Innovation and Sustainability of Small and Medium-Sized Enterprises in Imo State: The Moderating Effect of Information Technology Adoption

Abstract

This study examined the relationship between innovation and sustainability of Small and Medium-sized Enterprises (SMEs) in Imo State, Nigeria, with Information Technology (IT) adoption as a moderating variable. Grounded in the Resource-Based View, Dynamic Capability Theory, the study argues that innovation capabilities and IT adoption jointly strengthen firms’ sustainable performance. A correlational research design was employed, and the population comprised 1,886 registered SMEs in Imo State, from which a sample of 329 SMEs was determined using the Taro Yamane formula. A stratified proportional random sampling technique was adopted to ensure adequate representation of SMEs sectors. Data were collected through a structured questionnaire, 291 valid responses depicting a response rate of 88.45% were analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis with interaction terms to test the moderating effect via SPSS version 26. Validity was ascertained through expert review while reliability were measured using Cronbach’s alpha and all the variables were above 0.70. Results revealed significant positive relationships between product, process, and marketing innovations and economic, social, and environmental sustainability measures of SMEs at a 5% significance level, and IT adoption strengthened this relationship across all innovation dimensions. The findings suggest that SMEs that adopt innovative practices while leveraging IT are more likely to achieve sustainable business performance. The study concludes that innovation practices enhance SME sustainability when supported by IT adoption. The study recommends that SMEs institutionalize innovation culture, invest in IT adoption, seek government support for digital transformation, and engage in capacity-building programs for sustainable practices.