enterprise development research paper

A Systems View Across Time and Space

• Open access
• Published: 21 February 2022

The role of micro, small and medium enterprises (MSMEs) to the sustainable development of sub-Saharan Africa and its challenges: a systematic review of evidence from Ethiopia

• Ebrahim Endris   ORCID: orcid.org/0000-0002-9048-2351 1 &
• Andualem Kassegn 1  

Journal of Innovation and Entrepreneurship volume  11 , Article number:  20 ( 2022 ) Cite this article

54k Accesses

43 Citations

Metrics details

Micro, small and medium-sized enterprises (MSMEs) have a potential impact on achieving many of the sustainable development goals much greater than their size. This review aimed to investigate existing literature on the contribution of MSMEs to the sustainable development of Ethiopia and its challenges. The review provides a comprehensive and systematic summary of evidence and provides future research directions. A systematic review methodology was adopted through reviewing the available literature comprehensively including research articles, policy documents, and reports over the period 2011–2021 from ScienceDirect, Google Scholar, ECONBIZ, IJSTOR, EBSCO, Web of Science, and Scopus databases. A search on these databases and grey literature returned 1270 articles; 87 papers were included in this review following screening of aticles using pre-determined criteria. The paper found that MSMEs significantly contributed to the sustainable development goals of Ethiopia through creating employment, alleviating poverty, and improving their living standards. However, the review has identified access to finance, access to electricity, and trade regulation are the major constraints for the development of the sector. The review outlines key policy implications to develop a comprehensive policy that alleviates the existing challenges of the sector and calls for further MSMEs impact evaluation research.

Introduction

Growth in the working age population is expected to be even more rapid, increasing by 265.8% in Africa and by 306.6% in sub-Saharan Africa, compared to 28.3% globally (Bhorat & Oosthuizen, 2020 ). Consequently, unemployment is a colossal problem in sub-Saharan Africa (Dey, 2012 ). Entrepreneurship can be a cure for Africa’s problems such as unemployment, inequality, low productivity, disconnect from global value chains, etc. (Devine & Kiggundu, 2016 ). The General Assembly adopted resolution 71/221 recognizes the important contribution entrepreneurship to sustainable development by creating jobs, driving economic growth and innovation, improving social conditions, and addressing social and environmental challenges (UN, 2018 ). Hence, investment in entrepreneurial ventures can contribute immensely to economic growth and job creation (Arko-Achemfuor, 2017 ) and thus jobs provide income, which improves living standards and consumption possibilities (IFC, 2013 ). Micro, small and medium-sized enterprises (MSMEs) are a major source of growth, innovation and jobs and their potential impact on achieving many of the sustainable development goals is much greater than their size (ITC, 2019 ). Therefore, there is a great interest of young people to start a business and many of them are willing to undertake risks and challenges of entrepreneurship (Papulová & Papula, 2015 ).

Sustainable development goals (SDGs) in Africa emphasize on labor-intensive sectors (SDG 8.2), increase small-scale enterprises’ access to affordable credit in support of decent job creation and entrepreneurship (SDG 8.3 and 9.3) (Brixiová et al., 2020 ). The informal sector (nonfarm) has been a growing source of employment for a large section of the African youth, but also for older workers trying to seize entrepreneurial opportunities. Its contribution to GDP and poverty reduction has been substantial, and it has become a major point of entry into the labor market (AFDB, 2019 ). Small and medium-sized enterprises (SMEs) make crucial contributions to job creation and income generation. The promotion of SMEs has been a key area of intervention in recent years in view of the major employment challenges (ILO, 2015 ). For that reason, the employment share of the self-employed in low-income countries is almost five times (54%) the share in high-income countries (11%), and the employment share of micro-enterprises (2–9 employees) also much higher (ILO, 2019b ). Small and medium enterprises have embraced technological innovations in creating new opportunities as well as expanding their businesses. In particular, high mobile phone penetration has brought opportunities to SMEs in rural and urban areas of Africa (Amankwah-Amoah et al., 2018 ).

Ethiopia most important development priorities were job creation for the increasing supply of labor force which contributed in reducing poverty (NPC, 2016 ; WBG, 2018 ). Hence, the implementation of the micro and small enterprises (MSEs) development strategies given undue role to achieve these objectives (NPC, 2016 ). The revised MSE strategy focus on enhancing the competitiveness of MSEs, ensuring continued rural development through sustainable growth of MSEs, and making the subsector a foundation for industrial development (FMSEDA, 2011 ). During Growth and Transformation Plan (GTP) I implementation period (2010/2011–2014/2015), construction sector was largest over other sector which accounts about 36.2%, followed by services with 20.8%, trade with 15.2%, manufacturing with 14.7% and urban agriculture accounts 13.1% employment through MSEs (EEA, 2015 ).

Establishment of MSEs strategy by itself cannot alleviate the problems facing MSEs and improve the development of the sectors (Hunegnaw, 2019 ). The ability of the firm to operate for longer time depends up on a proper tradeoff between management of investment in long-term and short-term funds (Dinku, 2013 ). The more rapid growth of small firms in Ethiopia is offset by a very high rate of firm failures (Page & Söderbom, 2015 ), this risk of business failure is high during the first 2–4 years of business operation (Woldehanna et al., 2018 ). Given the implication of MSMEs to the national development goals and it is a key development policy, there is little evidence that explore its role and prevailing challenges in a broader context. Hence, this review article aimed to provide an exploratory insight on the contribution of MSMEs in achieving sustainable development of Ethiopia and identify the prevailing challenges. The review contributes to the existing literature by providing evidence for these specific questions. (1) What is the role of MSMEs in attaining sustainable development goals of sub-Saharan Africa specifically Ethiopia? (2) What are the challenges hindering the development MSMEs in the country? This literature review identifies the specific research gaps uniquely relevant for future researches and policy direction for the development of the sector.

Review methodology

The review adopted a systematic literature review method, which offers an explicit, trustworthy, and reproducible method to minimize bias, thus providing more reliable findings for the evaluation and interpretation of previous research relevant to a particular field (Sniazhko & Muralidharan, 2019 ). The review based on extensive overview of relevant literature (research articles, policy documents, and reports) following a systematic review approach utilizing PRISMA guidelines (Liberati et al., 2009 ).

Literature search

The review retrieved from international databases using keywords identified. The literature search was conducted in ScienceDirect, ECONBIZ, IJSTOR, Google Scholar, EBSCO, Web of Science and Scopus databases that provides large collection of articles. The literature search was done using the following keywords: ((“micro enterprise” OR “small enterprise” OR “enterprise” OR “sustainable development”) AND “Ethiopia” OR “Africa”) in the citation information, keywords and abstracts. Moreover, we conducted a snowball search by examining the reference lists of included studies to include additional relevant studies that might have been missed for a variety of reasons. In addition, national university research repository used to search relevant thesis and dissertation to obtain a comprehensive set of evidence. The review used secondary data extracted from international organization databases such as World Bank, IFC, ILO, and NBE to support the review with empirical evidences. These databases are recognized as the key sources for retrieving relevant, up-to-date articles in socio-economic field, and are commonly used by other scholars to conduct systematic review (Sniazhko & Muralidharan, 2019 ). The preliminary searches within the databases using the abovementioned keywords identified 1270 records.

Study identification and the screening and selection process

The two fundamental components in a systematic literature review are (i) deciding on the inclusion and exclusion criteria of studies, and (ii) assessing the quality of the studies to be included (Čablová et al., 2017 ). The preliminary extensive list of identified articles was narrowed down to specifically relevant literature through inclusion and exclusion criteria. The articles retrieved from online database searches and different sources were collected in to Endnote Library. The articles identified in stage one was examined thoroughly to exclude the duplicated articles of the same titles that were available in multiple search databases. For the initial search, we set three inclusion criteria: (1) any literature that include at least one of key terms or words (2) literature written in English language, and (3) conducted over the last 10 years (2011–2021). In addition, filter criteria were applied to reduce the number of articles based on (1) articles published before 2011, (2) editorial comments, book reviews, and review articles, and (3) any literature out of the scope of this review were excluded. Then, repetitive articles, and articles not related to the subject using the inclusion criteria were excluded. By applying these inclusion and exclusion criterions, the search generated 210 records.

Our search identified 1270 retrieved records, which were reduced to 960 after removing duplicates. Two of the researchers (E.E and A.K.) who used the above criteria to determine paper eligibility to be included in the study, reviewed titles and abstracts independently. From theses, 210 articles were identified eligible for full-text review after screening title and abstracts for final inclusion. There are 123 articles excluded because no empirical evidence relevant for this review. Any disagreements regarding the exclusion of an article were resolved through a discussion among the authors, through multiple round reading when necessary to achieve consensus. The details of procedures presented in the PRISMA flow diagram (Fig.  1 ), and 87 studies finally reviewed comprehensively in an attempt to identify the findings within the articles. The findings in the articles synthesized qualitatively to provide answers for review questions.

Study selection process (PISMA flow diagram)

Results and discussion

Implication of msmes towards sub-saharan africa sustainable development.

Entrepreneurial activity is crucial to the achievement of multiple SDGs, including SDG 1: “End poverty in all its forms everywhere”; SDG 8: “Promote inclusive and sustainable economic growth, employment and decent work for all”; SDG 10: “Reduce inequality within and among countries” (Bosma et al., 2020 ). The United Nations’ SDG 8 sets out a global consensus that business enterprises should aim for sustained, inclusive, and sustainable economic growth and also ensure decent work and living environments for all (Lin & Koh, 2019 ). Small and medium-sized enterprises play a key role in job creation, providing two-thirds of all formal jobs in developing countries and 80% in low-income countries. The sustained success of SMEs depends on local conditions, such as public services, good corporate law and access to finance (EDFI, 2016 ). In addition, MSEs provides a substantial collective contribution to the national economy (White, 2018 ), contribute more than 50% of most African GDP and an average of 60% of employment (Muiruri, 2017 ). It employs the vast majority of any local labor force and has an integral role in any sustainable growth trajectory and it is ‘the missing link’ for inclusive growth (ITC, 2018 ). Although African SMEs generate about 80% of new jobs, they also account for most lost jobs (ILO, 2019a ). Micro enterprises in Ethiopia account the greatest share of employment from developing countries (IFC, 2013 ).

Investing in SMEs can contribute to 60% of the targets established in the SDGs and about $1 trillion additional SME investment help developing countries reach the SDGs. Small and medium enterprise contribute to 83% of SDG 8 (Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all) targets, and 88% of SDG 9 (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation) targets (ITC, 2019 ). Hence, financial stability in sub-Saharan Africa enhances entrepreneurial development which improve economic growth and accelerated achievement of SDGs (Babajide et al., 2020 ). There is a large concentration of enterprises in sub-Saharan Africa, 44 million MSMEs, of which 97% are micro-enterprises, of which the largest share (37 million MSMEs) accounted by Nigeria enterprise (IFC, 2017 ).

Even though, the contribution of MSEs to total employment and gross job flows were underestimated (Li & Rama, 2015 ), it contributed to economic growth through their operational activities, via job creation in Nigeria economy (Matthew et al., 2020 ) and micro-enterprises alone account for a staggering 97% of manufacturing sector employment in Ethiopia (Li & Rama, 2015 ). Entrepreneurship and new venture creation in South Africa emphasize on employment opportunities for MSMEs employees, and the social dimensions of poverty reduction approaches are broader than these economic imperatives (Rambe & Mosweunyane, 2017 ). Small-scale enterprises employment has absorbed over 49% of the increase in the labor force in five countries of sub-Saharan Africa (Botswana, Kenya, Malawi, Swaziland and Zimbabwe). Similarly, about 80% of employment growth in Tanzania accounted by informal enterprises (Diao et al., 2018 ).

Problems in the development of enterprise in sub-Saharan Africa

Entrepreneurial activity in low-income countries dominated by individuals who are forced into starting their own business due to a lack of employment and typically not highly productive (Doran et al., 2018 ). The main challenges constrained SMEs contribution to local economic development of developing countries are lack of finance, lack of business skills, poor market access, and lack of operating space (Gebreyesus & Adewale, 2015 ). The contribution of MSMEs to sustainable development is constrained by unfavorable business environments, inadequate access to finance and high levels of informality (ITC, 2019 ). The challenges such as lack of access to finance, weak entrepreneurial attitudes, government policies, regulations and practices for entrepreneurs, and training are main constraints to SME development in sub-Saharan Africa (Achtenhagen & Brundin, 2016 ; Herrington & Coduras, 2019 ; IFC, 2011 ). Due to this, the core focus of the owner of MSMEs are personal financial survival rather than on growing and developing the business, which affected the success of small businesses. In these circumstances, profit made in the business is often spent on personal expenses rather than being reinvested into the business (IFC, 2020b ).

Accessing finance for entrepreneurship development in Africa is still continuing and new challenges to MSMEs (Atiase et al., 2017 ; Beck & Cull, 2014 ). Access to credit currently fails to support entrepreneurship development in Africa (Atiase et al., 2017 ; Wang, 2016 ), and SMEs have limited access to finance even though banks have sufficient liquidity (Brixiová et al., 2020 ). Most financial institutions undermine smaller enterprises and instead focus on big businesses that can provide the required collateral for their loans (Atiase et al., 2017 ). Difficulty to obtain formal credit were due to small capital of MSEs below critical collateral value (lack tangible assets as collateral) (Jin & Zhang, 2019 ), high risk premiums, and higher transaction cost to banks, as SMEs loan size are generally small (Quartey et al., 2017 ). Sub-Saharan Africa have low financial inclusion index (Ofori-Abebrese et al., 2020 ). Hence, access to finance remains the largest obstacle for SMEs in the region and 75% of enterprises were financed by internal funds and other 10% used traditional banking loans (Leke & Signé, 2020 ). For example, 79% of informal businesses have never obtained loan, and only 21% utilized bank loan in South Africa. From this, only 19% of formal businesses used a bank loan to start their business (IFC, 2020b ). In Tanzania, only 30% of MSMEs had access to financial services (Ishengoma, 2018 ). A large number of enterprises in sub-Saharan Africa are occasional enterprises that function for a limited period of the year. For instance, lack of profitability and a lack of finance the most important reasons for enterprise exit in Uganda (Nagler & Naudé, 2016 ). Furthermore, lack of finance and harsh business environment tends to constrain the growth of MSMEs in Uganda (Lakuma et al., 2019 ), access to finance is still a hurdle to MSMEs establishment in Lesotho (Khoase & Govender, 2013 ), and access to both debt and equity markets also affected micro-enterprises in South Africa (Fatoki, 2017 ).

The limitation of finance has an inhibiting effect on the growth of African firms (Fowowe, 2017 ). For example, financially constrained firms have 6.6% lower marginal revenue product of capital relative to unconstrained firms. Moreover, constrained firms are also more inefficient and less productive relative to unconstrained firms in sub-Saharan Africa. Constrained firms are 15% less efficient due to borrowing constraints compared to unconstrained firms (Amos & Zanhouo, 2019 ). For instance, SME access to bank finance can further increase the contribution of SMEs to the Ghanaian economy and increase their chances of survival and success through exports (Abor et al., 2014 ).

The low performances in sub-Saharan Africa attributed exclusively to factors outside firms, such as poor infrastructure and unfavorable governance (Mano et al., 2012 ). The risks faced by entrepreneurs in Nigeria SMEs arose from the increasing complexity and sophistication of the industrial sector and increasing macroeconomic instability (Ejembi & Ogiji, 2017 ). The operational environment of SMEs strongly indicate that their productivity is constrained by lack of adequate infrastructure as well as inefficient institutions in Nigeria (Effiom & Edet, 2020 ). The lack of business infrastructure hampers MSMEs’ ability to scale and grow in South African, lack of equipment as the second largest challenge at startup (IFC, 2020b ), and limited awareness of government program (Fatoki, 2017 ). The results further indicate that the majority of MSMEs had no access to public infrastructure, i.e., only 16% and 28% of MSMEs had access to electricity from the national grid and water from the public or municipal sources, respectively (Ishengoma, 2018 ).

The impact of COVID-19 on sub-Saharan Africa MSMEs

COVID-19 lockdowns and social distancing measures influenced the MSMEs operation. Finding from study carried out in 132 countries revealed that two-thirds of micro and small firms reported that COVID-19 has affected their business operations and one-fifth of SMEs confirmed they face risks of closing down permanently within 3 months (ITC, 2020 ). The COVID-19 outbreak has posed great challenges for the survival and growth of SMEs (Guo et al., 2020 ). The upheaval caused by the spread of COVID-19 have a devastating effect on small businesses. Moreover, the economic fallout from this pandemic get worse for small businesses and their employees (Liguori & Pittz, 2020 ). The feature of MSMEs such as more labor-intensive activity hurt during COVID-19 lockdowns, limited reserves and lack of collateral for new credit lines are key factors which make SMES highly vulnerable to the impact of COVID-19 pandemic (COMESA, 2020 ).

