Towards Sustainable Digital Innovation of SMEs from the Developing Countries in the Context of the Digital Economy and Frugal Environment

<jats:p>This study aims to explore the direct impact of the digital orientation, Internet of Things (IoT) and digital platforms on the sustainable digital innovation in the context of the digital economy and frugal environment. This study also investigated the mediating role of the digital platforms in these relations. The study was based on the quantitative research design and data were collected from the 397 CEOs and managing directors of Small and Medium Enterprises in Pakistan. Correlation and structural equation modeling approaches were applied for the analysis and testing of the hypotheses. Results revealed that the digital orientation, IoT and digital platform are major antecedents of the sustainable digital innovation. Results also show that the digital platforms mediate between both digital orientation-sustainable digital innovation link and IoT-sustainable digital innovation link. The rapid pace of change in the technology has forced the business organizations to think out of box and align their operational mechanism accordingly. The need for the sustainable digital innovation is a major need of the current decade for meeting the increasing demands of the society in a sustainable way. Organizations, especially SMEs, should be able to deal with these challenges and rapid technological transformations through cost effective frugal business models. The frugal innovation is an important element of sustainable digital innovation enables SMEs to reduce resources usage and waste and to enhance sustainable economic activities. In this way, they can develop and gain advantages in this highly competitive digital environment. This is the first study showing the bright harmony of the digital orientation, IoT and digital platforms for achieving the sustainable digital innovation in the rapid evolving digital economy.</jats:p>