1 s2.0 S2199853123002688 Main

Journal of Open Innovation: Technology, Market, and Complexity 9 (2023) 100166
Contents lists available at ScienceDirect
Journal of Open Innovation: Technology, Market,

and Complexity
journal homepage: www.sciencedirect.com/journal/journal-of-open-innovation-technology-
market-and-complexity
A SEM-ANN analysis to examine sustainable performance in SMEs: The

moderating role of transformational leadership
Imdadullah Hidayat-ur-Rehman a, *, 1, Majed Alsolamy b, 2
a
Department of MIS, Faculty of Business Administration, University of Tabuk, Saudi Arabia
b
Department of Management, Faculty of Business Administration, University of Tabuk, Saudi Arabia,
A R T I C L E I N F O A B S T R A C T
Keywords: The central aim of this research study is to investigate the interconnections and dynamics within small and
Fintech Adoption medium-sized enterprises (SMEs) by examining Fintech adoption, competitiveness, circular economy practices,
Sustainable performance transformational leadership, and sustainable performance. The study’s theoretical framework is grounded in the
Transformational leadership
Practice-Based View, integrating Fintech adoption, competitiveness, circular economy practices, trans
Competitiveness
Circular economy practices
formational leadership, and sustainable performance into the proposed model. To validate this model, the
research employs the SEM-ANN analysis method. The study focuses on workers within SMEs in Pakistan, with a
sample of 473 participants collected using a simple random sampling technique and 442 samples were deemed
suitable for analysis. Preliminary data examination and hypothesis testing were conducted using Smart-PLS 4.0
and SPSS-23. A two-fold SEM-ANN approach was employed to validate the study’s proposed model. The research
findings indicate a direct and significant impact of Fintech adoption and transformational leadership on the
sustainable performance of SMEs. Circular economy practices and competitiveness play vital intermediary roles,
connecting Fintech adoption and sustainable performance. Furthermore, transformational leadership acts to
moderate the relationships between Fintech adoption and both circular economy practices and competitiveness.
The ANN approach complements the SEM analysis, providing additional insights and expanding our under
standing of the subject. This study illuminates the interplay between Fintech, circular economy practices, and
transformational leadership in enhancing SMEs’ competitiveness and sustainable performance. It underscores the
pivotal role of integrating Fintech and sustainable practices for SMEs and provides insightful directives for
policymakers and scholars aiming to bolster SMEs in a competitive business environment.
1. Introduction 2003). Moreover, SMEs implement open innovation strategies across

