Sustainable Production and Consumption: Chunguang Bai, Matthew Quayson, Joseph Sarkis

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Sustainable Production and Consumption 27 (2021) 1989–2001

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Sustainable Production and Consumption


journal homepage: www.elsevier.com/locate/spc

Perspective Article

COVID-19 pandemic digitization lessons for sustainable development


of micro-and small- enterprises
Chunguang Bai a, Matthew Quayson a,d,e,∗, Joseph Sarkis b,c
a
School of Management and Economics, University of Electronic Science and Technology of China, Chengdu 611731, China
b
Foisie Business School, Worcester Polytechnic Institute, Worcester, MA 01609, USA
c
The Humlog Institute, Hanken School of Economics, 00100, Helsinki, Finland
d
Center for West African Studies (CWAS), University of Electronic Science and Technology of China, Chengdu, China
e
Department of Logistics and Supply Chain Management, Ho Technical University, Ho, Ghana

a r t i c l e i n f o a b s t r a c t

Article history: The coronavirus (COVID-19) pandemic has undeniably influenced the global economy and environment.
Received 28 November 2020 Major victims of the COVID-19 outbreak are Micro and Small Enterprises (MSEs), especially in developing
Revised 28 April 2021
countries, mainly because of limited use of digital technologies. This paper employs a literature review
Accepted 30 April 2021
and personal insights to provide COVID-19 pandemic digitization lessons for sustainable development of
Available online 8 May 2021
MSEs from a technology for social good perspective. We develop a framework to support post COVID-
Editor: Dr. Charbel Jabbour 19 digital transformation for sustainable development of MSEs. We find that digital payments, especially
mobile money, should be a critical digital transformation priority for MSEs. Also, institutions must sup-
Keywords:
COVID-19 port MSE resources and capabilities to adopt digital transformation for business continuity, and sustain-
Sustainable development able production and consumption. Our study suggests that MSE managers and other stakeholders rethink
Micro-and small enterprise their business strategies, incorporating crisis scenarios and business continuity plans to sustain customers
Digitization virtually to enhance sustainable development. We also propose further research areas to improve the suc-
Developing economies cessful digital transformation of MSEs post COVID-19.
© 2021 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.

1. Introduction and background (Fernandes, 2020). The impact of COVID-19 on the US economy has
been even more devastating, as it shrunk in the first quarter by
The coronavirus (COVID-19) pandemic has had significant ef- 1.2 %, its largest decline since the financial crisis (PWC, 2020). Al-
fects on global economies (Fernandes, 2020). It has impacted cap- though recovery continues, many areas of the world faced similar
ital and supply chains influencing the distribution and availabil- declines in economic performance.
ity of products. For example, factory closures and reduced sup- In the UK economy, the decline in outputs has been around 2%,
ply caused China’s factories to cease production because of de- although according to a report by the Office for National Statistics
creased demand for automotive parts, components, and clothing (ONS) the monthly GDP estimate declined by 10.4 % for March and
(Wang and Su, 2020). April 2020; this is the largest fall ever recorded (ONS, 2020). At the
Lockdowns worldwide and the shutdown of major industries same time, governments worldwide are issuing policies and imple-
such as hospitality, travel, and retail led to significantly higher un- menting action plans, including restrictions to prevent the spread
employment rates worldwide. The negative global economic im- of the COVID-19 outbreak. Those restrictions have implications for
pact in such a short period of time has been unprecedented businesses’ sustainable operations, including reducing business ac-
(Ozili and Arun, 2020). tivities and HR issues related to staffing and supply chain disrup-
Eurostat’s (2020) report suggests that Gross Domestic Product tions.
(GDP) has fallen by 3.8 % in the first quarter within the Eurozone. The COVID-19 restrictions are more severe on micro and small
This represents the sharpest drop since records were first compiled enterprises (MSEs) when compared to larger and global firms
in 1995, ranging from -4.7 % to -5.8 % in Italy, Spain, and France (Shafiand et al., 2020). This situation poses a serious threat to the
economy considering the role of MSEs. For instance, at the start of
2020, there were 5.94 million small businesses in the UK, consti-

Corresponding author at: School of Management and Economics, University of
tuting 99.3% of the total business, employing 13.3 million people
Electronic Science and Technology of China, Chengdu 611731, China.
E-mail address: matthew.quayson@yahoo.com (M. Quayson).
with a turnover of 1.6 trillion (Federation of Small Business, 2020).

https://doi.org/10.1016/j.spc.2021.04.035
2352-5509/© 2021 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.
C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