The study on 367 agri-food MSMEs from 17 low and middle income countries revealed that 94.3% of firm’s operations had been impacted by the pandemic, primarily through decreased sales as well as lower access to inputs and financing amid limited financial reserves. Moreover, 84% firms reported changing their production volume as a result of the pandemic; of these, about 13% reported stopping production and about 82% reported decreasing production (Nordhagen et al., 2021 ). The pandemic has severely affected about 37 million microenterprise and 28,000 SMEs due their lack of adequate cash buffers and access to finance. About 25 million micro-enterprises operating in tourism, hospitality, entertainment, and trade had to close or face significantly reduced operating hours (IFC, 2020a ). Therefore, COVID-19 is a substantial threat to the attainment of SDGs 1, 2, 3 and 8 in Nigeria (Ogisi & Begho, 2021 ). The pandemic severely hurt financial health of MSMEs in sub-Saharan Africa via reduced profit, turnover decrease, and liquidity crunch. The percentage of MSMEs that suffered due to the pandemic is presented (Table 1 ) for some countries for which data were obtained.

Role of MSMEs development in Ethiopia

Micro and small enterprise development is the primary strategy of GTP II to expand employment and reducing poverty particularly focusing on women and youths (NPC, 2016 ). The government of Ethiopia proposed MSEs as means of creating employment to millions of youths and achieving sustainable development goals. Hence, there is policy support leads SMEs generating more employment compare to large firms (Ashenafi, 2014 ). Therefore, the contribution of MSEs to employment creation is much higher (99%) than that of medium and large enterprises (1%) (Abera et al., 2019 ). A sizable number of people are employed in small-scale tourism enterprises with a decent average monthly income that can improve their living standard in Hawassa City (Tamene & Wondirad, 2019 ). Similarly, MSEs program had led to positive outcomes on the income and livelihood of beneficiaries in Bahir Dar City (Melese, 2017 ). With respect to sector contribution, manufacturing and construction enterprise ranked first and second, respectively, in creating job opportunities for job seekers in Kolfe-Keranio Sub-City, Addis Ababa (Tafa, 2019 ). Manufacturing and urban agriculture sector provide huge contribution in reducing food insecurity of operators in Mecha district (Yimesgen, 2019 ).

The conceptual framework on the role MSMEs towards SDGs is presented in Fig.  2 . The framework showed that MSMEs has positive implication in meeting SDG 1, 2, 5, 8, 9, and 12 (Bosma et al., 2020 ; ITC, 2019 ; Lin & Koh, 2019 ).

Framework on MSMEs contribution to sustainable development. Source: own sketch based on literature review

Employment in micro-enterprises leveled as high in terms of its extent of importance to poverty reduction (Kidane et al., 2015 ). It have played a positive role in women’s livelihood by creating employment opportunity for those who are in need of job and with low level of income, empowered them socially and economically (Admasu, 2016 ; Menda, 2015 ). In addition, entrepreneurs have created job opportunities to others while also contributing to local economy and communities through income tax payment. It provides annual average of minimum 5–7 and maximum 17–23 employment opportunities in the last 5 years. The annual average income of the enterprises was at the minimum ranging between 30,000–50,000 Birr and maximum ranging between 141,001–200,000 Birr (Hiluf, 2018 ). The distribution of MSEs established and number of employment opportunities in the enterprise varying across years. Based on Fig.  3 , the number of enterprise and employment in MSEs was largest in 2014/2015.

Number of enterprise and employment created in Ethiopia. Source: authors calculation from NBE (2020)

Challenges of MSME in Ethiopia

Financing msmes in ethiopia.

Access to finance improve the survival rates, productivity and competence of MSEs. These enterprises in Debre-Markos town obtained from microfinance, Iqub , Idir , own capital and relatives than large banks (Tadesse, 2014 ). The main sources of initial capital for MSE’s are microfinance institution followed by bank and own capital (Alemu, 2018 ). Insufficient credit services for youth is a challenge in implementing rural youth economic development (Abdi, 2019 ). Financial institutions’ reluctance to give credit to young SMEs due to fear that firms may be defaulter (Nega & Hussein, 2016 ). The revolving funds of 10 billion birr for MSEs (FDRE, 2017 ) were not enough to ease financial challenges of the sector. The existence of inadequate loan size, borrowing cost and collateral requirement (Goshim & Tefera, 2018 ; Sissay, 2016 ; Tadesse, 2014 ), and high rate matching fund and liquidity problem for matching fund (Abeiy, 2017 ; Amentie et al., 2016 ; Sissay, 2016 ) constrained MSEs access to finance in Ethiopia. Moreover, loan duration affects MSEs access to finance from formal financial institutions (Petros, 2017 ; Tadesse, 2014 ). The business firms’ obstacle in Ethiopia (Fig.  4 ) showed that finance and electricity were the first and second major challenges in Ethiopia. As depicted in Fig.  5 , finance is a major barrier and high loan rejection rate for MSEs than medium enterprises.

Financial challenges across enterprise size. Source: Author calculation from World Bank enterprise survey (2015)

Financial challenges across enterprise size. Source: author calculation from IFC database (2019)

Micro and small enterprises (MSEs) needs business knowledge, skills and entrepreneurial orientation to profitably operate their business consistently in the existing business dynamics (Ghebremichael & Kassahun, 2014 ; Tarekegn et al., 2018 ). However, there are personal factor such as lack of business vision, risk averse of members, personal business exposure aggravate MSEs members dropout (Daba & Atnafu, 2016 ). The impact of aspiration to expand existing business and starting additional new business on growth of the MSEs is much higher for small enterprise compared to microenterprise (Amha, 2015 ).

Barriers against the development of MSMEs in Ethiopia

The existence of favorable working environment like government played a key role in the growth and development of MSEs (Hailu, 2016 ; Yimesgen, 2019 ). This support service program on average increased Dire Dawa MSEs monthly sales by 28%, employement by 42%, and capital asset formation by 60% (Eshetu et al., 2013 ). However, these supports are not sufficient for the development of micro and small enterprise (Hailu, 2016 ). In addtion, lack of training to start their own venture (Tewolde & Feleke, 2017 ), lack of awareness about the contribution and accessibility of consultancy service are the major problem of enterprises (Kidane et al., 2015 ). The ease of obtaining licenses to SMEs in Ethiopia was  better relative to sub-Saharan Africa region (Table 2 ).

Micro and small enterprises were formally registered when they start operation in Ethiopia. The challenge of informal competitor lower in Ethiopia than sub-Saharan Africa and its effect decrease as firms grow from small to large enterprises (Fig.  6 ). This is due to large firms have the capacity to compete at large scale than small enterprise. Informal firms are also more credit constrained compared to formal firms (Aga & Reilly, 2011 ).

Informality of small and medium enterprise. Source: author calculation from World Bank Enterprise database (2020)

Micro and small enterprise access to sufficient premises in proper location increases enterprises financial performance (Ababiya, 2018 ). Poor infrastructure (Abeiy, 2017 ; Kinati et al., 2015 ) would cause more than 25% worktime loss daily due to power interruption (Cherkos et al., 2018 ) and business location identified as significant factors that hinder the growth of enterprises (Batisa, 2019 ). Power outages affected firms’ productivity, and the overall total cost due to outage increased by approximately 15% of firm’s aggregate cost (Abdisa, 2018 ). The cost of power outages for MSMEs in Addis Ababa is substantial, and a reduction of one power outage corresponds to a tariff increase of 16% (Carlsson et al., 2018 ). The location of enterprise effect on business performance raises two different arguments. Empirical evidences showed that MSEs desire to established in the center of town for attracting large customers even though rent in the downtown is high (Yimesgen, 2019 ). The second argument showed that MSEs that operate out of town have better performance. This is because MSEs have easy access for input and potential for business expansion (Kebeu, 2014 ). Entrepreneurial opportunities were increasing in Ethiopia, as presented in Fig.  7 over the 5 years. The score of ease of doing business increased over the last 5 years. However, the score of getting credit is stagnant which indicates access to finance were the long existing challenge of MSMEs development in Ethiopia.

Performance of doing business in Ethiopia. Source: author calculation from World Bank Enterprise database (2020)

The presence of market linkage enables MSEs to supply their produce and acquire inputs in the commercial value chain, which create jobs and improve efficiency of enterprises. However, the existing vertical linkage between MSEs and large enterprises are very limited, and limited access to raw materials (Mechalu, 2017 ; Mohammed & Beshir, 2019 ) and high cost of raw materials are major challenges of MSEs (Seifu, 2017 ). The absence of market linkage identified the critical problems of enterprises (Daba & Amanu, 2019 ; Dabi, 2017 ). Furthermore, there are weak institutional and sectoral linkages (Abera et al., 2019 ). As a result, informal linkages have a significant role to access market (Hadis & Ali, 2018 ).

Micro, small and medium-sized enterprises (MSMEs) has been a key area of intervention to sustainable development specifically in growing youth population of sub-Saharan Africa. Given the implication of MSMEs in national development goals and it is a key development policy, there is little evidence particularly at broader context. Hence, this review article presents a systematic review of studies on the contribution of MSMEs in achieving sustainable development of Ethiopia and identifies the prevailing challenges. The paper has also demonstrated that MSMEs has myriad role in economy growth, poverty reduction, industrialization and livelihood as a whole. Micro enterprises in Ethiopia account the greatest share of employment from developing countries. Investing in small and medium-sized enterprises (SMEs) can contribute in some measure to 60% of the targets established in the SDGs. Manufacturing sector of Ethiopia micro-enterprises account for a staggering 97% of employment, 80% of employment growth in Tanzania accounted largely by informal enterprises. The review pointed that employment in micro-enterprises leveled as high in terms of its extent of importance to poverty reduction, empowered women socially, economically, and contributing to local economy and communities through income tax payment in Ethiopia.

The review revealed that lack of access to finance, poor infrastructure, and entrepreneurial attitudes are main challenges facing MSMEs in sub-Saharan Africa. Access to finance remains the largest obstacle for enterprises in the region. The problems became severe in time of crisis such as COVID-19 that lead two-thirds of micro and small firms in crisis and one-fifth of SMEs face risks of closing down permanently. The existence of inadequate loan size, borrowing cost and collateral requirement constrained MSEs in getting access to finance thereby the development of micro and small enterprise in Ethiopia. In addition, poor infrastructures are the main constraint that lead MSMEs to high worktime loss, reduce productivity, and increased cost of enterprise production.

Recommendations and future research directions

Based on the review of studies, key implications for policy and future research include:

It is essential to unlock entrepreneurship potential through integrated multi-sectoral and sustainable approach. Policy measures should prioritize inclusive financing schemes to vulnerable and marginalized entrepreneurs and enterprises that support business recovery during the crisis, and development of MSMEs.

In addition, strong intervention to infrastructure development particularly electricity supply, working premise that increase ease of doing business and sustainable development of the country.

Furthermore, this review calls for further research that focus on areas not given sufficient research attention such as the impact of MSMEs in achieving SDG 1 (No poverty), SDG 2 (Zero hunger), SDG 9 (Industrialization), SDG 12 (Responsible consumption and production). Future research needs to address ways to overcome the challenges hindering MSMEs’ development.

Availability of data and materials

Not applicable.

Abbreviations

Ethiopia Economic Association

Federal Micro and Small Enterprises Development Agency

Growth and Transformation Plan

Micro and small enterprises

Micro, small and medium enterprises

National Bank of Ethiopia

National Plan Commission of Ethiopia

Sustainable development goals

Small and medium enterprises

Ababiya, A. (2018). Financial performance of agricultural enterprises and their determinant factors in Hadiya Zone, Ethiopia. European Journal of Business and Management, 10 (19), 25–34.

Google Scholar  

Abdi, B. (2019). Challenges and prospects of rural youth economic empowerment. The case of Dire Teyara of Harari Regional State, Ethiopia . Ethiopian Civil Service University.

Abdisa, L. T. (2018). Power outages, economic cost, and firm performance: Evidence from Ethiopia. Utilities Policy, 53 , 111–120. https://doi.org/10.1016/j.jup.2018.06.009

Article   Google Scholar  

Abeiy, A. (2017). Factors affecting performance of micro and small enterprises in Addis Ababa. The case of Addis Ketema Sub City Administration (City Government of Addis Ababa) . Addis Ababa University.

Abera, H., Vermaack, C., Gebrekirstos, K., Minwuyelet, L., Tsegay, M., Hagos, N., & Gidey, Y. (2019). Contributions of micro, small and medium enterprises (MSMEs) to income generation, employment and GDP: Case study Ethiopia. Journal of Sustainable Development, 12 (3), 46–81. https://doi.org/10.5539/jsd.v12n3p46

Abor, J. Y., Agbloyor, E. K., & Kuipo, R. (2014). Bank finance and export activities of small and medium enterprises. Review of Development Finance, 4 (2), 97–103. https://doi.org/10.1016/j.rdf.2014.05.004

Achtenhagen, L., & Brundin, E. (2016). Entrepreneurship and SME management across Africa context, challenges, cases . Springer Science.

Admasu, A. (2016). The role of small and micro enterprises on the livelihood of poor women entrepreneurs in urban locality of Addis Ababa: The case of Woreda 8 of Yeka Sub-City . Addis Ababa University.

AFDB. (2019). Creating decent jobs strategies, policies, and instruments: Policy research document 2 . African Development Bank.

Aga, G. A., & Reilly, B. (2011). Access to credit and informality among micro and small enterprises in Ethiopia. International Review of Applied Economics, 25 (3), 313–329. https://doi.org/10.1080/02692171.2010.498417

Alemu, O. (2018). Determinants of loan repayment of micro and small enterprises in Jimma Town, Ethiopia. Global Journal of Management and Business Research B Economics and Commerce, 18 (4), 47–66.

Amankwah-Amoah, J., Osabutey, E. L. C., & Egbetokun, A. (2018). Contemporary challenges and opportunities of doing business in Africa: The emerging roles and effects of technologies. Technological Forecasting and Social Change, 131 , 171–174. https://doi.org/10.1016/j.techfore.2018.01.003

Amentie, C., Negash, E., & Kumera, L. (2016). Barriers to growth of medium and small enterprises in developing country: Case study Ethiopia. Journal of Entrepreneurship & Organization Management, 5 (3), 1–4. https://doi.org/10.4172/2169-026X.1000190

Amha, W. (2015). Growth of youth-owned MSEs in Ethiopia: Characteristics, determinants and challenges. Ethiopian Journal of Economics, 24 (2), 93–128.

Amos, S., & Zanhouo, D. A. K. (2019). Financial constraints, firm productivity and cross-country income differences: Evidence from sub-Sahara Africa. Borsa Istanbul Review, 19 (4), 357–371. https://doi.org/10.1016/j.bir.2019.07.004

Arko-Achemfuor, A. (2017). Financing small, medium and micro-enterprises (SMMEs) in rural South Africa: An exploratory study of stokvels in the nailed Local Municipality, North West Province. Journal of Sociology and Social Anthropology, 3 (2), 127–133. https://doi.org/10.1080/09766634.2012.11885572

Ashenafi, B. (2014). The impact of subsidy on the growth of small and medium enterprises (SMEs). Journal of Economics and Sustainable Development, 5 (3), 178–188.

Atiase, V. Y., Mahmood, S., Wang, Y., & Botchie, D. (2017). Developing entrepreneurship in Africa: Investigating critical resource challenges. Journal of Small Business and Enterprise Development, 25 (4), 644–666. https://doi.org/10.1108/JSBED-03-2017-0084

Babajide, A., Lawal, A., Asaleye, A., Okafor, T., & Osuma, G. (2020). Financial stability and entrepreneurship development in sub-Sahara Africa: Implications for sustainable development goals. Cogent Social Sciences, 6 (1), 1–17. https://doi.org/10.1080/23311886.2020.1798330

Batisa, S. (2019). Determinants of youth based micro and small enterprises growth in Dawro Zone: A case of Mareka Wereda. International Journal of Research in Business Studies and Management, 6 (12), 27–37.

Beck, T., & Cull, R. (2014). SME finance in Africa. Journal of African Economies, 23 (5), 583–613. https://doi.org/10.1093/jae/eju016

Bhorat, H., & Oosthuizen, M. (2020). Jobs, economic growth, and capacity development for youth in Africa (Working Paper Series N° 336, Issue). African Development Bank.

Bosma, N., Hill, S., Ionescu-Somers, A., Donna Kelley, J. L., & Tarnawa, A. (2020). Global Entrepreneurship Monitor 2019/2020 global report . Global Entrepreneurship Research Association.

Brixiová, Z., Kangoye, T., & Yogo, T. U. (2020). Access to finance among small and medium-sized enterprises and job creation in Africa. Structural Change and Economic Dynamics, 55 , 177–189. https://doi.org/10.1016/j.strueco.2020.08.008

Čablová, L., Pates, R., Miovský, M., & Noel, J. (2017). How to write a systematic review article and meta-analysis. In T. F. Babor, K. Stenius, R. Pates, M. Miovský, J. O’Reilly, & P. Candon (Eds.), Publishing addiction science: A guide for the perplexed (pp. 173–189). Ubiquity Press. https://doi.org/10.5334/bbd.i

Chapter   Google Scholar  

Carlsson, F., Demeke, E., Martinsson, P., & Tesemma, T. (2018). Cost of power outages for manufacturing firms in Ethiopia: A stated preference study . University of Gothenburg.