various sectors, including Fintech, to bolster sustainable development
Small and Medium-sized Enterprises (SMEs) have emerged as (Bogers et al., 2018).
essential cogs within the mechanisms driving the global economy, Navigating through the financial ecosystem, Fintech adoption (FA)
substantively contributing to employment, innovation, and economic has burgeoned as a pivotal enabler for SMEs. It acts as a conduit for
development (Berisha-Namani, 2009; Mukaila Ayanda and Sidikat Lar financial inclusion and facilitates access to an expansive array of
aba, 2011). Their inherent agility allows for quick adjustments to financial tools, including, but not limited to, mobile banking and digital
changing market needs, which in turn helps in building economic payment platforms (Hollanders and Marc, 2020; Nicoletti et al., 2017).
resilience (Gölgeci et al., 2020). While SMEs foster regional develop FA not only streamlines operations and ameliorates cash flow manage
ment and enhance market diversity, they also navigate a myriad of ment for SMEs but also seamlessly integrates with facets of sustainable
financial challenges. These challenges necessitate adept adaptation to performance (SP), weaving a tapestry that aligns financial inclusivity
technological advancements in the financial sector and the embedding with sustainability (Soni et al., 2022; West and Bogers, 2017).
of sustainable practices (Abisuga-Oyekunle et al., 2020; Hawawini et al., In the era of digital transformation, particularly amidst Industry 4.0,
* Corresponding author.
E-mail addresses: [email protected] (I. Hidayat-ur-Rehman), [email protected] (M. Alsolamy).
1
ORCID ID: 0000–0001-7763-6566
2
ORCID ID: 0000–0001-9824-4780
https://doi.org/10.1016/j.joitmc.2023.100166
Received 10 September 2023; Received in revised form 28 October 2023; Accepted 31 October 2023
Available online 4 November 2023
2199-8531/© 2023 The Author(s). Published by Elsevier Ltd on behalf of Prof JinHyo Joseph Yun. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
I. Hidayat-ur-Rehman and M. Alsolamy Journal of Open Innovation: Technology, Market, and Complexity 9 (2023) 100166
big data analytics and blockchain technologies have emerged as pivotal how actions, particularly those that can be replicated and widely
elements in reshaping business operations and strategies, especially in adopted, impact performance (Bromiley and Rau, 2014). It provides a
the realm of SMEs. Blockchain technology, renowned for its ability to fitting approach to examine how firms can improve sustainability (Khan
offer secure, transparent, and tamper-proof transactions, coupled with et al., 2022). We posit that technological approaches, such as Fintech
big data analytics, which empowers businesses to derive actionable in and CEP, can be disseminated among companies, leading to superior
sights from voluminous data, has become indispensable in enhancing environmental and economic outcomes. Building on previous research
operational efficiency, ensuring data security, and facilitating informed that highlighted how Fintech can assist businesses in thriving in
decision-making. The integration of these technologies not only propels competitive markets and achieving SP, this study integrates FA, CEP,
SMEs towards achieving sustainable performance but also aligns seam COMP, TL, and SP into a comprehensive framework.
lessly with the global shift towards digitalisation and smart business The primary objective is to investigate the interconnections between
operations. FA, CEP, COMP, TL, and SP, thereby making significant theoretical
Incorporating blockchain technology and big data analytics into contributions. Firstly, this research addresses a current gap concerning
SMEs, especially within the context of Industry 4.0, can significantly FA and its influence on company SP, with a particular emphasis on its
enhance sustainable performance by fostering transparency, security, impact on CEP and SP among Small and Medium Enterprises (SMEs) in
and efficient decision-making. Blockchain technology facilitates secure the manufacturing sector. In addition, it explores how CEP and COMP
and transparent transactions, ensuring data integrity and reducing act as intermediaries in the FA - SP relationship, illuminating how
fraud, which is pivotal for financial transactions and supply chain financial aspects affect SMEs’ environmental initiatives. It also examines
management in SMEs (Hassan et al., 2023; Ho et al., 2023). Moreover, how TL moderates the relationships among FA, CEP, SP, and COMP. In
big data analytics enables SMEs to harness vast amounts of data, opti doing so, it bridges a lacuna in existing research by probing the effects of
mising operational processes, and facilitating predictive analytics for FA and financial accessibility on the adoption of CEP practices and
better strategic planning. Integrating these technologies can streamline sustainability endeavours among SMEs. Furthermore, this study gleans
operations, enhance resource allocation, and foster sustainability by insights from the PBV theory, deepening our understanding of how FA
enabling smart, data-driven decisions and secure transactions, especially affects environmental outcomes, competitive edge, and SP through
crucial in the financial ecosystem and supply chain management of better financial access and absorptive capacity. The findings will guide
SMEs (Patidar et al., 2023; Rehman Khan et al., 2022; Rejeb and entrepreneurs in the manufacturing SME domain on leveraging Fintech
Appolloni, 2022). Organisations must adapt their structures to incor and Industry 4.0 technologies to attain improved environmental
porate external knowledge, typically necessitating a transforming sustainability.
capability. Both Outside-In and Inside-Out open innovation strategies The subsequent sections of this manuscript are organised as follows:
are essential to enhance the transformative capability within dynamic The theoretical framework is elucidated, laying the foundational stones
capabilities, with Transformational Leadership playing a crucial role in for the hypotheses formulation. Subsequent sections immerse into a
this context (Albats et al., 2021). meticulous exploration of the research methodology, followed by data
The accentuation of sustainability within SME operational frame analysis. The paper culminates with an in-depth discussion, illuminating
works implicitly mandates an examination of the circular economy, the study’s implications and offering a cohesive synthesis of the findings.
which strives to minimise waste and optimizing resource utilization
(Ranta et al., 2020). By incorporating circular economy practices (CEP) 2. Theoretical framework
such as recycling and refurbishing, SMEs can effectively integrate
resource efficiency, cost reductions, and sustainable competitiveness 2.1. Fintech, financial accessibility and sustainability
into their business strategies, promoting both economic and environ
mental prosperity (İncekara, 2022; Rahman, 2020; Subramanian and In the contemporary financial landscape, Financial Technology
Suresh, 2022). (Fintech) has burgeoned as a pivotal force. It weaves together the
Competitiveness (COMP) and sustainability are not mutually exclu threads of financial accessibility and sustainability through the adept
sive; rather, they are intricately intertwined within the SME context. application of innovative technologies such as blockchain, artificial in
While COMP drives innovation and differentiation (Salavou et al., 2004; telligence, and big data analytics (Weihuan Zhou et al., 2015). Fintech,
Jin Hyo Joseph J.J. Yun et al., 2020; J.H.J. Yun et al., 2020), the with its inventive technological applications, offers a user-friendly and
adoption of sustainable practices boosts operational efficiency and convenient alternative to traditional financial management methods.
resilience, enhancing brand value and reputation in both clientele and This redefines the accessibility and efficiency of financial services and
market spaces (Moore and Manring, 2009). In parallel, the principles of products (Dorfleitner et al., 2017).
transformational leadership (TL) guide SMEs towards sustainability by The role of Fintech in enhancing financial accessibility is especially
nurturing an organisational culture that encompasses both environ noteworthy in regions where traditional banking infrastructures are
mental and social responsibility, forging sustainable partnerships, and limited. The inception of mobile money platforms has transformed
steering towards long-term sustainability (Alberti and Varon Garrido, financial access in several African countries. This allows populations
2017; Manzoor et al., 2019). without conventional banking access to engage in financial transactions,
The existing literature reveals a gap in understanding the interplay save, and access credit facilities (Okello et al., 2018). Moreover, Fintech
between Fintech Adoption (FA), Competitiveness (COMP), Circular platforms, such as peer-to-peer lending and crowdfunding, have demo
Economy Practices (CEP), and sustainability performance in SMEs, cratised access to capital. This enables small businesses and entrepre
despite earlier focused explorations of strategic and eco-conscious ini neurs to bypass traditional financial intermediaries (Bogers et al., 2017;
tiatives (Dwivedi et al., 2021; Siddik et al., 2023). Specifically, research Bollaert et al., 2021). Furthermore, Fintech not only streamlines the
has not delved deeply enough into the impacts of technology adoption in delivery of financial services globally but also promotes inclusivity. It
manufacturing enterprises and the pivotal role of finance in adopting champions green financing and sustainable development (Odei-Appiah
green practices and enhancing competitive sustainability (Kemunto and et al., 2022; Udeagha and Muchapondwa, 2023).
Kagiri, 2018; Khan et al., 2023; Pizzi et al., 2021). This study aims to The confluence of Fintech and sustainability has propelled both
clarify the intricate relationships among FA, COMP, CEP, Trans financial inclusion and eco-friendly practices, contributing significantly
formational Leadership (TL), and Sustainable Performance (SP) in SMEs. to sustainable development. Fintech, through innovative technologies
Using the Practice-Based View (PBV) as a guide, this study explores like blockchain and artificial intelligence, facilitates green financing by
how transferable technology and Circular Economy Practices (CEP) can enabling investments in sustainable projects and businesses (Zhang-Z
boost Sustainability Performance (SP). PBV facilitates understanding of hang et al., 2020). It also supports ESG (Environmental, Social, and
2
Governance) investing by developing platforms that seamlessly connect influencing firm performance, focusing on activities that various firms
investors with sustainable investments. Conversely, the sustainability might execute and are often in the public domain (Bromiley and Rau,
movement shapes Fintech by promoting the development of platforms 2014). On the other hand, RBV concentrates on the firm’s unique,
and products that adhere to green and ethical standards. This ensures inimitable resources as the source of competitive advantage, exploring
that technological advancements in finance do not exacerbate environ how such internal capabilities contribute to achieving and sustaining
mental issues (Deng et al., 2019). such advantage (Salsabila et al., 2022). While PBV tends to focus on
In addition, Fintech has facilitated the development of platforms that replicable practices adoptable across firms, RBV hones in on the inter
support sustainable investment and financing. For instance, robo- nal, often firm-specific resources that provide competitive edge. Both
advisors have been utilised to create investment portfolios aligned views, while focusing on different aspects of organisational strategy,
with the principles of sustainable and responsible investing (Friede provide valuable insights into how firms can navigate competitive
et al., 2015). Furthermore, blockchain technology has been employed to landscapes and enhance performance through either leveraging unique
enhance transparency and traceability in sustainable supply chains, resources or adopting effective practices.
ensuring that financial flows align with sustainable practices (Saberi A nuanced exploration of PBV in the context of sustainability,
et al., 2019). especially within SMEs, suggests that it offers a robust framework for
Despite the substantial progress in Fintech, there are evident gaps in analysing performance outcomes. This is particularly relevant when
the literature, especially concerning the long-term impacts of Fintech on considering the implementation of duplicable and transferrable ap
financial stability and sustainability. Firstly, there is limited empirical proaches, such as those discovered in the circular economy and financial
evidence on its impact on economic development and inequality, technology deployment (Khan et al., 2022).
particularly in developing countries (Arner et al., 2015). Secondly, the In the sphere of Circular Economy (CE) catered towards SMEs, PBV
intersectionality between Fintech and sustainability, particularly posits that CE methods can migrate among companies without stringent
regarding how Fintech platforms can be designed and regulated to isolation mechanisms, thus permitting SMEs to utilise the 3R (reduce,
incentivise sustainable investment and financing while positively reuse, and recycle) principles of CE through mimicking the operations of
