Resource Constraints and Sustainable Diversification in SMEs: Social Capital Mechanisms and Sustainable Development Outcomes
DOI:
https://doi.org/10.64229/x6syk650Keywords:
Resource constraints, Sustainable diversification, SMEs, Social capital, Green industries, Sustainable development goals, Absorptive capacityAbstract
Resource-constrained small and medium-sized enterprises (SMEs) are increasingly expected to participate in green industry development and contribute to sustainable development. However, these SMEs are reported to be lacking in financial, technological, informational and human resources to transform green opportunities into diversification options. The current studies offer limited explanation of how multidimensional social capital can help SMEs transform external network resources into diversification capabilities for sustainable development. Building on resource-based view, social capital theory and sustainable development literature, this conceptual paper aims to develop a testable framework that links relational, structural and cognitive social capital with SME sustainable diversification into green industries. The framework explains how relational capital helps transform external resources into trust-based resource sharing, structural capital broadens SMEs’ access to institutional and non-redundant resource networks, and cognitive capital enables SMEs to meet sustainability standards and stakeholders’ expectations. It further specifies absorptive capacity as a conversion mechanism and institutional context as a boundary condition shaping whether SMEs can transform social capital into sustainable diversification outcomes. It also explains the dark side of social capital, including network lock-in, over-embeddedness, groupthink and exclusionary ties that may lead to social capital failure. By linking firm-level social capital mechanisms with economic, environmental and social outcomes towards Sustainable Development Goals, the study advances a more development-oriented explanation of SME green transition and makes implications for SME managers, policymakers and institutional actors.
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