Cherkos, T., Zegeye, M., Tilahun, S., & Avvari, M. (2018). Examining significant factors in micro and small enterprises performance: Case study in Amhara region, Ethiopia. Journal of Industrial Engineering International, 14 (2), 227–239. https://doi.org/10.1007/s40092-017-0221-y

COMESA. (2020). Economic impact of covid-19 on micro, small and medium enterprises (MSMEs) in Africa and policy options for mitigation . Common Market for Eastern and Southern Africa.

Daba, A., & Atnafu, M. (2016). Analysis of the main cause for the entrepreneurs drop out in micro and small enterprises: Evidences from Nekemte Town, Eastern Wollega Zone, Oromia Regional State, Ethiopia. International Journal of Economics & Management Sciences, 5 (6), 1–16. https://doi.org/10.4172/2162-6359.1000376

Daba, B., & Amanu, K. (2019). The roles of micro and small enterprises in empowering women: The case of Jimma Town, Ethiopia. International Journal of Multicultural and Multireligious Understanding, 6 (2), 190–202. https://doi.org/10.18415/ijmmu.v6i2.69766

Dabi, N. (2017). Performance of micro and small-scale enterprises: The case of Adama, Oromia. World Journal of Economic and Finance, 3 (1), 046–051.

Devine, R. A., & Kiggundu, M. N. (2016). Entrepreneurship in Africa: Identifying the frontier of impactful research. Africa Journal of Management, 2 (3), 349–380. https://doi.org/10.1080/23322373.2016.1206802

Dey, P. (2012). Rapid incubation model for the development of micro and small enterprises in Sub-Saharan Africa. Global Journal of Management and Business Research, 12 (10), 78–85.

Diao, X., Kweka, J., & McMillan, M. (2018). Small firms, structural change and labor productivity growth in Africa: Evidence from Tanzania. World Development, 105 , 400–415. https://doi.org/10.1016/j.worlddev.2017.12.016

Dinku, T. (2013). Impact of working capital management on profitability of micro and small enterprises in Ethiopia: The case of Bahir Dar City Administration. International Journal of Accounting and Taxation, 1 (1), 15–24.

Doran, J., McCarthy, N., & O’Connor, M. (2018). The role of entrepreneurship in stimulating economic growth in developed and developing countries. Cogent Economics & Finance, 6 (1), 1–14. https://doi.org/10.1080/23322039.2018.1442093

EDFI. (2016). Investing to create jobs, boost growth and fight poverty . Association of the European Development Finance Institutions.

EEA. (2015). Small and Micro Enterprises (SMEs) development in Ethiopia: Policies, performances, constraints and prospects (EEA Research Brief, Issue). Ethiopia Economic Association.

Effiom, L., & Edet, S. E. (2020). Financial innovation and the performance of small and medium scale enterprises in Nigeria. Journal of Small Business & Entrepreneurship . https://doi.org/10.1080/08276331.2020.1779559

Ejembi, S. A., & Ogiji, P. (2017). A comparative analysis of risks and returns of running small/medium micro enterprises in North Central Nigeria. Journal of Social Sciences, 15 (1), 7–15. https://doi.org/10.1080/09718923.2007.11892556

Eshetu, T., Ketema, M., & Kassa, B. (2013). Economic impact of support service program on micro and small enterprises: The case of Dire Dawa Administration, Ethiopia. Agris on-Line Papers in Economics and Informatics, 5 , 21–29.

Fatoki, O. (2017). Enhancing access to external finance for new micro-enterprises in South Africa. Journal of Economics, 5 (1), 1–6. https://doi.org/10.1080/09765239.2014.11884978

FDRE. (2017). Ethiopian youth revolving fund establishment proclamation .

FMSEDA. (2011). Micro and small enterprise development strategy, provision framework and methods of implementation .

Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of Development Finance, 7 (1), 6–17. https://doi.org/10.1016/j.rdf.2017.01.006

Gebreyesus, G., & Adewale, A. (2015). An assessment of the roles of small and medium enterprises (SMEs) in the Local Economic Development (LED) in South Africa. Journal of Economics, 6 (3), 280–290. https://doi.org/10.1080/09765239.2015.11917617

Ghebremichael, A., & Kassahun, T. (2014). Entrepreneurial orientation as growth predictor of small enterprises: Evidence from Tigray Regional State of Ethiopia. Developing Country Studies, 4 (11), 133–143.

Goshim, A., & Tefera, Y. (2018). Role of financial institution on the growth of small and medium enterprises: The case in North Shewa Zone, Amhara Region, Ethiopia. Journal of Investment and Management, 7 (5), 143–150. https://doi.org/10.11648/j.jim.20180705.12

Guo, H., Yang, Z., Huang, R., & Guo, A. (2020). The digitalization and public crisis responses of small and medium enterprises: Implications from a COVID-19 survey. Frontiers of Business Research in China, 14 (1), 19. https://doi.org/10.1186/s11782-020-00087-1

Hadis, S., & Ali, Y. (2018). Micro and small enterprises in Ethiopia; Linkages and implications: Evidence from Kombolcha Town. International Journal of Political Science and Development, 6 (1), 16–26. https://doi.org/10.14662/IJPSD2018.001

Hailu, D. (2016). Effects of government support on performance of micro and small enterprises in Ambo Town . Haramaya: Haramaya University.

Herrington, M., & Coduras, A. (2019). The national entrepreneurship framework conditions in sub-Saharan Africa: a comparative study of GEM data/National Expert Surveys for South Africa, Angola, Mozambique and Madagascar. Journal of Global Entrepreneurship Research, 9 (1), 60. https://doi.org/10.1186/s40497-019-0183-1

Hiluf, N. (2018). Socio-economic roles and challenges of micro and small enterprises in Addis Ababa: The case of Arada Sub-City . Deberberhan University.

Hunegnaw, G. (2019). Policy framework of small and micro enterprises and its role on the development of the sector in Bahir Dar City, Ethiopia. Public Policy and Administration Research, 9 (4), 1–8. https://doi.org/10.7176/PPAR

IFC. (2011). Strengthening access to finance for women-owned SMEs in developing countries . International Finance Corporation.

IFC. (2013). Assessing private sector contributions to job creation and poverty reduction . International Finance Corporation.

IFC. (2017). MSME finance gap: Assessment of the shortfalls and opportunities in financing micro, small and medium enterprises in emerging markets . International Finance Corporation.

IFC. (2020a). Covid-19 rapid assessment: Impact on the nigerian private sector and perspectives on accelerating the recovery . Supplement to the Country Private Sector Diagnostic on Nigeria .

IFC. (2020b). The MSME Voice: GROWING SOUTH AFRICA’S SMALL BUSINESS SECTOR .

ILO. (2015). Small and medium-sized enterprises and decent and productive employment creation (Report IV, Issue).

ILO. (2019a). Enabling environment for sustainable enterprises in Sierra Leone . International Labour Organization.

ILO. (2019b). Global evidence on the contribution to employment by the self-employed, micro-enterprises and SMEs . International Labour Organization.

Ishengoma, E. K. (2018). Entrepreneur ATTRIBUTES and formalization of micro, small and medium enterprises in Tanzania. Journal of African Business, 19 (4), 491–511. https://doi.org/10.1080/15228916.2018.1472480

ITC. (2018). Promoting SME competitiveness in Africa: Data for de-risking investment . International Trade Centre.

ITC. (2019). SME competitiveness outlook 2019: Big money for small business—Financing the sustainable development goals . International Trade Centre.

ITC. (2020). Impact of COVID-19 lockdown on economies, small businesses . International Trade Centre, Geneva.

Jin, Y., & Zhang, S. (2019). Credit rationing in small and micro enterprises: A theoretical analysis. Sustainability, 11 (5), 1330. https://doi.org/10.3390/su11051330

Kebeu, H. (2014). Entrepreneurial success as a function of human capital and psychological factors among micro and small enterprises operators: A psychological perspective study. International Journal of Social Sciences and Entrepreneurship, 1 (12), 352–367.

Khoase, R. G., & Govender, K. K. (2013). Enhancing small, medium and micro enterprise development: Exploring selective interventions by the Lesotho government. Development Southern Africa, 30 (4–05), 596–615. https://doi.org/10.1080/0376835x.2013.834814

Kidane, M., Mulugeta, D., Adera, A., Yimmam, Y., & Molla, T. (2015). Microenterprises targeting youth group to socioeconomic development: The case of Addis Ababa, Ethiopia. International Journal of Business and Economics Research, 4 (3), 144–156. https://doi.org/10.11648/j.ijber.20150403.17

Kinati, B., Asmera, T., & Minalu, T. (2015). Factors affecting developments of micro and small enterprises (Case of Mettu, Hurumu, Bedelle and Gore Towns of Ilu Aba Bora Administrative Zone). International Journal of Scientific and Research Publications, 5 (1), 1–10.

Lakuma, C. P., Marty, R., & Muhumuza, F. (2019). Financial inclusion and micro, small, and medium enterprises (MSMEs) growth in Uganda. Journal of Innovation and Entrepreneurship, 8 (15), 1–20. https://doi.org/10.1186/s13731-019-0110-2

Leke, A., & Signé, L. (2020). Spotlighting opportunities for business in Africa and strategies to succeed in the world’s next big growth market .

Li, Y., & Rama, M. N. (2015). Firm dynamics, productivity growth, and job creation in developing countries: The role of micro- and small enterprises. The World Bank Research Observer, 30 (1), 3–37. https://doi.org/10.1093/wbro/lkv002

Liberati, A., Altman, D. G., Tetzlaff, J., Mulrow, C., Gøtzsche, P. C., Ioannidis, J. P. A., Clarke, M., Devereaux, P. J., Kleijnen, J., & Moher, D. (2009). The PRiSMA statement for reporting systematic reviews and meta-analyses of studies that evaluate healthcare interventions: Explanation and elaboration. British Medical Journal . https://doi.org/10.1136/bmj.b2700

Liguori, E. W., & Pittz, T. G. (2020). Strategies for small business: Surviving and thriving in the era of COVID-19. Journal of the International Council for Small Business, 1 (2), 106–110. https://doi.org/10.1080/26437015.2020.1779538

Lin, R.-T., & Koh, D. (2019). Small and medium enterprises: Barriers and drivers of managing environmental and occupational health risks. In Encyclopedia of environmental health (pp. 682–692). https://doi.org/10.1016/b978-0-12-409548-9.11347-8 .

Mano, Y., Iddrisu, A., Yoshino, Y., & Sonobe, T. (2012). How can micro and small enterprises in Sub-Saharan Africa become more productive? The impacts of experimental basic managerial training. World Development, 40 (3), 458–468. https://doi.org/10.1016/j.worlddev.2011.09.013

Matthew, O., Ufua, D. E., Osabohien, R., Olawande, T., Edafe, D., & O. (2020). Addressing unemployment challenge through micro and small enterprises (MSEs): Evidence from Nigeria. Problems and Perspectives in Management, 18 (2), 79–89. https://doi.org/10.21511/ppm.18(2).2020.08

Mechalu, A. (2017). Marketing challenges of micro and small enterprises (MSEs) in Bishoftu Town . Addis Ababa University.

Melese, B. (2017). Micro and small enterprises as an anti-poverty and employment generation strategy in Bahir Dar City, North-Western Ethiopia. Poverty & Public Policy, 9 (3), 258–275.

Menda, S. (2015). Role of micro and small scale business enterprises in urban poverty alleviation; A case study on Cobblestone paving Sector in Addis Ababa city . Addis Ababa University.

Mohammed, S., & Beshir, H. (2019). Determinants of business linkage between medium-small and large business enterprises in manufacturing sector: The Case of Kombolcha City. Journal of Economics and Sustainable Development, 10 (3), 74–92. https://doi.org/10.7176/JESD

Muiruri, S. (2017). African small and medium enterprises (SMES) contributions, challenges and solutions. European Journal of Research and Reflection in Management Sciences, 5 (1), 36–48.

Nagler, P., & Naudé, W. (2016). Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence. Food Policy . https://doi.org/10.1016/j.foodpol.2016.09.019

Nega, F., & Hussein, E. (2016). Small and medium enterprise access to finance in Ethiopia: Synthesis of demand and supply . Addis Ababa, Ethiopia.

Nordhagen, S., Igbeka, U., Rowlands, H., Shine, R. S., Heneghan, E., & Tench, J. (2021). COVID-19 and small enterprises in the food supply chain: Early impacts and implications for longer-term food system resilience in low- and middle-income countries. World Development . https://doi.org/10.1016/j.worlddev.2021.105405

NPC. (2016). Growth and Transformation Plan II (GTP II) (2015/16–2019/20), Volume I: Main text . Federal Democratic Republic of Ethiopia.

Ofori-Abebrese, G., Baidoo, S. T., Essiam, E., & McMillan, D. (2020). Estimating the effects of financial inclusion on welfare in sub-Saharan Africa. Cogent Business & Management, 7 (1), 1839164. https://doi.org/10.1080/23311975.2020.1839164

Ogisi, O. R. D., & Begho, T. (2021). Covid 19: Ramifications for progress towards the sustainable development goals (SDGs) in Nigeria. International Review of Applied Economics, 35 (2), 256–268. https://doi.org/10.1080/02692171.2020.1864302

Page, J., & Söderbom, M. (2015). Is small beautiful? Small enterprise, aid and employment in Africa. African Development Review, 27 (S1), 44–55.

Papulová, Z., & Papula, J. (2015). Entrepreneurship in the eyes of the young generation. Procedia Economics and Finance, 34 , 514–520. https://doi.org/10.1016/S2212-5671(15)01662-7

Petros, G. (2017). Factors affecting micro and small enterprises in accessing credit facilities: A study in Hadeya Zone, Hosanna Town Southern Ethiopia. International Journal of African and Asian Studies, 39 , 39–53.

Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS? Review of Development Finance, 7 (1), 18–28. https://doi.org/10.1016/j.rdf.2017.03.001

Rambe, P., & Mosweunyane, L. (2017). A poverty-reduction oriented perspective to small business development in South Africa: A human capabilities approach. African Journal of Science, Technology, Innovation and Development . https://doi.org/10.1080/20421338.2017.1322749

Seifu, D. (2017). Prospects and challenges of Micro and Small Scale Enterprises (MSEs): A study on Shashemene City, Ethiopia. International Journal for Research in Business, Management and Accounting, 3 (8), 1–15.

Sissay, F. (2016). The influence of micro finance institution on the development and performance of micro and small business enterprises in Addis Ababa (Ethiopia) . Indira Gandhi National Open University.

Sniazhko, S., & Muralidharan, E. (2019). Uncertainty in decision-making: A review of the international business literature. Cogent Business & Management, 6 (1), 1650692. https://doi.org/10.1080/23311975.2019.1650692

Tadesse, B. (2014). Access to finance for micro and small enterprises in Debre Markos Town Ethiopia. Global Journal of Current Research, 2 (2), 36–46.

Tafa, T. (2019). The contribution of group-based micro and small enterprises in employment creation and income generation: Evidence from Woreda Fourteen of Kolfe Keranio Sub-City, Addis Ababa, Ethiopia. International Journal of African and Asian Studies, 55 , 8–19. https://doi.org/10.7176/JAAS/55-02

Tamene, K., & Wondirad, A. (2019). Economic impacts of tourism on small-scale tourism enterprises (SSTEs) in Hawassa City, Southern Ethiopia. International Journal of Tourism Sciences, 19 (1), 38–55. https://doi.org/10.1080/15980634.2019.1592951

Tarekegn, M., Tesfaw, D., & Ebre, S. (2018). Entrepreneurial capabilities of micro and small-scale enterprises (MSEs): Evidence from South Wollo Zone, Ethiopia. Abyssinia Journal of Business and Social Sciences, 3 (1), 10–21. https://doi.org/10.20372/ajbs.2018.3.1.182

Tewolde, A., & Feleke, C. (2017). Challenges and prospects of entrepreneurship development and job creation for youth unemployed: Evidence from Addis Ababa and Dire Dawa city administrations, Ethiopia. Journal of Innovation and Entrepreneurship, 6 (11), 1–22. https://doi.org/10.1186/s13731-017-0070-3

UN. (2018). Entrepreneurship for sustainable development: Report of the Secretary-General . United Nations.

Wang, Y. (2016). What are the biggest obstacles to growth of SMEs in developing countries?—An empirical evidence from an enterprise survey. Borsa Istanbul Review, 16 (3), 167–176. https://doi.org/10.1016/j.bir.2016.06.001

WBG. (2018). FY 2018 Ethiopia Country Opinion Survey Report (Public Opinion Research Group, Issue).

White, S. (2018). Creating better business environments for micro and small enterprises’, Technical Report . Donor Committee for Enterprise Development.

