Materializing Digitalization as Sustainability-Oriented Innovation Among Micro, Small, and Medium-Sized Enterprises

Digital transformation has become imperative for businesses in the modern era, influencing their strategies, operations, and competitiveness. This chapter discusses the significance of digital transformation as a sustainable innovation for Micro, Small, and Medium-Sized Enterprises (MSMEs) in Malaysia, where most business establishments fall under this category. Thus, an organization’s capability to create knowledge depends on how much knowledge managers and employees can combine and exchange information. Sustainable value added is created within a firm when information is organized into knowledge, and knowledge is transformed into innovation. This argument can be extended to the setting of MSMEs by examining the interplay between digitization efforts, SOI, and overall business success. Despite the availability of government initiatives and financial aid programs, the adoption of digital technologies among Malaysian MSMEs still needs to grow, highlighting the importance of sustainable practices and innovation in long-term sustainability and growth. However, MSMEs often face challenges such as limited capital and lack of experience in managing new technologies, necessitating support and assistance in investment and training. The chapter concluded by emphasizing the crucial role of technology adoption in fostering innovation capabilities and outcomes among MSMEs in Malaysia. This sector significantly contributes to the country’s economy and employment.