Multidimensional approaches to climate change adaptability in small and medium enterprises: a study in Vietnam

Purpose In light of the significant concerns raised by climate change, it is essential to understand how small and medium enterprises (SMEs) become more resilient and adaptable to combat climate-related threats. This study aims to explore how SMEs can enhance their adaptability to climate change using a rational decision-making model. Design/methodology/approach Structural equation modeling was applied to estimate the research model using data collected from 238 Vietnamese SME managers. The mediating role of a firm’s resources between managers’ awareness of climate change and their climate change adaptability was also examined. Findings The results show that companies’ available resources, such as climate change data, information systems and human resource awareness, have a significant positive impact on their climate change adaptability. Furthermore, managers’ awareness of climate change positively affects firms’ resources and adaptability. This study also highlighted four dimensions of adaptation at the firm level: wait and see, assess risk, share risk and diversification. Practical implications SMEs should focus on increasing managers’ objective awareness and developing essential resources to implement effective adaptation practices simultaneously. These implications should be grounded in the four dimensions of adaptability to foster innovation while ensuring long-term sustainability. Originality/value This research contributes to sustainability literature by introducing a second-order construct to assess the multidimensional concept of climate change adaptability. The results reveal four distinct patterns of business adaptability, categorized by varying levels of proactive adaptation behavior. In addition, the study confirmed that firm resources play a partial mediating role between managerial climate change awareness and firm adaptability.