contributing to Sustainable Development Goals (SDGs), remains an more substantial enterprises (Tang et al., 2022). Moreover, PBV lays a
emerging and underexplored field. Lastly, the ethical dimensions of theoretical groundwork for businesses to assimilate cutting-edge tech
Fintech, particularly concerning data privacy and security, require nologies, highlighting the aspects of duality, dynamics, mutual re
further research (Chueca Vergara et al., 2021). lationships, linkage, and scattered agency to navigate technology
In the context of Small and Medium-sized Enterprises (SMEs) and the adoption theories and practices. Grasping these principles eases the
circular economy model, which emphasizes resource efficiency and triumphant adoption of technologies, like Fintech, which sway organ
waste minimization, Fintech can play a pivotal role. It can facilitate the isational and societal performance indicators, such as economic flour
adoption of circular economy practices among SMEs, enhancing their ishing, amplified productivity, entrepreneurship, sustainability, and
sustainability and competitiveness (Rizos et al., 2015). Fintech plat additional economic, social, and environmental advancements (Kannan
forms, through mechanisms like peer-to-peer lending and crowdfund and Perez-Aleman, 2022).
ing, can provide SMEs with the essential capital to invest in technologies Despite the importance of PBV, the literature adopting this frame
and processes that support circular economy practices, such as recycling work is limited, especially concerning CE and sustainability. A few
and remanufacturing (Siddik et al., 2023). Moreover, blockchain tech discernible deviations are studies conducted by (Khan et al., 2022;
nology in Fintech can enhance transparency and traceability in supply Siddik et al., 2023; Tang et al., 2022), which harnessed PBV as a theo
chains, which is crucial for SMEs adopting circular economy practices retical perspective to scrutinize the impact of Circular Economy Prac
(Saberi et al., 2019). tices (CEP) on organisations’ Sustainable Performance (SP). This
Given the identified research gaps and the complex interplay among research concurs with the PBV methodology, proposing that sustain
Fintech, sustainability, and circular economy practices, the present ability practices that can be easily mimicked, such as CEP, will notably
research endeavours to explore the effects of Fintech on the sustainable affect the sustainability performance of SMEs.
performance of SMEs, with a particular focus on the mediating effects of In light of the above, the integration of Industry 4.0 technologies,
circular economy practices and competitiveness. Additionally, consid such as Fintech, has been recognized as a key enabler for implementing
ering the complexity and breadth of the identified themes, it is CE in SMEs in emerging economies, addressing specific enablers and
impractical to address all aspects in one study. Hence, this study will barriers that SMEs need to consider to develop the resources and capa
specifically delve into the role of transformational leadership, exploring bilities necessary for a competitive advantage in CE (Despoudi et al.,
how leadership practices can influence the adoption of Fintech and 2023). Moreover, the adoption of Industry 4.0 technologies, including
circular economy practices among SMEs, thereby affecting their sus financial technologies, has been found to amplify resource utilization
tainable performance and competitiveness in the market. This approach and productivity, thereby propelling the circular economy forward and
allows for a focused investigation into specific, interlinked domains, potentially facilitating more sustainable and efficient operational prac
providing valuable insights that can further inform research and practice tices within businesses (Kristoffersen et al., 2020). Thus, the PBV theory,
in the interconnected realms of Fintech, sustainability, and SME especially when considering the adoption of Fintech and CE-practices,
performance. becomes crucial in boosting sustainability performance within SMEs.
2.2. Practice Based View 2.3. Hypotheses development and conceptual framework
The Practice-Based View (PBV) underscores the impact of replicable 2.3.1. Fintech-adoption-(FA) and sustainable-performance-(SP)
and openly available organisational practices on firm’s performance, Fintech, which denotes the application of technology to enhance and
with practices defined as “a defined activity or set of activities that a revolutionize financial services, has garnered attention due to its ca
variety of firms might execute” (Bromiley and Rau, 2014). Unlike the pacity to boost financial accessibility, streamline processes, and promote
Resource-Based View (RBV), which attributes an organisation’s transparency (Qureshi and Siddiqui, 2020). By harnessing innovation
competitive advantage to distinctive resources, the PBV ascribes and cutting-edge technology, Fintech enhances and automates financial
organisational performance to widely recognised and attainable activ services. This ultimately benefits businesses, stakeholders, and cus
ities that enterprises might pursue. The PBV and RBV offer distinct tomers through the deployment of sophisticated applications and soft
perspectives on organisational strategy and performance. PBV empha ware (Chueca Vergara et al., 2021). It makes financial services more
sizes the role of transferable and publicly accessible practices in accessible, efficient, and affordable, disrupting traditional service
3
delivery methods and epitomising the digital transformation of the transformational leaders inspire employees to transcend conventional
financial sector (Hommel and Bican, 2020). Companies that have boundaries and wholeheartedly pursue the organisational vision (Felfe
embraced Fintech employ innovative approaches to offer banking ser and Goihl, 2002). Moreover, this leadership approach fosters
vices through mobile apps, providing increased flexibility and efficiency problem-solving skills and abilities in the workplace (Geyery and
while promising time and cost savings through digital technologies (Al Steyrer, 1998; Li et al., 2019).
Hammadi and Nobanee, 2019). Moreover, the evolution of an innova Alternatively, SP in SMEs encompasses a broad array of factors,
tive digital financial ecosystem via Fintech is pivotal in promoting including emissions reduction, natural resource conservation, environ
financial advancement, inclusivity, social stability, and integrity, ulti mental initiatives, employment features, occupational health and safety,
mately fostering sustainable development (Zhang-Zhang et al., 2020). community relationships, stakeholder involvement, and non-financial
Additionally, Fintech is recognized as a catalyst for enduring economic impacts (Burawat, 2019; Yu Shan Chen et al., 2014). Previ
sustainable-economic growth, distinguishing itself from traditional ous studies have also validated the significant positive effects of TL on
financial industries with its unique characteristics (Chueca Vergara the SP of SMEs (Burawat, 2019; Yu Shan Chen et al., 2014; Chen, 2020).
et al., 2021). An illustration that demonstrates this concept is Given the aforementioned evidence, it can be posited that TL in SMEs
peer-to-peer financing, enabling SMEs and stakeholders to engage in the has the potential to enhance SP. Thus, we propose the following
lending or borrowing of funds to advance social or sustainable projects hypothesis:
(Mild et al., 2015). Fintech services, such as microfinance and crowd H2: TL significantly influences Sustainable Performance of
funding, offer small businesses sustainable financing options (Moro- SMEs.
Visconti et al., 2020). Recent studies have focused on investigating the
connection between digital finance, ecological sustainability, and the 2.3.3. The Mediating role of circular economy practices (CEP)
sustainability of both digital finance and Fintech (Yan et al., 2022). The concept of the Circular Economy (CE) is delineated as an eco
Consequently, there has been increasing interest in investigating the nomic system aimed at minimizing waste and maximising resource
relationship between FA and financial performance. Studies have indi utilisation. This spans various activities, including resource extraction,
cated a positive impact of FA on financial performance (Guangyou Zhou product manufacturing, and consumption processes (Kirchherr et al.,
et al., 2022). 2017; Pizzi et al., 2021). However, the implementation of CE disrupts
The adoption of Fintech by SMEs has been pivotal in enhancing their traditional business practices and presents notable challenges (Lopes de
relationships with financial institutions and fostering sustainability. Sousa Jabbour et al., 2019). Open innovation bolsters competitive
Fintech, encompassing various technological innovations in the finan capability and innovation in both small and large enterprises by
cial sector, offers alternative financing platforms, such as crowdfunding. leveraging external sources of innovation (Brunswicker and Vanha
These platforms have been embraced by entrepreneurs for their lower verbeke, 2012; Mikhaylov et al., 2023). Open innovation steers circular
transaction costs and greater efficiency (Nordin and Zainuddin, 2023). economy innovations towards sustainability in organisations. It utilises
Notably, Fintech significantly bolsters the development of green credit both internal and external collaborations to navigate through institu
by mitigating information asymmetry and enhancing green credit allo tional and spatial developmental transitions and path dependencies
cation efficiency, especially in areas with elevated governmental envi (Yangd et al., 2023).
ronmental objectives and among SMEs with low carbon emissions (Liu Digitalization, especially through the adoption of financial technol
and You, 2023). Furthermore, Fintech facilitates seamless and swift ogies and blockchain, is recognized as a driving force for the circular
financial transactions, potentially reducing the need for physical bank economy. Antikainen et al. (2018) underscore the capacity of digital
visits. This can lead to decreased paper and carbon emissions associated isation to convert information into valuable assets and commodities.
with travel (Lijoka, 2022; OECD, 2022). In essence, Fintech not only Moreover, technologies intrinsic to Industry 4.0, including financial
streamlines financial transactions but also plays a pivotal role in driving technologies, enhance resource utilization and productivity, thereby
the sustainable performance of SMEs. propelling the circular economy forward (Kristoffersen et al., 2020).
In light of the recognized correlation between firms’ uptake of In the realm of merging FA and CEP, it becomes crucial to explore in-
technology and their achievements in sustainability, we leverage the depth the manner in which Fintech, as an aspect of digitalization, can
insights provided by the Practice-Based View (PBV) framework to serve as a spark in advancing CE, particularly among SMEs. Fintech,
advance the idea that incorporating FA as a standard practice across the which weaves together finance and technology, transcends its role as
supply chain can significantly boost the SP of these firms. Past research merely a financial management tool and emerges as a facilitator that can
has confirmed the significant positive impacts of FA on organisations’ SP aid the shift from linear to circular business models by offering inno
(Dwivedi et al., 2021; Siddik et al., 2023; Yan et al., 2022). Specifically, vative solutions like mobile payment platforms, artificial intelligence,
concerning the adoption of Fintech within CEP and COMP, this study and the Internet of Things (IoT) (Rialti et al., 2020). It equips SMEs to
anticipates significant positive impacts on the SP of SMEs. Based on this, navigate the financial ecosystem, supplying customized payment solu
we present the following hypothesis: tions, encouraging peer-to-peer lending, and consequently, potentially
H1: FA by SMEs significantly influences Sustainable Perfor amplifying CEP (Fischer and Pascucci, 2017).
mance of SMEs . Additionally, Fintech solutions augment the dissemination of infor
mation, risk evaluation, funding assurance, investor alignment, and in
2.3.2. Transformational leadership (TL) and sustainable performance (SP) surance provision, thereby accelerating the organisational shift towards
Transformational Leadership (TL), characterized by leaders who CEP and carbon neutrality (Whenish and Ramakrishna, 2022). However,
inspire, stimulate intellectual thinking, and empower their followers, the intricate relationship between FA and CEP requires a comprehensive
has been extensively studied (Bass, 1999; Den Hartog et al., 1997). This exploration of how Fintech can specifically facilitate the adoption and
leadership style is renowned for its capacity to shape the moral values implementation of CEP within SMEs, given the unique challenges and
and ethics of employees, leading to performance outcomes that surpass opportunities presented by the digital transformation and Industry 4.0.
expectations (Bass, 1985; Yukl, 1999). Furthermore, transformational CE is recognized as a vital contributor to sustainability, focusing on
leaders have been observed to encourage innovative work behaviour minimizing inputs, waste, and emissions, and accommodating various
among their followers, directly impacting creativity and performance stakeholder interests (Geissdoerfer et al., 2017). It has garnered atten
(Politis, 2002). tion from governmental and industrial sectors due to its potential in