Woldehanna, T., Amha, W., & Yonis, M. B. (2018). Correlates of business survival: Empirical evidence on youth-owned micro and small enterprises in Urban Ethiopia. IZA Journal of Development and Migration, 8 (14), 1–26. https://doi.org/10.1186/s40176-018-0122-x

Yimesgen, Y. (2019). The growth determinants of micro and small enterprises and its linkages with food security: The case of Mecha district Amhara Region, Ethiopia. African Journal of Business Management, 13 (4), 138–146. https://doi.org/10.5897/AJBM2018.8697

Download references

Acknowledgements

We received no funding to carry this research.

Author information

Authors and affiliations.

Department of Agricultural Economics, Woldia University, Woldia, Ethiopia

Ebrahim Endris & Andualem Kassegn

You can also search for this author in PubMed   Google Scholar

Contributions

All authors read and approved the final manuscript.

Authors’ information

Ebrahim Endris is lecturer and researcher in the Department of Agricultural Economics at Woldia University, Ethiopia. He received his M.Sc and B.Sc from Haramaya University. Andualem Kassegn is lecturer and researcher in the Department of Agricultural Economics at Woldia University, Ethiopia. He has M.Sc in Agricultural Economics from Wollo University and BA in Economics from Mekelle University.

Corresponding author

Correspondence to Ebrahim Endris .

Ethics declarations

Competing interests.

The authors declare that they have no competing interests.

Additional information

Publisher's note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ .

Reprints and permissions

About this article

Cite this article.

Endris, E., Kassegn, A. The role of micro, small and medium enterprises (MSMEs) to the sustainable development of sub-Saharan Africa and its challenges: a systematic review of evidence from Ethiopia. J Innov Entrep 11 , 20 (2022). https://doi.org/10.1186/s13731-022-00221-8

Download citation

Received : 17 December 2020

Accepted : 12 January 2022

Published : 21 February 2022

DOI : https://doi.org/10.1186/s13731-022-00221-8

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Enterprises
• Sustainable development

Click through the PLOS taxonomy to find articles in your field.

For more information about PLOS Subject Areas, click here .

Loading metrics

Open Access

Peer-reviewed

Research Article

Technology empowerment: Digital transformation and enterprise ESG performance—Evidence from China’s manufacturing sector

Roles Conceptualization, Data curation, Funding acquisition, Supervision, Writing – original draft, Writing – review & editing

Affiliation School of Management, Dalian Polytechnic University, Dalian, China

Roles Conceptualization, Data curation, Formal analysis, Investigation, Methodology, Project administration, Software, Visualization, Writing – original draft

* E-mail: [email protected]

Roles Writing – review & editing

• Xianyun Wu, 
• Longji Li, 
• Dekuan Liu, 

• Published: April 17, 2024
• https://doi.org/10.1371/journal.pone.0302029
• Peer Review
• Reader Comments

In light of the long-term constraints posed by the "dual carbon" objective, can digital technology emerge as a transformative solution for enterprises to embark on a sustainable development trajectory? The existing body of research has yet to reach a consensus. In order to shed further light on the intricate relationship between digital transformation and ESG performance of enterprises, this study empirically examines the mechanisms and boundaries through which digital transformation influences ESG performance, based on observational data from A-share manufacturing listed companies in Shanghai Stock Exchange and Shenzhen Stock Exchange spanning from 2011 to 2021. The findings demonstrate that digital transformation exerts a significant positive impact on the ESG performance of manufacturing enterprises. Mechanism analysis reveals that the enabling effect of digital transformation primarily enhances company transparency, thereby fostering continuous improvements in ESG performance among manufacturing enterprises. The performance expectation gap will give rise to the phenomenon of "stop-loss in time" and impede the promotional impact of digital transformation. Further investigation into industrial characteristics and industry competition intensity indicates that state-owned enterprises and those operating within highly competitive environments experience more pronounced effects of digital transformation on their ESG performance. This study expands the mechanism and boundary of digital transformation on ESG performance of manufacturing enterprises, and provides a new perspective for manufacturing enterprises to realize the collaborative transformation of digital and green.

Citation: Wu X, Li L, Liu D, Li Q (2024) Technology empowerment: Digital transformation and enterprise ESG performance—Evidence from China’s manufacturing sector. PLoS ONE 19(4): e0302029. https://doi.org/10.1371/journal.pone.0302029

Editor: Jianhua Zhu, Harbin Institute of Technology, CHINA

Received: November 29, 2023; Accepted: March 26, 2024; Published: April 17, 2024

Copyright: © 2024 Wu et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the manuscript and its Supporting information files.

Funding: This study is a stage research result of the Liaoning Economic and Social Development Research Project 2024 (Project No. 2024lslybwzzkt-034), the Liaoning Social Science Planning Fund Educational Science Project (Project No. L21AED005), and the Dalian Municipal Science and Technology Bureau’s Soft Science Project (Project No. 2023JJ13FG087).

Competing interests: The authors have declared that no competing interests exist.

Introduction

In 2004, the United Nations introduced the concept of ESG (Environmental, Social, and Governance) in its initiative report titled "Who Cares Wins" [ 1 ]. This report provided a new direction for businesses on how to implement sustainable development principles. The concept of ESG originates from ethical investment and responsible investment, rejecting the profit-centric business philosophy, and advocating for enterprises to incorporate environmental, social, and governance factors into their investment decisions while considering economic benefits [ 2 – 4 ]. Currently, there is a global wave of low-carbon transformation underway, leading all countries worldwide to introduce ESG-related policies and regulations. Examples include "the Corporate Sustainability Reporting Directive" and "IFRS S1—General Requirements for Disclosure of Information Sustainability-related Financial Information". In recent years, China’s "dual carbon" goal has accelerated the development process of ESG in China [ 5 ]. Regulators have issued a series of policies and regulations that gradually require listed companies to disclose ESG-related information; thus making ESG practices an essential aspect for enterprise development. However, challenges such as insufficient willingness and limited participation in specific corporate practices undermine the positive impact of the ESG system on China’s economic transformation. Therefore, it is crucial to explore both internal and external factors influencing enterprises’ performance in implementing ESG.

At present, China is in a critical period of transformation from a manufacturing power to a manufacturing power [ 6 ]. Manufacturing is the backbone of the country’s economic development, Facing the medium and long term constraints of "dual carbon" target, whether manufacturing enterprises can explore a sustainable transformation path is related to the long-term healthy development of China’s economy [ 7 ]. The wave of digital transformation offers a novel perspective for the sustainable development of manufacturing enterprises. Digital transformation is regarded as the extensive application of digital technology across various aspects of enterprise survival, operation, and sales [ 8 ]. Previous studies have demonstrated that the adoption of digital technology can enhance the economic efficiency of manufacturing enterprises by improving resource allocation efficiency, innovation capability and Profit level [ 9 – 11 ]. However, can the technological advancements and resource utilization resulting from digital transformation effectively stimulate the inherent capabilities of manufacturing enterprises to enhance their environmental, social, and governance (ESG) performance? Although previous studies have made preliminary explorations into the relationship between digital transformation and ESG performance [ 12 , 13 ], the mechanism underlying digital transformation remains incompletely elucidated, necessitating further exploration of working conditions. Therefore, this study aims to further expand the existing research on this topic in order to address the limitations identified in previous studies.

Building upon China’s "dual carbon" goal policy context, this study delves into the potential of digital transformation in the manufacturing industry to stimulate endogenous drivers for enhancing ESG performance within enterprises. This investigation aims to unveil the underlying mechanisms of digital transformation, augment existing research findings, and hold significant theoretical and practical implications. Consequently, this study adopts corporate transparency as a foundational aspect and integrates the performance expectation gap into its research framework. Empirical analysis is conducted using observation data from A-share manufacturing listed companies on Shanghai and Shenzhen Stock Exchanges spanning from 2011 to 2021 to examine the boundaries and mechanisms through which digital transformation influences corporate ESG performance.

Compared to previous studies, this study innovatively addresses the following aspects: (1) Previous studies did not investigate whether the relationship between digital transformation and ESG performance of enterprises would be influenced during periods of declining enterprise performance. By introducing the situational condition of performance period gap, this study further defines the impact of digital transformation on ESG performance and enriches research on between digital transformation and performance feedback. (2) From a corporate transparency perspective, this paper elucidates the mechanism through which digital transformation affects ESG performance in manufacturing enterprises, offering new theoretical references and practical insights for sustainable development enabled by digital technology.

Literature review

Since the inception of the ESG concept in 2004, it has garnered significant attention from investors and business managers owing to its unique ability to balance economic benefits with social values. Consequently, academic research in ESG-related fields has witnessed substantial growth [ 14 ], with scholars predominantly favoring investigations into the impact of ESG [ 15 ]. Mainstream scholars contend that ESG practices can enhance enterprise brand valuation and foster green innovation capabilities, thereby mitigating business risks and ultimately improving enterprise value [ 16 – 19 ]. Scholars have also started examining the influencing factors of enterprise ESG performance. Previous research indicates that factors such as regional digital finance development and environmental protection tax legislation can significantly contribute to enhancing enterprise ESG performance [ 20 , 21 ]. However, existing studies pay more attention to the external factors that affect the ESG performance of enterprises. In order to fully play the positive role of ESG system in the low-carbon transformation of Chinese enterprises, it is necessary to stimulate the endogenous motivation of enterprises to improve ESG performance.

With the advent of a new wave of scientific and technological revolution, digital technologies such as big data and blockchain offer a novel avenue for facilitating the high-quality development of manufacturing enterprises. Esteemed scholars contend that leveraging digital technology can enhance resource allocation efficiency, innovation capabilities, and customer information advantage, thereby fostering the high-quality development of manufacturing enterprises [ 9 , 11 , 22 ]. In addition to researching the economic benefits of digital transformation, scholars have also begun to focus on its non-economic value. Specifically, they argue that the application of digital technology can facilitate green innovation in enterprises and lead to a reduction in carbon emissions [ 23 , 24 ]. With the advancement of research, scholars have started to establish a connection between digital transformation and enterprise ESG performance, leading to two main categories in existing research findings: the "empowerment" effect and the “too much is not good” effect. The "empowerment" effect is specifically reflected in the fact that digital transformation can improve the ESG performance of enterprises by reducing agency costs and improving corporate reputation and dynamic capabilities [ 25 , 26 ]. The “too much is not good” effect is specifically reflected in the fact that a high level of digitalization may weaken the ability and motivation of enterprises to carry out ESG practices. Asymmetric digital transformation and organizational transformation process make it difficult to play the enabling effect of digital technology, which may lead to "information overload" and reduce the information processing ability of enterprises. In addition, a large amount of capital investment in the materialization of digital technology may induce "crowding-out effect" and delay the process of enterprise green transformation [ 27 – 29 ].

The concept of transparency emerged from research in the field of information disclosure [ 30 ]. As research on information disclosure expanded, scholars introduced the notion of "company transparency," which refers to providing specific company information to external stakeholders [ 31 ]. With the deepening of research, Chinese scholars have refined the concept of company transparency, that is, the higher the transparency of a company, the wider and deeper the scope and level of external investors’ access to internal information of a company, and the stronger the liquidity of information [ 32 ]. The application of digital technology offers a novel perspective for researching company transparency. However, upon reviewing existing literature, it is evident that scholars tend to associate digital transformation with analysts’ forecasts and corporate governance [ 33 , 34 ]. These studies suggest that while there may be a close relationship between digital transformation and company transparency, further exploration is necessary.

The aforementioned analysis reveals that despite the existence of relevant studies demonstrating the correlation between digital transformation and ESG performance, certain limitations persist, primarily in the following aspects: (1) the existing research mainly discusses the influence between the two from the perspective of internal control, green innovation and information disclosure quality, and its internal influence mechanism needs to be further expanded. (2) The measurement approach for assessing the extent of digital transformation within enterprises remains singular, making it challenging to mitigate potential deviations resulting from false corporate disclosures. (3) What are the requisite conditions for effectively harnessing the impact of digital transformation empowerment?

Building upon this premise, the present study adopts corporate transparency as a focal point, integrates the performance expectation gap into the research framework, and explores whether digital transformation can incentivize enterprises to engage in ESG practices. The present study contributes to the existing literature on the mechanisms of digital transformation, elucidates the impact of digital transformation in situations characterized by performance expectation gaps, and addresses a research gap in this domain.

Theoretical analysis and research hypotheses

Digital transformation and enterprise esg performance.

The process of digital transformation involves a comprehensive reshaping of the traditional business model, governance mechanism, and organizational structure of an enterprise by integrating artificial intelligence, big data, blockchain, and other digital technologies into various aspects such as production, sales, and transportation [ 35 ]. Existing literature primarily focuses on the economic performance of digital transformation and its individual non-economic aspects [ 36 , 37 ], while only recently has there been exploration of the relationship between digital transformation and integrated environmental, social, and corporate governance (ESG) performance [ 38 ]. The present study posits that the digital transformation is poised to enhance the ESG performance of manufacturing enterprises through bolstering their capabilities and fostering intrinsic motivation.

From the perspective of behavioral outcomes, digital transformation improves the comprehensive strength of enterprises to carry out ESG practices. First of all, the rapid development of digital finance has broadened the financing channels of manufacturing enterprises [ 39 ]. It has also improved the matching efficiency of both parties of credit, effectively reduced the probability of resource mismatch and credit default, solved the financial discrimination problem of "Large enterprises are allocated a substantial loan quota, whereas small enterprises receive a limited loan quota" [ 40 ]. To a certain extent, and reduced the dependence of manufacturing enterprises on "resource-based" shareholders and large customers due to financing constraints [ 9 , 41 ]. This has greatly improved the discourse power of environment-sensitive executives and improved the intellectual support for enterprises’ ESG practices. In addition, the application of digital technology can refine the production and research and development process of products, reduce the probability of research and development manipulation [ 42 ], and provide conditions for enterprises to give full play to green innovation resources. This undoubtedly helps improve the green innovation ability of manufacturing enterprises, and then promote the quality and efficiency of green patents of enterprises, and provide technical support for ESG practices of manufacturing enterprises [ 43 , 44 ]. The application of digital platforms and big data technology has broken the barriers to information acquisition of manufacturing enterprises, narrowed the distance between enterprises and customers, and enabled enterprises to accurately grasp the differentiated needs of customers and improve the competitiveness of enterprises’ products [ 45 ]. At the same time, the application of digital technology improves the ability of enterprises to integrate internal resources and acquire external resources, blurs the business boundary of enterprises, transforms the single chain management structure of enterprises into a diversified network management structure, improves the sustainable competitiveness of enterprises, and provides economic possibilities for enterprises’ ESG practices [ 46 , 47 ]. Digital transformation consolidates the overall strength of manufacturing enterprises through the three aspects of "talent-technology-economy", and provides realistic conditions for manufacturing enterprises to improve their ESG performance.

From the perspective of behavioral motivation, digital transformation improves the willingness of manufacturing enterprises to carry out ESG practices. On the one hand, the application of digital technology breaks the constraints of time and space of traditional information exchange, connects stakeholders together through digital platforms, and improves the frequency of internal and external information interaction of enterprises [ 48 ]. Active disclosure of enterprises is no longer the only channel for stakeholders to obtain enterprise information, narrowing the "information fault line" between enterprises and stakeholders. It provides an opportunity for external investors to realize the identity transformation from "free rider" to "administrator" in corporate governance [ 49 ]. In addition, the application of big data technology makes any behavior of enterprises to follow, and R&D manipulation, false information disclosure and other violations are contained, which promotes the improvement of the quality of information disclosed externally and strengthens the internal motivation of enterprises to improve ESG performance [ 50 , 51 ]. On the other hand, digital transformation, as a positive signal of change, will attract the attention of external market players such as the government, analysts and media [ 52 ]. When enterprises are placed under the "spotlight", their business behaviors will be amplified infinitely, resulting in a sharp increase in the pressure of external attention, which is both an opportunity and a challenge for enterprises. Positive ESG practices will be spread rapidly by the media and analysts, improve the corporate image, and gradually increase its recognition among the government and consumers, It improves the advantages of enterprises in obtaining political resources and consumer trust [ 4 , 53 ]. However, when market observers dramatize poor market performance, the negative impact of enterprises rises geometrically and may be "labeled" as a shackles that restrict the development of enterprises. Therefore, in this case, the willingness of enterprises to ESG practices will increase significantly. Based on the above analysis, this paper proposes the following hypothesis:

• H1: Digital transformation will promote the improvement of ESG performance of manufacturing enterprises.

Digital transformation, company transparency and corporate ESG performance

This study posits that digital transformation primarily enhances company transparency, thereby continuously improving the ESG performance of manufacturing enterprises. On the one hand, it mitigates the issue of information asymmetry and facilitates external shareholders’ participation in corporate governance through its traceability, immutability, and timeliness [ 54 , 55 ]. Furthermore, it curbs managers from exploiting information asymmetry to manipulate environmental and social responsibility for profit-driven stock price escalation while enhancing internal governance transparency to improve non-financial information disclosure quality [ 50 ].

