Strategic agility reaches the environmental pillar of small firm sustainability more weakly than the economic pillar: disaggregated evidence from Indonesian micro and small enterprises

Small and medium enterprises are nine in ten firms worldwide, yet their environmental pillar of sustainability advances most slowly. Whether the capabilities that keep such firms viable also move them toward environmental sustainability is unresolved, because most studies collapse the three pillars into one composite and aggregate managerial ties across counterparties whose interests differ. This study models strategic agility as a dynamic capability acting on sustainability directly and through three separately specified channels, ties with buyers, with suppliers, and with government officials, and specifies the three pillars as distinct outcomes. Survey data from 179 strategic decision makers in Indonesian small enterprises were analysed with partial least squares structural equation modelling, using differentiated response anchors, attention checks, and a marker variable. Agility predicted economic (β = 0.409) and social (β = 0.365) performance with medium effect sizes and environmental performance at about half that strength (β = 0.218). On the scale free metric of latent correlations the environmental pillar separates from both others by 0.229 and 0.196, with bootstrap intervals excluding zero; on the metric of partial coefficients only the separation from the economic pillar is distinguishable, and the title claims that contrast alone. The gap is not an artefact of measurement: the environmental block has the lowest ceiling rate and the most symmetric distribution of the three, and correcting for unequal reliability widens rather than narrows the difference. The model achieved out of sample predictive relevance for the economic and social pillars but none for the environmental one, and the indirect effect of agility on environmental performance through ties is statistically equivalent to zero against a triviality bound of 0.10. Of nine paths from tie types to pillars, only buyer ties to social performance was significant (β = 0.193), a count compatible with chance across nine tests and one that does not survive correction for multiplicity, so it is reported as a pattern to be tested rather than as an established channel. Because a cross sectional sample contains only surviving firms, the economic association is consistent with both a capability account and a selection account, and this design cannot separate them. Capability reaches outcomes whose returns the firm's existing routines already register, and an item level test shows that pricing alone is not the boundary, since the one environmental practice that pays for itself is not reached distinguishably more strongly than the two that do not. Environmental progress therefore depends on instruments that make those returns visible and required, not on capability building alone.