Amir Machmud, Otamurodov Shavkat Nusratillaevich, Eshqulova Nasiba Normuminovna, Navik Istikomah, Imas Purnamasari, Adam Hermawan, Asep Kurniawan, Ali Usman
This study investigates the mediating role of creative destruction in the relationship between innovation speed and competitiveness among Indonesian small and medium-sized enterprises (SMEs), specifically examining contributions to Sustainable Development Goals 8 and 9. Addressing the paradox where 68 percent of innovative Indonesian SMEs fail to achieve superior performance, this research employs partial least squares structural equation modeling with data from 110 SME stakeholders in Bandung. Findings reveal that innovation speed alone produces modest direct effects on competitiveness, but becomes highly effective when channeled through creative destruction processes. The strong mediation effect (variance accounted for = 72.8 percent) demonstrates that sustainable transformation—systematic replacement of unsustainable practices with superior alternatives—serves as the primary mechanism linking innovation to competitive advantage in resource-constrained contexts. This research provides three contributions: one of the first empirical validations of creative destruction’s mediating role in emerging economy SMEs within the SDGs framework; second, demonstration that innovation speed influences competitiveness primarily through enabling sustainable transformation rather than temporal efficiency; third, establishment of a “sustainable transformation pathway” linking microlevel innovations to macrolevel development outcomes. The study extends Schumpeterian theory into sustainable development contexts while acknowledging limitations of cross-sectional design and geographic specificity. Findings offer practical frameworks for SME managers to prioritize creative destruction capabilities and for policy makers to design transformation-enabling support systems aligned with national SDG objectives. © 2026 International Council for Small Business.
Department of Economics Education, Universitas Pendidikan Indonesia, Indonesia; Department of Economics, Termez University of Economics and Service, Uzbekistan; Department of Accounting Education, Universitas Pendidikan Indonesia, Indonesia; Department of Digital Business, Universitas Pendidikan Indonesia, Indonesia
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