Notwithstanding the COVID-19 pandemic’s global nature and its Alleviation Programme (CAP) was announced by the President of
implications, much of the discourse and investigation has focused Ghana on April 5, 2020, in a televised address (Korankye, 2020).
on large developed and emerging economy regions such as Eu- In the CAP package, Ghana’s government dedicated GHS
rope, the United States, and China (Jurd De Girancourt et al., 2020; 600million funds to be deployed through the National Board for
Quayson et al., 2020). This global pandemic does not recognize na- Small Scale Industries (NBSSI) (Akuoko et al., 2021). Most impor-
tional borders. The issues faced by smaller and vulnerable devel- tantly, the CAP acknowledges that Micro Small and Medium Enter-
oping economies and regions are equally profound (). prises (MSME) are distressed by the impact of COVID-19 and that
Developing nations have also banned international flights, 40% percent of these MSME are women-led and that these women
closed borders, adopted large-scale quarantines, banned large– are breadwinners of their homes (Akuoko et al., 2021). Moreover,
scale gatherings, and implemented partial lockdowns. To pro- the NBSSI acknowledges the fact that the micro-enterprises are
vide basic essential services, the food industry, banking, construc- mostly of the informal sector.
tion, and front-line health care are deemed essential industries The informal economy is especially pertinent to sustainable
in these nations. Micro- and small enterprises (MSEs) in devel- supply chains due to a product’s end-of-life cycle (Hilson and Ma-
oping economies have been most vulnerable during this crisis conachie, 2019). For example, one of the most common examples
(Korankye, 2020). These enterprises typically have less than 50 of the informal economy—for good or bad—is the management of
workers and sometimes are frequently small family-run enterprises e-waste and urban waste heavily dependent on informal economy
with one or two employees. players’ governance and involvement (Mohanty and Mishra, 2020).
MSEs are a major driving force for sustainable and social devel- In the COVID-19 pandemic, digitization technologies have be-
opment in developing nations (Oppong et al., 2014). For example, come more critical (Nandi et al., 2020). However, the lack of digi-
they represent more than 90 percent of businesses on the African tization, technology adoption, and limited online presence of MSEs
continent (UNCTAD, 2020). MSEs play an important role in stabiliz- has made the pandemic even more damaging for them; increasing
ing employment rates and income for many informal, vulnerable, MSEs vulnerability, especially for individuals and family businesses
and disadvantaged groups (Blankson and Nukpezah, 2019). (Bartik et al., 2020). It is not clear how long this pandemic will
MSEs are also a primary source of environmental pollution persist globally. It is also more uncertain that we will return to the
(He et al., 2014). Sensitive environmental issues in these develop- previous normal state. COVID-19 has challenged and will likely in-
ing nations exist across sectors, including farming with biodiversity troduce new digitization technologies within the supply chain con-
and deforestation, mining with deforestation and hazardous waste, text, many of which affect supply chain sustainability. Digitization
and electronic waste with solid and hazardous waste. may be a significant differentiator for MSEs who survive this pan-
MSEs could strengthen their sustainability transformation dur- demic (Akpan, et al., 2020; Katz, et al., 2020).
ing this crisis. Home telework, virtual conferences, and online Our perspective paper discussion focuses on how COVID-19
shopping continue to gain popularity. Some food supply chain pandemic digitization lessons for sustainable development of MSEs
MSEs—such as restaurants, cafeterias, and retail enterprises, oper- may influence post-COVID-19 resilience for MSEs; a technology for
ate remotely and allow online ordering, picking up, and delivery. social good perspective. We develop a framework to support post-
The COVID-19 pandemic virtually opened up new MSEs opportuni- COVID- 19 digital transformation for sustainable development of
ties. MSEs and suggest practical and research implications to enhance
Few developing nation MSEs are formal and follow the latest the successful digital transformation of MSEs post-COVID- 19.
business practices (Xu et al., 2020). MSEs are characterized by low We proceed with the paper as follows; In Section 2, we discuss
efficiency, operating out of residences, in open spaces, or dilapi- the theoretical and literature background of the study with insights
dated structures (Mohanty and Mishra, 2020). They lack operat- for the MSEs situation. Section 3 presents the practical implications
ing funds, have limited access to technology and equipment, have of the study. In section 4, we provide the research implications and
weak institutional support, and are characterized by poor manage- future directions. We provide a conclusion in section 5.
rial competencies (Singh et al., 2019). They rarely go beyond local
activities and markets. 2. Literature review
While the COVID-19 pandemic has had cross-industry in-
fluences, informal MSEs are even more profoundly influenced In this section, we present the theoretical background of MSEs
(Shafi et al., 2020). Indeed, MSEs have lower capital reserves, less digital transformation process, insights for MSEs digital transfor-
inventory, and lower productivity than larger businesses, mostly mation in post-pandemic, and some relevant organizational the-
dependent on one-on-one transactions, rendering them more vul- oretical underpinnings of our study (e.g. Institutional theory, Re-
nerable to crises (Liu and Cheng, 2018). Also, in times of crisis, source based view (RBV), Dynamic capability theory, Transaction
small companies and leaders face obstacles. While MSEs might not cost theory, TOE framework). These theories have reference value
have significant overhead, they are also financially committed to for further studies on the potential research fields provided by
employee wages and facility costs (Xu et al., 2020). this paper. Regarding these theories, we develop a framework (see
Due to their scale and versatility, MSEs are seeking new mar- Fig. 2) to support COVID-19 pandemic digitization lessons for the
kets and are designing evolving strategies for sustainable busi- sustainable development of MSEs.
ness activities. Yet, the COVID-19 pandemic has exposed the frailty
and vulnerability of many developing nation MSEs. Many MSEs 2.1. Digital transformation process of micro and small enterprises
may also not be formally formed, as they could be individuals
or family members who jointly form their markets to sell wares Digital transformation by MSEs has received much research ef-
and goods in public markets—an informal economy. McKinsey es- fort over the last two decades (Barann et al., 2019). The extant
timates that 50 million informal sector jobs across Africa — in sec- literature has discussed digital transformation in terms of its en-
tors like wholesale, retail, trade, and manufacturing — are vulnera- ablers (Martín-Gómez et al., 2019), required resources and ca-
ble to economic shocks from the pandemic. The informal economy pabilities (Li et al., 2018), transformation processes and modes
in some developing countries—such as Nigeria—may represent 70% (Bienhaus and Haddud, 2018), and benefits (Barann et al., 2019).
of the GDP (Ayyagari, et al., 2007). Transformational IT evolved over the decades. Earlier, firms
In response to the outcry by informal workers and their re- were mainly concerned about deploying internal management in-
action to the government’s COVID-19 protocols, the Corona Virus formation systems such as Enterprise Resource Planning or Cus-