The significance of TL in reshaping organisational norms and values, aiding the accomplishment of sustainable development goals (Schroeder
thereby enhancing individual performance, cannot be overstated (Jung et al., 2019). At a corporate tier, CEP involves compliance with envi
and Avolio, 2000). By encouraging intellectual thinking, ronmental protection regulations, particularly those related to
4
reduction, reuse, and recycling (Zhu et al., 2010). CE represents an et al., 2020; Jinhyo Joseph J.J. Yun et al., 2020; J.H.J. Yun et al., 2020;
innovative business model demanding fresh perspectives and ap J.H.J. Yun et al., 2020; J.J. Yun et al., 2020). Lastly, managerial acumen
proaches to business operations (Bocken et al., 2016). It aims to restore becomes more effective as cost savings are easily identified (Hojnik
and regenerate resources while enhancing production and consumption et al., 2018).
efficiency through the implementation of the 3Rs (Ghisellini et al., Building on the points mentioned earlier, this study suggests that
2016). CE-driven manufacturing systems are associated with resource COMP serves as a mediating factor between FA by SMEs and their sus
circulation, natural asset utilization, and product durability, all of which tainability performance, shaping the nature of their relationship. The
fortify sustainable operations (Siddik et al., 2023). CE inherently in level of COMP within an industry or market can determine how effec
tegrates aspects of environmental and economic sustainability (Calisto tively SMEs leverage Fintech solutions to enhance their sustainability
Friant et al., 2020). The integration of Fintech, as underscored by Siddik practices. Higher COMP may drive SMEs to adopt Fintech more exten
et al. (2023), can streamline financial operations and facilitate seamless sively, leading to improved sustainability performance, while lower
transactions, which are pivotal in managing and optimizing resource COMP may limit the effect of FA on sustainability results. Therefore, the
utilization, a core tenet of CEP. Moreover, Fintech enables SMEs to ac following hypothesis is proposed:
cess innovative financial solutions that can potentially fund and support H4: COMP mediates the relationship between FA by SMEs and
the implementation of circular practices, influencing their sustainability the SP of SMEs.
trajectory directly. The data management and predictive analytics ca
pabilities of Fintech can assist SMEs in strategically planning and 2.3.5. The moderating effects of transformational leadership (TL)
implementing CEP, offering insights into resource usage, waste man Transformational Leadership (TL) plays a crucial role in shaping
agement, and sustainable practices, thus paving a structured route to organisational dynamics, instigating changes in functionality, motiva
wards enhanced sustainable performance. Consequently, this study tion, guidance, and values of followers. This enhances their performance
suggests that Fintech adoption significantly impacts CEP, which in turn and aligning them with organisational objectives (Escortell et al., 2020).
influences SMEs’ SP. Therefore, the following hypothesis is presented: TL not only fosters satisfaction among employees through intellectual
H3: CEP mediates the relationship between FA by SMEs and the stimulation and guidance but also acts as a linchpin in elevating morale
SP of SMEs. and mitigating both emotional and organisational conflicts, ensuring
sustained high group performance (Arnold, 2017; Nurjanah et al.,
2.3.4. The Mediating role of competitiveness (COMP) 2020).
According to K. Wang et al. (2021); Y. Wang et al. (2021), the FA The profound influence of TL also encompasses nurturing positive
strengthens firms’ risk control capabilities and enhances customer relationships with subordinates, amplifying job performance, and
orientation, leading to increased confidence and improved COMP. Fin advocating for innovative approaches to achieve organisational objec
tech usage in firms is viewed as a vital innovation strategy (Dwivedi tives (Y. Wang et al., 2021; K. Wang et al., 2021). TL facilitates effective
et al., 2021). It not only reduces operating costs but also ensures effi communication and stimulates intellectual growth, motivating and
ciency and performance (Bömer, 2020; Glavina et al., 2020), which are inspiring individuals, amplifying their capabilities, and fostering a cul
important factors for enhancing COMP. Moreover, the adoption of ture of continuous learning and innovation (Y. Wang et al., 2021; K.
Artificial Intelligence can be seen as a form of FA, which undoubtedly Wang et al., 2021).
enhances firms’ competitive advantage, as argued by Momaya et al. The theoretical underpinning for exploring the moderating role of TL
(2020) and Sudiatmika et al. (2020). Fintech simplifies financial trans in the relationships among Fintech Adoption (FA), Sustainable Perfor
actions, enhances user-friendliness, fosters customer loyalty, and in mance (SP), Circular Economy Practices (CEP), and Competitiveness
creases COMP (Zetsche et al., 2017). (COMP) is deeply rooted in its inherent characteristics and previously
Murinde et al. (2022) have confirmed that FA augments COMP. established influences. Philosophical and empirical discourses posit that
However, the strength and sophistication of this competitive power transformational leaders are instrumental in enhancing COMP, inno
depend on the management of the adoption process. Regardless of the vative work behaviour, and SP. They bridge relational gaps among team
method of adoption (phased or immediate), it simplifies transactions, members and foster an environment conducive to improved perfor
reduces costs, improves user-friendliness, attracts more customers, and mance and innovation (Dwivedi et al., 2021; Li et al., 2019; Lin et al.,
enhances competitive power (Dwivedi et al., 2021; Sohal and Vass, 2022).
2022). The theoretical underpinning for studying the potential moderating
COMP and sustainability are concepts that have been extensively role of Transformational Leadership (TL) in themes like Sustainable
discussed in the literature. These arguments have gained popularity Performance (SP), Fintech Adoption (FA), Circular Economy Practices
worldwide, considering various perspectives at both organisational or (CEP), and Competitiveness (COMP) is rooted in the ability of TL to
market levels (Lopez-Torres, 2022). Sustainability refers to achieving a inspire and motivate followers towards enhanced performance and
balance in resource utilization to ensure that future generations have innovation. TL can potentially harmonize organisational goals with
access to similar resources as in the present (Artene et al., 2015). employee aspirations, thereby enhancing SP by fostering a culture that
Accomplishing sustainability requires a combination of three tasks that prioritizes sustainability in operational practices and decision-making.
guarantee the organisation’s sustainability. On the other hand, COMP Previous studies have verified notable effects of TL on SP (Burawat,
signifies healthy competition in the business environment. 2019). In the context of FA, TL can facilitate a conducive environment
Eco-innovation positively affects both sustainable competitive advan that encourages the adoption of new financial technologies by miti
tage and performance (Albats et al., 2021). gating resistance to change and fostering a culture of innovation.
While there is not a direct bidirectional link between the two con Regarding CEP, TL can promote the adoption of circular economy
cepts, both COMP and sustainability drive organisations to develop practices by instilling a vision aligned with sustainable development and
strategic activities that improve their performance and secure an edge resource optimisation. Furthermore, in enhancing COMP, TL can
over market competitors. This might be attributed to their multidi potentially create a competitive edge by devising strategies that harness
mensional and complex nature (Dwivedi et al., 2021). Viewing it from organisational strengths and capabilities, ensuring a lasting competitive
another angle, and in alignment with revisionist opinions, several rea advantage.
sons explain how sustainability influences COMP. Firstly, sustainability The exploration of TL as a moderator in these relationships is not
innovations and practices become effective and efficient (Gürlek and only theoretically justified but also practically relevant, providing
Tuna, 2018). Secondly, sustainability improves quality by sustaining nuanced insights into how the benefits of FA can be maximized through
productivity, reducing waste, and enhancing competitive power (Dey strategic leadership. Thus, the following hypotheses are proposed,
5
grounded in the aforementioned theoretical and practical were considered suitable for further analysis, resulting in a response rate
considerations: of 52.0%. This surpasses the threshold for a pen-paper survey as indi
H5: TL moderates the relationship between FA by SMEs and CEP. cated by Nulty (2008), indicating a satisfactory level of participation. To
H6: TL moderates the relationship between FA by SMEs and SP. ensure fairness and minimize bias, a simple random sampling technique
H7: TL moderates the relationship between FA by SMEs and was employed. Each participant received a sealed envelope containing
COMP. the questionnaire directly, and the envelopes were distributed impar
Proposed model of the study is depicted in Fig. 1 below. tially. The completed questionnaires were collected within a two-month
period, either directly from the participants themselves or through
3. Research methodology representatives of the researchers, instead of relying on factory man
agers. It is crucial to note that the participation in the survey was
3.1. Instrument development voluntary, and personal identification questions were deliberately
omitted to ensure anonymity. Table 1, presented below, outlines the
The study utilised a survey approach, using items derived from demographic composition of the participants.
previous pertinent research. The questionnaire was segmented into two
sections. The initial segment pertained to demographic details, encom 4. Empirical analysis
passing aspects such as work area, educational qualifications, experi
ence, and the age group of the participants; the subsequent portion The study employed a combined SEM-ANN approach, using a two-
comprised 30 questions aimed at eliciting the respondents’ viewpoints fold methodology. Firstly, the SEM method was utilized to scrutinize
about FA, CEP, COMP, SP, and TL. FA was measured using seven items, the relationships within the conceptual model. Secondly, the ANN
while COMP was assessed with five items, each adapted from Dwivedi method was applied to evaluate the significance of exogenous constructs
et al. (2021). To measure CEP seven items were derived from (French in predicting endogenous constructs. The suitability of PLS-SEM for
and Laforge, 2006; Jae chun Lee et al., 2007; Unob et al., 2007; Zhu complex models with multiple constructs has been acknowledged
et al., 2005). SP and TL were measured using five and six items, (Urbach and Ahlemann, 2010). To ensure robustness, pre-multivariate
respectively, adapted from Li et al. (2019). analysis assessed assumptions like linearity, normality, and
multi-collinearity (Voon Hsien Lee et al., 2020). The Linearity of re
lationships was gauged using ANOVA, revealing two non-linear re
3.2. Data collection and sample lationships (Table 2). Data normality was examined via the one-sample
Kolmogorov-Smirnov test, uncovering non-normal distribution.
The focus of the current research was directed towards individuals
employed within SMEs in Pakistan, specifically targeting employees Table 1
working in Finance, Accounting, Information technology, among other Profile of Participant Demographics.
areas. According to findings from the Small and Medium Enterprise
Item Characteristics Percentage (%)
Development Agency (SMEDA), there are over 38 million SMEs oper
ating in the country, contributing to approximately 40% of the national Finance 24.9
Accounting 35.5
income (Ali, 2020). Moreover, there are more than 21 million employees Working Area/ Department
Information Technology 28.1
working in SMEs in Pakistan, with approximately 100,000 employees Others 11.5
are working in Finance, Accounting, Information technology (State Bank Bachelors 24.2
of Pakistan, 2022). The primary objective of this study was to collect Educational Qualification
Masters 50.5
Ph.D. 3.6
survey responses from this particular population. Self-administered
Other 21.7
survey questionnaires were distributed proportionately, taking into ac Less than 11 years 47.5
count the sizes of the companies. A total of 850 questionnaires were 11–20 Years 33
Work Experience
handed out to employees within the Finance, Accounting, and Infor 21–30 years 12.9
mation Technology sectors of Pakistani SMEs, which employ between 50 More than 30 years 6.6
Less than 31 years 40.3
and 250 individuals. A response rate of approximately 50% was antici 31–40 years 31.9
pated. The questionnaires were distributed through face-to-face in Age Group
41–50 years 17
teractions with the employees, and ultimately, 473 questionnaires were Above 50 years 10.9
returned. After eliminating incomplete responses, 442 questionnaires
Fig. 1. Proposed Model of the Study.
6
Table 2
ANOVA Summary.
ANOVA-Table Sum-of-Squares df. Mean-Square F. Sig. Linear/ Non-Linear
SP*COMP Deviation-from-Linearity 135.366 168 0.806 1.407 0.006 No.