On the other hand, the application of digital technology will improve the circulation frequency of internal and external information of enterprises. The existence of asymmetric information between enterprises and stakeholders also gives rise to stakeholders’ distrust and even aversion to enterprises with high information acquisition costs and low information disclosure quality, which reduces the market attention of such enterprises [ 56 , 57 ]. In order to obtain more external resources to make up for the loss of sustainable strategy, enterprises are more willing to take advantage of the convenience of digital technology and the characteristics of low information disclosure cost to actively promote the positive achievements of corporate environment and social responsibility, and shift from passively improving the quality of information disclosure to actively improving it [ 58 ]. At the same time, the diversified information sharing channels derived from digital transformation make it easier for enterprises to identify false or low-quality information disclosure behaviors, which improves the quantity, quality and depth of enterprise information obtained by stakeholders [ 34 ]. External analysts, media and other market intermediaries can make more objective and fair market evaluations [ 59 , 60 ]. It helps enterprises to improve their green and environmental reputation among consumers and governments, and encourages enterprises to carry out ESG practices with confidence. To sum up, company transparency is the channel through which digital transformation can improve the ESG performance of manufacturing enterprises. Based on this, this paper puts forward the following hypothesis:

• H2: The digital transformation facilitates the enhancement of ESG performance through augmenting company transparency.

Digital transformation, performance expectation gap and enterprise ESG performance

The performance expectation gap refers to the difference between an enterprise’s actual performance and its expected performance [ 61 ]. According to the theory of corporate behavior, the performance expectation gap is an important reference for managers to formulate corporate future strategies [ 62 ]. Among them, the expected performance represents the minimum level of output anticipated by management, and whether the actual performance aligns with management’s expectations will significantly influence subsequent strategic planning decisions.

Currently, there is no consensus among academia regarding the potential impact of the performance expectation gap. On one hand, when managers observe that actual performance falls short of expectations, it may lead to a "make or break" situation. According to the Resource Based View, an enterprise’s competitive advantage relies on its unique resources [ 63 ]. When an enterprise fails to meet expectations in terms of performance, its competitive advantage begins to decline. As a crucial component of enterprises’ sustainable development strategy, ESG practices may temporarily compromise their operational performance due to high investment costs and extended return periods. However, forward-thinking managers recognize that ESG practices hold significant appeal in terms of corporate reputation, political resources, and consumer recognition [ 64 , 65 ]. In order to establish sustainable competitive advantages for enterprises, managers are more inclined to forego short-term interests and pursue long-term developmental benefits. At the same time, the talent reserve and organizational structure of enterprises need to be timely matched with the process of digital transformation to play an enabling role [ 66 ]. However, because the enterprise performance is not up to expectations, the capital market will cause doubts about the operating conditions of enterprises, making it more difficult for enterprises to obtain resources from the outside. In the face of "internal and external challenges", managers will use limited organizational resources to make up for the gap between the application of digital technology and the organizational governance system, give full play to the enabling role of digital technology, and improve the level of digital governance of enterprises [ 30 ].

However, the performance expectation gap can also result in the occurrence of a phenomenon known as "stop-loss in time"effect. The decline in business performance leads to internal anxiety among management and doubts from external investors, which subsequently affects managers’ judgment and execution capabilities [ 67 , 68 ]. Since both digital transformation and ESG practices require significant resource investments, companies that are struggling financially may find it challenging to sustain these high-cost reform solely with their own resources. As a result, the enterprise’s transformation process slows down and ESG practices are reduced or even suspended. Additionally, according to threat-rigidity theory [ 69 ], when faced with continuous expectation gaps, enterprises tend to prioritize survival over thriving. Consequently, decision-making becomes more conservative as organizations immersed in pessimism experience sluggish information processing and acceptance capacities [ 70 , 71 ]. In such circumstances, limited market information becomes the basis for strategic decisions made by management. Choosing riskier reforms or investments during this period would expose enterprises to devastating strategic risks that not only fail to alleviate their predicament but also deplete their resources further. Furthermore, lack of resources exacerbates the difficulty of implementing ESG practices at this time. Even if enterprise management is willing to exhaust all options in pursuing original strategic goals, they remain powerless due to resource constraints [ 72 ]. Based on the aforementioned analysis, this paper proposes the following hypothesis:

• H3a: Performance expectation gap has a positive moderating effect on the relationship between digital transformation and ESG performance of manufacturing enterprises.
• H3b: Performance expectation gap has a negative moderating effect on the relationship between digital transformation and ESG performance of manufacturing enterprises.

Research design

Research sample and data sources.

This study utilizes a sample of manufacturing enterprises listed on the A-shares of the Shanghai Stock Exchange and Shenzhen Stock Exchange, covering the period from 2011 to 2021. To ensure consistency with previous studies, the initial sample is refined through the following steps: ① Exclusion of samples classified as ST and *ST in the current year; ② Elimination of samples with missing data on core variables; ③ Exclusion of samples with less than three consecutive years of data; ④ To mitigate the impact of extreme values, all continuous variables are winsorized at the 1% and 99% levels. Consequently, a total of 6044 observation samples are obtained.

The original financial data utilized in this study, as well as the robustness test concerning the extent of digital transformation, were sourced exclusively from the China Stock Market & Accounting Research Database(CSMAR). Furthermore, the word frequency analysis pertaining to digital transformation primarily relied upon annual reports disclosed by listed companies through Juchao Consulting Network, Shenzhen Stock Exchange, and Shanghai Stock Exchange. The data analysis was conducted using Python and Stata version 16.0.

Measurement of variables

Dependent variable..

ESG performance (ESG). Currently, there exist notable disparities in the measurement of ESG ratings domestically and internationally, with influential rating systems including MSCI, Bloomberg, Shangdao Ronglv, Huazheng, among others. The ESG rating score provided by Bloomberg was chosen as the proxy index for the core explanatory variable, based on the sample characteristics outlined in this paper.

Independent variables.

Digital transformation (Digital). The measurement method employed in this study for assessing the extent of digital transformation primarily draws upon existing research [ 73 ], utilizing the construction of digital dictionaries and text analysis to determine the degree of digital transformation within enterprises. In contrast to previous approaches that relied on intangible assets related to digital technology, questionnaire surveys, and ERP system applications [ 74 – 76 ], this measurement method establishes a relatively objective and comprehensive digital term dictionary based on semantic expressions found in national policies pertaining to the digital economy. Subsequently, it employs text analysis techniques to construct a more holistic indicator reflecting the level of digitization among Chinese enterprises. Meanwhile, considering the "right-skewed" feature word frequency data and avoiding the impact of enterprises not carrying out digital transformation, the total word frequency is added by 1 and then logarithmized.

Mediating variables.

Company transparency (Tra). Drawing upon the methodologies proposed by LANG et al. (2012) and Xiang et al. (2020) [ 77 , 78 ], this study adopts four comprehensive indicators to assess company transparency: earnings quality, audit company quality, information disclosure rating, and analyst attention.

The second indicator is the quality of the audit company, which is measured by whether the listed company employs the auditors of the Big Four domestic accounting firms to conduct audit.

The third indicator is the information disclosure rating, which primarily pertains to the disclosure ratings of the Shanghai and Shenzhen Stock Exchanges. In this context, A denotes excellent, B represents good, C signifies pass, and D indicates fail. This study assigns a numerical value to each rating in descending order: A = 4 and D = 1. Consequently, a higher score corresponds to a superior quality of information disclosure.

The fourth indicator is analyst attention, referring to the existing research, how many analysts (teams) have followed the company within a year. in order to avoid the impact of 0 value, it is added by 1 to take the logarithm.

Based on the aforementioned four indicators, this study constructs a comprehensive indicator to assess company transparency (Tra) by adopting the approach proposed by Xin Qingquan et al. (2014) [ 79 ]. This is accomplished as follows: computing the average of sample percentiles for each variable. Considering the delayed initiation of SSE’s information disclosure rating and missing data in certain years, the company transparency index is determined as the average of three remaining index sample percentiles. A higher Tra index indicates greater company transparency.

Moderating variables.

The enterprise’s historical expected performance (HA i,t ) is determined by a weighted combination of its historical expected performance in period t − 1 and the actual operating performance in period t − 1, where α represents the weight assigned to this combination and takes a value between (0,1). Following the practices of Cao Yanan (2023) and Chen(2008) [ 81 , 82 ], we set α as 0.4 for calculating historical expected performance. The comprehensive expected performance is calculated by weighting the historical expected performance of the enterprise and the industry’s expected performance. SA represents the enterprise’s expected performance in relation to the industry, which is determined as the mean value of ROA for all enterprises in the industry except Company i. The β weight setting follows Guo Rong et al. (2019) and Rudy (2016) [ 83 , 84 ]. Initially set at 0.5, β increases by 0.1 incrementally each time. The weight is determined based on model fitting, with results indicating that the best fit occurs when β = 0.5; therefore, this paper selects β = 0.5 to weigh the comprehensive expected performance.

When the actual performance falls below the expected performance (P-A<0), a negative gap is observed between the actual and expected performances. Conversely, when the actual performance exceeds the expected performance, a positive gap in expected performance is evident. To further analyze the impact of digital transformation on ESG performance of manufacturing enterprises considering this expectation-performance gap, we introduce a dummy variable L1 in this study. The value of L1 is set to 1 when the expectation-performance gap is < 0 and 0 when it is ≥0. The constructed variable L1*gap i,t represents instances where actual performance lags behind expectations, with smaller values indicating larger gaps. Additionally, for ease of comprehension, we multiply L1*gap i,t by -1 to obtain an indicator for the expected performance gap (Ngap i,t ). Higher values indicate greater disparities between actual and anticipated performances.

Control variables.

Drawing on the existing literature, This paper adds enterprise Size (Size), asset-liability ratio (Lev), growth rate of operating income (Grow), Cashflow ratio (Cashflow), proportion of independent directors (Indira), years of company establishment (Listage) and shareholding ratio of the largest shareholder (Top1) as control variables in the regression model. The detailed variable definition and calculation method are shown in Table 1 .

• PPT PowerPoint slide
• PNG larger image
• TIFF original image

https://doi.org/10.1371/journal.pone.0302029.t001

Model setting

Empirical results analysis

Descriptive statistics and correlation analysis.

The descriptive statistical results of the main variables in this paper are presented in Table 2 . Among these, the mean value of ESG performance for manufacturing enterprises is 28.199, indicating a moderate level of environmental, social, and governance performance among the sample manufacturing enterprises that are implementing the "dual carbon" target. there is still significant room for improvement. Furthermore, the minimum value observed among the sample enterprises is 11.488, while the maximum value is 56.121, suggesting a substantial disparity in ESG practice input between leaders and followers. The digital variable exhibits a maximum value of 6.544 and a minimum value of 1.386, highlighting considerable variation in digital transformation degrees across sample enterprises. The results of other control variables are basically similar to those of existing studies [ 28 , 29 ].

https://doi.org/10.1371/journal.pone.0302029.t002

Additionally, this study conducts a Pearson correlation test on the main variables, and the results demonstrate a significantly positive correlation coefficient between digital transformation and enterprise ESG performance, thereby providing preliminary support for hypothesis 1 proposed in this paper. Furthermore, the selected control variables exhibit a statistically significant correlation with enterprise ESG performance, indicating the reasonable selection of control variables in this study. The average VIF of each variable in the model regression is 1.18, indicating that there is no serious multicollinearity problem in the model.

Benchmark regression results

The regression results in Table 3 demonstrate the impact of digital transformation on enterprise ESG performance. In Column (1), only industry and year dummy variables are controlled, while other control variables selected in this study are not included. The regression analysis reveals a significantly positive coefficient of 0.304 for Digital at the 1% level, providing preliminary evidence for a positive correlation between digital transformation and ESG performance. Building upon these findings, Column (2) incorporates additional control variables identified in this research, resulting in a slight decrease in the coefficient of Digital; however, it remains statistically significant at the 1% level. These results indicate that even after accounting for industry-specific factors, temporal effects, and firm characteristics, digital transformation continues to play a significant role in enhancing enterprise ESG performance, thereby confirming Hypothesis 1 posited in this paper. The aforementioned findings demonstrate that the benefits derived from digital transformation, including technological advancements, resource optimization, and enhanced management capabilities, can serve as an endogenous driving force for enterprises to engage in ESG practices. These advantages not only provide the necessary material foundation but also offer technical support for businesses to effectively implement ESG initiatives.

https://doi.org/10.1371/journal.pone.0302029.t003

Moreover, considering the coefficients of control variables, it can be observed that well-established large enterprises with ample cash flow and high ownership concentration exhibit a greater inclination and capability to leverage the benefits derived from digital transformation in order to enhance their ESG performance. Conversely, enterprises with limited revenue capacity and a high debt ratio display a higher degree of reluctance towards allocating scarce resources for ESG practices due to prevailing survival pressures. The findings of this study are in line with the existing body of research [ 86 , 87 ].

Robustness and endogeneity test

Change the measurement method of variables..

Firstly, in order to enhance stock prices and attract the attention of uninformed investors, some enterprises tend to embellish facts in their annual reports, extensively publicize their digital transformation blueprint through verbose narratives, and captivate investors with enticing stories and aspirations. Consequently, relying solely on keyword frequency analysis within the annual report becomes inadequate for accurately assessing the extent of digital transformation within these enterprises [ 88 ]. Therefore, this study adopts the Digital Transformation Index from CSMAR as a substitute variable that encompasses various dimensions including word frequency related to enterprise transformation, investment in digital resources, formulation of digital strategies, alignment of organizational structure with digital transformation goals, accomplishments in digital transformation endeavors, and application of digital technologies. This comprehensive measurement system aims to rectify the limitations associated with single-indicator assessments. Following a baseline regression approach, we incorporate the Digital Transformation Index (Digital_index) into our model for re-regression analysis. The results are presented as M1 in Table 4 where it is evident that the regression coefficient for Digital_index exhibits significant positive association at a 1% level of significance–consistent with previous findings.

https://doi.org/10.1371/journal.pone.0302029.t004

Moreover, this study employs the ESG rating provided by huazheng as an alternative index (ESG_H). Specifically, a value of 9 is assigned to AAA and subsequently decreases in descending order. A higher score indicates better ESG performance of the company. To minimize result deviation caused by different rating systems, the mean value of quarterly ratings is selected as a substitute variable in this paper. The aforementioned empirical method is employed to test the robustness of the baseline regression results, which are presented in M2 within Table 4 . Notably, the Digital regression coefficient exhibits significant positive association at a 1% level, thereby further confirming H1 posited in this study.

Extend the observation period.

Considering that it takes a certain amount of time for the technological, management and resource advantages brought by digital transformation to affect the ESG practice activities of enterprises, we draw on the practice of existing research to extend the observation period and delay ESG by one, two and three periods. The results are shown in M3, M4 and M5 in Table 4 . The regression results are significantly positive at the levels of 1%, 5% and 10% respectively, indicating that H1 in this paper is still robust after the observation period is extended.

Fixed effect model.

Considering the possible estimation errors caused by unobservable factors that do not change with individuals, this study incorporates individual fixed effects and industry-year joint fixed effects into the model to enhance its robustness. Moreover, given that the fixed effect of high latitude already encompasses the impact of industry and year, dummy variables for industry and year are not included in the regression analysis. The results, presented in M6 of Table 4 , exhibit a significantly positive association at a 1% significance level.

In order to address the endogeneity problem arising from potential sample self-selection, this study employs propensity score matching (PSM) for testing purposes. Firstly, enterprises are categorized based on the median degree of digital transformation. Subsequently, all control variables selected in this study are utilized as covariates to pair the samples using a 1:1 nearest neighbor matching method. To ensure the validity of the matching results, a balance test is conducted on the matched outcomes, with all normalized bias absolute values being less than 10%. This indicates that the matching results largely meet the requirements. Finally, after matching, regression analysis is performed on 3182 samples and presented in M7 of Table 4 . The regression coefficient of Digital remains significantly positive at a level of significance of 1%, indicating that the conclusion remains robust after addressing sample self-selection issues.

Tool variable method.

Given the potential reverse causality between digital transformation and ESG performance of enterprises, wherein digital transformation can foster improvements in ESG performance while enterprises exhibiting good ESG performance may also demonstrate a greater inclination towards undertaking digital transformation, this study employs the instrumental variable method to mitigate endogeneity issues arising from reverse causality. Referring to the existing research [ 89 , 90 ], we select regional communication level as the instrumental variable in this study. This choice is motivated by the influence of digital infrastructure development and communication level in the city where enterprises are located on their digital transformation process. A higher communication level enhances support for information, technology, consumer demand, and other aspects crucial for enterprises, thereby accelerating their digital transformation process. Hence, this variable satisfies the correlation condition of instrumental variables. Additionally, regional communication level primarily reflects micro-level application of information technology and does not directly impact enterprise ESG performance, meeting the exogeneity condition. Specifically, we employ mobile phone penetration rate (per 100 people) in the province where an enterprise operates as a proxy for regional communication level. As shown in Table 5 , two-stage regression results using instrumental variables exhibit significantly positive effects consistent with previous findings. The Kleibergen-Paap rk LM statistic is significant at the level of 1%, which passes the underidentification test. The Kleibergen-Paap rk Wald F statistic is 53.288, which is larger than the 16.38 critical value of F test at 10% level in weak instrumental variable identification, and passes the weak instrumental variable test, indicating that the selection of instrumental variables in this paper is reasonable to some extent. To sum up, after considering the endogeneity problem, digital transformation can still promote the improvement of ESG performance.

https://doi.org/10.1371/journal.pone.0302029.t005

Further analysis

Mechanism test..

