Small and medium-sized enterprises have long been underestimated in their ability to drive Europe’s digital, green and social transformations. A new open-access study published in the Journal of Cleaner Production challenges this assumption, showing that SMEs can act as powerful agents of change if they develop more than just basic technological tools. Conducted by Joan Torrent of the Universitat Oberta de Catalunya and Dolores Añón of the Universitat de València, the research draws on data from nearly 12,000 European companies. It identifies the conditions that allow smaller firms to combine artificial intelligence with sustainable business practices.

The key message is that digital maturity alone does not guarantee that SMEs will leap into a low-carbon, socially responsible future. The study argues that simply adopting standard digital tools is not enough to support what it calls the “twin transition” (digital and green), or the broader “triple transition” (digital, green and social). What enables meaningful progress is the presence of strategic and organisational capabilities that allow a company to integrate technology with sustainability goals. These include strong financial health, a culture of innovation, skilled workers and experience in intellectual property or business collaboration. Firms that possess patents, belong to larger business groups or have entrepreneurial expertise are significantly more likely to adopt advanced technologies alongside environmental and social practices.

One of the most striking findings is what the researchers call the “digital block effect”. This occurs when a company relies too heavily on basic digital tools without developing the non-technological assets that support transformation. In such cases, digitalisation becomes a barrier rather than a stepping stone, trapping companies at a basic level and preventing them from using more transformative innovations, such as artificial intelligence or advanced sustainability strategies. According to the study, this block can keep SMEs from contributing meaningfully to the green and social transitions, despite their potential influence.

These conclusions carry significant implications for public policy. The authors argue that governments too often treat digitalisation as an end in itself rather than linking it to skills development, research support, and business collaboration. To enable SMEs to become true agents of change, policy must encourage connections between technology, human capital and business ecosystems. The research also highlights uneven progress across the continent. SMEs in northern and western Europe are advancing more quickly because they operate within stronger support systems. In contrast, many southern and eastern regions lag due to fewer resources and differing political priorities. Although Spain leads in environmental and social sustainability, it is slow to transform digitally, a situation the researchers describe as creating a new internal “social divide” among companies.

For SMEs wishing to move forward, the study recommends starting by identifying where the business creates value and using digitalisation and sustainability as tools to rethink that value, rather than merely improving efficiency. From there, companies should seek external support through partnerships, advisory services and targeted funding that align with long-term goals. The researchers warn that SMEs failing to embrace these transitions risk becoming less competitive and reinforcing low-value business models that harm workers and communities. However, those that successfully integrate digital, green and social strategies can strengthen their competitiveness while contributing to a more inclusive and sustainable European future.

More information: Dolores Añón Higón et al, AI-twin and AI-triple firm’s transition: Unveiling the predictors from European SMEs, Journal of Cleaner Production. DOI: 10.1016/j.jclepro.2025.146134

Journal information: Journal of Cleaner Production Provided by Universitat Oberta de Catalunya (UOC)