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

tomer Relationship Management (Narimissa et al., 2019). These MSEs, which have aligned to digital technologies, are relieved dur-
transformations were primarily limited to improvements in busi- ing the COVID-19 era.
ness processes within organizational boundaries for efficiency
improvement, cost reduction, and business process optimization
(Teichert, 2019). 2.2. Insights of digital transformation for micro and small enterprises
In recent years, cross-boundary technologies such as e- in post-pandemic
commerce and social media have been quickly and widely adopted
by companies (Rahayu and Day, 2015). The transformations driven Given these vulnerabilities, the post-COVID-19 period—due to
by such externally oriented IT go far beyond internal business pro- pandemic pressures and basic survival needs—will likely see MSEs
cess changes; they include drastic changes to business models, or- that are more likely to adopt digital technologies to manage their
ganizational strategy and culture, and business alliance building operations and supply chains. We recognize the importance and
(Ulas, 2019). necessity of digitization technology for MSEs development and risk
However, digital transformation is more a managerial issue than prevention (e.g. see Matarazzo et al., 2020). Yet, poor infrastruc-
a technical one (Matarazzo et al., 2021). Successful digital trans- ture, network difficulties, and high data cost have created severe
formation demands acquiring and deploying technical resources digitization adoption challenges in developing countries. To over-
and—perhaps even more importantly—tackling managerial issues come these digitization challenges, we provide some insights to
such as redesigning business processes and training and invest- help developing country MSEs manage the post-pandemic supply
ing in e-Commerce, human resources and organizational capabil- chain; environmental sustainability concerns are a core focus.
ities (Ordieres-meré, 2020). Digitization can lessen MSEs concerns about economic survival,
Firms redesign the business process by adopting digital technol- allowing them to meet their various social and environmental
ogy to improve efficiency, minimize costs, and innovate. The digi- obligations (Zhanna and Yana, 2020). A small fraction of MSEs—
tal transformation includes practical internet use as a data-based mainly urban enterprises with well-planned processes—integrate
management model in design, production, marketing, sales, and some form of digitization in their business processes (Liu and
communication. Cheng, 2018; Tengeh and Talom, 2020).
The digital transformation of MSEs requires the joint efforts of Digital payments, especially mobile money, is a critical digi-
government and enterprises (Räisänen and Tuovinen, 2020). First, tal transformation priority for MSEs post-pandemic (Shaikh et al.,
the government plays a role in promoting the digital processing 2019). Compared to other digital tools, mobile technology appears
of MSEs. Government interference involves determining how digi- to be widely adopted by small businesses, especially in developing
tal transformation is strengthened by the existing legal and regula- countries (Mohanty and Mishra, 2020).
tory system. For MSEs digital transformation, the government can There has been an increase in the use of mobile money-
play a prominent role by raising digital transformation awareness, payment by African governments to disseminate stimulus funds to
increasing labor-power competence, providing technical and finan- assuage the economic impact of the COVID-19 crisis. This policy
cial support, and strengthening data communication infrastructure deepens financial inclusion outside the traditional bank establish-
(Mukaila Ayanda and Sidikat Laraba, 2011). ments (Bazarbash et al., 2020). Some areas are also implementing
Second, despite the many benefits of digital transformation social protection programs using mobile money to support work-
to MSEs because they are agile, dynamic, interactive, more ers, especially those in the informal sector (World Bank, 2020).
casual and less bureaucratic than bigger organizations, their For instance, in Kenya, the government approved fee waivers on
digital transformation is difficult due to poor infrastructure person-to-person mobile money transactions on M-PESA (Jurd De
(Krishnamurthy, 2020). Girancourt et al., 2020). Similarly, Ghana also suspended for three
In the digitization process, the demands of MSEs may be differ- months any financial charges on mobile money transfers that do
ent (Räisänen and Tuovinen, 2020). Digital content must be priva- not exceed Hundred Ghana Cedi (GH¢100). The Central Bank of
tized with the scale of the business, industry, and culture of MSEs. West African States also provided more flexible measures to open
Digitization would bring changes in policy, market and business mobile money accounts and conduct personal transfers, to pro-
structure, and enterprise culture. When a digital system is applied mote the use of electronic payment tools in Benin, Burkina Faso,
broadly across goods and business processes, an MSE is then trans- Côte d’Ivoire, Guinea- Bissau, Mali, Niger, Senegal, and Togo (World
formed. Bank, 2020).
Past studies have considered general technology adoption Sub-Saharan Africa has the largest number of registered mo-
and identified a range of factors that affect the acceptance of bile money accounts globally, at around 400 million, and most un-
information and communications technology for organizations banked adults own a mobile phone (World Bank, 2020). In most
(Queiroz and Fosso Wamba, 2019). Factors included business char- of these countries, mobile money is more popular than banks (see
acteristics, past experiences, concerns about privacy and security, Fig. 1). MSEs can take advantage because most of the unbanked are
absence of a technological roadmap, digital transformation ecosys- in the informal sector and are the main customers of MSEs (Senyo
tem, lack of information-sharing systems, regulatory needs result- and Osabutey, 2020). Most MSE owners are habitually compelled to
ing from digital transformation, and the assurance of a secured en- leave their premises unattended for numerous hours a day when
vironment. they visit the bank or even close down, therefore losing sales. This
However, limited MSE resources and capital can prevent digi- traditional requirement negatively impacts their survival.
tal transformation. For example, although many MSEs are increas- Physical distancing measures are likely to carry over into a
ingly aware that the Internet can be the key to success, they still post-COVID-19 world. Also, Online delivery and payment services
have no website on smartphones in many cases. Notwithstanding, during the lockdown will continue even after the pandemic. This
other MSEs use smartphones for general business details, online means that mobile money will continue to play a crucial role and
banking, customer mail, payment of bills, supplies purchase, and result in prevalent use.
tax payments online. The classical business model has disappeared MSEs must evolve post-pandemic, and mobile money provides
and replaced a versatile and instantly evolving business models the right opportunity. For instance, mobile money will enable the
(Akbar and Tracogna, 2018). These new business models respond MSEs to collect receivables straight from customers and make di-
to customer behaviors in real-time and are knowledge-based. MSEs rect payments to suppliers using their cellphone without having
also can conduct cost-effective analyzes of digital technologies. to close or leave their premises for hours. It will bridge the un-

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

Fig. 1. Mobile Money and Bank Account holders in selected African countries.

banked financial inclusion, reduce the risk of carrying cash, and Digitally enabled MSEs can potentially improve employment
enable MSEs to access the mobile money platform’s loans. prospects, reduce poverty, and improve sustainable develop-
MSEs mobile pay services for small businesses exist, such as ment through further inclusion into society, providing them
MTN MoMo pay. MoMo Pay has shown considerable early success greater reason to practice social and environmental sustainability
in driving the digitization of payments in Ghana’s cash-dominated (Räisänen and Tuovinen, 2020). Digitization technology can make
economy (Shaikh et al., 2019). MoMo Pay is a merchant pay- the process of sustainable development more participatory and in-
ment service that encourages customers to digitize transactions clusive (Isensee et al., 2020). To integrate these MSEs, especially
with sellers, paying for products and services through MTN Mo- those that contribute to waste management, circular economies,
bile Money rather than cash. Merchants are not charged to transfer and improved social and environmental sustainability, a series of
money from their merchant account to their bank account, from digitization technologies can be integrated to achieve sustainable
which they can cash out for free. environmental performance (Fatimah et al., 2020). Post COVID-19
MSEs could use various communication platforms, including stimulus packages1 provide an opportunity to do this. Not only
websites, social media, traditional media, and text messaging, to will digitization support supply chain business and economic re-
educate customers about mobile money payments. MSEs must also silience, but it can also support environmental and social sustain-
be aware of the risks and fraud associated with mobile money ability goals.
transactions, such as false transactions, sending fake text mes- Given MSE vulnerability, it is up to supply chain partners to co-
sages to make customers believe a successful transaction (Gilman operate in diffusing digital tools and integrating MSEs. Governmen-
and Joyce, 2012). These negatively impact profitability and opera- tal development efforts can supplement these supply chain partner
tions. Therefore, service providers and regulators should engage in efforts and should include broader social digitization investment.
frequent dialogue, and regulators should closely monitor evolving The introduction of digital address systems, mobile money interop-
risks in the payment system to minimize these risks. erability, and digitization of public agencies and institutions (such
Despite the proliferation of digital solutions, many rural and ur- as marine ports) can be supported and developed. These efforts
ban enterprises know little of digitalization (Räisänen and Tuovi- require broad information and communication technology (ICT) in-
nen, 2020). Many MSEs in the informal economy do not have ap- frastructure investment; most likely through public agency effort.
propriate and official documentation (Xu et al., 2020). For example, MSEs have limited funds, and most of them do not have finan-
80% of the MSEs in Kenya’s informal sector comprise unlicensed cial reserves to meet expenses during emergencies. For example,
enterprises collectively known as the “Jua Kali” (Siddiqui et al., only 39% of Kenyans have set aside funds to manage emergencies
2020). They will get minimal support from the stimulus package that arise from income loss (Siddiqui et al., 2020). Therefore, for-
of the government. The package will largely cater to MSEs in the mal resource-rich organizations should deploy resources to inte-
formal sector Government stimulus packages that some developing grate MSE’s into their supply chains; it means more efficient, ef-
nations offer in response to the COVID-19 crisis will be unlikely fective, and sustainable opportunities (Ali et al., 2018).
to identify and pay vulnerable MSEs (CGAP, 2020). Most informal
MSEs will be excluded from recovery stimulus financing due to
lack of documentation. We believe that having digital identity and 1
A comprehensive tracking, listing and evaluation of Post-COVID 19 stimu-
records of MSEs would facilitate better inclusion of such enter- lus policies and economic responses by governments from 197 countries can be
found at the International Monetary Fund website at: https://www.imf.org/en/
prises, enable better protection in the future; and further support
Topics/imf- and- covid19/Policy- Responses- to- COVID- 19. Measures including tax and
various sustainability and circular economy practices dominated by spending, loans and guarantees, monetary instruments, and foreign exchange oper-
the informal sector. ations policies.