Columns (4) and (5) of Table 3 show the test results of the action mechanism of digital transformation affecting enterprise ESG performance. Among them, the coefficient before digital transformation in Column (4) is significantly positive, indicating that technological advantages and organizational structure changes brought by digital transformation will significantly improve company transparency. Column (5) is the estimated result of Model 3. The results show that the coefficient of company transparency (Tra) is significantly positive, indicating that company transparency plays an intermediary role in the process of digital transformation affecting the ESG performance of enterprises. The research findings demonstrate that the utilization of digital technology enhances corporate transparency, thereby augmenting the frequency of interaction between enterprises and external investors as well as improving internal supervision efficiency. Consequently, this engenders both internal and external governance effects, ultimately enhancing corporate ESG performance.

At the same time, Sobel method is used to test the mediating effect, in which the z-value of Sobel test is 3.96, p<0.01, which further verfies H2 hypothesis in this paper.

Moderating effect test.

The empirical results of the moderating effect are presented in (6) of Table 3 , revealing a significantly negative regression coefficient (-2.787) for the interaction term (Digital*Ngap) at a 5% significance level. This indicates that the performance expectation gap does not trigger a "make or break" effect on enterprises. On the contrary, due to the presence of this gap, internal survival pressures and external investor doubts lead to reduced environmental protection investments and fulfillment of social responsibility by enterprise management.

Furthermore, when actual performance falls short of expectations, disputes may arise within internal management regarding whether to continue with strategic reforms. If there is an entrenched resistance within management circles, managers from different positions face significant threats. In such circumstances, persisting with implementing reform strategies escalates strategic risks and potentially triggers a "stop-loss in time" effect. Additionally, based on limited attention hypothesis, conflicts over internal control rights further divert managerial focus away from utilizing digital transformation’s technical advantages to enhance internal governance efficiency–resulting in declining corporate environmental, social, and governance performance levels. The hypothesis H3b in this paper is thus confirmed, indicating that the performance expectation gap plays a negative moderating role in the relationship between digital transformation and corporate ESG realization.

Heterogeneity analysis

Nature of property rights..

State-owned enterprises possess inherent advantages in resource acquisition, market competition, innovation strength, strategic reform risk, and other aspects due to their unique institutional advantages [ 92 ]. The process of digital transformation requires significant capital investment, the recruitment of digital technology talents, and the implementation of digital technologies. State-owned enterprises enjoy strong credit endorsement which makes financial institutions and external investors prefer supporting them financially [ 93 ]. This effectively mitigates the crowding-out effect on innovation behavior, environment, and society caused by dedicated capital investment during enterprise reform.

Moreover, state-owned enterprises’ excellent corporate image attracts more talent compared to non-state-owned enterprises, thereby addressing the personnel allocation-technical resources mismatch during digital transformation that hinders leveraging the enabling effect of digital technology. Therefore, as key players in China’s ESG system and national strategic policy implementation initiatives, state-owned enterprises are more proactive in improving their ESG performance. By contrast, non-state-owned enterprises prioritize seeking economic benefits through leveraging competitive advantages offered by digital technology amidst fierce market competition and environmental uncertainty. Non-economic benefits are often not their core objective. Therefore, based on this analysis,the promotion effect of digital transformation on ESG performance is significantly greater for state-owned enterprises than for non-state-owned ones.

This study categorizes enterprises into state-owned and non-state-owned based on their ownership nature. Columns (1) and (2) of Table 6 present the regression results for different ownership types. The findings indicate that, in comparison to non-state-owned enterprises, state-owned enterprises exhibit a higher regression coefficient, suggesting a more significant role of digital transformation in enabling state-owned enterprises.

https://doi.org/10.1371/journal.pone.0302029.t006

Intensity of industry competition.

The level of market competition within an industry significantly influences the strategic formulation of enterprises [ 94 ]. In highly competitive industries, products exhibit high homogeneity and strong substitutability. When transformative breakthroughs in product innovation are unattainable, enterprises are inclined to leverage digital technology’s information resources, organizational changes, business models, and other competitive advantages to enhance non-financial performance in environmental sustainability, social responsibility, and corporate governance. This approach aims to bolster enterprise reputation, cultivate distinctive soft power capabilities, and facilitate differentiation amidst intense market competition [ 16 , 64 ].

Therefore, this paper argues that the impact of digital transformation on enterprise ESG performance is more pronounced in highly competitive industries. To test this hypothesis, we adopt the established research methodology [ 95 ] and employ the Herfindahl index (the sum of squared ratios of each company’s main business income to the total main business income of the industry) as a measure of industry competition intensity. The regression results are presented in columns (3) and (4) of Table 6 . The findings indicate that low competition does not yield statistically significant results, whereas high competition exhibits a significantly positive effect at a 1% level of significance. This suggests that in highly competitive environments, enterprises can achieve more substantial improvements in their ESG performance through leveraging digital technology.

Firstly, the empirical analysis results confirm the hypothesis (H1) proposed in this study. This finding aligns with existing research and further substantiates that digital transformation not only positively impacts financial performance but also serves as an internal driver for enhancing ESG performance within enterprises [ 13 , 25 , 26 ].

Furthermore, this study confirms the proposition H2. Existing literature predominantly examines the relationship between digital transformation and ESG performance through the lenses of total factor productivity and dynamic capability, neglecting the role of corporate transparency in this context. On one hand, the application of digital technology brings about technological advantages that generate a "governance effect," enhancing internal governance capabilities by increasing shareholder participation in decision-making and curbing managerial discretion [ 48 ]. On the other hand, digital transformation yields a "spotlight effect" that amplifies market attention towards enterprises and facilitates greater interaction frequency of internal and external information [ 59 ], thereby promoting environmental and social investments among manufacturing firms to enhance their ESG performance. This research finding expands upon existing knowledge regarding the mechanisms linking digital transformation with enterprise ESG performance while contributing to non-economic value research within the domain of digital transformation.

This study also investigates whether the relationship between digital transformation and ESG performance is influenced by the performance expectation gap, and the empirical findings confirm the hypothesis H3b proposed in this study. The underlying reason is that during a performance expectation gap, enterprises face increased strategic risks and heightened internal and external pressures on management [ 61 , 62 ]. Pursuing strategic reforms at such times may not yield immediate turnaround results but can potentially lead to organizational difficulties. Consequently, the performance expectation gap tends to foster more conservative strategic decision-making by management, thereby limiting the extent to which digital transformation can promote ESG performance. This conclusion underscores the significance of performance feedback in understanding the intrinsic connection between digital transformation and ESG performance within enterprises while addressing existing research limitations.

In the face of medium and long-term constraints posed by the ’dual carbon’ goal, leveraging competitive advantages brought about by digital transformation to stimulate ESG practice motivation and help enterprises explore a sustainable development path with economic and social benefits has become a major concern for academia and industry. While scholars have begun exploring the impact mechanism and effect of digital transformation on enterprise ESG performance, the ’black box’ remains unopened, with impact boundaries yet to be fully revealed. Therefore, this paper empirically investigates the impact of digital transformation on ESG performance in manufacturing industries, elucidating its internal mechanisms from a company transparency perspective while revealing differences in relationships between digital transformation and ESG performance under conditions of performance expectation gaps. This study provides new theoretical references and policy implications for deep integration between digital transformation and green transformations. The findings demonstrate that: (1) Digital transformation has a significant positive impact on enterprise ESG performance.(2) Analysis of the influence mechanism reveals that company transparency partially mediates the relationship between digital transformation and enterprise ESG performance. (3) The performance expectation gap will give rise to the phenomenon of "timely stop loss" and impede the transformative impact of digitalization on the ESG performance of manufacturing enterprises.(4) Through heterogeneity analysis of the internal and external environment, it is observed that in highly competitive industries within the external environment, digital transformation exhibits a more pronounced positive influence on enterprise ESG performance. State-owned enterprises can fully leverage the enabling role of digital transformation.

Theoretical and practical contributions

The exploration of ESG practice in emerging markets holds significant theoretical significance for the advancement of the ESG field [ 96 ]. Despite China’s rapid development as an emerging economy, its research in the realm of ESG is still nascent [ 97 ]. By focusing on China as a research subject, this study not only expands the investigation into influencing factors on ESG within China but also offers insights applicable to sustainable development in other developing nations. Moreover, from a corporate transparency perspective, this study elucidates the logical framework linking digital transformation and enterprise ESG performance while broadening our understanding of how digital transformation impacts such performance. It also explores the significance of the performance expectation gap in the internal relationship between digital transformation and ESG performance, thereby addressing the limitations of existing research.

From a practical perspective, this study unveils the mechanism and impact of digital transformation on the ESG performance of enterprises, offering a novel empirical reference for effectively aligning digitization with environmental sustainability efforts in underperforming companies. Moreover, it provides fresh insights for governments to formulate incentivizing policies. Specifically, organizations need to shift their development mindset and fully recognize the long-term advantages of investing in environmental, social, and governance initiatives. Simultaneously, careful attention should be paid to potential adverse effects arising from digital transformation; thus necessitating timely adjustments in personnel allocation, organizational structure, and business processes to ensure optimal utilization of digital technologies’ enabling capabilities. Furthermore, The government should prioritize the impact of altruistic preferences [ 98 ] and develop a robust policy incentive framework encompassing capital infusion, talent cultivation, and equipment provisioning. This will help alleviate resource scarcity-induced reluctance or apprehension towards ESG investments during the process of enterprise digitization while partially sharing change-related risks.

Limitation and future research

There are certain limitations in this study. Despite employing text analysis and utilizing data from the CSMAR database to measure the extent of enterprise digital transformation, it is still unable to completely mitigate the influence of management behavior such as false disclosure and exaggeration, which may introduce some deviation between the measurement indicators and the actual scenario. Future research could explore alternative measurement methods to minimize potential errors. Furthermore, due to data constraints, this study does not investigate the effects of the COVID-19 outbreak on enterprises’ ESG practices; Therefore, future studies can explore disparities in impact before and after the outbreak. Lastly, it is important to note that our sample only encompasses Chinese market enterprises with ESG rating agency coverage and does not encompass emerging markets comprehensively. Subsequent research could concentrate on discerning differences between digital transformation and ESG performance in developed versus developing countries.

Supporting information

https://doi.org/10.1371/journal.pone.0302029.s001

Acknowledgments

We would like to express our heartfelt gratitude to the anonymous reviewers, editor, and everyone who contributed to the writing of this paper.

• View Article
• Google Scholar
• PubMed/NCBI

Journal of Small Business and Enterprise Development: Volume 20 Issue 1

Table of contents, small business performance: business, strategy and owner‐manager characteristics.

This paper aims to contribute to the understanding of the factors that influence small to medium‐sized enterprise (SME) performance and particularly, growth.

The development of SME managerial practice for effective performance management

This paper aims to investigate the gap between theory and practice in performance management in small and medium‐sized enterprises (SMEs) and analyse it in the light of specific…

SME top management team and non‐executive director cohesion: Precarious equilibrium through information asymmetry

Research into top management team (TMT) performance and consensus has been equivocal; furthermore, research into the role of non‐executive directors (NEDs) in UK SMEs concluded…

Financing practices and preferences for micro and small firms

The aims of the paper are three‐fold: first, to analyse how small and micro firms finance themselves; second, to investigate what their financing preferences are; and third, to…

Levels of innovation within SMEs in peripheral regions: the role of business improvement initiatives

The aim of this paper is to investigate the effectiveness of business improvement methods (BIM/TQM) in contributing to innovation implementation in SMEs within peripheral regions.

Entrepreneurial competencies of women entrepreneurs pursuing business growth

Entrepreneurial competencies have an impact on firm performance and growth. The purpose of this paper is to report empirical research into the entrepreneurial competencies…

Gender, disadvantage and enterprise support – lessons from women's business centres in North America and Europe

The aim of this paper is to analyse support measures in the USA, Canada and Sweden aimed at encouraging women to start their own business and/or promote growth in women‐owned…

Supporting entrepreneurship in deprived communities: a vision too far?

Government intervention has increasingly identified deprived communities as a key focus for enterprise support. The purpose of this paper is to examine attitudes and perceptions…

Age driven influence of role‐models on entrepreneurship in a transition economy

The purpose of this paper is to examine the differential impact of entrepreneurial role models over entrepreneurial activities at different stages of an individual's life cycle in…

Innovation characteristics of young and old family‐owned businesses

The purpose of this study is to examine characteristics and factors affecting innovation in young and old family‐owned businesses. The research focuses on three important factors…

Assessing students' entrepreneurial skills development in live projects

The aim of this paper is to present an exploratory study that examined the development of students' entrepreneurial skills over time within live projects.

2012 Awards for Excellence

Online date, start – end:

Copyright holder:, open access:.

• Patrick J. Murphy

Further Information

• About the journal (opens new window)
• Purchase information (opens new window)
• Editorial team (opens new window)
• Write for this journal (opens new window)

We’re listening — tell us what you think

Something didn’t work….

Report bugs here

All feedback is valuable

Please share your general feedback

Join us on our journey

Platform update page.

Visit emeraldpublishing.com/platformupdate to discover the latest news and updates

Questions & More Information

Answers to the most commonly asked questions here

Unraveling Enterprise Persistent Innovation: Connotation, Research Context and Mechanism

• Published: 02 April 2024

Cite this article

• Ye Zheng 1 , 2 ,
• Jiachen Ma 1 &
• Ruixue Lu 1  

68 Accesses

Explore all metrics

In today’s rapidly evolving global economy, enterprise persistent innovation is the key to the success of the enterprise, and the inexhaustible power of development can help enterprises in the fierce business competition to obtain competitive advantages and continue to maintain the leading position. This study through the WOS database of SSCI, SCI-E journal library of 1062 English literature review and scientific knowledge map analysis, thus defined the connotation of enterprise persistent innovation and measurement, exploration, and the enterprise persistent innovation research knowledge base and research hotspot and reveals the development of enterprise persistent innovation research. On this basis, the integrated analysis framework of the formation mechanism and effect of enterprise persistent innovation is constructed. The study found that the enterprise persistent innovation is a dynamic and lasting process and ability, involving the accumulation, destruction, and reorganization of innovation, which can be measured from the two aspects of innovation results and process. The knowledge base of enterprise persistent innovation involves fields such as economics, management science, and policy science, and research trends have gone through three stages of development. Factors affecting enterprise persistent innovation include technology, organization, individual, and environment. The integration of enterprise capabilities and resources is an important intermediary in the process of persistent innovation and enterprise strategic management, and the external environment plays a regulatory role in the process of persistent innovation. Enterprise persistent innovation also has a positive impact on economic performance and social development. Finally, this study summarizes the shortcomings of existing studies and presents future research perspectives. This paper serves as a valuable resource for researchers, policymakers, and practitioners seeking to navigate the complex terrain of enterprise persistent innovation in an ever-changing business landscape.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price includes VAT (Russian Federation)

Instant access to the full article PDF.

Rent this article via DeepDyve

Institutional subscriptions

Similar content being viewed by others

Different Routes, Same Goal: Exploring the Impact of Innovation Policy Tools on SMEs’ Persistent Innovation—A Hybrid Study Using SEM and fsQCA

Demystifying Strategic Innovation

Advances in the innovation of management: a bibliometric review

Data availability.

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

Acemoglu, D., Akcigit, U., Alp, H., et al. (2018). Innovation, reallocation, and growth. American Economic Review, 108 (11), 3450–3491.

Article   Google Scholar  

Achterkamp, M. C., & Vos, J. F. J. (2006). A framework for making sense of sustainable innovation through stakeholder involvement. International Journal of Environmental Technology and Management, 6 (6), 525–538.

Aghion, P., & Howitt, P. (1990). A model of growth through creative destruction . NBER.

Book   Google Scholar  

Anderson, N., Potočnik, K., & Zhou, J. (2014). Innovation and creativity in organizations: A state-of-the-science review, prospective commentary, and guiding framework. Journal of Management, 40 (5), 1297–1333.

Angela, T., David, C., & Maria, C. C. (2014). Measuring the persistence in innovation in Spanish manufacturing firms: Empirical evidence using discrete-time duration models. Economics of Innovation and New Technology, 23 (5-6), 447–468.

Arnold, M. (2017). Fostering sustainability by linking co-creation and relationship management concepts. Journal of Cleaner Production, 140 (Part 1), 179–188.

