Interlinking networking capabilities, knowledge worker productivity, and digital innovation: a critical nexus for sustainable performance in small and medium enterprises

Purpose As sustainable performance has a central role in the small and medium enterprises (SMEs) performance literature, this study aims to examine the influence of networking capabilities in enhancing sustainable performance through knowledge workers’ productivity and digital innovation. It also examines the sequential mediating role of knowledge workers’ productivity and digital innovation on networking capabilities and SMEs’ sustainable performance relationship. Design/methodology/approach Data were collected from 308 knowledge workers in the information technology sector and analyzed using the Hayes Process Macro bootstrapping method to test the proposed hypotheses. Findings Results indicate that knowledge workers’ productivity and digital innovation individually and sequentially mediate the relationship between networking capabilities and SME’s sustainable (economic and environmental) performance, surprisingly, they do not act as a mediator between networking capability and SME’s social performance. SMEs should prioritize investments in the professional development of their knowledge workers through training and skill enhancement programs. This investment equips knowledge workers with the tools to effectively use the knowledge and resources acquired through networking. Thus, knowledge workers may improve performance by using these resources to tackle challenges. Research limitations/implications Although this research focused on this specific context, it is prudent to acknowledge that additional factors may also exert influence on sustainable performance within SMEs, factors that managers may consider when making decisions. Methodologically, the cross-sectional design of this research poses a potential limitation, as it does not allow for the complete elimination of endogeneity concerns. However, it is worth noting that scholars have endorsed the use of cross-sectional data in cases where management researchers aim to expand beyond well-documented and longitudinal data sets. Practical implications This research offers practical recommendations for SMEs to improve their sustainable performance through networking. SMEs should seek partnerships with complementary knowledge to improve operations and for other performance-oriented benefits. Originality/value This study adds significantly to the literature on sustainable SME performance by studying the interdependent effects of networking capabilities. It also represents the individual and sequential mediation mechanism that links networking capabilities to SME success through knowledge worker productivity and digital innovation.