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

Digitization can leverage supply sustainability practices Tok, Instagram, and Tokopedia have launched new advertising ser-
(Doyle and Cosgrove, 2019). Digitization and sustainability prac- vices for MSEs (Sakudo, 2021).
tices together should be part of strategic plans for organizations of Also, as part of the response to the novel COVID-19 pandemic
all sizes who competitively survive for the long-term. A positive in Uganda, The United Nations Development Programme (UNDP)
and significant relationship between IT use and various corporate partnered with Jumia Food Uganda to launch an e-commerce plat-
social responsibility (CSR) categories–economic, legal, ethical, and form to sustain supply chains for MSEs and to connect them with
discretionary responsibilities in MSEs—has been found (Malaquias consumers online (UNDP UGANDA, 2020).
et al., 2016). Again, in Malaysia, stakeholders have engaged LOCUS-T as a
Digitization can help make CSR information more easily avail- Technology Solution Provider (TSP) to assist MSEs in their digiti-
able to stakeholders and create new possibilities of linking infor- zation efforts (The Star, 2020).
mation on company impacts with other sources, providing easier Blockchain and synergistic digitization tools can help MSEs con-
access to information through the Internet, developing sustainable nect with suppliers and customers to ensure resilient and sustain-
awareness. Digitalization has also been found to positively impact able supply chain activities (Bai and Sarkis, 2020).
environmental sustainability (Chen and Despeisse, 2020). But the Cellulant Agrikore and Hara Technology have successfully ap-
findings have also been mixed, as some studies revealed that MSEs plied blockchain technology in the agriculture industry, creating fi-
smart technologies do not directly influence environmental or so- nancial inclusion and connecting farmers directly to buyers, which
cial sustainability (Saunila et al., 2019). Yet, corporate sustainability provide evidence of this claim (Quayson et al., 2020). Smallholder
strategy does fully mediate the relationship between smart tech- farmers in Ghana, Kenya, and Indonesia have been incentivized
nologies and corporate sustainability in environmental sustainabil- through the Internet of Things (IoT) and blockchain technology to
ity and social sustainability (Saunila et al., 2019). become more formalized organizations (de Boer et al., 2019). Other
Lack of awareness hinders digitization for sustainability and re- sectors, such as retail, can adopt these innovations with electronic
silience (Ordieres-meré, 2020). Thus, to increase green and sus- payment systems.
tainable digital maturity, MSEs have to improve relevant internal MSEs are also critical to the circular economy, environmental
capabilities and transformations in “people and culture” and “gov- protection, and social responsibility (Katz-Gerro and Sintas, 2019).
ernance.” Management tasks include providing adequate resources, If MSEs adopt environmentally friendly and circular business mod-
integrating the digital agenda into vision statements, the organiza- els as part of the supply chain, they can acquire new economic op-
tional sustainability strategy, centralized decision-making, collabo- portunities. MSEs can coordinate organizational commitment and
ration, and communication of values (Baggia and Maletiˇ, 2019). socio-cultural practices to reduce energy consumption, reuse, and
The internal factors driving MSEs environmental sustainability recycle local waste generated by them (Ünal et al., 2019); allow-
and digital development and their interactions have been given ing for savings and new revenue streams. For example, consider
limited attention in the literature (Jovanovicand et al., 2018). The Zabaleen in Cairo, as an informal MSE, that recycles polyethy-
interdependence of organizational culture, environmental sustain- lene terephthalate (PET) to enhance the circular supply chain
ability, and digitization remains poorly understood. MSEs decision (Jaligot et al.,2016). Circular economy practices can be enhanced by
makers miss an opportunity to use these powerful instruments to digitization, leading to the localization of supply chains to improve
fully understand and consider different interests. resiliency (Sarkis et al., 2020). Care must be taken when digitizing
Volatility in technological environments on sustainability of and formalizing these circular activities for stronger local produc-
MSEs in developing countries has seen some investigations. tion of materials and corporate resiliency. There are inclusion is-
(Das et al., 2020). It was found that both institutional capabilities sues for digitalization and circular economy sustainability efforts;
and external capabilities both play significant roles in effectively for example, the digital divide may cause MSEs to lose a voice
managing this volatility. Institutional capabilities have a strong im- in a formalized and digitalized circular economy (Duncombe and
pact on sustainability of MSEs compared to external capabilities in Heeks, 2002).
high technologically volatile environments. This situation provides Without critical means, many MSEs will not survive this crisis
an opportunity to further evaluate this volatility and sustainabil- (Dutta et al., 2020; Ncube, 2020). Supportive activities may be eco-
ity relationship. Along this line of volatility and sustainability, it nomical and technological. A broad and thoughtful set of policies
has been found that MSEs that deploy digitization resources across and technology tools can be used to support the transition towards
business processes are more likely to survive uncertainty and be sustainability of MSEs. More inclusive research is needed in both
more sustainable in a pandemic era (Chen et al., 2021; Doyle and the public and private sectors to understand how post-COVID-19
Cosgrove, 2019). activities will influence the most vulnerable organizations and in-
In Table 1 we summarize various digital applications applied dividuals in developing economies.
across different MSEs business dimensions in relation to sustain-
ability and resilience. While external circumstances lead enter- 2.3. Institutional theory
prises to adopt several resilience measures to better respond to the
pandemic, the motivations that are most relevant in this decision Institutional theory can be used as a reason for the digitization
are generally internal. of MSEs (Jean et al., 2020). The core principle of institutional the-
Many governments and other stakeholders have given priority ory is that an organization is incorporated and informed by the
to MSEs digitization. For example, Indonesia had started to digitize institutions’ standards and practices to which firms ultimately ad-
MSEs even before the COVID-19 pandemic. The country launched here (Gupta and Gupta, 2020). Institutional theory can help decide
initiatives such as the 2018 Making Indonesia 4.0 Roadmap, the whether the digitization plan is driven internally or externally and
2019 E-Commerce Roadmap, and the 2020 Go Digital Vision to its adoption rationale. The institutional theory makes it possible to
support the sustainable competitiveness of MSEs in the digital analyze how MSEs respond to digitization pressures during and af-
economy (Sakudo, 2021). ter COVID 19 period. Researchers use isomorphic pressures to dif-
To aid MSEs digitization during the pandemic, the Indonesian ferentiate forces and establish particular characteristics related to
government has partnered with Grab Indonesia’s GrabMerchant their use and implementation (Kummer et al., 2020). This isomor-
mobile app, a one-stop service platform for MSEs in the food and phism can be divided into three parts within the institutional the-
beverage industries. Likewise, social media networks such as Tik ory: coercive, normative, and mimetic pressures (Latif et al., 2020).
We discuss how these influence digitization of MSEs.

