products or services to enhance its competitive edge.	0.840
The company’s primary objective in recent times has been to introduce a new product or service.	0.830
The organization consistently selects high-risk initiatives that offer significant potential returns.	0.849
The organization takes firm prompt decisions to fulfill its corporate targets.	0.819
The company leads its competitors in launching innovative products and ideas.	0.847
Network orientation (NO)		0.910	0.933	0.736
The company prioritizes building relationships with external partners.	0.861
The company prioritizes the establishment of strong networking bonds with its operational network members.	0.857
The company demands high priority for sustained networking bonds with its operational network members.	0.886
The organization acquires guidance and insights from various external relationships that it maintains.	0.836
The organization gives high importance to outside partnerships which include the sharing of resources.	0.849
Entrepreneurial leadership (EL)		0.906	0.930	0.726
Our senior management frequently suggests new ideas to enhance and develop our products and services.	0.831
Our executive team displays openness toward innovative prospects while accepting acceptable levels of risk.	0.857
Our top management has shown strong commitment along with great enthusiasm for guiding the organization forward.	0.873
Our top leadership defines a transparent future direction for the company that employees actively receive.	0.836
The senior leadership team leads with challenge and embraces innovative methods to improve existing business operations.	0.863
Technological innovation capabilities (TIC)		0.904	0.929	0.723
The company can enhance its products or services by incorporating emerging technologies.	0.826
The organization maintains efficient control over the schedule of its product/service manufacturing to fulfill emergency requests.	0.870
The company has implemented innovations to improve its Manufacturing operations and organizational control mechanisms.	0.848
By utilizing its technological capabilities, the company produces and provides high-quality services.	0.856
The current set of technological solutions and procedural approaches follow both green principles and cost-effectiveness requirements.	0.852
Strategic flexibility (SF)		0.924	0.941	0.728
The company’s resources are used widely across different departments, creating large areas of doubles management.	0.801
This resource offers wide operational flexibility that enables applications throughout various stages from product development to manufacturing and marketing different products.	0.870
Minimal time and financial resources are needed for changing between different usages of single resources.	0.865
Fast and positive actions toward external competition enable the organization to surpass current and upcoming competitors effectively.	0.865
The company can enter new markets at a faster pace than both current and potential competitors.	0.860
The company can effectively distribute resources in a constantly changing environment.	0.858

Note: Every factor loading was robustly significant (p < 0.05) level. The reported reliability and validity measures include Cronbach’s Alpha (α), Composite Reliability (CR), and Average Variance Extracted (AVE).

), indicator reliability was evaluated. All item loadings in the outer model were statistically significant and above the 0.7 cutoff. Additionally, the constructs’ convergent validity was supported by the AVE values, which were all higher than 0.5 [89,90]. These results demonstrate the high reliability of the data, enabling further analysis. The square roots of the AVE were calculated and compared with correlations between latent variables in order to test discriminant validity. The findings in

Table 3. Evaluation of the Measurement Model’s Discriminant Validity.

Variable	SP	EO	NO	EL	TIC	SF
SP	0.864
EO	0.839 **	0.824
NO	0.725 **	0.827 **	0.857
EL	0.732 **	0.764 **	0.775 **	0.852
TIC	0.749 **	0.737 **	0.744 **	0.847 **	0.850
SF	0.683 **	0.720 **	0.776 **	0.805 **	0.826 **	0.853

Note: Square root of average variance in diagonal. ** p < 0.01.

show strong discriminant validity, confirming the unique characteristics of the model’s constructs. When taken as a whole, these results validate the data’s accuracy and dependability, guaranteeing that it is appropriate for further examination.

3.2. Hypothesis Testing

With an R-squared value of 0.743, the dependent variable model in

Table 4. Summary of Model Fit.

Dependent Variable	R-Squared	F-Statistic	p-Value	Adjusted R-Squared
SP	0.743	222.163	<0.001	0.739
TIC	0.742	295.512	<0.001	0.738

demonstrates a strong fit, accounting for approximately 74.3% of the variance in SP. The model’s robustness is further reinforced by a highly significant F-statistic of 222.163 (p < 0.001). Although the Adjusted R-squared is slightly lower at 0.739, it still indicates strong predictive capability.