SP * CEP Deviation-from-Linearity 155.155 131 1.184 1.739 0.000 No.
SP * FA Deviation-from-Linearity 23.610 22 1.073 1.070 0.377 Yes
SP * TL Deviation-from-Linearity 27.407 18 1.523 1.547 0.070 Yes
PLS-SEM was chosen due to its compatibility with non-normal data

Table 4
(Hew et al., 2017). In light of non-linear relationships, a dual-stage
Outcomes of Fornell-Lacker’s Criterion.
approach (PLS-SEM followed by ANN) was preferred over
composite-based SEM and factor-based SEM, as the latter struggled with CEP COMP FA SP TL
non-linearity (Hidayat-ur-Rehman et al., 2022). Hence, the study CEP 0.787

adopted the combined SEM-ANN approach to tackle these complexities. COMP 0.392 0.751
FA 0.379 0.683 0.795
SP 0.418 0.586 0.679 0.811
4.1. SEM-based analysis TL 0.391 0.573 0.616 0.649 0.821
4.1.1. Evaluation of the measurement model

The study employed the PLS algorithm with its standard configura Table 5
tions to appraise the trustworthiness and soundness of the constructs. Heterotrait-Monotrait Ratio (HTMT).
The outcomes, laying out the reliability and convergent validity, are CEP COMP FA SP TL
meticulously laid out in Table 3. These findings distinctly portray that
CEP
the values of Cronbach’s alpha, composite reliability, and the reliability COMP 0.472
of indicators all exceed the threshold of 0.7, thus establishing a robust FA 0.441 0.813
degree of reliability within the measurement model, a fact highlighted in SP 0.490 0.713 0.807
the research by Leong et al. (2020). Moreover, the values of average TL 0.457 0.695 0.727 0.779
variance extracted (AVE) go beyond 0.5, thereby corroborating the

