Sustainable Development towards Openness SME Innovation: Taking Advantage of Intellectual Capital, Sustainable Initiatives, and Open Innovation

Abstract

The issues of the relationship between the innovative maturity of enterprises, the orientation of small- and medium-sized enterprises (SMEs) to the principles of sustainability, and the expansion of their participation in sustainable development with business efficiency are very important and interesting. In this case, it is important to find a good balance between a policy that focuses on sustainable development and businesses’ needs. This will help SME companies be as efficient as possible and have the least amount of impact on the environment. This is especially important for countries where small- and medium-sized businesses are the main driving force of the country’s economy. This research aims to examine how the conceptualizations of intellectual capital (e.g., relational capital, social capital, and structural capital) affect open innovation and sustainability-oriented initiatives to foster open sustainability innovation for small- and medium-sized businesses. Using structural equation modeling based on second-order factor analysis, survey data were collected from 481 SMEs in Thailand. Intellectual capital in SMEs enhances opportunity recognition in SMEs to develop open sustainability innovation, while sustainability-oriented initiatives and an open innovation strategy should be well-placed. SMBs and business policymakers should pay attention to the idea of intellectual capital in terms of socio-rational resources, in which open sustainability innovation projects could be developed through sustainable cooperation.

1. Introduction

The transition to sustainability in the modern knowledge-based economy is marked by intellectual capital [1]. Focusing on intellectual capital for sustainability is important because small- and medium-sized businesses in emerging markets such as Thailand depend on it when there is a low rate of innovation, weak ties to industry, and bad policies for managing socio-relational resources, which lead to innovation through cooperation [2]. The United Nations’ overall concept of sustainable development goals (SDGs) and long-term sustainability remains unchanged. Their ongoing dedication is exemplified by Agenda 2030 [3]. It is no coincidence that businesses are building methods for quantifying and reporting their intellectual capital, which is viewed as a source of increased organizational efficiency and stakeholder trust [4]. Intellectual capital can be defined as the ability to sustain a firm’s competitive advantage, primarily through value outputs produced by the firm’s resources, competence, and capabilities. It is the potential for a long-term profit with a given degree of reliability [5]. As a result, intellectual capital is considered an intangible activity in the value creation process that involves social networks, external links, and organizational and technological culture (referred to as social capital, relational capital, and structural capital) [6]. These components assist businesses in becoming more competitive [7]. Intellectual capital encapsulates the realm of “intangible” resources that are not quantifiable in budget documents [8], but they are still crucial for creating long-term worth [9]. It is essential for economic progress, long-term sustainability, and human well-being [4,7]. Due to their smaller budgets, SMEs and business strategists face many limitations, such as capital and resources [10]. This shows that they need to make the most of the resources they already have, one of which is intellectual capital. This research undertakes an evaluation of SMEs’ intellectual capital to create a new link to open sustainability innovation (OSI). In this context, this research poses four central research questions:

• RQ1: Are the elements of intellectual capital conceptualized by relational, social, and structural capital?
• RQ2: Does intellectual capital have a link to the open innovation strategy and sustainability-oriented initiative of the organization?
• RQ3: Does intellectual capital positively affect open sustainability innovation?
• RQ4: How do open innovation strategies and sustainability-oriented initiatives affect open sustainability innovation?

External networks, combined with internal capabilities, have always been essential components of innovation [11]. When it comes to innovation through cooperation with external networks, it is addressed as open innovation. Chesbrough and Marcel Bogers [9,12] defined an open innovation paradigm as a way for firms to produce new goods or services together with external sources of innovation. The impact of open innovation in the SME literature has garnered a great deal of attention in light of collaboration [2,13]. Open innovation, describing the inflows and outflows of knowledge for enhanced performance in the invention, is widely recognized as a crucial innovation management technique [14]. The stream of present literature highlights the importance of open service innovation and organizational, social, and human resources, including intellectual capital [13]. The literature on intellectual capital stresses that knowledge may generate a more vital competitive advantage in the service sector than other tangible capital [13]. On the other hand, open innovation’s potential drawbacks include a loss of control, increased management and organizational complexity, and, as a result, higher costs [15]. Moreover, despite the availability of open innovation techniques, little is known about how firms create external partnerships and profit from their inventions [16], how they collaborate with external partners, and for what reasons they collaborate [17]. This is especially true in the case of sustainability innovations, and Hossain (2013) [18] refers to the necessity to rethink and redesign goods, processes, and services to satisfy the sustainable development criteria, which are being requested by many organizations, such as customers, NGOs, and governments [19].

Thailand’s 20-Year National Strategy Framework, with a GDP per capita of approximately USD 13,000, aims to elevate the country from middle-income to high-income status by 2036, constantly obtaining inclusive, long-term population development and full and productive desirable employment outcomes. As a result, the 12th National Economic and Social Development Plan was developed to build a healthy, competitive, service-based, and digital economic system [20]. It also envisions a competitive entrepreneurial society with competitive micro, small and medium enterprises (MSMEs) that use innovation and technology to generate more advanced, value-added goods and services. Moreover, using environmentally friendly manufacturing methods is anticipated to distribute benefits across the country [21]. Small- and medium-sized enterprises (SMEs) are Thailand’s major economic drivers, and Thai SMEs need intellectual capital to innovate and produce viable products and services [22]. Intellectual capital might be utilized in Thailand to detect gaps within those two factors and build or offer training for employees to assist them in enhancing their intellectual capital [23]. Existing intellectual capital traits may be developed or preserved above elevated levels, allowing staff to share their knowledge and provide exceptional customer service while generating long-term competitive advantages [23]. According to the National Innovation Agency’s report [24], with the backdrop of Thailand’s economy, moving towards open innovation allows many to collaborate to increase competitiveness. Thai government agencies (e.g., the National Innovation Agency: NIA) attempt to support SMEs with innovative business opportunities to better respond to consumer needs and enhance their ASEAN competency [24]. Small- and medium-sized businesses will gain from people outside the firm who engage in innovation, increasing networking possibilities while lowering investment risk [24]. As a result, Thai SMEs are looking for ways to collaborate by utilizing a creative business strategy to generate finance and the efficacy of organizational design to attract workers with open innovation as one of their purposes [25].