Similarly, Technological Innovation Capabilities (TIC), the dependent variable, show a strong model fit, explaining 74.2% of the variance with an R² value of 0.742. The model’s robustness is reinforced by a high F-statistic of 295.512 (p < 0.001), while an Adjusted R-squared of 0.738 ensures a stable fit. Figure 2 shows the results of the structural pathway analysis and provides a visual summary of the relationships between the constructs and their corresponding path coefficients. Overall, both dependent variable models demonstrate strong explanatory power, supported by robust statistical evidence and reliability.

The results show that Startup Performance (SP) is significantly improved by Entrepreneurial Orientation (EO) (β = 0.635, p < 0.05) (

Table 5. Hypothesis testing.

Hypothesized Relationships	Standardized Estimates (β)	t-Value	p-Value	Decision
H1a: EO→SP	0.635	11.478	<0.001 ***	Accept
H1b: NO→SP	0.036	0.643	0.520	Reject
H1c: EL→SP	0.050	0.824	0.411	Reject
H2: TIC→SP	0.266	4.671	<0.001 ***	Accept
H3a: EO→TIC	0.140	2.557	<0.001 ***	Accept
H3b: NO→TIC	0.137	2.450	<0.001 ***	Accept
H3c: EL→TIC	0.633	12.966	<0.001 ***	Accept

*** p < 0.001.

). However, neither Entrepreneurial Leadership (EL) (β = 0.050, p > 0.05) nor Network Orientation (NO) significantly affect SP (β = 0.036, p > 0.05). However, SP is significantly impacted by Technological Innovation Capabilities (TIC) (β = 0.266, p < 0.05). Additionally, NO (β = 0.137, p < 0.05), EL (β = 0.633, p < 0.05), and EO all significantly contribute to TIC (β = 0.140, p < 0.05). Thus, hypothesis H1b and H1c are not supported, hypotheses H1a, H2, H3a, H3b, and H3c are supported.

The study identifies a statistically significant (p < 0.05) total effect (0.8919; SE = 0.0327; t = 27.2353) of EO on SP via TIC (

Table 6. The result of mediating effect.

Hypothesized Relationships	Effect	Standardized Estimates (β)	SE	t-Value	p-Value	Decision
H4a: EO → TIC → SP	Direct impact Indirect effect Overall effect	0.6679 0.2240 0.8919	0.0454 0.0465 0.0327	14.7105 6.6912 27.2353	0.0000 0.0000 0.0000	Supported (Partial mediation)
H4b: NO → TIC → SP	Direct impact Indirect effect Overall effect	0.3931 0.3660 0.7592	0.0545 0.0719 0.0409	7.2120 9.0242 18.5792	0.0000 0.0000 0.0000	Supported (Partial mediation)
H4c: EL → TIC → SP	Direct impact Indirect effect Overall effect	0.3658 0.4102 0.7761	0.0720 0.0986 0.0409	5.0844 6.7334 18.9633	0.0000 0.0000 0.0000	Supported (Partial mediation)

). The findings underscore the significance of both direct and mediated pathways, reinforcing hypothesis H4a and confirming partial mediation. Likewise, the total effect of Network Orientation (NO) on Startup Performance (SP) via Technological Innovation Capabilities (TIC) was significant (total effect = 0.7592, SE = 0.0409, t = 18.5792, p < 0.05), with both direct and indirect effects being significant. These findings support hypothesis H4b, demonstrating that TIC partially mediates the link between NO and SP. Additionally, the examination uncovered a statistically significant total effect of Entrepreneurial Leadership (EL) on SP via TIC, with an effect size of 0.7761 (SE = 0.0409, t = 18.9633, p < 0.05), as presented in Table 6. The significance of both direct and indirect effects substantiates hypothesis H4c and confirms partial mediation.

The results indicate that the interaction between Entrepreneurial Orientation (EO) and Strategic Flexibility (SF) contributes an additional 0.00% to the explained variance in Startup Performance (SP). However, this contribution is not statistically significant (R² change = 0.0000, F = 0.0281, p = 0.8670, which is greater than 0.05) (

Table 7. The result of moderating effect.

