Business clusters and SMEs' sustainable performance in emerging markets: examining the roles of open innovation and digital capacity

Abstract

Purpose This study aims to develop a framework for the sustainable performance (SP) of small and medium enterprises (SMEs) that will benefit emerging markets by emphasizing the roles of open innovation (OI) and digital capacity (DC) within a business cluster. Thus, the research investigates how social capital theory (SCT) and diffusion of innovation theory (DOI) within a cluster can facilitate the SP of SMEs. Design/methodology/approach The study employed a confirmatory research design and Partial Least Squares Structural Equation Modelling (PLS-SEM). It analyzed 583 Nigerian SME owners/managers. SP was measured using environmental, social, and economic performance, while coexisting, business support, and knowledge sharing were employed to measure cluster support (CS), which are essential factors in understanding the overall impact of SMEs on their communities and economies. OI was measured using both inbound and outbound open innovation (OI) methods. Findings The findings reveal that CS, OI, and DC impact SMEs' SP within clusters. The evidence reveals the innovative potential of SME clusters and the role that SCT and DOI play in helping sustainable performance through OI and DC, indicating that cluster support is critical to OI. The finding highlights the role of clusters in facilitating collaborative innovation, particularly in how they enable SMEs to leverage shared resources and knowledge for enhanced innovative outcomes. Findings also indicate that DC is vital for SMEs' SP. Research limitations/implications The study provides data to support informed decisions about sustainability in SME clusters, benefiting SMEs, researchers, policymakers, and practitioners. SMEs in clusters can leverage the ecosystem's collaborative potential to enhance OI practices across developing countries. This is significant for policy and practice in developing countries seeking to optimize SMEs' SP. Originality/value This study fills a gap in the literature by exploring how DC and OI can enhance SMEs' SP within a cluster. The integration of SCT and DOI in clusters for SMEs' SP is also a novel contribution of the study.

The authors' abstract, as published at the source. International Journal of Entrepreneurial Behaviour & Research, 2026 · DOI ↗