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

Table 1
Business dimensions and effects of digital applications on sustainability and resilience of MSEs (Adapted from (Chen et al., 2021).

Business
Dimension Digital transformation application Impact on sustainability/resilience of MSE References

Process and Automation tools to replace labor Production can continue during a lockdown, and (Chen et al., 2021; Naderi et al, 2019)
system social distancing
Using Point of Sale (POS) Reduce the cost of production to increase profit (Narayanan et al., 2019)
Demand for digital learning platforms Increase employee skill to be more productive (Dwivedi et al., 2020)
Demand for energy-efficient technology Reduce energy use and enhances environmental (Singh et al., 2019)
sustainability
Information system of Business to Business(BandB) Enhances customer experience that increases sales (Clohessy and Acton, 2019)
and profit
Recycling technology Reduce environmental pollution caused by waste (Liu et al., 2020)
Using tools for customer data analysis Predict customer preference and sales to increase (Akter et al., 2020)
profit
Green IT Smart use of IT that lowers the environmental (Baggia and Maletiˇ, 2019)
impact of manufacturing, operations, etc
Inventory management system Avoid excess stocked inventory and potential (Chebet, 2019)
shortage, thereby increasing profit
Integrate e-commerce, mobile multimedia, and The use of digital marketing tools enhances (Day and Schoemaker, 2016)
manufacturer app into one system customer experience to increases sales and profit
Customers Social media account and social media advertising Customer virtual engagement to drive sales even (Akpan et al., 2020)
partial lockdown
Online auction Increase sales and virtual customer experience (Tang, 2019)
Live broadcast Virtual engagement with customers to increase sales (Chen et al., 2021)
and customer experience
Chat robot Reduce human to human contact that drives sales (Pillai, 2020)
during restrictions
Demand environmentally friendly production Reduce environmental pollution (Chen and Despeisse, 2020)
technologies
e-commerce for sales channel Increases sales and profit (Ulas, 2019)
Have a website for selling Increases sales and profit even in contact (Fitriasari, 2020)
restrictions
Platform to resell and donate items Reduces waste and environmental pollution (Jovanovic et al., 2018)
Products Free WiFi A better customer experience that increases profit (Chen et al., 2021)

2.3.1. Coercive pressure and the digitization of micro and small pectations exist because regulatory constraints influence attitudes
enterprises and behaviors that are under social expectations. Regulatory pres-
International buyers, foreign investors, professional associations, sure ensures that external consumers and vendors use them in so-
and transnational institutions exert coercive pressure on the envi- cially respectful ways, thus allowing environmental and social re-
ronmental protection of MSEs in developing nations (Gupta et al., sponsibility behavior and digital transformation to be easily mon-
2020). External entities such as regulatory authorities and non- itored (Latif et al., 2020). The culture and efficiency of businesses
governmental organizations also exert coercive pressure on MSEs influence trade union members. Enterprises adopt non-detrimental
(Zhu and Sarkis, 2007). This pressure requires the MSEs to ap- trade unions’ policies because they impact capital, expertise, and
ply various environmental rules and standards. Then, MSEs have corporate culture (Fassin and Buelens, 2011).
mandatory and obligatory ecological control and standards. Insti- Digital transformation can help MSEs to manage public opinion,
tutional theory suggests that coercive pressure will form the envi- especially on environmental concerns, through visibility, connectiv-
ronmental protections and legislative mandates of MSEs. Many au- ity, and management. When MSEs do not manage public opinion,
thors have reported how coercive forces affect the ecological per- these opinions may impact their image and credibility. MSEs with
formance of MSEs (Latif et al., 2020). Government authorities en- damaged reputations may also suffer from external losses and lose
force these compulsory rules and regulations. Even during the pan- their benefits. Therefore, digitalization affects the credibility and
demic, MSEs should be subject to these regulations penalties for competitive advantage of MSEs.
breaches.
Many government authorities also promote and provide fa-
vorable conditions for enterprises to adopt digital transformation 2.3.3. Mimetic pressure and digitization of micro and small
(Chen et al., 2021). Furthermore, digitalization helps MSEs in- enterprises
crease their environmental efficiency and gain government sup- Digital transformation enables MSEs to react to mimetic pres-
port while facing coercive pressures. Digitization’s digital divide sure and give competitive advantages (Latif et al., 2020). MSEs
may be a coercive deterrent—with formalized barriers and rules need to adapt to the acts and behaviors of their competitors. If
and regulations—that limit MSEs involvement. Coercive forces can competitors adopt emerging digital technologies, MSEs can follow
support or deter MSEs needing to digitize (Wang et al., 2020). suit. Mimetic pressure in developing nations facilitates enhanced
environmental protection through domestic and multinational en-
2.3.2. Normative pressure and digitization of micro and small terprises (Chaudhry and Amir, 2020). The intense mimetic pressure
enterprises will influence governments and stakeholders to ensure that MSEs
Normative pressure arises from vendors, consumers, groups implement the most effective digital technologies. MSEs can gain
such as trade unions, media and other social organizations. Trade economic benefits by being more competitive, especially within
unions and other associations are generally regarded as the key certain industries, and adopting certain practices. Mimetic pres-
organizations which create regulatory pressures (Kornilaki and sures are powerful not only as forces for change, but as avenues
Font, 2019). Developing nations view regulatory power as a cata- for learning. For example, it is likely that MSEs that see successful
lyst for affecting expectations and a sense of obligation. These ex- implementation of digitization for sustainability will adopt due to