convergent validity of the measurement scales, as demonstrated by threshold. As thoroughly outlined by Henseler et al. (2015), adhering to
Leong et al. (2018a). the norm of HTMT ratios under 0.9 decisively affirms the profound ex
In the assessment of discriminant validity, a comprehensive istence of discriminant validity within the framework.
approach was adopted, incorporating both the Fornell-Lacker’s criterion
and the Heterotrait-Monotrait ratio (HTMT) criterion. The results ob 4.1.2. Common method bias
tained through utilizing the Fornell-Lacker’s criterion are meticulously The occurrence of common method bias (CMB), which refers to the
delineated in Table 4, in which the diagonal elements distinctly display bias that arises when data for both dependent and independent variables
the square root values of AVE across various constructs. It is significant are collected from the same source (such as a survey), can be recognized
to highlight that these values consistently exceed the related correla by investigating whether one factor primarily accounts for the majority
tions noticed with other variables, thereby offering persuasive proof for of the variation among the variables (Philip et al., 2003). To assess CMB
effectively establishing discriminant validity. Similarly, Table 5 reveals in our study, we conducted Harman’s single-factor test, which revealed
the HTMT ratios, consistently sustaining levels beneath the 0.9
Table 3
Overview of Tests for Reliability and Convergent Validity.
α Composite_Reliability Meas_Items Indicator Reliability AVE
Constructs
higher than 0.7 higher than 0.7 higher than or equal to 0.7 > 0.5
CEP1 0.795
CEP2 0.764
CEP 0.847 0.851 CEP3 0.815 0.620
CEP5 0.750
CEP6 0.811
COMP1 0.751
COMP2 0.744
COMP 0.808 0.810 COMP3 0.762 0.565
COMP4 0.736
COMP5 0.764
FA1 0.839
FA2 0.855
FA 0.852 0.856 FA3 0.834 0.632
FA4 0.739
FA6 0.695
SP1 0.804
SP2 0.826
SP 0.826 0.828 0.657
SP3 0.806
SP4 0.807
TL1. 0.754
TL2. 0.867
TL 0.838 0.840 0.675
TL3. 0.854
TL4. 0.805
7
that a single factor accounted for 34.29% of the total variance, a value complementary partial mediation.
significantly lower than 50%. This finding indicates the absence of CMB Furthermore, the subsequent set of three hypotheses, namely H5, H6,
in our case. Furthermore, a thorough collinearity assessment was con and H7, put forth the idea that transformational leadership acts as a
ducted, revealing that all variance inflation factor (VIF) values remained moderating factor in the relationships amid FA→CEP, and FA→COMP
under 3.3. This aligns with Kock’s (2015) assertion that VIF values while the FA→SP association is not moderated by TL. The results of our
below 3.3 indicate the absence of CMB. study provided empirical support for hypotheses H5 and H7, as indi
cated by the p-values of 0.000 for TL x FA → CEP and 0.042 for TL x FA
4.1.3. Structural Model Analysis → COMP, respectively. These findings demonstrate that TL significantly
In the process of assessing the structural model, our initial focus was moderates the relationships between FA → CEP and FA → COMP.
on scrutinizing the internal variance inflation factor (VIF) to identify any However, our hypothesis H6 did not receive empirical support, as the p
signs of collinearity. Notably, the highest VIF value recorded was 2.201, value (0.512) was significantly above 0.05, suggesting that the moder
which falls below the recommended threshold of 5 – a value established ating effects of TL on the FA → SP relationship are not prevalent.
by (Hair et al., 2017) – signifying the absence of collinearity. Moreover, To sum up, the practical examination outcomes have verified the
we conducted evaluations based on the coefficient of determination suggested framework, providing evidence that FA, CEP, COMP, and TL
(R2), effect size f2, and predictive relevance using Q2. The outcomes for play crucial roles in influencing the SP of SMEs. Furthermore, the
these assessments all exceeded their respective predefined threshold investigation unveils that CEP and COMP function as intermediaries in
values, as outlined in Table 6. the connection between FA and SP. Moreover, TL moderates the re
Hypotheses testing was carried out using the bootstrapping method lationships between FA and CEP, as well as FA and COMP, while it does
in SmartPLS 4, employing 5000 subsamples with default settings. The not moderate the FA and SP relationship. The model validated in this
significance of the relationships was evaluated by analysing the beta (β) study successfully explains 56.5% of the variance observed in the SP of
values, alongside their respective t-values and p-values. Elaborate SMEs.
bootstrapping outcomes are available in Table 7. Results of boot
strapping are listed in Fig. 2. These findings demonstrate that our six
hypotheses (H1 to H5, and H7) were supported while hypothesis H6 (TL 4.2. ANN Analysis
x FA → SP) was not supported.
The empirical results confirmed significant impacts of FA on SP (β: In the research undertaken, SPSS 23 played a pivotal role in per
0.365, p = 0.000, t = 6.477) thus providing support to hypothesis H1. forming analytical operations, particularly employing a multilayer
This finding suggests that the FA by SMEs leads to a reasonable gain in perception Artificial Neural Network (ANN). The ANN methodology,
SP. The next hypothesis H2 proposed the direct significant impacts of TL elucidated thoroughly by several researchers, articulates the manner in
on SP. H2 was also supported by bootstrapping results (β: 0.327, which neurons accumulate knowledge through an intricate learning
p = 0.000, t = 5.835). process, subsequently leveraging this acquired information to predict
The next research hypothesis (H3) focused on the involvement of outcomes at output neuron nodes (Hew et al., 2019; Ooi et al., 2018).
CEP as an intermediary factor linking FA and SP. The empirical findings Engaging in ANN analysis for this study mandated inclusion criteria that
substantiated a noteworthy mediation effect of CEP, as evidenced by the were stringent - only constructs substantiated with statistical signifi
p-value (0.044) falling below 0.05 and the t-value (1.998) surpassing cance via PLS-SEM were considered (Liébana-Cabanillas et al., 2018).
1.96. As the three beta values between FA→CEP, CEP→SP, and FA→SP Hence, the variable ’Trialability’ was judiciously excluded from the
are significant and positive, thus, the CEP plays a role of complementary ANN model visually depicted in Fig. 3. Adhering to methodologies
partial mediation between FA → SP. The second proposed hypothesis embraced by a multitude of studies exploring technology adoption
(H4) about mediation effects was related to the mediating effects of through neural network models (Voon Hsien Lee et al., 2020; Ooi et al.,
COMP between the relation FA → SP. This hypothesis was also sup 2018), a singular hidden layer was utilized. This strategy, rooted in its
ported by results since the p (0.025) is below 0.05, and t (2.245) exceeds efficacy in adequately representing any continuous function, was
1.96. Moreover, the three path coefficients between FA→COMP, deemed most appropriate (Negnevitsky, 2011). The hidden layers were
COMP→SP, and FA→SP are significant and positive, thus, the relation automatically generated and strategically employed the sigmoid acti
ship FA→SP is partially mediated by COMP and the type of mediation is vation function in both the hidden and output layers (Ooi et al., 2018).
An imperative step taken to safeguard against over-fitting involved
Table 6
Evaluation of the Structural-Model.
Endogenous- R Square
R2
Variables Adjusted
2 0.75 = > Substantial0.50 = > Moderate0.25 = > WeakHair et al.
R CEP 0.276 0.271
(2017)
COMP 0.511 0.507
SP 0.566 0.561
Endogenous Variables CEP COMP FA SP TL
CEP 0.017
COMP 0.013 0.35 = > Large effect0.15 = >Medium effect0.02 = > Small effect
Effect Size(f2)
FA 0.025 0.333 0.140 Hair et al. (2017)
SP
TL 0.087 0.086 0.128
Constructs CEP COMP FA SP TL
CEP 1.399
COMP 2.072
Collinearity(Inner VIF) VIF< 5.0Hair et al. (2017)
FA 1.641 1.641 2.201
SP
TL 1.664 1.664 1.922
Endogenous Construct Predictive Relevance Q2
PredictiveRelevance(Q- CEP 0.150
Value larger than0 indicates Predictive RelevanceGötz et al. (2010)
Square) COMP 0.278
SP 0.365
8
Table 7
Bootstrapping Test Results.
Confidence Interval 95% Bias Corrected
Hyp.#. Path. Beta (β) T-Values. P-Values. Remarks
Lower Limit Upper Limit
H1. FA → SP 0.365 0.023 0.125 6.477 0.000 Supported

