Linking financial technology, innovation, and green finance to drive sustainable performance of SMEs of Pakistan

Abstract

Sustainability has become a strategic imperative for manufacturing SMEs amid increasing environmental regulations and stakeholder expectations. However, existing research offers limited insights into how digital financial innovations, particularly FinTech, contribute to sustainability performance in resource-constrained SMEs contexts. Addressing this gap, the present study investigates the impact of FinTech adoption (FA) on the sustainability performance (SP) of manufacturing SMEs, while exploring the mediating roles of organisational innovation (OI) and green finance (GF). Grounded in the resource-based view (RBV), the study develops a conceptual framework linking digital capabilities with sustainable outcomes. A quantitative research design was employed, and survey data were collected from 340 manufacturing SMEs in Pakistan. Structural equation modelling (SEM) was used to test hypothesised relationships. The results demonstrate that FA significantly improves sustainable performance both directly and indirectly through OI and GF. Furthermore, FA also mediates the relationship between GF and SP, emphasising its role in operationalising sustainable financial flows. This study provides empirical evidence that FA, when strategically integrated with innovation and financial mechanisms, acts as a transformative enabler of sustainability in SMEs. It contributes to theory by extending the RBV to include digital and green financial resources as dynamic capabilities for achieving environmental goals.