Fostering Digital Innovation and Sustainable SMEs: The Complementary Roles of Offline and Online Social Capital

The rise of digital technologies and online social networks is reshaping business environments, necessitating new innovation and sustainability strategies for small and medium enterprises (SMEs).This study examines the influence of offline (conventional) and online social capital on digital innovation and overall business sustainability among SMEs participating in an Indonesian state-owned enterprise incubation program.Survey data from 258 fashion SMEs were analyzed using structural equation modeling.The results indicate that both offline and online social capital have significant positive impacts on digital innovation and business sustainability measures spanning economic, social, and environmental performance.The findings highlight the complementary value of cultivating both conventional and digital social networks to drive innovation and sustainability in SMEs undergoing digital transformation.Implications for theory and practice around leveraging social capital are discussed.