Surprisingly, unlike large corporate firms, few SMEs will be able to respond to sustainability in such a way that they raise awareness of issues and accept responsibility for their impact [26]. Investment in sustainability knowledge comes with costs. In light of SMEs, to initiate sustainable orientation, open innovation is required in order to look for (sustainable) partners throughout the innovation lifecycle, from conceptualization to commercialization. Previous research by Na-Nan et al. (2020) had an impact on the characteristics of intellectual capital in SMEs in terms of employee perspectives [23]. However, the results obtained are inconclusive for business owners or managers, depending on which intellectual capital strategy is defined. There is a good chance that this research will look at intellectual capital as a social resource for SMEs. This is an area that requires further investigation in order to combine intellectual capital for SMEs capable of initiating sustainability innovation [27,28,29]. Consequently, this research examines how intellectual capital affects open sustainability innovation when open innovation strategies and sustainability-oriented initiatives are intermediaries.

The study’s main objective is to investigate and answer how intellectual capital is related to the open innovation strategy and sustainability-oriented initiative of the firm, how it influences open sustainability innovation, and how it simultaneously affects open sustainability innovation. This study contributes to the current literature in the following ways. First, we develop a conceptualization of intellectual capital and its measures. As a result, rather than concentrating only on a single construct of intellectual capital, we examine the construct’s many different dimensions. To the best of our knowledge, this has not been carried out so far theoretically. Second, we specify open innovation orientation and sustainability-oriented initiatives to account for open sustainable considerations. Therefore, open sustainability innovation can emerge when SMEs recognize that both open innovation orientation and sustainability-oriented initiative are key in the development of their underlying performance.

The following is the outline for the paper: The second section is a review of the literature and hypothesis development. The technique and data are described in Section 3. The empirical analysis is presented in Section 4. Section 5 provides an illustration of our discussion into diverse impacts. Additionally, Section 5 provides the summary and conclusion to the article.

2. Literature Review and Hypotheses

2.1. Theory of Intellectual Capital

Organizations should highlight the importance of intellectual capital due to its rapid growth in technologically advanced firms in an economy with knowledge and management [7]. Intellectual capital (IC) is critical in achieving competitive advantages and growth for firms [23]. Businesses must thus focus on managing and developing their organizational mental processes, which result in a collection of intangible objects useful in economic activity [30]. When combined with an organization’s information archives, IC represents the potential for long-term business profit with a certain degree of dependability [1]. This study measures intellectual capital in terms of social capital, relational capital, and structural capital. Structural capital includes organizational infrastructure and innovative capital [31]. Relational capital is collective knowledge. It is also considered to be vital in relationships with suppliers and consumers [32]. Social capital includes friendship, compassion, and social interaction among individuals and families [33]. Most Thai SMEs are family businesses, and they focus on relationships and trust among internal individuals and families. As a result of this rationale, this study paid attention to social capital rather than human capital. To measure IC, we assumed that:

Hypothesis 1:

Intellectual capital is a second-order factor model, consisting of the sub-dimensions of social capital, relational capital, and structural capital.

Social capital is defined as collaboration and contact amongst individuals with similar views [13]. Consider, for instance, Rowley and Suseno’s (2019) discussion of social capital in service sectors, particularly in the context of internationalization, in which service businesses increasingly rely on external collaboration [34]. Spence and Schmidpeter (2003) argue that investing in social capital appears to impact firms in business and society networks positively [35]. Because of their importance to general commerce, SMEs and the environment can create a collaborative culture and help solve some societal problems [36,37,38]. All of these reasons indicate why social capital is important to conceptualizing intellectual capital. The following hypothesis was proposed:

Hypothesis 1a:

Social capital has a positive effect on firms’ intellectual capital.

Relational capital is described as a collection of all the interactions, i.e., market relationships, reputation, power relationships, and cooperation, based on the organization, culturally similar people, and having a strong sense of belonging to institutions [33]. As a result of its growing importance in business and marketing research, relational capital has been regarded as a primary form of capital that supports competitive advantage [38,39]. Nevertheless, most companies are burdened with increasing transaction expenses due to the opportunistic actions of their partners [39]. Therefore, organizational survival relies on its ability to leverage the intellect and creativity of the employee and the development of relational capital by a continual learning process [40]. Based on Ryu et al. (2021) research, SMEs with a high level of relationality positively affected overall international performance in SMEs [41]. In this context, the research set the following hypothesis:

Hypothesis 1b:

Relational capital has a positive effect on firms’ intellectual capital.

As a term, structural capital refers to a mix of competitive intelligence, formulas, patents, policies, information systems, and the organization’s culture, which are derived from the firm’s goods and systems built throughout its existence [32]. Most researchers agree that structural capital positively affects performance and innovation in SMEs [42]. Additionally, it implies that an increase in structural capital would result in improved firm performance and innovation. However, in regard to innovation, employees’ information and necessary knowledge must be combined and integrated for many current technologies to function properly due to their complexity [42,43]. This research proposes the following hypothesis:

Hypothesis 1c:

Structural capital has a positive effect on firms’ intellectual capital.

2.1.1. Intellectual Capital and Open Innovation

A more comprehensive form of literature can be found in Lo et al. (2020) in that intellectual capitals are strongly associated with a firm’s capacity to innovate, which in turn improves the ability of businesses to use knowledge resources [13]. Open innovation may enhance search capabilities, allowing for the discovery of new sources of intellectual capital [44,45]. Thus, it appears that intellectual capital is affected by open innovation. However, Barrena-Martínez et al. (2019) found that there was a relationship between intellectual capital and open innovation [44]. This relationship indicated that the stocks of intellectual capital served as the cornerstone of open innovation. As for strategic alliance outcomes, Sambasivan et al. (2013) showed that relational capital plays a role in establishing strong collaborative partnerships amongst supply chain partners [46,47]. It can also raise the issue of the partnership paradox [15]. Based on previous studies, it can be summarized that the relationship between intellectual capital and open innovation can be interchanged. We hypothesized that:

Hypothesis 2:

Intellectual capital has a positive effect on firms’ open innovation.

