Pathways to twin transformation in SMEs: the role of innovation ecosystems

Purpose This study examines the key factors influencing twin transformation (TT) in small and medium-sized enterprises (SMEs) in Austria and Germany. By exploring insights from SME managers, founders, and representatives of innovation ecosystems (IEs), it highlights how IEs help SMEs navigate barriers and leverage enablers in their transformation journey. Design/methodology/approach An exploratory research approach is utilized, drawing on 62 semi-structured interviews. An inductive approach for concept development was applied to structure the qualitative data, followed by a fuzzy-set qualitative comparative analysis (fsQCA) to identify transformation pathways. Findings The results reveal different pathways to TT, shaped by varying enablers and barriers. Corporate culture and internal alignment emerge as fundamental enablers. In addition, the findings show that IEs mitigate barriers such as financial constraints and knowledge gaps while amplifying enablers like strategic partnerships and technological readiness. Practical implications The findings offer actionable insights for policymakers, IEs, and SMEs to advance TT by addressing common barriers and activating enablers, including support from public-private partnerships, funding programs, and digital innovation hubs. Originality/value This study contributes to the growing discourse on TT by empirically mapping the enablers and barriers SMEs encounter. It underscores the critical role of IEs in supporting SMEs and provides a nuanced perspective on how ecosystems facilitate the integration of digitalization and sustainability.