H2. TL → SP 0.327 0.022 0.107 5.835 0.000 Supported
H3. FA → CEP → SP 0.033 0.003 0.067 1.998 0.044 Supported
H4. FA → COMP → SP 0.055 0.006 0.103 2.245 0.025 Supported
H5. TL x FA → CEP 0.280 0.178 0.375 5.620 0.000 Supported
H6. TL x FA → SP 0.028 -0.057 0.109 0.655 0.512 Not Supported
H7. TL x FA → COMP 0.078 0.002 0.150 2.030 0.042 Supported
Fig. 2. Bootstrapping Results.
deploying a ten-fold cross-validation method, wisely allocating 70% of In Table 8, we observe RMSE performances across 10 neural net
the data to network training and holding back the remaining 30% for works during the training and testing phases. The RMSE values, which
rigorous network evaluation. Subsequent phases of the research are all below 0.1, confirm the model’s accuracy, as lower RMSE values
involved a meticulous evaluation of the ANN Model’s Predictive Effec indicate minimized error, and thus, a more reliable model. The average
tiveness and a thorough exploration into the inherent strengths of its RMSE for the training phase was 0.097 and 0.057 for the testing phase,
predictive capability. while standard deviations of 0.003 in both phases signify minor varia
The Artificial Neural Network (ANN) model was scrupulously tions, highlighting the model’s consistency.
assessed, emphasizing its predictive precision by calculating the root Underlining that within the ANN model, Circular Economy Practices
mean square error (RMSE) values during both testing and training stages (CEP), Fintech Adoption (FA), Competitive Advantage (COMP), and
across numerous iterations. The consolidated data (refer to Table 8) Transformational Leadership (TL) function as the input neurons, and
reveals a clear trend, wherein the mean RMSE values for the testing and Sustainable Performance (SP) is the output neuron. The formula
training stages are 0.097 and 0.057, respectively. The remarkably R2 = 1 − RMSE
S2
was used, where RMSE and S2 (variance of desired output)
modest size of these statistical values strongly validates the notably are derived from the test data, underscoring the model’s robustness in
improved predictive accuracy of the ANN model, aligning with predictive analytics. This extensive examination and resultant data
Hidayat-ur-Rehman et al. (2022). corroborate the model’s enhanced capability in forecasting with
In order to quantify the ANN model’s effectiveness, the proportion of commendable precision, thereby rendering it an invaluable tool in
variability (R2) explained by the model was also scrutinized. This analysing and interpreting SMEs’ SP.
assessment employed a specific formula where S2 denotes the variance After assessing the predictive capabilities of the ANN Model, a sub
of the anticipated output (Leong et al., 2018b). The results pinpoint that sequent sensitivity analysis was undertaken. This analysis, aimed at
the input neurons can predict approximately 83.2% of the variability in dissecting the predictive competencies of the input neurons, providing
the sustainable performance of SMEs. Significantly, the ANN model’s insight into the relative importance of the exogenous constructs,
derived R2 value of 86.9% surpasses the 56.6% achieved through essentially determining their effectiveness in influencing Sustainable
Structural Equation Modelling (SEM) analysis, highlighting the ANN Performance (SP) among SMEs (Leong et al., 2019). The method used to
model’s superior predictive prowess, especially in delineating SMEs’ measure the relative importance of each determinant involved
Sustainability Performance (SP). observing changes in the anticipated outcome as varying metrics of the
9
Fig. 3. The ANN Model.
Table 8 Table 9
RMSE Performance in Training and Testing Phases. Sensitivity Assessment Using Normalised_Importance Measures.
ANN-Model (R2 =86.9%) In the ANN model, the output neuron represents
Neural-Network SP
Neural. Networks. Training-Phase Testing-Phase.
CEP COMP FA TL
N-1 SSE R M S E. N-2. S S E. R M S E.
ANN-1 0.155 0.011 0.441 0.393
ANN-1 301 2.856 0.097 141 0.396 0.053
ANN-2 0.177 0.160 0.310 0.353
ANN-2 318 3.148 0.099 124 0.488 0.063
ANN-3 0.183 0.044 0.451 0.322
ANN-3 298 2.938 0.099 144 0.464 0.057
ANN-4 0.194 0.146 0.418 0.242
ANN-4 296 2.735 0.096 146 0.449 0.055
ANN-5 0.188 0.092 0.435 0.285
ANN-5 305 3.000 0.099 137 0.440 0.057
ANN-6 0.195 0.100 0.375 0.330
ANN-6 320 2.833 0.094 122 0.432 0.059
ANN-7 0.193 0.071 0.383 0.353
ANN-7 302 2.904 0.098 140 0.413 0.054
ANN-8 0.241 0.083 0.377 0.299
ANN-8 307 2.746 0.095 135 0.417 0.056
ANN-9 0.154 0.114 0.421 0.311
ANN-9 312 2.865 0.096 130 0.414 0.056
ANN-10 0.140 0.090 0.389 0.382
ANN-10 320 2.681 0.092 122 0.420 0.059
Average-Relative-Importance 0.182 0.091 0.400 0.327
Average. 2.871 0.097 0.433 0.057
Maximum-Relative-
Std-Dev. 0.138 0.003 0.028 0.003 0.241 0.160 0.451 0.393
Importance
Remarks: Normalized-Relative-
76% 57% 89% 83%
Within the ANN-Model, CEP; FA; COMP; and TL served as the input neurons; Importance(%)
while SP served as the output neuron.
R2 = 1 - RMSE/S2, where RMSE, and S2 (the variance of the desired output) are
taken for the test data. Interestingly, despite the variations in normalized importance across all
instances of the ANN model (ANN-1 through ANN-10); the consistent
factor were applied (Chong, 2013). Subsequent assessment of normal emergence of FA and TL as dominant factors solidifies their influential
ized importance was realized by dividing each construct’s average roles in steering SP for SMEs.
relative importance by the highest relative importance observed, This profound assessment mirrors not only the substantial impact of
rendering the outcome as a proportion in percentage terms (Hidaya FA and TL on SP but also subtly underscores the necessity for SMEs to
t-Ur-Rehman et al., 2021; Hidayat-Ur-Rehman et al., 2022). pivot their strategies and policies toward recognizing and enhancing
Table 9 encapsulates the results, displaying Fintech Adoption (FA) as these specific areas. Therefore, by incorporating advanced Fintech so
the paramount determinant, boasting a normalised importance of 89%. lutions and fostering transformative leadership within their operations,
Transformational Leadership (TL) trails closely with a notable 83% SMEs could potentially pave the way for enhanced sustainable perfor
normalised importance. Circular Economy Practices (CEP) and mance. This interpretative elucidation of the sensitivity analysis illu
Competitive Advantage (COMP) manifest lower normalized importance minates the pivotal role of certain determinants and affirms the
values, 76% and 57% respectively. coherency and reliability of the ANN model in elucidating predictive
Peering into the data from Table 9, these findings coalesce seamlessly insights within the SME context.
with results derived from the Structural Equation Modelling (SEM)
analysis, which pinpointed FA and TL as imperative constructs.
10
5. Discussion crucial mediators in the FA → SP relationship. The moderating role of TL