2.1.2. Intellectual Capital and Sustainability-Oriented Initiative

When developing open sustainability innovation projects for SMEs, it is important to think about intellectual capital and sustainability-focused initiatives [48]. To develop sustainability innovation through cooperation [49], resource conservation is part of the sustainability response and often involves changing operations for more efficient use of resources [50,51,52,53]. Intangible resources are less expensive, allowing for more sustainable innovation and performance (i.e., enhancing sustainable brand recognition and green intellectual property), particularly in firms with limited resources. When combined with other parts of innovation, intellectual capital has the potential to enhance processes, disseminate knowledge, and inspire network connections, resulting in improved environmental and social innovation performance. Intellectual capital could help SMEs and the public change their values so that they care more about sustainability. Meanwhile, sustainability-oriented initiatives have become a major concern as society and governments strive for a pollution-free environment and resource sustainability [53]. The capacity of SMEs to grasp sustainable business opportunities and guarantee a significant supply of ideas linked to sustainability in which to invest is critical. To encompass all functional areas with a sustainability approach, SMEs may increase their internal and external cooperation since customers and employees probably have a wealth of ideas that could make their business greener [7,54]. Thus, intellectual capital in terms of socialization, relationships, and interaction contributes to the development of a strategic sustainable culture that is capable of dealing with organizational sustainability as a process that is based on identifying and investing in sustainability innovation opportunities [1,55]. We assumed that:

Hypothesis 3:

Intellectual capital has a positive effect on firms’ sustainability-oriented initiative.

2.1.3. Intellectual Capital and Open Sustainability Innovation

Many studies have highlighted intellectual capital as a key factor in attaining sustainability innovation success. To develop new (sustainable) product innovation, Li et al. (2019) pinpointed that intellectual capital has been a critical asset for businesses seeking to improve innovation (i.e., increase efficiency and retain market dominance) [56]. According to Hsu and Fang (2009), a firm with more intellectual capital has higher innovation ability and performance than an organization with less intellectual capital [57]. Wang and Juo (2021) found that intellectual capital is positively linked to green innovation, indicating structural capital (i.e., as the stock of green intellectual property, organizational culture, green know-how, databases, software, organizational capabilities inside a firm) to obtain green competitive advantages [58]. It is also critical for firms to establish social relationships with stakeholders that allow them to exploit new opportunities for sustainable business innovation [59]. Looking at the relationship between intellectual capital and open sustainability innovation, we hypothesized that:

Hypothesis 4:

Intellectual capital has a positive effect on open sustainability innovation.

2.2. Towards Open Sustainability Innovation

Below is the academic literature to understand the antecedent of open sustainability innovation. This study shapes the idea of open sustainability innovation from a combination of open innovation orientation and sustainability-oriented initiative. It creates the paradigm which is so called open innovation for sustainability.

We define the term open sustainability innovation as the way of bringing (new) ideas, concepts, management practices, products, and services that benefit the environmental, social, and economic impact into widespread use while interacting with an interconnecting web of stakeholders. Customers, end-users, suppliers, investors, governments, and business partners are all stakeholders in the value co-creation process [60]. Managing performance on open sustainability innovation is the forward-looking process of ensuring that sustainable actions and outputs are inside a firm’s sustainable goals. The management of performance is critical in order to maintain or enhance the firm’s sustainability performance [61]. Therefore, open initiatives and sustainability-oriented initiatives drive firms to perform open sustainability innovation by combining internal research with external knowledge of sustainable development to aggregate sustainably innovative products and services [62].

A typical definition of innovation is implementing new ideas from organizational processes that combine diverse resources [63]. Firms’ performance and survival in a complex and intellectually competitive world are dependent on innovation [64]. (K.-P. Hung and Chou, 2013) found that internal R&D and environmental instability would strengthen and diminish firms’ performance for open innovation. The open innovation paradigm is based on the concept that a firm’s connection with other groups leverages internal and external R&D efforts, improving its innovativeness [46]. Since the early 2000s, open innovation has transformed the landscape of innovation. As a result, a wide range of businesses, including suppliers, customers, rivals, and universities, are now involved in the process of innovation learning [50]. Due to its ability to facilitate ideas, open innovation is a critical element of a successful management strategy. Open innovation has three types: inbound, outbound, and coupled. In the first, external learning or experiences are used inside, whereas internal information is used and disseminated externally in the second [65]. Firms must improve their collaboration abilities to efficiently acquire information and technology from their partners [66]. In the third, coupled open innovation is how firms co-innovate and co-create with complimentary strategic partners [67].

Does open innovation promote sustainable innovation? Cooperation and co-creation which are under coupled open innovation play roles in sustainable growth. Cheng and Huizingh (2014) revealed that strategic orientation affected the relationship between open innovation and innovation performance [65]. Costa and Matias (2020) indicated open innovation as an enabler of innovation ecosystem sustainability [68]. Srisathan et al. (2020) pointed out that the networked innovation ecosystem could provide knowledge flows through value co-creation practices, increasing sustainability [55]. Rauter et al. (2017) address the fact that open innovation for sustainable innovation is important with regard to a firm’s internal innovation system [69]. Aspects of execution of sustainable innovation that were addressed in these articles included not just strategy and culture but also openness in knowledge-provider relationships and absorptive ability. Naruetharadhol et al. (2021) found that open innovation fostered openness to sustainability efforts (i.e., open eco-innovation) in SMEs, indicating open innovation as one antecedent of open sustainability innovation [50]. As a result, it is clear that open innovation tends to enhance sustainable innovation. We hypothesized that:

Hypothesis 5:

Open innovation has a positive effect on open sustainability innovation.

