Theoretical model of green entrepreneurship and digital transformation in enhancing the sustainability of batik MSMEs with business innovation as a mediating variable

Batik micro, small, and medium enterprises (MSMEs) around the world are increasingly facing pressure to adopt environmentally responsible practices while simultaneously adapting to rapid digital transformation. However, research that integrates environmental entrepreneurship, digital transformation, business innovation, and business sustainability—especially within culture-based creative industries—remains limited and fragmented. This study addresses this gap by developing a theoretical model that explains how environmentally oriented entrepreneurship and digital transformation influence innovation and long-term business sustainability in Batik MSMEs in Madura, Indonesia. A quantitative research design was employed using Structural Equation Modeling with the Partial Least Squares approach. Data were collected through a structured questionnaire administered to batik MSME owners and managers, and analyzed using SmartPLS version 4. The findings show that environmentally oriented entrepreneurship and digital transformation both enhance business innovation and overall business sustainability, with innovation serving as a key mediating factor. That most Batik MSMEs actors display environmental awareness and engage in product innovation, although creative promotion remains relatively low. Indicators of sustainability also show positive tendencies, including stable profit patterns and the creation of permanent employment. This study contributes to the international literature by offering a culturally grounded model that integrates environmental and digital dimensions in creative microenterprises. The conclusions highlight the importance of strengthening innovation capabilities and supporting environmentally responsible digitalization as strategic pathways for ensuring the long-term sustainability of Batik MSMEs.