Digital transformation and ESG practices in SMEs: a pathway to entrepreneurial resilience and sustainable growth in emerging economies

Digital transformation and ESG (environmental, social, and governance) practices are essential forces driving entrepreneurial resilience (ER). However, little has been done to investigate their combined effect, especially about SMEs (small- and medium-sized enterprises) in emerging economies. This study investigates how digital transformation influences ER, paying particular attention to the mediating and moderating roles of ESG practices. We collected data from 340 SMEs across several industries using a structured questionnaire survey and convenience sampling. We conducted the analysis using PLS-SEM (Partial Least Squares Structural Equation Modeling) and machine learning insights to ensure robustness. Digital transformation positively influences ER directly and indirectly through ESG practices. In addition, ESG adoption acts as a mediator between digital transformation and ER, providing both theoretical and practical implications. This study introduces a dual-layer ER model, creates an ESG Adoption Index specific to SMEs, and compares ASEAN (Association of Southeast Asian Nations) economies. This research supports current academic discussions on digital and sustainable entrepreneurship and provides actionable policy recommendations to enhance ER within emerging market economies.