Balancing global standards and local needs: Digital technologies, social sustainability, and MSMEs

Literature has shown the benefits of digital technologies, and there is no doubt that they create immense value. However, value creation, such as digitally produced, increased standardized social sustainability practices in micro, small and medium enterprises (MSMEs), can sometimes produce negative outcomes. However, these relationships were rarely examined and discussed by prior researchers. The current study investigates, first, how the adoption of globalized digital technology solutions influences standardized social sustainability practices in MSMEs under the moderating effect of institutional pressures. Second, the study examines the effect of standardizing social sustainability practices on localized social sustainability initiatives in MSMEs. Third, it investigates the role of sustainability innovation in the relationship between standardizing social sustainability practices and focusing on localized, community-specific social sustainability initiatives in MSMEs. The theoretical model is developed using Institutional theory, Resource-based view and Contingency theory. Using 500 survey data sets, the theoretical model is tested. The findings indicate that globalized digital technology solutions have a positive and significant impact on the standardization of social sustainability practices. In addition, institutional pressures moderate the relationship between globalized digital technology solutions positively and significantly influence the standardization of social sustainability practices. The interesting aspect of our study is that the standardization of social sustainability practices has a negative influence on the focus on localized, community-specific social sustainability initiatives in MSMEs. Nonetheless, sustainability innovation acts as a contingency factor and increased sustainability innovation softens the negative effect of standardization on social sustainability initiatives. This study demonstrates that adopting globalized digital solutions can help MSMEs enhance standardized social sustainability practices, particularly when institutional pressures are present. However, standardization can sometimes limit localized, community-focused initiatives. To address this, businesses should prioritize sustainability innovation, reduce these negative effects, and create a better balance between standardized and local sustainability efforts.