SMEs combining innovation and AI boost their social and environmental sustainability

Complementarity between the different types of innovation (economic, social and green) and artificial intelligence (AI) accelerates the environmental and social sustainability of European SMEs. That is the main conclusion of a study by the Universitat Oberta de Catalunya (UOC) that shows how the combination of economic innovation, the strategic use of AI technologies, and social and environmental innovation practices can make companies more sustainable without compromising on profitability. The study, led by Joan Torrent, Professor of Economics at the Faculty of Economics and Business and the coordinator of the ICT - Artificial Intelligence Laboratory (i2TIC-IA Lab) interdisciplinary research group, analysed data from more than 13,000 companies in 29 European countries and found that this interaction is present not only in Catalonia and Spain, but throughout the continent.

The article has been published as open access in the journal Business Strategy and the Environment, one of the world's most prestigious publications in the field of sustainable management, and it identifies the factors that are decisive for moving towards a business model that is more responsible without compromising on competitiveness. Alongside Torrent, two other UOC researchers also took part in the study: Mihaela Enache-Zegheru and Pilar Ficapal, who are both also members of i2TIC-IA Lab.

"Until recently, companies were only concerned with economic viability, but recently, as a result of the entire context of climate change, we've also been asking them to think about environmental sustainability and social sustainability," said Torrent. The researchers determined the extent to which artificial intelligence contributes to improving the pathways of SMEs against this backdrop of a dual transition, in order to link digitalization and sustainability policies to promote more sustainable economic activity from an economic, social and environmental perspective.

The results show that although economic innovation alone (everything that companies do in terms of their product, process, organizational and marketing innovation) makes a positive contribution to social and environmental sustainability, its impact is significantly enhanced when combined with green/social innovation and AI-based technologies, highlighting their role as drivers of sustainability.

"The major contribution that the study makes is that we have found that the pathways are quite varied. In other words, complementarity between economic innovation with social and environmental innovation is better for achieving environmental sustainability results, while on the other hand, complementarity between economic innovation and the use of artificial intelligence is more powerful for creating results related to social sustainability," said Torrent, who is also director of the UOC-DIGIT research centre.

The study also shows that companies that are committed to social impact, engaging in practices such as workforce integration, equality, and engagement with their local area, generate stronger links with their stakeholders and boost their intangible assets such as trust and corporate reputation. This also leads to improved economic performance and a greater capacity to innovate in the long term.

The challenge for microfirms

The study analysed data from 2020 from 13,117 companies obtained from the Flash Eurobarometer, a survey commissioned by the European Commission, and found that the impact of these dynamics is not uniform for all SMEs but varies depending on the size of the company. The researchers found that in microfirms (those with between 1 and 9 workers) the effect is less pronounced than in small companies (those with from 10 to 49 workers) and medium-sized enterprises (those with from 50 to 250).

"It's a result that's to be expected, because adopting AI requires more financial muscle, more knowledge, more trained people… in short, a number of barriers which mean that the smaller the company, the more difficult it is to overcome them. The complementarities we observed with AI are therefore more powerful in medium-sized companies," said Torrent.

The researchers believe that these results will help the business sector to understand that sustainability can be a good way to rethink their business model and become more viable in the medium and long term. "If we are able to introduce artificial intelligence and combine it with a strategy for sustainability, SMEs will undoubtedly be able to rethink the way they do business and become more economically viable, but on top of that they will also be more socially and environmentally responsible," said the UOC researchers.

Implications for business leaders and policymakers

The study has clear implications for business executives, policymakers and investors: a firm commitment to social and environmental innovation, backed by artificial intelligence technologies, is today one of the surest ways to guarantee not only the survival but also the success of European companies in a post-pandemic setting against the backdrop of the climate challenge and growing social disparities.

The scientific evidence provided by studies like this one makes it increasingly clear that sustainability is no longer an added cost, and is becoming a source of competitive advantage. Rather than being just another technical tool, AI use is becoming a key mechanism for transforming data into value, identifying opportunities for innovation, optimizing sustainable processes and, above all, transforming business models.

Accordingly, the authors suggest that in view of these results, policymakers must implement large-scale AI use and innovation plans aimed at SMEs and microfirms in particular. "If they don't use the right technology to become sustainable, it will be very difficult for them," said Torrent.

A study that opens up unknown new dimensions

Based on this research, the researchers now plan to focus on the dynamics that affect companies with clear contradictions between their strategies, such as those that have a strong environmental commitment but very little social awareness. They also want to explore the efficiency of technology provision models, because they are very strongly focused towards large companies but do not offer solutions that are adapted to the needs of SMEs. "We have identified a problem with the model used to provide smaller companies with technology which needs to be resolved," said Torrent.

This UOC study aligns with the university's Digital transition and sustainability research mission. It contributes to the UN's Sustainable Development Goals (SDGs), particularly SDG 8, Decent Work and Economic Growth, and 9, Industries, Innovation and Infrastructure.

Reference article

Torrent-Sellens, J.; Enache-Zegheru, M.; Ficapal-Cusí, P. 2025. "Promoting the European Sustainable Firm: How Economic, Social, and Green Innovation and the AI‐Based Technologies Create Pathways of Social and Environmental Sustainability." Business Strategy and the Environment, 1–27. https://doi.org/10.1002/bse.70068

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