Arrow, K. J. (1972). Economic welfare and the allocation of resources for invention . Macmillan Education UK.

Bas, C. L., Mothe, C., & Nguyen-Thi, T. U. (2011). Technological innovation persistence: Literature survey and exploration of the role of organizational innovation . Working Papers. https://doi.org/10.2139/ssrn.1969293(7600945) https://ideas.repec.org/p/hal/wpaper/halshs-00649095.html

Batra, S., Sharma, S., Dixit, M. R., & Vohra, N. (2018). Does strategic planning determine innovation in organizations? A study of Indian SME sector. Australian Journal of Management, 43 (3), 493–513.

Bianchini, S., & Pellegrino, G. (2019). Innovation persistence and employment dynamics. Research Policy, 48 (5), 1171–1186.

Carrillo-Hermosilla, J., Del Río, P., & Könnölä, T. (2010). Diversity of eco-innovations: Reflections from selected case studies. Journal of Cleaner Production, 18 (10-11), 1073–1083.

Cefis, E. (2003). Is there persistence in innovative activities? International Journal of Industrial Organization, 21 (4), 489–515.

Cefis, E., & Orsenigo, L. (2001). The persistence of innovative activities: A cross-countries and cross-sectors comparative analysis. Research Policy, 30 (7), 1139–1158.

Chen, X., & Yang, L. (1999). Ten years of technological innovation . Science Press.

Google Scholar  

Chen, Y., & Zhao, S. (2008). Analysis of the influence of organizational structure on the persistent innovation ability of small and medium-sized high-tech enterprises. Journal of Guangxi University for Nationalities (Philosophy and Social Sciences Edition), S1 , 42–46.

Cho, Y. S., & Linderman, K. (2020). Resource-based product and process innovation model: Theory development and empirical validation. Sustainability, 12 (3), 913.

Chowhan, J., Pries, F., & Mann, S. (2017). Persistent innovation and the role of human resource management practices, work organization, and strategy. Journal of Management & Organization, 23 (3), 456–471.

Clausen, T., Pohjola, M., Sapprasert, K., et al. (2012). Innovation strategies as a source of persistent innovation. Industrial and Corporate Change, 21 (3), 553–585.

Coad, A., & Rao, R. (2008). Innovation and firm growth in high-tech sectors: A quantile regression approach. Research Policy, 37 (4), 633–648.

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation (pp. 128–152). Administrative Science Quarterly.

Crespi, F., & Scellato, G. (2014). Knowledge cumulability and path dependence in innovation persistence. In The Routledge Handbook of the Economics of Knowledge (pp. 116–134). Routledge.

D’Angelo, A., & Baroncelli, A. (2020). An investigation over inbound open innovation in SMEs: Insights from an Italian manufacturing sample.  Technology Analysis & Strategic Management, 32 (5), 542–560.

De Jesus, A., Antunes, P., Santos, R., & Mendonça, S. (2019). Eco-innovation pathways to a circular economy: Envisioning priorities through a Delphi approach. Journal of Cleaner Production, 228 , 1494–1513.

Diana, S. (2014). Persistence of innovation in unstable environments: Continuity and change in the firm’s innovative behavior. Research Policy, 43 (4), 726–736.

Diéguez-Soto, J., Duréndez, A., García-Pérez-de-Lema, D., et al. (2016). Technological, management, and persistent innovation in small and medium family firms: The influence of professionalism. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 33 (4), 332–346.

Duflos, G. (2006). Persistence of innovation, technological change and quality-adjusted patents in the US pharmaceutical industry . Cahiers de la Maison des Sciences Economiques.

Duysters, G. M., & Hagedoorn, J. (2002). The effect of mergers and acquisitions on the technological performance of companies in a high-tech environment. Technology Analysis & Strategic Management, 14 , 67–84.

Ellwood, P., Grimshaw, P., & Pandza, K. (2017). Accelerating the innovation process: A systematic review and realist synthesis of the research literature. International Journal of Management Reviews, 19 (4), 510–530.

Fang, S. R., Fang, S. C., Chou, C. H., Yang, S. M., & Tsai, F. S. (2011). Relationship learning and innovation: The role of relationship-specific memory. Industrial Marketing Management, 40 (5), 743–753.

Fontana, R., & Vezzulli, A. (2016). Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999. Research Policy, 45 (8), 1604–1619.

Geissdoerfer, M., Vladimirova, D., & Evans, S. (2018). Sustainable business model innovation: A review. Journal of Cleaner Production, 198 , 401–416.

Geroski, P. A., Van Reenen, J., & Walters, C. F. (1997). How persistently do firms innovate? Research Policy, 26 (1), 33–48.

Gilbert, R. J., & Newbery, D. M. G. (1982). Preemptive patenting and the persistence of monopoly. The American Economic Review , 514–526.

Granstrand, O., & Holgersson, M. (2020). Innovation ecosystems: A conceptual review and a new definition. Technovation, 90 , 102098.

Guarascio, D., & Tamagni, F. (2019). Persistence of innovation and patterns of firm growth.  Research Policy ,  48 (6), 1493–1512.

Guo, Z., Peng, Y., & Chen, Y. (2022). How digital finance affects the continuous technological innovation of Chinese energy companies? Frontiers in Energy Research, 10 , 833436.

Haned, N., Mothe, C., & Nguyen-Thi, T. U. (2014). Firm persistence in technological innovation: the relevance of organizational innovation. Economics of Innovation and New Technology , 23(5–6), 490–516.

He, Y., & Zhang, S. (2017). Research on the impact of technological innovation sustainability on enterprise performance. Scientific Research Management, 38 (09), 1–11.

Holl, A., Peters, B., & Rammer, C. (2022). Local knowledge spillovers and innovation persistence of firms. Economics of Innovation and New Technology, 32 (6), 826–850.

Ishak, W. (2017). Creating an innovation culture (Vol. 4). McKinsey Quarterly.

Jang, S. L., Tsai, Y. T., & Chen, J. (2008). Persistent innovation: A cross-country study of output and diversity over time. Applied Economics Letters , 15 (4), 323–326.

Järventie-Thesleff, R., Moisander, J., & Villi, M. (2014). The strategic challenge of continuous change in multi-platform media organizations—A strategy-as-practice perspective. International Journal on Media Management, 16 (3-4), 123–138.

Kannan-Narasimhan, R. (2014). Organizational ingenuity in nascent innovations: Gaining resources and legitimacy through unconventional actions. Organization Studies, 35 (4), 483–509.

Kuang, J., & Cheng, Q. (2010). Entrepreneurship and sustainable enterprise development. Exploration of Economic Issues, 10 , 80–85.

Lahti, A. (2021). Economist (2108): Competition theory—The forgotten theory of incomplete competition. Management, 9 (2), 71–103.

Laszlo, C., & Zhexembayeva, N. (2017). Embedded sustainability: The next big competitive advantage . Routledge.

Latan, H., Jabbour, C. J. C., de Sousa Jabbour, A. B. L., de Camargo Fiorini, P., & Foropon, C. (2020). Innovative efforts of ISO 9001-certified manufacturing firms: Evidence of links between determinants of innovation, continuous innovation and firm performance. International Journal of Production Economics , 223 , 107526.

Le Bas, C., Mothe, C., & Nguyen Thi, T. U. (2011). Technological innovation persistence: Literature survey and exploration of the role of organizational innovation. https://doi.org/10.2139/ssrn.1969293

Le Bas, C., & Scellato, G. (2014). Firm innovation persistence: A fresh look at the frameworks of analysis. Economics of Innovation and New Technology, 23 (5-6), 423–446.

Lee, Y. N. (2015). Evaluating and extending innovation indicators for innovation policy. Research Evaluation, 24 (4), 471–488.

Lhuillery, S. (2014). Marketing and persistent innovation success. Economics of Innovation and New Technology, 23 (5-6), 517–543.

Liang, F., Qiu, Y.X., Li, Q. (2023). How platform leadership promotes the improvement of organizations' continuous innovation capabilities in a dual environment - the mediating role of organizational resilience. Scientific and technological progress and countermeasures (15), 23–31.

Liang, F., Yuanxin, Q., & Qi, L. (2023). How platform leadership promotes the improvement of organizations’ continuous innovation capabilities in a dual environment - The mediating role of organizational resilience. Scientific and Technological Progress and Countermeasures, 15 , 23–31.

Lichtenthaler, U., & Lichtenthaler, E. (2009). A capability-based framework for open innovation: Complementing absorptive capacity. Journal of Management Studies, 46 (8), 1315–1338.

Long, T. Q. (2021). Is innovation activity persistent among small firms in developing countries? Evidence from Vietnam. Journal of the Asia Pacific Economy, 26 (1), 140–157.

Lǚ, C., Peng, C., Li, R., & Yin, J. (2021). The impact of organizational dual learning and its complementarity on enterprise sustainable development performance in a dynamic environment: The intermediary role of persistent innovation ability. Science and Technology Management Research, 41 (22), 135–144.

Malerba, F., & Orsenigo, L. (1999). Technological entry, exit and survival: An empirical analysis of patent data. Research Policy, 28 (6), 643–660.

Martínez‐Ros, E., & Labeaga, J. M. (2009). Product and process innovation: Persistence and complementarities. European Management Review , 6 (1), 64–75.

Martini, A., Laugen, B. T., Gastaldi, L., et al. (2013). Persistent innovation: Towards a paradoxical, ambidextrous combination of exploration and exploitation. International Journal of Technology Management, 61 (1), 1–22.

Ndungu, J. M. (2013). Competitive strategies adopted by KENATCO Taxis Limited to achieve competitive advantage. [Doctoral dissertation] . University of Nairobi Library.

Nelson, R. R. (1985). An evolutionary theory of economic change . Harvard University Press.

Pan, Z., Dai, X., & Li, J. (2017). Political gene, marketization process and the sustainability of enterprise innovation. Journal of Guangdong University of Finance and Economics, 32 (04), 24–31 + 57.

Peters, B. (2009). Persistence of innovation: Stylised facts and panel data evidence. The Journal of Technology Transfer, 34 , 226–243.

Ponta, L., Puliga, G., & Manzini, R. (2021). A measure of innovation performance: The Innovation Patent Index. Management Decision, 59 (13), 73–98.

Rauter, R., Globocnik, D., Perl-Vorbach, E., et al. (2019). Open innovation and its effects on economic and sustainability innovation performance. Journal of Innovation & Knowledge, 4 (4), 226–233.

Raymond, W., Mohnen, P., Palm, F., et al. (2010). Persistence of innovation in Dutch manufacturing: Is it spurious? The Review of Economics and Statistics, 92 (3), 495–504.

Reinganum, J. F. (1983). Technology adoption under imperfect information. The Bell Journal of Economics , 57–69.

Russell, M. G., & Smorodinskaya, N. V. (2018). Leveraging complexity for ecosystemic innovation. Technological Forecasting and Social Change, 136 , 114–131.

Ruttan, V. W. (1997). Induced innovation, evolutionary theory and path dependence: Sources of technical change. The Economic Journal, 107 (444), 1520–1529.

Salomo, S., Weise, J., & Gemünden, H. G. (2007). NPD planning activities and innovation performance: The mediating role of process management and the moderating effect of product innovativeness. Journal of Product Innovation Management, 24 (4), 285–302.

Schaltegger, S., & Wagner, M. (2011). Sustainable entrepreneurship and sustainability innovation: Categories and interactions. Business Strategy and the Environment, 20 (4), 222–237.

Schumpeter, J. A., Yntema, T. O., Chamberlin, E. H., et al. (1934). Imperfect competition. The American Economic Review, 24 (1), 21–32.

Schumpeter, J. A. (2013). Capitalism, socialism and democracy . Routledge.

Sheng, Y., & Zhu, C. (2020). The influence of high-tech enterprise diversification strategy on innovation sustainability—dynamic ability. Scientific and Technological Progress and Countermeasures, 37 (17), 73–82.

Soosay, C. A., & Hyland, P. W. (2005). Effect of firm contingencies on continuous innovation. International Journal of Innovation and Technology Management, 2 (02), 153–169.

Sun, B., & Yang, X. (2021). The influence of sleeping knowledge on the sustainability of enterprise technological innovation — A regulated mediation model. Scientific and Technological Progress and Countermeasures, 38 (11), 116–124.

Tang, Y., & Liu, T. (2020). Research on the influence of government subsidies on the innovation sustainability of small and technology-based enterprises — The regulatory effect based on financing constraints. Journal Title Not Specified, 20 (10), 41–50.

Tavassoli, S., & Karlsson, C. (2015). Persistence of various types of innovation analyzed and explained. Research Policy, 44 (10), 1887–1901.

Teece, D. J., Pisano, G. P., & Shuen, A. (1992).  Dynamic capabilities and strategic management. Center for Research in Management , University of California.

Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18 (7), 509–533.

Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15 (6), 285–305.

Tödtling, F., Lehner, P., & Kaufmann, A. (2009). Do different types of innovation rely on specific kinds of knowledge interactions? Technovation, 29 (1), 59–71.

Triguero, A., Córcoles, D., & Cuerva, M. C. (2014). Persistence of innovation and firm’s growth: Evidence from a panel of SME and large Spanish manufacturing firms. Small Business Economics, 43 , 787–804.

Wang, H., Tan, Q., & Li, Y. (2023). Digital technology application, green innovation and enterprise sustainable development performance — The regulatory role of system pressure. In Scientific and Technological Progress and Countermeasures (pp. 1–12) Retrieved March 25, 2023, from https://kns-cnki-net.webvpn.nwpu.edu.cn/kcms/detail/42.1224.G3.20230303.1307.004.html

Wang, J., Cao, N., & Ye, M. (2020). Multidimensional knowledge search, knowledge reconstruction and enterprise persistent innovation — Regulation of IT governance. Soft Science, 34 (09), 85–89.

Wang, K. H., Umar, M., Akram, R., & Caglar, E. (2021). Is technological innovation making world “greener”? An evidence from changing growth story of China. Technological Forecasting and Social Change, 165 , 120516.

Wooldridge, J. M. (2005). Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity. Journal of applied econometrics , 20 (1), 39–54.

Wu, K., Wu, S., & Zheng, C. (2009). Persistent enterprise innovation: Theoretical review and development trend outlook. Modern Management Science, 01 , 82–84.

Xi, L., & Zhao, H. (2022). Executive dual environmental awareness, green innovation and enterprise sustainable development performance. Economic Management, 44 (03), 139–158.

Xiang, G. (2005). Persistent enterprise innovation: Theoretical research basis, definition, characteristics and basic types. Scientific Research, 23 (1), 134–138.

Xiao, Y., & Zhang, X. (2021). The impact of technology mergers and acquisitions on the persistent innovation of manufacturing enterprises: The intermediary role based on the absorption capacity and utilization capacity. Technical Economy, 40 (11), 1–12.

Xie, Z., Du, J., & Wu, Y. (2022). Does financialization of non-financial corporations promote the persistence of innovation: Evidence from A-share listed manufacturing corporations in China. Eurasian Business Review, 12 , 229–250.

Yu, F., Fan, X., & Li, Z. (2021). Does corporate financialization help to make innovation more sustainable? Also on the influence of the institutional environment. Research and Development Management, 33 (03), 1–13.

Zeng, F., Lee, S. H. N., & Lo, C. K. Y. (2020). The role of information systems in the sustainable development of enterprises: A systematic literature network analysis. Sustainability, 12 (8), 3337.

Zhang, B., & Ren, H. (2018). Empirical study on the research mechanism of persistent innovation ability improvement of virtual organizations. Economic Management, 40 (10), 122–139.

Zhao, Y., Qi, N., Yan, R., Meng, Q., & Li, Z. (2023). Structural embedding, absorption capacity and enterprise persistent innovation — Evidence from the high-tech enterprise alliance innovation network. Journal of Management Engineering , 1–14 Retrieved April 26, 2023.

Zhang, Y., Zhou, Y., Lemus, D., Song, H., Zhang, Y., Rohlfer, S., et al. (2015). Chinese innovation in product, process and strategy: The end of low cost era? In The Source of Innovation in China: Highly Innovative Systems (pp. 15–76). Springer.

Chapter   Google Scholar  

Zhou, S. S., Zhou, A. J., Feng, J., & Jiang, S. (2019). Dynamic capabilities and organizational performance: The mediating role of innovation. Journal of Management & Organization, 25 (5), 731–747.

Download references

This study was funded by the National Natural Science Foundation of China (72004182), the Annual Project of Shaanxi Social Science Fund (2022R031), the Innovation Capability Support Program Project of Shaanxi (2024 ZC-YBXM-188), the Science and Technology Plan Project of Yulin City (CXY-2022-164), and the “Double First-Class” Construction Special Fund Project of Northwestern Polytechnical University–Characteristic Liberal Arts Development Plan Project (23GH0306)

Author information

Authors and affiliations.

