From Knowledge to Capability: The Role of Adaptability in Transforming Digital Creativity and Government Support into SME Sustainability

Abstract

This study investigates the role of adaptability as a mediating mechanism in the relationship between entrepreneurial knowledge, digital creativity, government support, and business sustainability among Small and Medium Enterprises (SMEs). In the context of increasing digital transformation and market uncertainty, SMEs are required not only to possess resources but also to develop adaptive capabilities to ensure long-term sustainability. This research adopts a quantitative approach using data collected from 280 SMEs operating in the food and beverage sector in Pangkalpinang City, Indonesia. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results reveal that digital creativity and government support have a positive and significant effect on adaptability, while entrepreneurial knowledge does not show a significant influence. Furthermore, adaptability has a strong and significant impact on business sustainability. However, entrepreneurial knowledge and digital creativity do not directly affect sustainability, indicating that their influence operates indirectly through adaptability. Mediation analysis confirms that adaptability significantly mediates the relationship between digital creativity and government support with business sustainability. These findings highlight that sustainability is not driven by static resources, but by dynamic capabilities that enable firms to respond effectively to environmental changes. This study contributes to the development of dynamic capability theory and provides practical implications for SME development strategies in the digital era.