This paper defines the term sustainability-oriented initiative as the practical implementation of sustainable concepts to align behaviours in order to promote environmental sustainability. In many firms, innovation remains a difficult endeavour. Sustainably innovation initiatives often fail, while successful innovators struggle to maintain their performance. Why is it so difficult to develop and sustain the ability to innovate? The causes go well beyond the most frequently stated cause: a failure to execute [70]. The issue with attempts to increase sustainable innovation stems from a lack of a sustainable innovation strategy itself [71]. According to Budhwar et al. [59], some of the world’s leading economies come from Asia, and their economies have grown from an impact on the globe in recent years. Due to environmental problems, sustainable business practices and moves towards sustainable development have been adopted by organizations due to changes in business operations [56]. Sustainability covers environmental, financial, and social performance [72]. Efficiencies in environmental performance may be measured by reducing resource use and pollution emissions [61]. Concentration and expansion, a firm’s size, and other factors impact financial performance [72]. Social performances are based on firms fulfilling these responsibilities; businesses have economic, legal, ethical, and discretionary responsibilities for corporate social responsibility [34]. Applying sustainability-oriented initiatives to SMEs has positively influenced their sustainability performance [72,73]. Thus, sustainability-oriented initiative is likely to link sustainable awareness to the full impact of sustainable thinking and actions inside firms. We assumed that:

Hypothesis 6:

Sustainability-oriented initiative has a positive effect on open sustainability innovation.

Figure 1 elaborates on our conceptual model which was developed considering the literature. At first, the construct of intellectual capital is conceptualized by the multidimensions of social, relational, and structural capital. This intellectual capital concept is aimed at being understood in terms of a network relationship establishment. It seems to be consistent with the context of Thai SMEs since most of these firms are often set up by family groups and extended family relationships. In the second, it is intended to understand how SMEs perform open sustainability innovation, while open sustainability innovation is derived from a combination of open innovation and sustainability-oriented initiative.

3. Research Methodology

3.1. Data Collection and Sampling

The current research operated in micro-, small-, and medium-sized enterprises (SMEs) in Thailand. The Thai government seems to support sustainability innovation development for efficiency and productivity in the workplace to adopt innovation and the circular economy solution and restructure the country’s economic structure into an innovation-driven economy to achieve Thailand 4.0 [50,55]. Moreover, SMEs in Thailand construct essential large profit margins. However, these SME businesses rarely concentrate on contemporary technology innovation because high budget expenditures are required [74]. Consequently, Thai SME industries should significantly provide open sustainability innovation because there is limited research in Thailand. Thus, Thailand serves as a place for this current study into open sustainability innovation.

The research design was justified by using a survey approach by which the gathering process was based on electronic administration through Google Form. The questionnaires included 30 items that covered hypotheses that investigate how intellectual capital affects open innovation strategy and sustainability-oriented initiative, including open sustainability innovation (see Appendix A and Appendix B).

We extracted several SMEs from OSMEP statistics and found that there were 756,344 businesses in 2021. This figure was identified as the whole population available for investigation. We calculated the sample size based on the principle of Krejcie and Morgan (1970), using a 95% margin confidence level and a 5% error [75]. We used data collected based on a purposive random sampling technique based on geographical clusters [76]. Purposive random sampling was found suitable for this study because the list of SME contacts could not be completely applicable. A sample of SMEs was built up which enables us to recruit based on their specific characteristics [77]. The sample selection was based on the geographical region and inclusion criteria as follows:

• The respondents must be at least 20 years old. This practice is defined by research ethics and compliance.
• Only family-owned businesses will be considered.
• SME managers, business owners, entrepreneurs, and CEOs are required to attend. If none of the aforementioned personnel are available, the questionnaire may be sent to anyone who works in a job that exclusively involves firm-level innovation.
• SMEs must provide the location of the company in terms of the region and province.
• SMEs must be registered as legal entities.

The respondents will be excluded from the quantitative study if one of these criteria is missing.

The sample size calculation resulted in 481 respondents. According to the Thai government, SMEs have the most business support in the central region. Therefore, we mainly focused on collecting most of the sample numbers in central Thailand. We collected data by sending 600 questionnaires to SMEs in Thailand, e-mailing, calling, and spreading the word among acquaintance companies. This request for 600 responses aimed to achieve the most accurate sample and avoid unnecessary problems (e.g., an overaction answer, no response, no questionnaire return, and other circumstances). As a result, we obtained 481 accomplishment responses, a consequential total response rate of 481/600 × 100 = 80.16%, and these were considered for subsequent data analysis.

3.2. Measures and Variables

We utilized a seven-point Likert scale with a 1–7 scale of agreement statements ranging from strong disagreement to strong agreement. According to the most accurate depiction of a participant’s evaluation, the most precise scale is the seven-point scale [78]. It tends to show a broader range of answer alternatives, increasing participants’ chances of reaching their reasonable goals [79]. Furthermore, with the adoption of a seven-point scale, the number of choices affected the reaction [80]. With a slight modification from prior research, all important constructs were modified.

A latent exogenous variable, which is a second-order factor model, was intellectual capital. In this study, intellectual capital in an SME business refers to the total stock of shared knowledge (e.g., new relationships established, trust, integrity, credibility, infrastructure, management processes, and intellectual property) that resides in a firm. A company’s value-creating combination of social capital, relational capital, and structural capital is referred to as capital [5,6]. It means that intellectual capital is measured by the multidimensions of social, relational, and structural capital.

To measure social capital, the respondents were asked about their current perceptions regarding collaboration, connection establishment, trust, and influential relationships (a = 0.877). To fit the context of this study, these four items were adopted from Al-Omoush et al. (2020) [36], Liu (2017) [36], and Zhao et al. (2019) [33].

Relational capital was measured by the maintenance of long-term relationships, the promotion of collaboration and networks, community and society connection, and relationship establishment with internal and external stakeholders (α = 0.913). The four-item scale was changed from Liu and Jiang (2020) [39], Wang (2014) [81], Kohtamäki et al. (2012) [39], and Sambasivan et al. (2013) [49].

Six items were combined to assess the respondents’ perception regarding structural capital, e.g., IT governance, an easily accessible information system, an environmental knowledge system, capital budgeting, information distribution systems, and well-documented systems and procedures (α = 0.931). We modified these measures from Hsu and Fang (2009) [57], Li et al. (2019) [56], Yusoff et al. (2019) [59], and Asiaei et al. (2018) [30].

The open innovation approach emphasizes information exchange inside and between businesses [82]. To measure the open innovation variable, the seven items asked the respondents to assess their innovation activities about finding sources of innovation funding, using the Internet to search for new trends, ideas, knowledge, or technologies of sustainability considering social and environmental issues in the development of new value, and coordinating the activities of exchange of sustainability information among partners (α = 0.864). Three items were removed from the analysis because their loadings were lower than 60% of variation to form the factor [83]. These items with moderate change were adapted from previous research such as the research of Hung and Chou (2013) [64], Cheng and Huizingh (2014) [76], and Naruetharadhol et al. (2021) [54].

