GREEN INNOVATION ADOPTION AMONG SAUDI SMES: ALIGNING WITH VISION 2030

Abstract

This paper investigated green innovation adoption among Saudi Arabian small and medium-sized enterprises (SMEs) and their alignment with Vision 2030's sustainability objectives. Using mixed methods, the study combined statistical analysis of Monsha'at secondary data (21,557 SMEs) with Partial Least Squares Structural Equation Modeling (PLS-SEM) and primary survey responses from 87 SMEs to examine how organizational capabilities, financial mechanisms, cultural norms, and policy incentives influenced sustainability adoption. The research employed three theoretical frameworks— Technology-Organization-Environment (TOE), Resource-Based Theory (RBT), and Institutional Theory—to comprehensively capture barriers and supporting factors. Findings revealed that while 59.8% of SMEs had defined sustainability goals, implementation was severely constrained by financial barriers (67.8%), knowledge gaps regarding sustainability benefits (60.9%) and implementation expertise (59.8%), and limited awareness of government support programs (32.2%). Institutional drivers— government support (57.5%) and regulatory compliance (47.1%)—dominated motivations, outweighing intrinsic strategic considerations. SMEs prioritized financial incentives (70.1%), networking opportunities (65.5%), regulatory clarity (58.6%), and training (57.5%) as critical support needs. The study proposed targeted interventions addressing awareness gaps, accessibility barriers, and implementation effectiveness to bridge policy- practice gaps. These findings support policymakers, financial institutions, and SME leaders in accelerating green innovation, contributing to Vision 2030's successful achievement of economic diversification and environmental sustainability objectives.