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Purpose This study aims to examine the implementation of blue economy principles in coastal micro, small, and medium enterprises (MSMEs) and analyze their effects on economic and environmental sustainability. The study also investigates the roles of MSME capabilities and ecosystem support in explaining how blue economy practices contribute to sustainable business outcomes in coastal economic systems. Design/methodology/approach This study employs a quantitative research design using Partial Least Squares Structural Equation Modelling (PLS-SEM) to test the proposed structural model. Data were collected from 350 owners and managers of coastal MSMEs operating in six coastal regions of South Sulawesi, Indonesia, including Makassar City, Selayar Islands Regency, Bulukumba Regency, Takalar Regency, Pinrang Regency, and Palopo City. The measurement and structural models were evaluated using reliability, validity, and hypothesis testing procedures. Findings The results indicate that blue economy implementation has a significant positive effect on both economic and environmental sustainability of coastal MSMEs. The findings also reveal that blue economy practices significantly enhance MSME capabilities, which in turn contribute to improved sustainability outcomes. In addition, ecosystem support plays an important role in strengthening both economic and environmental sustainability. The study further confirms that MSME capabilities partially mediate the relationship between blue economy implementation and sustainability outcomes. Research limitations/implications This study is limited to coastal MSMEs in South Sulawesi Province, which may restrict the generalizability of the findings to other regions. Future research may expand the geographical scope and incorporate additional variables such as technological innovation, digital transformation, or stakeholder collaboration to further explain sustainability outcomes in the blue economy context. Practical implications The findings provide important insights for policymakers and development agencies in promoting sustainable coastal economic development. Strengthening MSME capabilities, improving access to institutional support, and promoting sustainable business practices are essential strategies for enhancing the effectiveness of blue economy implementation among coastal enterprises. Originality/value This study contributes to the blue economy literature by developing and empirically testing a structural model that integrates blue economy implementation, MSME capabilities, ecosystem support, and sustainability outcomes at the firm level. By focusing on coastal MSMEs, the study provides new insights into how sustainability principles can be operationalized within small-scale enterprises in marine-based economic sectors.
Alrasyid et al. (Tue,) studied this question.