Sustainability-oriented initiatives refer to an effort to increase businesses’ participation in sustainability. This variable had five items modified from Danso et al. (2020) [54], Soo Sung and Park (2018) [73], and Claudy et al. (2016) [62]. The items included: considering sustainability as an integral part of our business plans and operations, the 3Rs concept of waste (reduction, recycling, and reuse), communication with customers and suppliers on sustainability issues, training programs for employees on environmental awareness, and the investment in sustainable options (α = 0.946).

Open sustainability innovation refers to the way of developing or improving sustainable methods, initiatives, products, and services while using external innovation sources. To measure open sustainability innovation, we employed seven items including promoting external sustainable knowledge, introducing sustainable products and services to markets, environmental and socially responsible products, practices, and brand values, sustainable supply chain management practices (e.g., process, market, and logistics), the reduction rate of emissions, energy, and waste, the cooperation with customers for sustainable innovation, and social compliance as an enabler for sustainable innovation (α = 0.946). The seven-item scale was modified from Foo et al. (2018) [61] and Ceptureanu et al. (2020) [71].

3.3. Data Analysis

This research justified applying the second-order factor model (also called hierarchical component models) to test the higher-order construct of intellectual capital containing two layers of constructs [84] This analysis was included in the path model because the second-order factor construct (ξ) proves valuable if the first-order constructs (η) are appropriately correlated. To examine the second-order factor hypothesis, this research adopted the procedures addressed by Byrne (2016) [84], in which the tests of collinearity issues and discriminant validity need to be carefully carried out to validate the whole set of structural equational modelling results.

4. Research Findings and Analysis

4.1. Descriptive Statistics

The descriptive data statistics of demographic sampling are shown in

Table 1. Descriptive statistics and sample characteristics.

Demographic of SMEs	Frequency	%
Type of SME business
Manufacturing	103	21.41
Service	161	33.47
Transportation	87	18.09
Technology	57	11.85
Product processing	68	14.14
Other	5	1.04
Region of Thailand
The north	39	8.11
The northeast	41	8.52
The center	320	66.53
The east	50	10.4
The west	8	1.66
The south	23	4.78
Seniority
0–5 years	241	50.1
6–10 years	137	28.48
11–15 years	53	11.02
Above 15 years	44	9.15
Respondents’ position
CEO	20	4.16
Chairman/vice chairman	18	3.74
Head of department	27	5.61
Secretary	13	2.7
Manager	76	15.8
Boss	78	16.22
Entrepreneur	249	51.77
Size of SME business
1–10 employees	139	28.9
11–50 employees	252	52.39
51–250 employees	90	18.71
Age of SME business
0–10 years	260	54.05
11–20 years	122	25.36
21–30 years	54	11.23
31–40 years	25	5.2
Above 40 years	20	4.16

, which describe our control variables and how SME companies engaged in open sustainability innovation. There were 481 correspondences, which came from six separate types of SMEs; service businesses provided most of the correspondences (33.47%), followed by manufacturing (21.41%), transportation (18.09%), product processing (14.14%), technology (11.85%), and other types (1.04%). Most respondents (52.39%) were small enterprises (11–50 employees), 28.90% were micro-enterprises (1–10 employees), and 18.71% were medium enterprises with 51–250 employees.

Next, most of the respondents (54.05%) were businesses 10 years old or younger, 25.36% were 11 to 20 years old, 11.23% were 21 to 30 years old, 5.20% were 31 to 40 years old, and 4.16% were over 40 years old. The establishment year of the firm has an impact on how knowledge is shared and perceived inside a company [80]. According to (Stocké, 2006), respondents’ attitudes towards surveys can significantly influence the quality of the data collected [85]. A total of 51.77% of the respondents in the survey who adhered to the research criteria were entrepreneurs. Meanwhile, 16.22% of the respondents were bosses, 15.80% were managers, 4.16% were CEOs, and 3.74% were a chairman/vice-chairman. Geographical location is not only crucial to the success of a business but also influences its resource endowment [86]. A total of 66.53% of the SME companies were located in the central region of Thailand, followed by those from the east region (10.40%), then 8.52% from the northeast region, 8.11% from the north region, 4.78% from the south region, and 1.66% from the west region. Most top management responders worked in their respective position for five years or fewer (50.10%), followed by 6 to 10 years (28.48%), 11 to 15 years (11.02%), and those who had worked in their specialized job for more than 15 years (9.15%).

4.2. Reliability and Validity

We evaluated datasets for validity, reliability, and model fit using several methods. IBM SPSS AMOS v.26 [87] was used to run SEM on the model’s reliability and validity and then compared the results. We employed factor analysis for estimating our datasets and measurement models to determine the valid factors. In exploratory factor analysis (EFA), 30 loading factors were used for principal component analysis (PCA). As an alternative, we intended to test convergent and discriminant validity and the model’s fit quality. To identify common method variance, our Harman’s one-factor test passed the minimum aspect of less than 50%, with the result of 47.158% of variance [88]. Thus, a typical technique bias in our study is not problematic.

According to Kaiser (1974), factor analysis for Bartlett’s test of sphericity was acceptable at the figure of least 0.6, our significant result was found (χ² = 11,213.701; p < 0.001), and the result of 0.951 was enough to determine the appropriateness of sampling for each variable in the model [89]. With our data, factor analysis may be beneficial.

The construct reliability and convergent validity are given in

Table 2. Construct reliability and convergent validity.