Hypothesized Relationships	R2 Change	F	p-Value	Decision
H5a: EO → SF → SP	0.0000	0.0281	0.8670	Rejected
H5b: NO → SF → SP	0.0007	0.4965	0.4816	Rejected
H5c: EL → SF → SP	0.0102	7.3232	0.001	Accepted
H6: TIC → SF → SP	0.016	5.1940	0.001	Accepted

). Therefore, hypothesis H5a is not supported, confirming the absence of a moderation effect. Similarly, the interaction between Network Orientation (NO) and Strategic Flexibility (SF) contributes an additional 0.07% to the explained variance in Startup Performance (SP); however, this contribution is not statistically significant (R² change = 0.0007, F = 0.04965, p = 0.4816). Consequently, hypothesis H5b is not supported, indicating that moderation is absent. Furthermore, the interaction between Entrepreneurial Leadership (EL) and Strategic Flexibility (SF) contributes an additional 1.02% to the explained variance in Startup Performance (SP), and this contribution is statistically significant (R² change = 0.0102, F = 7.3232, p = 0.001). So, hypothesis H5c is accepted, validating the existence of a moderation influence. Finally, the interaction between Technological Innovation Capabilities (TIC) and Strategic Flexibility (SF) contributes an additional 1.6% to the explained variance in Startup Performance (SP). Hypothesis H6 is supported by the results, which show statistical significance (R² change = 0.016, F = 5.1940, p = 0.001). This attests to the analysis’s moderation effect.

4. Discussion

This research examines the developmental factors influencing successful innovation in startups operating within Nepal’s tourism sector. It contributes to the academic literature by investigating how entrepreneurial leadership (EL), network orientation (NO), and entrepreneurial orientation (EO) impact startup performance (SP), with technological innovation capabilities (TIC) acting as a mediator. Grounded in Resource-Based View (RBV) and Strategic Flexibility Theory (SFT), this study offers significant theoretical insights into startup behavior in resource-constrained environments. Additionally, strategic flexibility (SF) serves as a moderator, providing guidance on how SMEs can pursue sustainable development amid economic, social, and environmental challenges.

Empirical evidence supports the hypothesis (H1a) that EO directly enhances SP, underscoring the importance of fostering an entrepreneurial mindset within organizations. The findings align with established theoretical frameworks, demonstrating that EO enables firms to compete effectively in uncertain markets, drive innovation, and capitalize on unexploited opportunities [56,92]. Notably, EO helps startups in emerging economies, particularly those with limited infrastructure and technological capabilities, to overcome systemic challenges and achieve superior performance. The study also reinforces RBV, which posits that intangible resources, particularly entrepreneurial capabilities, are critical to organizational success [21]. Furthermore, EO-driven firms adopt sustainable innovations, such green technologies and energy-saving methods [14]. Entrepreneurial SMEs are more likely to invest in renewable energy systems and waste reduction strategies, yielding both economic and environmental benefits [15].

NO and EL produced different results from previous studies when evaluating their effects on SP than those discovered in this investigation. The non-significant effects of Entrepreneurial Leadership (EL) and Network Orientation (NO) on startup performance (H1b and H1c) warrant a deeper examination of Nepal’s distinctive entrepreneurial and tourism context. The lack of significance in H1b (NO → SP) highlights a structural limitation in Nepal’s entrepreneurial environment. While network orientation typically enhances business performance by facilitating access to external resources, industry knowledge, and collaborative opportunities, Nepalese tourism startups operate in fragmented and loosely organized environments. These ecosystems often lack institutionalized platforms and digital infrastructures that support cooperation and knowledge exchange [11]. In contrast to more developed regions like Vietnam, where SMEs profit from digitally connected ecosystems [34], Nepalese businesses continue to face resource constraints and isolation. Therefore, without cohesive networks and enabling support systems, the potential advantages of NO are unlikely to materialize into immediate performance gains.

