The role of innovation creation in diagnosing business acumen for empowering digital platforms and achieving business sustainability in Indonesia’s micro, small and medium-sized enterprises

Purpose This study aims to identify core capability gaps that hinder the development of business acumen and examine its role as a strategic enabler of innovation and sustained performance among Indonesia’s micro, small and medium-sized enterprises (MSMEs) in the digital era. Design/methodology/approach Based on a survey of 450 MSME executives, this study employs partial least squares structural equation modeling (PLS-SEM) to analyze the relationships among business acumen, innovation creation, digital platform empowerment and sustainability. Findings MSME business characteristics, particularly strategic commitment and learning orientation, shape foresight and adaptability in dynamic markets, as reflected in the Enlightenment and Empowerment phases of the 5E model. Technological competence mediates the effect of government support on performance, while business acumen emerges as a central mechanism driving innovation and resilience. Research limitations/implications Theoretically, the study enriches the understanding of business acumen as a dynamic capability aligned with organizational learning and strategic foresight. Practical implications Practically, it offers a diagnostic roadmap for MSMEs and policymakers to strengthen innovation, commitment, and resilience. By framing business acumen as a cultivated capability, it emphasizes the role of digital literacy, adaptive learning, and institutional support in fostering inclusive and sustainable transformation. Social implications The study underscores the social value of MSME digitalization in promoting inclusive participation in the digital economy (SDG 8 and SDG 9). Through innovation and learning, particularly in the Enrichment and Empowerment phases, it supports socially inclusive and adaptive enterprise development. Originality/value The study offers an integrated mid-range conceptual model bridging organizational knowledge creation and dynamic capability theories. The novel 5E model outlines a developmental sequence for assessing how MSMEs build strategic agility through digital transformation.