Constructs	Items	Factor Loadings	AVE	C.R.	Cronbach	VIF
Intellectual capital	SOC	0.691				1.295
	RC	0.918				3.436
	STC	0.737	0.621	0.828	0.934	1.418
Relational capital	RC1	0.898				2.854
	RC2	0.809				1.747
	RC3	0.826				1.870
	RC4	0.867	0.724	0.913	0.913	2.302
Social capital	SOC1	0.886				2.606
	SOC2	0.824				1.860
	SOC3	0.750				1.464
	SOC4	0.740	0.644	0.878	0.877	1.427
Structural capital	STC1	0.836				1.961
	STC2	0.837				1.966
	STC3	0.830				1.909
	STC4	0.844				2.028
	STC5	0.831				1.914
	STC6	0.814	0.692	0.931	0.931	1.780
Sustainability initiative orientation (SI)	SI1	0.909				3.164
	SI2	0.859				2.196
	SI3	0.840				1.994
	SI4	0.914				3.303
	SI5	0.896	0.782	0.947	0.946	2.815
Open sustainability innovation (OSI)	OSIP1	0.892				2.741
	OSIP2	0.824				1.855
	OSIP3	0.818				1.806
	OSIP4	0.836				1.955
	OSIP5	0.879				2.485
	OSIP6	0.841				1.999
	OSIP7	0.834	0.717	0.947	0.946	1.934
Open innovation (OI)	OIN1	0.809				1.751
	OIN5	0.912				3.232
	OIN6	0.822				1.837
	OIN7	0.637	0.642	0.876	0.864	1.197

. According to (Fornell and Larcker, 1981), all standardized factor loadings should be equal to or greater than 0.6. Our factor loading result ranged from 0.637 to 0.914, indicating that the factor is able to extract enough variation from that variable. The composite reliability (CR) ranged from 0.876 to 0.947, which passed over the 0.7 acceptable level of (Joseph F. Hair et al., 2013), indicating that several indicators fulfilling the internal criteria must be consistent in each. According to Hair et al. (2013), the average variance extracted (AVE) was acceptable at more than 0.5; the result was significant between a range of 0.642 and 0.782, which supports the validity of convergence [90,91,92,93]. As a result, distinct indicators were associated with different constructs. According to Henseler et al. (2015), the heterotrait–monotrait ratio (HTMT) of correlations was used to evaluate the factor loading for a confirmed lack of discriminant validity, for which the threshold should be no more than 0.85 [93] (see

Table 3. Discriminant validity.

Heterotrait–Monotrait Ratio (HTMT) of Correlations
	IC	OIN	OSIP
OIN	0.676
OSIP	0.713	0.840
SI	0.703	0.762	0.779

). The variance inflation factor (VIF) in regression analysis can detect multicollinearity (

Table 4. KMO and Bartlett’s test.

Kaiser–Meyer–Olkin Measure of Sampling Adequacy		0.951
Bartlett’s test of sphericity	Approx. chi-square	11,213.701
	df	325
	Sig.	0.000

) and should be less than 5 [90], which occurs when there is a correlation between predictors in a model that ranges from 1.197 to 3.303. These survey factor analyses positively represented the big picture to explain how the variables were connected. In the following phase, confirmatory factor analysis will be used to identify the factor structure of our dataset.

Confirmatory factor analysis (CFA) was considered for first-order model fits, which confirmed that the model fits well for our datasets (

Table 5. Measurement models.

	Chi-Square	GFI	AGFI	IFI	TLI	CFI	SRMR	RMSEA
First-order CFA	1100.089 (p < 0.001)	0.866	0.84	0.945	0.939	0.945	0.0398	0.062
Second-order CFA	1219.800 (p < 0.001)	0.853	0.827	0.937	0.93	0.937	0.0609	0.066
Structural model	1303.806 (p < 0.001)	0.844	0.817	0.93	0.923	0.93	0.0698	0.069
Threshold	p < 0.05	>0.8	>0.8	>0.9	>0.9	>0.9	<0.08	<0.08

Note: p = probability; GFI = goodness of fit; AGFI = adjusted goodness of fit; NFI = normed fit index; CFI = comparative fit index; TLI = Tucker–Lewis index; RMSEA = root mean square error of approximation; SRMR = standardized root mean square residual.

) were: CMIN = 1100.089; GFI = 0.866; AGFI = 0.840; IFI = 0.945; TLI = 0.939; CFI = 0.945; SRMR = 0.0398; and RMSEA = 0.062.

Next, for the CFA of the second-order model, which also confirmed good result model fits (Table 5): CMIN = 1219.8; GFI = 0.853; AGFI = 0.827; IFI = 0.937; TLI = 0.930; CFI = 0.937; SRMR = 0.0609; and RMSEA = 0.066.

4.3. Hypothesis Testing Results

Structural model testing describes the result in Figure 2, showing all of the significant statistical path coefficients that support our hypotheses. Before hypothesizing, we investigate the relationship of the intellectual capital effect with open innovation strategy and sustainability-oriented initiative through the open sustainability innovation of the organization, and our structural model is appropriate (see Table 5): CMIN = 1303.806; GFI = 0.844; AGFI = 0.817; IFI = 0.930; TLI = 0.923; CFI = 0.930; SRMR = 0.0698; and RMSEA = 0.069.111. According to (Oliveira et al., 2010), supporting investigation of the relationship between intellectual capital and its components: H1a; social capital (β = 0.707; t-value = 12.889; p < 0.001), H1b; relationship capital (β = 0.846; t-value = 18.169; p < 0.001), H1c; and structural capital (β = 0.665; t-value = 12.911; p < 0.001), which indicated significant results in the structural model. H2 investigated the relationship between intellectual capital and the open innovation strategy of SME firms and found that the indicated result was significant (β = 0.788; t-value = 15.146; p < 0.001).

H3 was significantly confirmed to support how intellectual capital affected sustainability initiative orientation (β = 0.817; t-value = 17.579; p < 0.001). Furthermore, the current research found a significant intellectual capital relationship through open sustainability innovation (H4; β = 0.180; t-value = 2.275; p < 0.05). An open innovation strategy significantly influenced the increase in an organization’s open sustainability performance (H5; β = 0.507; t-value = 8.726; p < 0.001). Finally, sustainability initiative orientation was found to be significantly related to open sustainability innovation (H6; β = 0.267; t-value = 4.441; p < 0.001).

4.4. Discussion and Implementation

This research study aimed to analyze the influence of intellectual capital (social capital, structural capital, and relational capital), open innovation strategy, and sustainability-oriented initiative on Thailand SMEs’ open sustainability innovation. The results of this study support all the hypotheses represented in

Table 6. Structural model result.