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less perceived risks and potential new markets from these digital- guides organizational transformation, and provides a stable source
ization efforts by similar companies. for obtaining a competitive advantage (Teece, 2018).
In the context of digitization, the institutional theory research Literature has found that MSEs face increased difficulty in
should explore how MSEs strive to monitor institutional pres- adopting new technologies due to a lack of resources, skills, com-
sures in space, resources, and innovations, particularly how cre- mitment, and understanding of digital opportunities (Rowan and
ative methods lead to mimetic processes among competitors. Over- Galanakis, 2020). Overcoming these difficulties will require MSEs
all, institutional theory can be used to research why MSEs should to build these and related capabilities.
embrace emerging innovations. In MSEs, some capabilities reside either in the entrepreneur,
owner, or the executive team. The ability to perceive new digital
2.4. The resource-based view opportunities, change customer interactions, and co-create value
with them imply changes in existing routines, resource configura-
RBV, also known as resource-based theory, focuses on resources tions, and building new capabilities.
and their capabilities that an organization already owns or could Dynamic capability theory could explain why MSEs change
own to build a competitive advantage. RBV provides an examina- their resources to support their competitive advantage in a con-
tion of intra-organizational relationships of resources and their ca- tinuously changing context (Bag et al.,2020). Setting up and recon-
pabilities to explain why and how some organizations outperform figuring resources to provide capabilities would create a competi-
others—gain competitive advantages. RBV argues that an entity’s tive advantage. Thus, MSEs need to begin to ensure business conti-
resources may be physical, human, or organizational and valuable, nuity in unpredictable environments, like the COVID-19 pandemic,
uncommon and inimitable (Cruz and Haugan, 2019). through building capabilities “sensing, seizing and transforming”
Organizational resources and capabilities have emerged as core (Papadopoulos et al., 2020).
strategic theoretical lenses. Tangible and intangible resources help MSEs require sensing capabilities to scan the external environ-
firms establish competitive relational capabilities. Knowledge capa- ment for trends that disrupt organizational activities. Sensing (and
bility can build intangible resources and allow dynamic organiza- shaping) new opportunities [and threats] is a scanning, creation,
tional learning in organizations for environmental and social sus- learning, and interpretative activity that analyzes diverse informa-
tainability. Relational capability is meant to augment alliance part- tion about trends in the business ecosystem (Khan et al., 2020).
ner resources to create, extend or modify their resource bases. Therefore, sensing should occur at all levels of the organization,
RBV helps better understand the relationship between firm with lower levels helping to provide information about and in-
resources and building post-COVID- 19 supply chain resilience sights into external trends to middle and top managers (Teece and
(Nandi et al., 2020). As a result, Nandi et al., (2020) applied Linden, 2017).
RBV and resource-dependent theories to investigate supply chain However, MSEs face significant challenges like systemic failures
disruptions during COVID-19. They found that firms develop lo- and unintended consequences in building sensing capabilities to
calization, agility, and digitization capabilities by applying their predict the latest digitization trends (Chen et al., 2021). Dynamic
critical circular economy and blockchain technology–related re- managerial capabilities and business units dedicated to scenario
sources they either already possess or acquire from external planning are essential to mitigate such challenges (Ramírez et al.,
agents. 2013). MSEs further need to build generative sensing capabilities
RBV supports the supposition that digitization is an example of that use technologies to generate and test multiple hypotheses to
organizational capability. Digitization can support other resources, help managers explain surprising events and judge the impact of
structure, growth strategies, metrics, and goals (Verhoef et al., unexpected trends (Dong, 2016).
2019). RBV provides a useful lens to view MSEs digitization as Studies report that MSEs in pursuit of digital innovation re-
a capability for them to survive and also be more sustainable quire sensing capabilities in digital evolution scanning to gather
(Eller et al., 2020). Drawing on the RBV, we can better understand information through new digital devices, channels, and emerg-
the relationship between MSEs and their information technology ing user behaviors across contexts and markets (Khan et al.,
(IT), employee skills, digital strategy, and digitization. 2021). Here, sensing capabilities do not reside exclusively inside
However, in major disturbances and extreme events, such as firms but can be co-created with other parties in the business
the COVID-19 pandemic, it is challenging to build this relationship ecosystem.
(Papadopoulos et al., 2020). Yet, an important aspect of RBV is dy- Also, to address opportunities or neutralize threats in COVID-19
namic capabilities theory which can be used to explain how and era, MSEs require seizing capabilities that ensure managers avoid
why MSEs adjust their resources to sustain their competitive ad- deception, bias, and delusion and allow MSEs to experiment with
vantage in a constantly changing context; helping to address the digital platforms and new business models. Seizing is an experi-
challenges of the COVID-19 crisis. We discuss dynamic capabilities mental capability that supports action and commitment by using
in the next section. techniques such as rapid prototyping and real options logic to bal-
ance risk and reward effectively (Day and Schoemaker, 2016).
2.5. Dynamic capability theory Sensing and seizing capabilities help MSEs create and discover
opportunities in the COVID-19 period. However, to execute a digiti-
Dynamic capabilities have become one of the most active re- zation strategy, MSEs need transforming capabilities to realize the
search streams in the strategic management literature. It is useful full potential of strategic change (Garbellano and Da Veiga, 2019).
because it explains how firms respond to rapid technological and A firm with “transforming capabilities is one where the ag-
market change (Pieroni et al., 2019). ile, entrepreneurial mindset is actively cultivated within, with a
Dynamic capabilities are innovation-based and provide the broad, expansive approach to external network-building as well.”
capacity to create, extend, and modify a firm’s resource base. (Day and Schoemaker, 2016). Thus, transforming capabilities sup-
Teece et al. (2009) argue that dynamic capabilities consist of three ports MSEs with the continuous strategic renewal of assets and or-
broad clusters: (1) sensing opportunities (and threats), (2) seiz- ganizational structures to ensure responsiveness in fast-changing
ing opportunities, and (3) transforming the organization’s busi- environments, especially in the COVID-19 era.
ness model and wider resource base. Building sensing, seizing, Understanding how MSEs build dynamic capabilities for digital
and transforming capabilities allows a firm to craft a future strat- transformation is a paramount strategic question that is yet to be
egy that designs, creates, and refines a defensible business model, fully understood, providing an avenue for further investigation.

