Beyond ESG Adoption: How Value Co-Creation and Community Engagement Transform Sustainability Practices into Business Performance in Creative SMEs

Sri Ismulyati; Ginta Ginting; Andriyansah Andriyansah

doi:10.32535/ijabim.v11i2.5062

Beyond ESG Adoption: How Value Co-Creation and Community Engagement Transform Sustainability Practices into Business Performance in Creative SMEs

Sri Ismulyati, Ginta Ginting, Andriyansah Andriyansah

Abstract

This study examines how Environmental, Social, and Governance (ESG) practices enhance creative SME performance through value co-creation and community engagement. Drawing on Stakeholder Theory and Service-Dominant Logic, data were collected from 215 owners, managers, and employees of creative SMEs across Java, Indonesia, and analyzed using PLS-SEM. Results show that all ESG dimensions significantly enhance value co-creation and community engagement. Environmental practices exert the strongest effect on value co-creation (? = 0.426), while social practices have the strongest effect on community engagement (? = 0.454). Both mechanisms significantly mediate ESG–performance relationships, with the social practices–community engagement–SME performance pathway showing the strongest indirect effect (? = 0.180, p < 0.001). These findings identify collaborative value creation and community-embedded relationships as complementary pathways linking ESG to performance. The study suggests that creative SMEs should integrate sustainability practices with stakeholder collaboration and meaningful community participation to strengthen competitiveness and sustainable business performance

Keywords

ESG practices; value co-creation; community engagement; SME performance; creative SMEs; Indonesia

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DOI: https://doi.org/10.32535/ijabim.v11i2.5062