H	Relationships	Path Coefficients	t-value	p	Results
H1a	IC ---> SOC	0.707	12.889	***	Support
H1b	IC ---> RC	0.846	18.169	***	Support
H1c	IC ---> STC	0.665	12.911	***	Support
H2	IC ---> OIN	0.788	15.146	***	Support
H3	IC ---> SI	0.817	17.579	***	Support
H4	IC ---> OSIP	0.180	2.275	0.023 *	Support
H5	OIN ---> OSIP	0.507	8.726	***	Support
H6	SI ---> OSIP	0.267	4.441	***	Support

Source: Data adapted from authors (2022). Note: *** p-value < 0.001, * p-value < 0.05.

. It is reasonable to conclude that the SME sample for Thailand corresponds to the measurement model.

In light of H1a, we discovered that social capital has a beneficial impact on intellectual capital, such as innovative behaviors, dedicated staff, skills training, knowledge, perspective, and inventive workers. Spence and Schmidpeter (2003) suggested that firms’ effect on business and society networks is favorably correlated with investing in social capital [36]. That is contrary to Rowley and Suseno’s (2019) concept of social capital within service industries, particularly in globalization, where service firms increasingly rely on external collaboration, as they said that social capital did not fit small- and medium-sized enterprises (SMEs) [35]. When an organization’s customers, partners, and other stakeholders engage in the context of the broader market and society, relational capital is produced [81]. Next, our study found a significant positive effect of relational capital on intellectual capital, and the relationship between employees may lead to knowledge and skill transition and expertise. (Marr, 2005)’s study [94] supports our H1b case, as he found that because of the excellent relationships between employees and people outside the organization, they assist in perceiving the demands of consumers or markets more clearly [23,95]. We also found that H1c, through structural capital, has a significantly positive effect on intellectual capital for the long-term operation of SME companies, which identified an important role. For example, the study by Beltramino et al. (2020) found that structural capital positively influences performance and innovation in small- and medium-sized enterprises (SMEs) [45]. Therefore, it has been hypothesized that increased structural capital would also improve firms’ performance and innovation [44].

Moreover, intellectual capital positively increases openness and strategy adaptation. When an SME has more effective people with knowledge skills, it will have a positive impact on the open innovation strategy of organizations. Therefore, our evaluation results accepted H2, that humans are involved in generating intellectual capital, a value-creating activity. In addition to social media and external links, corporate culture and technology are essential. Suppose open innovation is linked to the movement of information into and out of small- and medium-sized businesses. In that case, intellectual capital is crucial in defining the competence and expertise of employees in a company. Smaller and younger companies are more likely to adopt open innovation than older and larger companies. Efficacy in small- and medium-sized firm innovation activities is a key metric for measuring performance in the corporate innovation world. Measurement of market share or customer satisfaction is based on revenue and profit margin growth. Our findings are also supported by West and Bogers (2014) in that innovation (especially sustainable innovation) taking place through a cooperative network of relationships would allow them to take sustainable ideas or projects from within the firm and also co-develop them outside the firm [47]. In contrast to Manzini et al. (2017), open innovation can raise costs, owing to increasing administrative and organizational complexity, as well as network paradoxes [15].

Furthermore, our evaluation results for H3 show that intellectual capital has a significant positive impact on sustainable business practices and moves towards sustainable development, which is supported by McAloone and Pigosso (2017), owing to changes in company operations due to environmental issues. Intellectual capital plays an essential role as a driving force in developing knowledge and skills and a proactive approach for the company’s future [52]. According to Xu and Wang (2018), intellectual capital efficiency impacts the financial performance of firms with better sustainable growth [7]. IC will allow organizations to utilize knowledge of organizational processes and develop an integrated and sustainability-oriented culture. Indeed, it has been acknowledged as a strategic resource for enhancing organizational performance and processes [1]. We also support that more intellectual capital is related to stronger open sustainability innovation in H4. Moreover, Lo et al. (2020) corroborate our finding of a link between intellectual and social capital and social and organizational capital that helps firms produce value and increase innovation [52].

The findings of our evaluations for H5 and H6 support the use of open innovation to produce sustainable products, services, and activities, which is known as open sustainability innovation. Because it is not focused on the point of sale, this marketing strategy may be helpful because it provides customers with information they have never been exposed to before. As a result, sustainability innovations will not only encourage the adoption of sustainable products and services, they will also have a snowball effect on other businesses, forcing them to adopt innovative sustainability practices to stay competitive, which may pique the interest of customers, manufacturers, and investors. As a result, firms that excel at open sustainable innovation work more closely with all of their partners than their competitors that fall short in this regard [69].

In addition, product and service improvements are more sustainable [57]. Therefore, a stakeholder approach appears suitable and valuable for the development of open innovation for sustainability. Our findings also support the idea that economic and open sustainability innovation does not imply trade-off judgements when spending resources on the firm’s innovative activities. According to these findings, the complexity of sustainability innovations, along with the fact that most firms have limited experience with their development and commercialization, requires extra knowledge and new synergies. Additionally, our study found that if organizational capital development is intellectual, knowledge productive, and strong, then open sustainability innovation increases and is simultaneously influenced by open innovation strategy and sustainability-oriented initiative increases. The findings fairly support the prediction that intellectual capital in conjunction with open innovation strategy and sustainable initiative plays an important role when SMEs are deciding whether to perform open sustainability innovations.

Figure 3 shows an evolution of open innovation sustainability. Based on Figure 3, SMEs can start with the importance of intellectual capital and how SMEs relate to the elements of IC through the open innovation process. When it comes to the establishment of relationships and interaction with internal and external stakeholders, the characteristics of the ecosystem may be used to describe the degree to which open innovation practices are being adopted by small- and medium-sized enterprises (SMEs). Meanwhile, open innovation allows SMEs to organize the sphere of interaction through the use of external structures, processes, and pressures, with the primary goals being to stimulate sustainable ideas and the development of sustainable initiatives, products, and business operations. The latter is impacted not just by their relationships with the government, suppliers, and customers, but also by the fact that they are implementing open innovation strategies themselves. Thus, in order to convert relationships and knowledge assets into long-term value for the benefit of a firm, improve decision-making, and provide the supportive infrastructure for creativity, our intellectual capital concept (i.e., combining social, relational, and structural capital) is intended to accomplish these goals. As part of its innovative process, the firm engages in strategic exchanges of internal and external information (e.g., sustainability ideas, knowledge, and technology) with actors outside its own boundaries, with the goal of integrating their resources and knowledge into the firm’s own innovative process. According to Figure 3, the re-consideration and understanding of intellectual capital, open innovation, and internal sustainable initiatives would enable SMEs to develop the extent of R&D collaboration for sustainability innovation, which is either domestic or international partnerships to co-innovate. In turn, open sustainability innovation together with business strategy allows the combination of technological change, and sustainable practices emerging in organizational knowledge [96].

