How can SMEs drive a greener and more inclusive Europe?

Despite what some believe, small and medium-sized enterprises (SMEs) can play a key role in the digital, green and social transition taking place in the 21st century. However, SMEs cannot expect real change to come from adopting only a few basic digital tools. They need to go further, harnessing a range of organizational and ecosystem support factors. These are some of the conclusions of an open access study published in the Journal of Cleaner Production by Dolores Añón, Professor of Economics at the Universitat de València and a member of the ERI-CES research group and by Joan Torrent, Professor of Economics in the Faculty of Economics and Business and coordinator of the Interdisciplinary research group on ICT - Artificial Intelligence Laboratory (i2TIC-IA Lab) at the UOC.

The research analyses representative data from some 12,000 SMEs in the European Union and identifies the technological, organizational and environmental factors that contribute to the combined implementation of artificial intelligence (AI) and sustainability practices. The results show that digital maturity in itself does not guarantee that companies will make the leap towards the twin transition (digital and green) or the triple transition (digital, green and social).

The study by Añón and Torrent notes that SMEs also need specific strategic capacities and support from those around them. According to the study, external links and support, such as business ecosystems, networks of partners and public programmes, are decisive for strengthening internal capacity. The research, therefore, calls into question a widely accepted premise: "We've shown that, alongside large corporations, smaller companies can also be agents of change, provided they have the right conditions and the right support around them," the researchers explain.

The study's message is a hopeful one, the authors believe, but one which poses challenges: "Digitalization, environmental sustainability and social sustainability complement each other to a significant degree. When an SME invests in one of these areas, it produces positive effects in the others. But this only happens if it has the capacity to integrate them and an environment that supports this transformation."

Capabilities that make all the difference

According to the research findings, basic digital tools alone do not ensure readiness for advanced transitions. What makes the difference is "having strategic and dynamic capabilities, such as a clear orientation towards innovation, qualified personnel and good financial health". According to the authors, these qualities allow SMEs to restructure their internal resources and adapt to today's sustainability and digitalization challenges.

Research shows that factors such as owning patents, entrepreneurial experience and forming part of business groups significantly increase the likelihood of a company adopting AI and sustainability practices. In contrast, it is more difficult for companies with no interest in digitalization, those suffering from a shortage of talent and those operating exclusively in the domestic market to make progress.

The digital block effect

According to Dolores Añón, one of the key concepts of the study is the digital block effect, which occurs when an over-reliance on basic digital tools hinders upgrading to more advanced and transformative ones, such as AI. As Torrent, who is also director of the UOC-DIGIT research centre, explained, "it's not enough to mobilize digital capabilities; you need to mobilize non-digital capabilities, such as an innovative culture, human capital and financial solvency". "Without these levers, many SMEs are trapped at a basic level of digitalization that doesn't allow them to make the leap to the green and social transition," he added.

The authors noted that the research has significant political implications: "Public policies cannot be limited to promoting digitalization per se. They must promote the relationship between technology, organization and the environment, and this means supporting R&D, human capital and the cooperative ecosystems in which SMEs operate."

Differences across Europe

The analysis draws on EU-representative data from the Flash Eurobarometer 486 survey conducted for the European Commission. Participants included 11,976 companies with up to 250 workers, and the results point to a clear division within the continent. Thanks to more robust support ecosystems, SMEs in the north and west are leading the adoption of digital technologies and sustainable practices. Meanwhile, companies in the south and east are moving more slowly, due to a lack of resources and other political priorities.

"Catalonia and Spain have a substantial industrial ecosystem and a considerable number of new companies, but SMEs are a long way behind in the digital transformation process," said Torrent. The researcher believes that this is creating "a new social divide between companies that policymakers should be addressing but are not". To redress this, he suggests a need to act on two fronts. The first would involve revitalizing policies on competition to reduce the power of large corporations that threaten the new entrepreneurial landscape. Secondly, there should be a decisive effort to promote the digital transformation of existing SMEs, with targeted support programmes to meet the needs of the region and the sector. Despite this delay in digitalization, Spain stands out for its leadership in environmental and social sustainability practices.

Recommendations to avoid being left behind

The researchers warn that SMEs that fail to engage with the digital, green and social transitions risk losing competitiveness and reinforcing low-cost economic models with negative impacts on workers and society. However, those that manage to develop integrated digital and sustainability strategies can become agents of social change. "Small and medium-sized enterprises can be the protagonists of a greener, more digital and inclusive Europe, provided they have the right capabilities and the support of their communities," said the researchers.

For SMEs that want to embark on this path, the researchers recommend assessing the company's competitive value and treating digitalization and sustainability as levers for business model transformation. According to Torrent, the first step is to identify "where, why and how the company adds value", viewing digitalization and sustainability as mechanisms for transforming the business model. It is then necessary to seek external support, in the form of advice, partnerships and financing, that allows the deployment of a new digital and sustainable strategy in line with the company's vision of the future. "If you don't move forward," warned Torrent, "you run the risk of becoming less efficient and competitive, reinforcing a low-cost economic model with strong social and labour implications".

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This research project at the Universitat Oberta de Catalunya is part of the UOC's digital transition and sustainability mission. It supports the UN's Sustainable Development Goals (SDGs), particularly SDG 8, decent work and economic growth, and SDG 9, industry, innovation and infrastructure.

Dolores Añón wishes to express her gratitude for the financial support received from the PID2021-124266OB-I00 and TED2021-130232B-I00 projects (funded by MCIN/AEI/10.13039/501100011033 and by the ERDF and Next Generation EU/PRTR programmes), as well as from the PROMETEO/2023-CIPROM/2022/029 project of the Government of Valencia.

Reference article:

Añón Higon, D., & Torrent-Sellens, J. (2025). AI-twin and AI-triple firm's transition: Unveiling the predictors from European SMEs. Journal of Cleaner Production, 521, 146134. https://doi.org/10.1016/j.jclepro.2025.146134