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Some studies claim that due to the COVID-19 outbreak, enter- action cost and maximizes the price, which is the acceptable trans-
prises can focus only on exploration or exploitation with a spe- action mode (Roeck et al., 2020).
cific preference (Katz et al., 2020). Others argue that it is sim- Digital technology adoption can simultaneously affect and re-
pler for larger enterprises to become ambidextrous since they duce the costs of MSEs processes and activities. For example, an
have more significant and more diversified resources (Buliga et al., MSE can stop business with enterprises that can replace digital
2016). Many studies focus on large enterprise ambidexterity but technology for their services or new market entrants that provide
consider MSEs ambidexterity and building dynamic capabilities digital services to emerge.
(Chen et al., 2018). Ambidexterity is a dynamic capability that can In supply chain digitization investigations, researchers have an-
enable MSEs to fix COVID-19 issues (Papadopoulos et al., 2020). In- alyzed transaction costs from the perspective of digital technology.
vestigating this ambidexterity by building joint capabilities across For example, Schmidt and Wagner (2019) explored digital technol-
environmental, economic, and social sustainability—and their levels ogy’s ability to reduce transaction costs. Studies support that the
of relationships—due to the adoption of digitization by MSEs are digitization and market-oriented governance structure for buyer-
primed for research. Given the potential for digitization adoption supplier transactions can reduce transaction costs (e.g. Hazen et al.,
post-COVID-19, the sample size of these MSEs is likely to grow, es- 2016; Sanders et al., 2019). This cost reduction is achieved by lim-
pecially in developing countries. iting opportunistic behavior as well as environmental and behav-
ioral uncertainties. Similarly, Roeck et al. (2020) studied the ability
to minimize or even eliminate digital technologies’ cost. They iden-
2.6. Transaction cost analysis tified nine impacts of supply chain transactions conditions of trust,
transparency and disintermediation.
Transaction costs theory is an optimal management struc- Similarly, Rowan and Galanakis (2020) based on transaction
ture to reduce total costs under exogenous transaction conditions cost to review the challenges, opportunities, and potential solu-
(Schmidt and Wagner, 2019). The theory is well-established within tions for digitizing MSEs in the post–COVID-19 period. At the same
operations and supply chain management and purchasing and sup- time, Akbar and Tracogna (2018) showed how digitization for both
ply management. Akbar and Tracogna (2018) used the theory to trading parties could also lower opportunistic behavior in the ho-
study the sharing economy and the hotel industry’s future. tel industry. This is because some digital technology, especially
The transaction is the theory’s unit of analysis and is under- blockchain, records verifiable smart contracts (Saberi et al., 2019).
stood as an exchange of information, goods, or services between In general, the measurement of transaction costs may help assess
subsequent stages of a production process (Williamson, 1989). the effects of changes in transaction costs. Digital technologies im-
For example, a transaction is any exchange between value-adding pact organizational processes and activities subsequently.
stages within a firm and any buyer’s purchase (Williamson, 1998).
The constant need to gather and process information, draft and 2.7. Technology- organization – environment framework and digital
negotiate contracts and arrangements, monitor and enforce agree- transformation of MSEs
ments, and manage and maintain relationships generates transac-
tion costs. Although other adoption models exist, we employ the
Two key assumptions about human behavior are fundamental Technology-Organisation-Environment (TOE) Framework because
to transaction cost theory: bounded rationality and opportunism of its focus on technological, environmental, and organizational
(Williamson, 1989). First, bounded rationality considers cognitive factors that influence MSEs decisions to adopt digital transforma-
restrictions when conducting human behavior. An individual might tion (Wong et al., 2020). TOE offers a more comprehensive view of
want to act rationally, but the inability to process all available in- technology adoption because embracing digital transformation de-
formation limits a decision’s rationality. pends on technological, organizational, and environmental factors
Second, opportunism denotes the risk that the other party seeks (Orji et al., 2020).
self-interest primarily. Opportunistic behavior includes withholding Kouhizadeh et al. (2021) used TOE to investigate blockchain
information, cheating, or any other contract violation form. adoption barriers among academics and practitioners. Relatedly,
Three key constructs within transaction cost theory directly Orji et al. (2019) developed a theoretical framework based upon
influence the transaction costs of economic exchange: asset- TOE for critical success factors, which influence the use of so-
specific investments, transaction characteristics, and uncertainty cial media for supply chain social sustainability in freight logistics
(Dahlstrom and Nygaard, 2010). Transaction cost theory considers firms in Nigeria.
two forms of uncertainty to drive costs. Due to potential regu- TOE has been popular in the study of Small and Medium En-
latory, political, or economic changes, environmental uncertainty terprises (SMEs) technology adoption. Abed (2020) examines the
increases the difficulty to draft sufficient agreements before ex- factors that affect SME social commerce adoption using TOE. Their
change. Behavioral uncertainty occurs if one party’s performance survey of 181 SMEs in Saudi Arabia indicates that trading partner
after a transaction is difficult to measure, often due to implicitly pressure in the environmental context, followed by top manage-
or explicitly generated information asymmetry. ment support in the organizational context, and perceived useful-
Transaction cost theory prescribes governance structures to ness in the technological context, have the most significant influ-
minimize costs under given exogenous conditions. As the global ence on behavioral intention to use social commerce. These dimen-
economy changes and managers increasingly engage in collabo- sions are popular in TOE.
rative partnerships, relational governance structures are also in- Wong et al. (2020) adopted the TOE Framework to investigate
tegrated into the transaction cost framework (Schmidt and Wag- blockchain adoption of 194 SMEs in Malaysia empirically. They
ner, 2019). Three distinct transaction governance problems orig- found that SMEs often lack technological investments but face the
inate from the transaction cost theory. Specifically, organizations same requirements for streamlining business processes to optimize
have to solve the safeguarding, performance measurement, and returns. Blockchain presents a viable option for SME sustainability
adaptation problem by selecting an appropriate governance struc- due to its immutability, transparency, and security potential to rev-
ture (Leiblein, 2003). olutionize businesses which is also supported by Orji et al. (2020).
The measurement of transaction costs is based on the assump- TOE can help predict digital transformation in MSEs
tion that price and its transaction cost decide an organizational un- (Bollweg et al., 2016; Rahayu and Day, 2015). This TOE capa-
dertaking. The most economical transaction is to minimize trans- bility is because different innovations have different adoption

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

Fig. 2. A framework to support COVID-19 Pandemic Digitization Lessons for Sustainable Development of MSEs.

factors in different cultures and contexts, such as MSEs, especially These supportive developments would enhance economic well-
in developing economies. The argument is that MSEs have techno- being, which is a strong social sustainability effort, but also make
logical, organizational, and environmental factors that differ from operations more efficient reducing waste and sharing information
SMEs and large-sized firms (Sohns and Revilla Diez, 2018). For related to latest practices for environmental and social sustainabil-
example, in Ghana, specific government institutions and policies ity.
support micro and small enterprises’ capacity due to their unique Post-COVID-19, MSEs would need to rethink strategies to incor-
nature (Oppong et al., 2014). There have also been fiscal incen- porate crisis scenarios and business continuity plans using alterna-
tives, grants, bilateral and aids from multilateral agencies, and tive additional sale channels. Sustaining customers virtually is not
specialized institutions supporting MSE success.” an easy task as providing a substandard service will harm compa-
In summary, we believe the organizational theories discussed nies irreversibly.
in this section have reference value for further studies on the po- COVID-19 resulted in MSEs facing greater challenges and un-
tential research fields provided by this paper. They underpin MSEs certainties; organizational actors need to build greater adaptabil-
digitization, especially in the COVID-19 period, to enhance sustain- ity through digitization. Scenario building with digitalization in-
able production and consumption, and business continuity. We de- cluded from lessons learned can provide managers to more effec-
velop a conceptual framework that summarizes how these theories tively determine whether they have adaptable and dynamic capa-
support COVID-19 pandemic digitization lessons for sustainable de- bilities. These experiences can be parlayed to more effectively ad-
velopment of MSEs in Fig. 2 below. dress future longer-term issues that may arise from environmental
and social sustainability crises. The concern here is that MSEs do
not necessarily have this longer term and adaptable focus—COVID-
3. Implications for practice 19 may have provided them opportunity to consider these, even
given the short-term challenges faced.
MSEs digitization should be of importance for multiple orga- A stakeholder approach has been theorized for organizational
nizations across the supply chain and policy-makers. One criti- social and environmental sustainability management. MSEs need to
cal aspect of this digital transformation is to enhance sustainable carefully examine how crises affect broader stakeholders outside
production and consumption. Clearly, resource constrained MSEs organizational boundaries and their communities. An integrated
will require appropriate systems and support staff that can be approach to improve local, national, and global community envi-
enhanced through improved public and supply chain supported ronments is one lesson learned in this environment. The pandemic
infrastructure. This infrastructure is necessary to ensure effective crisis showed MSEs organization leaders that stakeholder com-
business operations and integration within and between organiza- plexity will also result in multi-faceted decisions. That the well-
tions. For example, policymakers can help establish a multi-agency being of organizations, and their approach to sustainable produc-
platform to support MSEs access digital technologies; with spe- tion and consumption is not only based on decisions they make
cial focus on monitoring environmental and social performance. but are greatly affected by issues and concerns outside the tradi-
They can also provide training and support in using e-commerce tional supply chain and organizational boundaries. Digitization can
and social commerce, digital payments, and alternate modes of allow them to be integrated with these communities, social and
financing—including those from the private sector—this can socially environmental sustainability concerns.
enhance these vulnerable organizations.