Likewise, the non-significant finding for H1c (EL → SP) suggests that entrepreneurial leadership alone may not drive performance outcomes in resource-constrained environments. Although EL is widely recognized for fostering creativity, vision, and strategic adaptability, its effectiveness is contingent on the presence of adequate internal resources and operational infrastructure. In Nepal, where many tourism startups face barriers such as restricted financial access, underdeveloped management systems, and limited technological infrastructure, the strategic guidance offered by EL may not lead to enhanced operational performance. These findings align with research in other low-resource settings, such as Kenya, where the strengthening of institutional capacity was a prerequisite for leadership to positively impact performance outcomes [3].

These results highlight an important realization: the effects of NO and EL in emerging economies vary depending on the context and are frequently mediated by elements like ecosystem maturity, institutional quality, and technological prowess. Strategic orientations might not produce quantifiable performance results in the absence of these enablers. Future studies should examine the ways in which these contextual factors interact with network and leadership tactics to affect startup success, especially in underdeveloped industries like tourism in developing countries. The indirect support for sustainability between NO and EL emerges through stakeholder alliances that enable social responsibility and environmentally friendly practices [16].

The research validated the central role of TIC, demonstrating its status as a main mediator, as the analysis proved statistical significance in all strategic orientations (H4a, H4b, and H4c). The implementation of technological innovations drives firm performance because companies use new products to create operational efficiency structures that help them respond to changing market needs [16]. The study’s finding confirms the crucial role that TIC plays in operationalizing performance outcomes, demonstrating that TIC serves as a statistically significant mediator across all three strategic orientations (EO, NO, and EL). Since neither EL nor NO had a direct impact on performance, this difference is particularly significant and supports TIC’s mediating role as a crucial facilitator. These results demonstrate the theoretical importance and originality of TIC, particularly in low-infrastructure settings where conventional innovation pipelines are absent. Accordingly, the study positions TIC not merely as an enabler but as a transformative mechanism that converts entrepreneurial intent into sustainable outcomes. This contribution advances the existing literature on innovation in developing countries and broadens the relevance of TIC beyond traditional, high-resource contexts.

The discovery expands research knowledge about performance implementation because strategic orientations do not always translate tactics into measurable results when technological innovation is not present. The sustainable adoption of green technologies by SMEs relies heavily on TIC due to its capacity to implement energy-efficient manufacturing innovations together with digital resource management solutions which lead to environmental improvements and operational gains [17]. Carefully managed data analytics applications from SMEs with advanced TIC allow these businesses to utilize resources more effectively as well as eliminate waste according to circular economy principles [18].

The results of the moderation analysis showed that strategic flexibility (SF) had mixed effects; the only relationships that showed significant moderation were those between entrepreneurial leadership (EL) and startup performance (SP) and technological innovation capabilities (TIC) and SP (H5c and H6). These results highlight the context-dependency of SF, particularly in Nepal’s tourism sector, where startups often face obstacles to funding, institutional support, and digital infrastructure. The ability of a company to reallocate internal resources to adapt to environmental uncertainty is known as SF, dynamic capabilities theory serves as its foundation [93]. However, in resource-constrained environments like Nepal, the efficacy of SF is diminished by the absence of foundational assets. SF cannot solve the gaps in technology, skilled labor, and funding on its own. As demonstrated by its positive effects on the EL–SP and TIC–SP relationships, flexibility is advantageous when internal capabilities, such as strategic leadership and innovation, are already established. SF does not, however, enhance the effects of EO and NO, which rely on networking and the awareness of outside opportunities mechanisms that are difficult to activate in Nepal’s scattered entrepreneurial ecosystem. These findings suggest that more comprehensive institutional enablers for Nepalese tourism SMEs are required to support future research, and policy should explore how improving digital access, financial support, and managerial capacity can unlock the full potential of strategic flexibility. According to the research findings strategic flexibility proves valid for organizations because they perform better when they quickly shift resources and strategies to meet environmental changes [93]. Strategic flexibility allows SMEs to face environmental regulatory changes by adopting flexibility in their strategies which supports them to pursue green economy opportunities in sustainable supply chain development and eco-tourism expansion [19].

