Published May 5, 2026 | Version v1
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Understanding the MSME Environmental Transition: Nonlinear and Moderation Effects of Digitalization and Institutional Context

Authors/Creators

  • 1. ROR icon Universidad Internacional De La Rioja
  • 2. ROR icon Universidad Pontificia de Salamanca

Description

The necessary environmental transition involves a substantial challenge for micro, small, and medium-sized enterprises
(MSMEs). Moreover, in the Ibero-American context, it is even more challenging. Our study aims to shed light on the scarce and
inconclusive evidence in this regard, analyzing the influence of digitalization, given its inclusion in the so-called MSMEs' double
transition, as well as the effect of the institutional setting. The so-called double transition is more sensitive in emerging areas.
By means of analyzing direct and moderation effects on a representative database of 17.498 Ibero-American MSMEs, we aim to
show the existence of linear and nonlinear relationships that determine the level of environmental involvement of those organi-
zations. Our results show that the expected positive effect of digitalization exists, but it is not linear, but U-shaped. The extension
of the Kuznets curve is confirmed for digitalization in MSMEs. Additionally, the institutional context's positive influence also
moderates this nonlinear influence. These findings involve the need for not only digital technologies but also a transformational
internal process, which is influenced by institutional quality. Managers need to understand the importance of substantial or-
ganizational commitment and their own transformational capacity in the dual transition to avoid negative effects. In this vein,
institutions must focus on reducing the duration of the downward part of the U-shaped influence of digitalization. Ultimately,
digital transformation and institutional quality must move forward to sustainable change in MSMEs aligned.

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URL
https://summa.upsa.es/details.vm?q=id:0000180019

Dates

Accepted
2025-09-30

References

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