5. Conclusions

Our research supports open sustainability innovation principles and theories, with an emphasis on the SME sector. The findings of this study will aid researchers and academics in expanding their understanding of open sustainability innovation, particularly for SME businesses. IC theory is a useful measurement tool for SME promoters. The findings of this study may be used by academics to clearly define how open sustainability innovation works in SME businesses. SMEs can exploit co-innovation activities to establish sustainable-conscious networks that are beneficial to key stakeholders along the sustainable supply chain [49,61] and to incorporate sustainable practices while gaining competitive advantages on a regular basis. Although SMEs would be able to learn new ways and make things using external tools more sustainably, they will be able to improve their firm’s open sustainable innovation through intellectual capital, open innovation strategy, and sustainable initiative orientation.

The findings of the study answered affirmatively to the three primary questions posed in the research goal. Since social capital, relational capital, and structural capital make up IC, the first question was addressed. The relationship between intellectual capital and SMEs’ open innovation strategy and sustainability-oriented initiative answered the second question. However, further studies are needed for open innovation strategy and sustainability-oriented initiative because in the context of a complicated and intellectually competitive environment, firms’ performance and survival are contingent on innovation and sustainability. The third question was answered: intellectual capital positively affects open sustainability innovation. However, open sustainability innovation requires further insight in terms of the consistence with sustainable development goals (SDGs). The final question asks how open innovation strategy and sustainability-oriented initiative affect open sustainability innovation with a positive effect that is an important component of organizational sustainability. To analyze the effect of intellectual capital towards open sustainability innovation on open innovation and sustainability initiative orientation, further comparative research in management disciplines, such as human resource management and development, organizational behavior, industrial–organizational psychology, and small and medium company administration in Thailand, will be useful to improve knowledge. The addition of human capital may be considered in the IC construct in order to successfully form the idea of sustainable intellectual capital, suggesting future research is necessary.

5.1. Theoretical Contributions

The possible theoretical contributions of this study are threefold. First, our study is the first to examine the rise of open sustainability innovation mainly from the perspective of open innovation and sustainable initiative orientation. Our originality offers new insights into the existing literature that scholars need to understand the theoretical underpinnings of how open sustainability innovation emerges as a result of the combination of open innovation and sustainable initiative orientation. Second, this study offers an original insight based on cross-sectional survey data of Thai SMEs to reveal the impact of intellectual capital on open sustainability innovation. Our originality also offers the theoretical understanding of the impact of intellectual capital on open innovation orientation and sustainable initiative orientation. Third, this study theoretically develops the construct of intellectual capital as a hierarchical second-order factor model. The existing literature explores the intellectual capital construct considering human capital rather than social capital. Based on our aim, intellectual capital being added by social capital would contribute to socio-relational organizational connection as the firm knowledge asset.

5.2. Implications for SMEs

Our results provide managerial and practical implications for SMEs as follows. First, the implications of the research results are that SMEs need to know that open innovation and sustainability-oriented initiative affect the performance of open sustainability innovation. An open innovation approach that includes sustainability-oriented initiative would help SMEs feel more sustainably cooperative with open sustainability innovation. Second, our research results imply that SMEs should understand that intellectual capital functions in different ways, which helps facilitate open sustainability innovation outcomes. Firms should carefully monitor social networking behavior and online activity to encourage better consumer adoption rates of cloud computing services. Accordingly, in a resource-based view, innovating SMEs with different intellectual capital would exploit internal resource availability to improve sustainable innovation outcomes. To better perform sustainability innovation, these SMEs should collaborate and cooperate with other sustainable partners, as well as end-users.

5.3. Policy Contributions

Based on the current statement of public intervention in Thailand, the Twelfth National Economic and Social Development Plan (2017–2021) (NESDB, 2017) aims to:

…… under section (4.4) which states to strategize environmentally friendly growth for sustainability.

One of key development approaches is to promote sustainable consumption and production. Thus, sustainable consumption and production are part of open sustainability innovation. The dialogue between businesses and customers may generate ideas about the significance of sustainability and how people connect to it via consumption. Based on our empirical results, public policymakers should be aware of the benefits that organizations for open sustainability innovation can offer, i.e., providing a platform for sustainable innovative ideas to promote environmental and socially responsible products, practices, and brand values in the industry [taken from OSIP3]. Furthermore, our findings also call for a business model for sustainability. Policymakers may consider the sustainability business model innovation in the revision plan.

5.4. Limitations and Future Research

Inevitably, some research limitations need more attention for future investigation. Firstly, as the data were collected in Thailand, this may affect the generalizability of this research limited to the context of Thai SMEs. The degree of sustainability practices of SMEs in European countries such as Danish firms may bring more insights into sustainable procurement since the European Green Deal aims to make the EU’s economy sustainable, resourceful, and climate neutral by 2050 [97]. Future research may use cross-country and cross-cultural samples, in which the support for the sustainable strategy of SMEs may be different. Secondly, although this research has set up types of businesses to select diverse samples, it is not stipulated whether this sample also reflects the industry features. Industry specifics are very important both in assessing innovation and in its orientation to the principles of sustainable development. This may be a gap for future research to understand sustainability standards in each industry; therefore, a mixed research design could be highly recommended. Thirdly, this research is still incomplete when considering one more element of intellectual capital, which is human capital. While this research brought new insights into the conceptualization of intellectual capital, it emphasized an external perspective (i.e., socio-relational resources). In future research, it may be important to look at things from the inside, such as how innovative human capital can be in a sustainable way. This is because a positive effect of human capital (i.e., employees’ sustainable behaviors and sustainable knowledge creation) can be part of developing business sustainability [2,46].