5. Implications, Limitations, and Future Research

5.1. Theoretical Implications

The integration of RBV theory and Strategic Flexibility Theory produces enhanced knowledge about entrepreneurial strategies for tourism startups throughout developing economies. The findings demonstrate that technological innovation capabilities and an entrepreneurial mindset are key determinants of startup performance, reinforcing the notion that possessing substantial resources alone is insufficient. Instead, businesses must also dynamically reorganize and adapt these resources to maintain a competitive edge. Technological innovation capabilities exhibit partial mediation, affirming that innovation serves as a key mechanism for enhancing performance. This finding aligns with previous research, highlighting the crucial role of innovation in resource-constrained environments by enabling technological advancement to mitigate limited physical and financial constraints.

Furthermore, the study’s mixed results regarding the moderating role of strategic flexibility offer new insights into the nuanced conditions under which flexibility enhances performance. The findings suggest that while strategic flexibility may be less critical for firms with strong entrepreneurial or network orientations, it becomes particularly valuable when leveraging entrepreneurial leadership and technological innovation. This contributes to ongoing theoretical discussions by suggesting that flexibility should be viewed as context-dependent rather than a universal strategic approach.

5.2. Practical Implications

The results provide actionable insights for tourism entrepreneurs, businesses, and policymakers in Nepal and other developing nations, particularly in the context of sustainability. Tourism SMEs should develop an organizational environment that promotes creative methods together with purposeful risk-taking and quick decision-making because these entrepreneurial qualities build performance along with resilience. The essential nature of technological innovation capabilities (TIC) stands out because they allow small and medium enterprises to adopt sustainable operations with green technology and waste management systems and energy saving methods [16,19]. SMEs should utilize technological innovation capabilities to put renewable energy solutions in place, while decreasing their carbon emissions and creating sustainable tourism products which attract eco-minded consumers [14]. Enterprise leaders need access to ongoing training and skills development programs which provide tools and knowledge they require to generate sustainable innovation practices.

The findings indicate that one of the key mechanisms through which entrepreneurial strategies enhance performance is the development of Technological Innovation Capabilities (TIC). Consequently, managers of Nepalese tourism SMEs should prioritize TIC, not only to improve operational efficiency, but also to advance eco-innovation initiatives such as adopting technologies for waste reduction or renewable energy use that directly align with the goals of sustainable tourism. Only the EL–SP and TIC–SP relationships showed the moderating effect of strategic flexibility (SF), suggesting that SF is a conditional rather than universally applicable asset. Firms possessing strong internal capabilities such as robust innovation systems or visionary leadership are better positioned to leverage adaptability in volatile market environments. Accordingly, managerial efforts should concentrate on cultivating organizational agility through flexible planning, dynamic resource allocation, and leadership development that supports rapid responsiveness to change. These findings underscore that SMEs cannot rely solely on either creativity or adaptability. Rather, performance improvements require a synergistic alignment between internal capabilities and external enablers. In resource-constrained settings like Nepal, it is imperative that policymakers facilitate SMEs’ ability to harness SF and TIC by investing in digital infrastructure, offering financial incentives, and implementing capacity-building programs.

The essential component for business success in fluctuating tourist markets is strategic flexibility (SF). Managed businesses should implement flexible approaches to business methods combined with dynamic resource distribution procedures so they can speed up their reactions to changing market elements and customer desires. SF enables firms to conduct experiments with green technology solutions and external arrangements and external knowledge integration for developing innovative resilient business cultures [17,76]. Best practice requires entrepreneurs to develop their entrepreneurial leadership (EL) abilities for uncertainty management and innovation enhancement and organizational resilience growth. Leaders who emphasize sustainability practices enable their teams to embrace environmentally and socially responsible practices directly linked to economic and social and environmental sustainability [19]. Network orientation (NO) itself does not affect essential performance outcomes but creating valuable collaborative relationships stands vital for resource acquisition and obtaining market information and business opportunities. Small businesses should become active participants with stakeholders to obtain funding through government agencies and NGOs while obtaining industry partner support and expert assistance and obtaining sustainable tourism certifications. Collaborative networks help businesses share knowledge combined with best practices related to sustainability through examples like eco-tourism initiatives and community-based tourism models [15,16].