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C. Bai, M. Quayson and J. Sarkis Sustainable Production and Consumption 27 (2021) 1989–2001

The use of digitization in extreme disruptions may help peo- proved MSEs sustainability performance and contribution to
ple and organizations stay connected, facilitate smart working sit- supply chain sustainability?
uation, and links to potential stakeholder privacy infringements. 2 What cultural and socioeconomic challenges exist for MSEs
Practitioners should need to carefully consider how digitization technology acceptance behavior? The adoption of new tech-
changes the MSEs modes of working—not only for MSE’s them- nologies may be met with some suspicion. Will environmen-
selves, but partners. Implications for sustainable development in- tal sustainability—for example recycling electronics—in sus-
clude the issues of community building, knowledge sharing and or- tainable and circular economy improvements from digitiza-
ganizational learning all related to various social and environmen- tion bring corresponding economic improvement to informal
tal concerns. Digital transformation for MSEs that supported busi- partners?
ness continuity during COVID-19 need to be evaluated from social 3 Do traditional technology acceptance theory frameworks and
and environmental sustainability dimensions. Example social sus- models apply in this emerging economy supply chain en-
tainability may be safety and health issues can be managed more vironment; especially during and after similar crises? Will
effectively—workers can reply and do work from home if there are crises overcome the mistrust and cost of these digital tech-
emergency situations. Yet, care must be taken that these situations nologies and alter their adoption?
do not exploit workers who might be continuously on call. More 4 Can multi-stakeholder environmental regulatory policy more
broadly, policy makers need to consider whether greater digitiza- effectively include MSEs, especially informal MSEs, through
tion is good for the environment, especially given some of the en- digitization?
ergy requirements of these systems. 5 What is the relationship between the capacity of MSEs and
The transformational initiatives of MSEs during the COVID-19 environmental regulation? Do COVID-19 style mechanisms
disruption slightly shifted from technology to social, customer, and and regulations, such as stimulus funds and distribution,
organizational driven changes. The choice of technology could be provide additional avenues for MSEs to be more sustainable
related to the MSE’s existing equipment, basic digital competen- actors?
cies to use these technologies, and already established digital com- 6 What roles do various stakeholders and institutions play in
munication channels with customers. Lack of resources and exper- the digital inclusion of MSEs? For instance, NGOs, govern-
tise connected to the use of more advanced technological solu- ments, and local community stakeholder involvement. Have
tions could also play a role. This emergent role should be taken collaborations amongst these broad sets of stakeholders oc-
into account by policy-makers when defining new policies relating curred during the COVID-19 crisis, will they be maintained,
to future MSEs support measures, especially when those measures and can lessons be learned?
are to help govern various sustainability—environmental and social 7 How does digital transformation change the customer value
goals. creation process for MSEs? What are the most important dy-
Innovation challenges that arise from including digital technolo- namic capabilities for digital transformation in MSEs; espe-
gies such as AI (artificial intelligence) in developing sustainable cially with relation to sustainable production and consump-
business models are likely to have ethical, social, economic, and le- tion?
gal implications. In this context, the collaboration of scholars, pro- 8 Should MSEs pursue digitization alignment during COVID-19
fessionals, and institutions in continuing research and implement- and similar crises? Does a direct link between digitization
ing a public-private partnership network to anticipate and manage and performance during COVID-19 exist and what can be
the profound social changes connected to the digital revolution are learned for broader sustainability?
needed to support sustainability. 9 What skills and training—human resource capabilities—do
Innovation in creating sustainable business models for deliv- MSEs require for digitization? How can policymakers pro-
ering services, remote operations, substitution and channels of mote MSEs training programs—with digitization—to achieve
service delivery, innovative collaboration environments, and new inclusive environmentally sustainable practices?
service consumption opportunities enable and improve the value 10 How do cloud-systems, artificial intelligence (AI), e-
proposition. MSEs often need external inputs and resources on commerce, analytics, social media, and the sharing economy
these matters. and their synergistic relationships, create sustainability
The influence of COVID-19 motivates MSEs to rethink their core opportunities for MSEs?
competencies, seek new opportunities, and redefine sustainable 11 What challenges do MSEs face in participating in digital
business models in a more intense and timely manner. Strategic ecosystems; especially with relationships to environmental
ambidexterity in shorter cycles, balancing between measures, and and social sustainability?
concentrating on building innovation is not limited to only MSEs
during this period. Developing new competencies, improving ex- 5. Conclusion
pertise, and enhancing professional experience regarding apply-
ing new technologies within business models is a significant re- This paper sheds light on digitization lessons that can be
gional development need over the long-term. MSEs can survive gleaned for MSEs to build resilient and sustainable post-COVID-
this and other disruptions, and in this example will emerge capa- 19 supply chains—especially vulnerable MSEs populations in devel-
ble of adopting new technologies and become more competitive. oping countries. We believe MSEs digitization is feasible; this is
especially true for many agrarian-based developing countries like
4. Research implications and future directions Ghana in sub-Saharan Africa. Emerging economies in environmen-
tally sensitive regions of the world—such as Brazil and Indonesia
Given the possibilities and the uncertainties associated with are also exemplary locations that have the potential to leap-frog
digitization technology, much of what we are proposing is based technological inclusion for the sustainability of their MSEs. Not
on newer technologies and evolving settings; some of which are only do practical issues and exemplars exist to achieve sustainabil-
unprecedented. We now introduce additional outstanding and po- ity through digitization in a post-COVID-19 world, but research can
tential research questions that require further study. be advanced from some basic questions addressed in this perspec-
tive paper. For example, we provided theoretical lenses that can
1 How will digital innovations diffuse through the supply help investigate and may even support MSEs digital transforma-
chain to benefit MSEs? Will digital innovations result in im- tion processes, especially for circular, economical, sustainable sup-

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cial interests or personal relationships that could have appeared to
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