Challenges and enablers of sustainability in SMEs: a conceptual review

Sustainable business practices are increasingly important for resilience, long-term competitiveness, and positive social and environmental benefits. However, the acceptance of sustainability remains low, particularly among small businesses in developing nations. This conceptual paper explores the factors that promote and hinder sustainable business practices in Malaysian small medium enterprises (SMEs) by applying multiple theoretical perspectives, including Institutional Theory, Resource-Based View (RBV), Natural Resource-Based View (NRBV), Knowledge-Based View (KBV), Green Theory, and the Diffusion of Innovation Theory. These theories offer SMEs a thorough lens to see, apply, and react to sustainability opportunities and challenges. This study identifies key driving sustainability adoption such as cost savings, improved capital assets, improved market positioning, improved brand reputation, and increased long-term business growth. Whereas, limited financial resources and reliance on government assistance, human resource challenges, and legal and technology barriers are among several crucial elements still preventing the adoption of sustainability in SMEs. This research presents a strategic model of enablers for the adoption of SME sustainability by combining theoretical ideas and existing literature. It highlights the importance of lean and green business strategies in removing obstacles to sustainability. The study also highlights the role of government agencies, regulatory bodies, and NGOs in formulating targeted initiatives to support SMEs in adopting sustainable practices. Understanding these barriers can accelerate sustainability transitions, enhance SMEs’ contribution to the circular economy, and align business practices with Malaysia's Environmental, Social, and Governance (ESG) and Sustainable Development Goals (SDG) aspirations.