Through their support, policymakers develop an entrepreneurial environment which promotes technological innovation besides enabling strategic alliances among business owners while creating resource-sharing programs. SMEs need financial assistance through grants and low-interest loans from governments for the purpose of acquiring sustainable technology systems and infrastructure [17]. The government should adopt training programs that instruct sustainable business operations while also developing eco-tourism certification programs for tourism businesses. Public–private partnerships help tourism sustainability efforts by uniting SMEs together with government agencies and NGOs to develop fresh approaches to environmental and social difficulties [19]. Tourism SMEs in developing economies who merge sustainability strategies with their innovation initiatives as well as their leadership policies and networking efforts will establish long-term growth and protect natural ecosystems together with fostering local community success. Such practical measures improve the competitive positions of SMEs and maintain sustainable development objectives to ensure tourism’s prolonged sustainability in areas with limited resources.

5.3. Limitations and Future Research

Multiple restrictions were found within this research despite its important findings. The analysis using static data hinders researchers from establishing direct cause–effect relationships between startup achievement results and TIC and strategic orientations. The study needs to use extended longitudinal testing techniques to observe these dynamic processes throughout time especially for sustainability projects deploying green technology and environmentally friendly measures [14,19]. The findings vary depending on the context and might not be applicable to broader industries because this research concentrates on SMEs within Nepal’s tourism sector. Research that includes comparative analysis between nations and industries would help validate and widen the findings particularly in emerging markets facing multiple sustainability threats and potential [15,16].

Still, the study excluded the investigation of additional possible mediators, which include organizational learning and customer engagement alongside TIC. Examining these variables would better explain how SMEs implement sustainability in their business operations and follow environmentally attentive customer markets [17]. The analysis of entrepreneurial outcomes in resource-limited settings should focus on contextual elements that consist of regulatory environments, cultural influences as well as institutional frameworks. Analyzing how government policies and community-led sustainability initiatives contribute to sustainable practice adoption provides better understanding about tourism entrepreneurism [19]. Extra research efforts will provide an enhanced understanding of what drives sustainable growth with resilience in tourism-related small to medium enterprises.

6. Conclusions

This study emphasizes how important strategic flexibility (SF) and technological innovation capabilities (TIC) are to the success of tourism SMEs in resource-constrained settings like Nepal. Using the Resource-Based View (RBV) and Strategic Flexibility Theory, the study shows how SMEs can overcome resource constraints and embrace eco-friendly technologies and other sustainable practices through innovation and adaptability. The fragmented tourism ecosystem limits the direct impact of network orientation (NO) and entrepreneurial leadership (EL), despite the fact that EO and SF boost performance significantly. This emphasizes the need for context-specific strategies. The results provide useful information for policymakers to create supportive ecosystems through training initiatives and financial incentives, as well as for entrepreneurs looking to invest in sustainable innovations. To further promote sustainable entrepreneurship in emerging markets, future studies should examine additional mediators like organizational learning and contextual elements like cultural and regulatory influences [14,16,17,19]. However, the results of the study must be interpreted within certain contextual limitations. The study’s geographical and cultural focus is Nepal, a country known for its collectivist culture, informal business structures, and inadequate digital infrastructure. Because these factors have an impact on how concepts like network orientation (NO) and entrepreneurial leadership (EL) function, the findings might not be as broadly applicable to other emerging economies with different sociocultural and institutional contexts. To better isolate the effects of cultural and environmental factors on entrepreneurial behavior, future research should pursue cross-country comparative studies, including contexts such as Vietnam and Bhutan.

From a practical standpoint, the study offers several actionable recommendations for SMEs operating in similar emerging markets. First, tourism SMEs should adopt cost-effective technological innovation capability (TIC) strategies to achieve both operational and environmental benefits such as utilizing mobile digital booking platforms, energy-efficient technologies, or low-cost waste management systems. Second, managerial training programs should prioritize the development of adaptive leadership, scenario-based planning, internal agility, and dynamic resource reallocation. Finally, policymakers are encouraged to foster entrepreneurial ecosystems by investing in digital infrastructure suited to the informal nature of SMEs, supporting microfinance initiatives, and establishing public–private training facilities. Collectively, these strategies offer a roadmap for tourism SMEs and policymakers aiming to enhance resilience and promote sustainable performance in resource-constrained yet high-potential economic environments.