emphasises the importance of adept leadership in facilitating the
5.1. Insights and interpretations from the findings acceptance and implementation of Fintech solutions. This, in turn,
promotes the assimilation of CEP and boosts COMP within SMEs.
The aim of this study was to examine the mediating influence of CEP
and COMP on the impacts of FA on SP in SMEs, with a particular focus on 5.2. Theoretical implications
the moderating role of TL. Drawing from the Practice-Based View, we
proposed a comprehensive model that includes FA, CEP, COMP, TL, and This research augments the existing knowledge base by offering
SP. Using a two-fold SEM-ANN analysis, we validated our model and valuable theoretical and managerial implications. The theoretical im
obtained insightful findings. plications of the study are multifaceted, spanning several domains of
The comprehensive analysis we conducted has yielded numerous organisational theory and practice. The study’s theoretical framework
significant findings that illuminate the intricate relationships among the draws from Practice-Based View, which provide a lens to examine how
variables within our proposed model. Foremost, our investigation un firms develop and deploy capabilities to adapt to dynamic environ
equivocally establishes that FA exhibits a direct and significant impact ments. This perspective provides a robust foundation for understanding
on the SP of SMEs. This pivotal discovery reinforces the idea that SMEs the relationships between FA, CEP, COMP, TL, and SP in SMEs.
who embrace Fintech solutions are not only poised to experience Firstly, the direct and substantial impact of FA on SP, as demon
enhanced SP outcomes but are also better positioned to flourish in the strated by this study, bolsters the theoretical premise that technological
dynamic business landscape. Notably, these findings are consistent with adoption is crucial for improving organisational performance, especially
previous research endeavours, which have consistently underscored the within the context of SMEs. This lends strong support to the Practice
positive and broad impacts of FA on various aspects of overall business Based View, highlighting the strategic importance of practice and
performance (Dwivedi et al., 2021; Siddik et al., 2023; Yan et al., 2022). technology adoption in shaping organisational outcomes.
Moreover, our comprehensive findings highlight the pivotal role Secondly, the mediating roles of CEP and COMP in the FA-SP rela
played by CEP and COMP as vital mediators within the intricate rela tionship present a nuanced interpretation of how technological adoption
tionship between FA and SP. The identification of CEP as a mediating leads to enhanced sustainable performance. The theoretical insight
factor indicates that integrating Fintech solutions allows SMEs to derived suggests that the adoption of Fintech solutions is not isolated but
incorporate sustainable practices into their daily business operations is deeply connected to an organisation’s sustainable and competitive
seamlessly, thereby fostering a notable improvement in their SP out strategies. Consequently, future theoretical models examining the
comes. Likewise, the intermediary role of COMP emphasizes that the FA impact of technology adoption on organisational performance should
enhances the competitive capacities of SMEs, thereby generating a incorporate the mediating roles of sustainability and competitiveness
favourable and transformative effect on their SP. These notable dis practices to offer a more holistic and nuanced understanding.
coveries underscore the paramount importance of considering medi Moreover, the study illuminates the pivotal role of TL, not just as a
ating factors when assessing the profound implications of FA on the SP of direct influencer of SP, but also as a moderator in the relationships be
SMEs. Crucially, these findings not only align with the current body of tween FA and CEP, and FA and COMP. This reinforces the theoretical
research but also corroborate the consistent results reported by Siddik proposition that leadership styles, especially those that are trans
et al. (2023) and Dwivedi et al. (2021), reinforcing the notion that FA formational in nature, can dictate how technological adoption perme
confers substantial benefits on SMEs’ SP. ates various organisational practices, such as sustainability and
Moreover, our study delves deeper to unveil the pivotal moderating competitiveness. Thus, TL emerges as a pivotal element that can
role of TL within two key relationships embedded in our proposed potentially amplify the benefits derived from FA, particularly in the
model. Firstly, our findings unequivocally establish that TL exerts a realms of CEP and COMP, thereby providing a deeper, more nuanced
direct and significantly positive impact on SP. This key discovery understanding of the FA-SP dynamic.
highlights the vital influence of transformational leaders in fostering an However, the non-validation of Hypothesis H6, suggesting the
organisational conducive to enhanced SP outcomes. Secondly, our moderating effect of TL on the FA-SP relationship, poses a theoretical
investigation reveals that TL serves as a potent moderator in the FA - CEP conundrum. Even with the established direct impacts of FA and TL on
relationship. This compelling evidence suggests that transformational SP, and TL’s moderating role in the FA-CEP and FA-COMP relationships,
leaders excel at creating an environment that encourages and supports TL did not manifest as a significant moderator in the direct FA-SP
the seamless integration of Fintech solutions, thereby facilitating the relationship. This implies that while TL can influence how FA affects
incorporation of CEP within SMEs. Thirdly, our study illuminates the certain organisational practices (CEP and COMP); its moderating influ
moderating influence of TL in the relationship between FA and COMP. ence on the direct association between FA and SP is not as pronounced.
These notable findings are in harmony with the existing body of This paves the way for further theoretical exploration and debate
research, as emphasized by the works of Ayoko and Konrad (2012) and regarding the conditions and contexts under which TL may or may not
Nurjanah et al. (2020). They further solidify the pivotal role played by exert a moderating influence on the FA-SP dynamic.
transformational leaders in harnessing the myriad benefits of FA to In essence, the study provides a rich theoretical framework that not
enhance SMEs’ competitive capabilities. This transformative role of TL only validates existing propositions within the literature but also in
culminates in a tangible and sustained improvement in overall perfor troduces new paradigms and questions that warrant further exploration.
mance outcomes for SMEs. The intricate roles of CEP, COMP, and TL within the FA-SP relationship,
Our empirical findings did not validate Hypothesis H6, which posited as outlined by the study, serve as a fertile foundation for future research
that TL would moderate the FA→SP relationship. A p-value of 0.512, endeavours. This is especially true for those keen on exploring the
exceeding the conventional 0.05 significance level, negates the pre complex interplay among technology adoption, sustainable practices,
sumed moderating effects of TL. The anticipated moderating effect of TL competitiveness, leadership, and organisational performance in the SME
on the relationship between FA and SP was not substantiated in the arena. This theoretical foundation not only enriches the academic
empirical findings, indicating that TL might not be a pivotal factor in discourse but also provides practical insights for SMEs navigating the
either enhancing or diminishing the impact of FA on SP. As a result, the complexities of technology adoption, sustainability, and competitive
role of TL in the FA→SP dynamic warrants investigation to discern its ness in the ever-evolving business landscape.
nuanced impacts, if any, in future research endeavours.
In summary, our findings highlight the direct significant impacts of
FA and TL on SP in SMEs. Additionally, CEP and COMP emerged as
11
5.3. Practical Implications on the direct and indirect impacts of FA on SP, and there might be other
unexplored factors influencing these relationships. Future research
The managerial implications of this research are particularly note could incorporate additional variables, such as financial resources,
worthy. The study reveals several pragmatic implications that could be technological infrastructure, and regulatory environment, to enrich the
invaluable for practitioners, especially those working within the SME comprehensiveness of the model. Addressing these limitations will
sector. contribute to a more robust understanding of the intricate interactions
Firstly, the direct and potent impact of FA on SP underscores the between FA, CEP, COMP, TL, and SP in SMEs.
need for SMEs to integrate Fintech solutions into their operational
frameworks strategically. Practitioners should harness the capabilities Ethical statement/approval
offered by Fintech, such as enhanced financial management, stream
lined operations, and improved customer experiences. Doing so can Not applicable, as our paper does not involve research on animal or
augment their SP and strengthen their standing in an increasingly digital human subjects under the Bioethics Act.
and competitive business environment. Aligning FA with organisational
strategies could open up new opportunities for growth, innovation, and Ethics statement
sustainability within SMEs.
Secondly, the mediating roles of CEP and COMP in the FA-SP rela Not Applicable.
tionship offer a roadmap for SMEs to navigate the intricacies of
enhancing performance sustainably through Fintech adoption. Practi Funding Statement
tioners should recognise that the advantages gained from FA can be
magnified when combined with sustainable and competitive practices. This research received no external funding.
As such, the strategic incorporation of Fintech solutions should be
bolstered by a robust framework that also highlights circular economy
Funding
and competitive strategies. This ensures that technological adoption is
not only sustainable but also provides a competitive edge.
The author(s) received no financial support for the research,
Moreover, the pivotal role of TL, especially in moderating the re
authorship, and/or publication of this article.
lationships between FA and CEP, and FA and COMP, underscores the
need for SMEs to foster a leadership style that is transformational in
CRediT authorship contribution statement.
nature. Practitioners, particularly those in leadership positions, should
strive to develop an organisational culture that not only embraces
Dr. Imdadullah Hidayat-ur-Rehman: Idea Development, Data
technological innovations but also ensures their smooth integration into
Analysis & Interpretation. Dr. Majed Alsolamy: Literature Review,
sustainable and competitive practices. TL, with its emphasis on inspi
Proof Reading.
ration, motivation, and innovation, can act as a catalyst propelling the
organisation towards a trajectory that seamlessly combines technology,
Declaration of Generative AI and AI-assisted technologies in the
sustainability, and competitiveness.
writing process
However, the non-validation of Hypothesis H6, which postulated the
moderating effect of TL on the FA-SP relationship, indicates that the
During the preparation of this work the author(s) used ChatGPT in
journey from Fintech adoption to sustainable performance is not
order to improve the quality of few sentences. After using this tool/
straightforward and is not significantly swayed by TL. Therefore, prac
service, the author(s) reviewed and edited the content as needed and
titioners should approach the assimilation of TL strategies understand
take(s) full responsibility for the content of the publication.
ing that while TL can profoundly influence certain aspects of
organisational performance and practices (such as CEP and COMP), its
impact on the direct FA-SP relationship might be less evident. This calls Declaration of Competing Interest
for a more comprehensive approach, considering a range of other factors
and strategies that could affect the FA-SP dynamic. The authors declare that they have no known competing financial
In conclusion, the study provides a pragmatic framework that SMEs interests or personal relationships that could have appeared to influence
can leverage to navigate the intricacies of FA, CEP, COMP, TL, and SP. the work reported in this paper.
The insights drawn from the study not only illuminate channels through
which SMEs can boost their sustainable performance through Fintech Data Availability
adoption but also underscore the nuanced roles of sustainability prac
tices, competitiveness, and transformational leadership in this context. Data will be made available on request
Consequently, practitioners are endowed with a refined understanding
that can inform strategic decisions and policy-making in the areas of References
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Journal of Open Innovation: Technology, Market, and Complexity 9 (2023) 100166

Contents lists available at ScienceDirect

Journal of Open Innovation: Technology, Market,

A SEM-ANN analysis to examine sustainable performance in SMEs: The

1. Introduction 2003). Moreover, SMEs implement open innovation strategies across

Fig. 1. Proposed Model of the Study.

SP*COMP Deviation-from-Linearity 135.366 168 0.806 1.407 0.006 No.

PLS-SEM was chosen due to its compatibility with non-normal data

non-linearity (Hidayat-ur-Rehman et al., 2022). Hence, the study CEP 0.787

4.1.1. Evaluation of the measurement model

variance extracted (AVE) go beyond 0.5, thereby corroborating the

H1. FA → SP 0.365 0.023 0.125 6.477 0.000 Supported

Fig. 2. Bootstrapping Results.

Fig. 3. The ANN Model.

5. Discussion crucial mediators in the FA → SP relationship. The moderating role of TL

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