School of Public Policy and Administration, Northwestern Polytechnical University, Xi’an, Shaanxi, China

Ye Zheng, Jiachen Ma & Ruixue Lu

National Governance Collaborative Innovation Research Center, Northwestern Polytechnical University, Xi’an, Shaanxi, China

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Ye Zheng .

Ethics declarations

Conflict of interest.

The authors declare no competing interests.

Additional information

Publisher’s note.

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Zheng, Y., Ma, J. & Lu, R. Unraveling Enterprise Persistent Innovation: Connotation, Research Context and Mechanism. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-01878-0

Download citation

Received : 23 August 2023

Accepted : 20 February 2024

Published : 02 April 2024

DOI : https://doi.org/10.1007/s13132-024-01878-0

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Persistent innovation
• Competitive advantage
• Sustained success
• Enterprise capabilities
• Strategic management
• Resource integration

Advertisement

• Find a journal
• Publish with us
• Track your research

The green IT revolution: A blueprint for CIOs to combat climate change

Companies and governments looking to combat climate change are turning to tech for help. AI, new technologies, and some promising tech-driven business models have raised hopes for dramatic progress.

About the authors

This article is a collaborative effort by Gerrit Becker, Luca Bennici, Anamika Bhargava, Andrea Del Miglio , Jeffrey Lewis , and Pankaj Sachdeva, representing views from McKinsey Technology.

While many organizations’ climate goals are lofty, enterprise technology leaders—CIOs, chief digital innovation officers (CDIOs), and chief technology officers (CTOs), among others—have not always succeeded at turning climate ambitions into reality. One of the biggest reasons is that hard facts and clear paths of action are scarce. Misconceptions and misinformation have clouded the picture of what CIOs and tech leaders should do.

We have done extensive analysis of where technology can have the biggest impact on reducing emissions. To start, we divided technology’s role into two primary types of activities:

• offense—the use of technology and analytics to cut emissions by reducing (improving operational efficiency), replacing (shifting emission-generating activities to cleaner alternatives), and reusing (recycling material)
• defense—the actions IT can take to reduce emissions from the enterprise’s technology estate

Scope of the McKinsey analysis

McKinsey’s emissions analysis for this report focuses on enterprise technology emissions, which are the business IT emissions from the hardware, software, IT services, enterprise communications equipment, mobile devices, fixed and mobile network services, and internal technology teams that a company uses for its own operations and that a CIO has control over. These include the emissions related to the full life cycles of the products and services that an enterprise IT function uses, including their development, delivery, usage, and end of life (exhibit). Our internal services emissions' analysis assumes around 40 percent of IT workers are working from home.

The analysis does not include the emissions from the technology products and services that a company is selling (such as data center capacity sold by hyperscalers), operational technology devices (such as sensors and point-of-sale systems), and cryptocurrency mining.

The defense activities are where the CIO, as the head of IT, can act independently and quickly. This article focuses on defense, specifically the IT elements over which a CIO has direct control. We examined emissions from use of electricity for owned enterprise IT operations, such as the running of on-premises data centers and devices (classified as scope 2 by the Greenhouse Gas Protocol 1 Greenhouse Gas Protocol: Technical Guidance for Calculating Scope 3 Emissions: Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard , World Resources Institute & World Business Council for Sustainable Development, 2013. Scope 1 emissions are direct emissions from the activities of an organization or under their control, including fuel combustion on site such as gas boilers, fleet vehicles, and air-conditioning leaks; scope 2 emissions are from electricity purchased and used by the organization; and scope 3 emissions are all indirect emissions not included in scope 2 that occur in the value chain of the reporting company, including both upstream and downstream emissions. ), and indirect emissions from technology devices that the CIO buys and disposes of (scope 3). 2 These calculations do not include emissions from technology-driven services sold, such as cloud capacity. (See sidebar, “Scope of the McKinsey analysis.”)

What the facts say

Our analysis has uncovered several facts that contravene some commonly held views about enterprise technology emissions. These facts involve the significant amount of tech-related emissions, the share of emissions from end-user devices, the variety of mitigation options available, and the favorable impact of shifting to cloud computing.

Enterprise technology generates significant emissions

Enterprise technology is responsible for emitting about 350 to 400 megatons of carbon dioxide equivalent gases (CO 2 e), accounting for about 1 percent of total global greenhouse gas (GHG) emissions. At first blush, this might not seem like a lot, but it equals about half of the emissions from aviation or shipping and is the equivalent of the total carbon emitted by the United Kingdom.

The industry sector that contributes the largest share of technology-related scope 2 and scope 3 GHG emissions is communications, media, and services (Exhibit 1). Enterprise technology’s contribution to total emissions is especially high for insurance (45 percent of total scope 2 emissions) and for banking and investment services (36 percent).

This amount of carbon dioxide and equivalent gases is a significant prize for companies under increasing pressure to cut emissions. Progress on climate change requires action on many fronts, and enterprise technology offers an important option that CIOs and companies can act on quickly.

You’re invited

To a McKinsey Technology webinar on the critical role of technology in building a sustainable enterprise on October 25, 9:30–10:30am ET.

The biggest carbon culprit is end-user devices, not on-premises data centers

End-user devices—laptops, tablets, smartphones, and printers—generate 1.5 to 2.0 times more carbon globally than data centers (Exhibit 2). 3 On-premises and co-located data centers used by enterprises, not including data center capacity sold by hyperscalers. One reason is that companies have significantly more end-user devices than servers in on-premises data centers. In addition, the devices typically are replaced much more often: smartphones have an average refresh cycle of two years, laptops four years, and printers five years. On average, servers are replaced every five years, though 19 percent of organizations wait longer. 4 Rhona Ascierto and Andy Lawrence, Uptime Institute global data center survey 2020 , Uptime Institute, July 2020.

More worrisome, emissions from end-user devices are on track to increase at a CAGR of 12.8 percent per year. 5 End-user computing market: Growth, trends, COVID-19 impact, and forecasts (2022–2027) , Mordor Intelligence, January 2022. Efforts to address this could target the major causes of emissions from these devices. About three-fourths of the emissions comes from manufacturing, upstream transportation, and disposal. A significant source of these emissions is the semiconductors that power the devices.

Plenty of low-cost/high-impact options exist, starting with improved sourcing

We have found that when it comes to going green, many CIOs think in terms of investments needed to replace items or upgrade facilities. Our analysis, however, finds that CIOs can capture significant carbon benefits without making a significant investment—and in some cases can even save money (Exhibit 3).

Overall, for example, 50 to 60 percent of emissions related to end-user devices can be addressed through sourcing changes, primarily by procuring fewer devices per person and extending the life cycle of each device through recycling. These options will not require any investment and will lower costs, though companies may want to evaluate the impact on employee experience.

In addition, companies can more aggressively recycle their devices; 89 percent of organizations recycle less than 10 percent of their hardware overall. 6 Sustainable IT: Why it’s time for a green revolution for your organization’s IT , Capgemini Research Institute, 2021. CIOs can put pressure on suppliers to use greener devices, especially as companies in the semiconductor sector are already increasing their commitments to emission reduction. Further low-cost, high-impact actions include optimizing business travel and data center computing needs, as well as increasing the use of cloud to manage workloads.

Moving to cloud has more impact than optimizing data centers

Optimizing an on-premises data center’s power usage effectiveness (PUE) 7 PUE describes how efficiently a computer data center uses energy, expressed as the ratio of total facility energy to IT equipment energy. is expensive and results in limited carbon abatement. If a company were to double what it spends on infrastructure and cloud to reduce PUE, it would cut carbon emissions by only 15 to 20 percent. Structural improvements in data centers and optimized layout can help, but the impact is limited, and many companies have already implemented them. More aggressive measures, such as moving data centers to cooler locations or investing in new cooling tech, are prohibitively expensive.

A more effective approach is to migrate workloads to the cloud. Hyperscalers (also known as cloud service providers) and co-locators are investing significantly to become greener through measures such as buying green energy themselves and investing in ultra-efficient data centers with a PUE equal to or less than 1.10, compared with the average PUE of 1.57 for an on-premises data center. 8 “Uptime Institute 11th annual Global Data Center Survey shows sustainability, outage, and efficiency challenges amid capacity growth,” Uptime Institute, September 14, 2021. (We estimate that companies could achieve just a 1.3 PUE score for their data center if they invested nearly 250 percent more, on average, over what they currently spend for their data centers and cloud presence.)

With thoughtful migration to and optimized usage of the cloud, companies could reduce the carbon emissions from their data centers by more than 55 percent—about 40 megatons of CO 2 e worldwide, the equivalent of the total carbon emissions from Switzerland.

Three steps to take now

With companies and governments under intensifying pressure to cut carbon emissions and with technology playing a key role in delivering on those goals, CIOs will find themselves on the front lines. The challenge will be to reduce IT’s carbon footprint while delivering high-quality, low-cost technology services to customers and employees.

On average, completion of the defensive steps might take three to four years. However, CIOs who act decisively and precisely can achieve 15 to 20 percent of carbon reduction potential in the first year with minimal investment.

CIOs can choose from among a wide array responses, particularly in conjunction with the CEO and the board. However, three measures they can take right now will prepare the organization for longer-term efforts. These measures involve sourcing strategies, key metrics, and a performance management system.

The net-zero transition: What it would cost, what it could bring

Move now on sourcing strategies.

Far and away the fastest and most effective defensive measure for reducing IT carbon emissions is to revise policies for technology sourcing. Optimizing the number of devices in line with standards followed by companies in the top quartile 9 Top quartile in terms of the ratio of devices to people is derived from the number of devices per person. Our analysis uses McKinsey Digital’s Ignite solutions and 2020 data. would reduce about 30 percent of end-user-device emissions, the amount of carbon emitted by Hong Kong. For example, top-quartile companies have one printer for every 16 people in the workplace; the overall average is one printer per eight people.

This sourcing shift does not necessarily lead to a degradation in user experience, because the rollout of 5G and increasingly advanced processing and compute power allow the main processing function to happen at the server. Therefore, devices can be less powerful and consume much less energy. Essentially, this is a software-as-a-service (SaaS) model where high-end and user-friendly experiences happen on the server, not the device. The effectiveness of this approach will depend on having stable networks, less resource-intensive coding at the device level, edge computing capabilities, and shifts of offerings to more efficient platforms (for example, cloud).

As part of this effort, the CIO and the business’s head of procurement will need to collaborate on reviewing and adjusting device refresh timelines and device-to-person ratios, as well as adjusting the basis for purchasing decisions. Procurement generally relies on cost/benefit calculations, and rightly so. That approach will need to expand to account for carbon dioxide emissions. The spirit of collaboration should extend to suppliers as well, with the parties working together to formulate plans that provide the greatest benefits for all.

A more thoughtful sourcing strategy extends beyond end-user devices. CIOs, for example, should look for green sources of the electricity IT uses. When these sources are unavailable, CIOs can direct procurement to power purchase agreements to offset carbon use. CIOs can also set green standards for their vendors and suppliers, requiring GHG emissions disclosures and incorporating them into their criteria for purchase decisions.

Establish a green ROI metric for technology costs

Any real progress on green technology can happen only when companies measure their “green returns.” But today, most green metrics omit cost and savings, which ultimately makes them impractical. A better metric focuses on cost per ton of carbon saved (accounting for costs saved as well). Sophisticated models calculate emissions throughout the full life cycle, including production, transportation, and disposal.

CIOs can further assess suppliers, manufacturers, and service providers based on how advanced they are in recycling and refurbishing electronics; designing circular components; extending product life cycles with better design, higher-quality manufacturing, and more robust materials; offering repair services; and reselling to consumers.

Decisions about IT spending need to consider a range of factors, including technical debt abatement and business strategy. Along with these factors, companies should institutionalize a green ROI metric that is transparent to everybody in the business as an element in IT decision making, including in requests for proposals (RFPs). Doing so will enable companies to better understand the true impact their technology is having on carbon emissions.

Put in place green measurement systems

Establishing a green ROI metric is only a start. CIOs need to establish a baseline of performance, measure progress against the baseline, and track impact in near real time, much as companies track real-time computer and network usage for applications in the cloud. This kind of measuring system ensures that CIOs know what’s working and what isn’t, so they can adjust quickly.

In practice, implementing green measurement can be challenging. Some companies have spent a year measuring their carbon footprint, ending up with an outdated analysis. This tends to happen when companies are determined to measure every bit of carbon emitted, a praiseworthy but time-consuming effort. CIOs can make substantial progress by instead prioritizing measurement where the impact is highest, such as tracking the number of end-user devices purchased and in use, the current duration of use for each device, and the ratio of devices per user. Another way CIOs can make quick progress is to embed emissions- and power-monitoring capabilities into large technology assets and work with external providers, such as electricity companies, to track usage in real time.

Effectively combating climate change won’t happen through one or two big wins; those don’t exist yet. To have real impact, companies and governments will need to act in many areas. Technology has a huge role to play in many of these areas, but CIOs and tech leaders need to act quickly and decisively.

This article is the first in a series about how CIOs can reduce emissions. The next article will explore how CIOs can drive the business’s sustainability agenda by playing offense and implementing reduce, replace, and reuse levers to decarbonize.

Gerrit Becker is an associate partner in McKinsey’s Frankfurt office, Luca Bennici is an associate partner in the Dubai office, Anamika Bhargava is a consultant in the Toronto office, Andrea Del Miglio is a senior partner in the Milan office, Jeffrey Lewis is a senior partner in the New Jersey office, and Pankaj Sachdeva is a partner in the Philadelphia office.

The authors wish to thank Bernardo Betley, Arjita Bhan, Raghuvar Choppakatla, Sebastian Hoffmann, Abdelrahman Mahfouz, Tom Pütz, Jürgen Sailer, Tim Vroman, Alice Yu, and Gisella Zapata for their contributions to this article.

Explore a career with us

Related articles.

It’s not easy buying green: How to win at sustainable sourcing

Sustainability in semiconductor operations: Toward net-zero production

Delivering the climate technologies needed for net zero

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Land use changes in the environs of Moscow

Related Papers

Eurasian Geography and Economics

Grigory Ioffe

komal choudhary

This study illustrates the spatio-temporal dynamics of urban growth and land use changes in Samara city, Russia from 1975 to 2015. Landsat satellite imageries of five different time periods from 1975 to 2015 were acquired and quantify the changes with the help of ArcGIS 10.1 Software. By applying classification methods to the satellite images four main types of land use were extracted: water, built-up, forest and grassland. Then, the area coverage for all the land use types at different points in time were measured and coupled with population data. The results demonstrate that, over the entire study period, population was increased from 1146 thousand people to 1244 thousand from 1975 to 1990 but later on first reduce and then increase again, now 1173 thousand population. Builtup area is also change according to population. The present study revealed an increase in built-up by 37.01% from 1975 to 1995, than reduce -88.83% till 2005 and an increase by 39.16% from 2005 to 2015, along w...

Elena Milanova

Land use/Cover Change in Russia within the context of global challenges. The paper presents the results of a research project on Land Use/Cover Change (LUCC) in Russia in relations with global problems (climate change, environment and biodiversity degradation). The research was carried out at the Faculty of Geography, Moscow State University on the basis of the combination of remote sensing and in-field data of different spatial and temporal resolution. The original methodology of present-day landscape interpretation for land cover change study has been used. In Russia the major driver of land use/land cover change is agriculture. About twenty years ago the reforms of Russian agriculture were started. Agricultural lands in many regions were dramatically impacted by changed management practices, resulted in accelerated erosion and reduced biodiversity. Between the natural factors that shape agriculture in Russia, climate is the most important one. The study of long-term and short-ter...

Annals of The Association of American Geographers

Land use and land cover change is a complex process, driven by both natural and anthropogenic transformations (Fig. 1). In Russia, the major driver of land use / land cover change is agriculture. It has taken centuries of farming to create the existing spatial distribution of agricultural lands. Modernization of Russian agriculture started fifteen years ago. It has brought little change in land cover, except in the regions with marginal agriculture, where many fields were abandoned. However, in some regions, agricultural lands were dramatically impacted by changed management practices, resulting in accelerating erosion and reduced biodiversity. In other regions, federal support and private investments in the agricultural sector, especially those made by major oil and financial companies, has resulted in a certain land recovery. Between the natural factors that shape the agriculture in Russia, climate is the most important one. In the North European and most of the Asian part of the ...

Ekonomika poljoprivrede

Vasilii Erokhin

Journal of Rural Studies

judith pallot

In recent decades, Russia has experienced substantial transformations in agricultural land tenure. Post-Soviet reforms have shaped land distribution patterns but the impacts of these on agricultural use of land remain under-investigated. On a regional scale, there is still a knowledge gap in terms of knowing to what extent the variations in the compositions of agricultural land funds may be explained by changes in the acreage of other land categories. Using a case analysis of 82 of Russia’s territories from 2010 to 2018, the authors attempted to study the structural variations by picturing the compositions of regional land funds and mapping agricultural land distributions based on ranking “land activity”. Correlation analysis of centered log-ratio transformed compositional data revealed that in agriculture-oriented regions, the proportion of cropland was depressed by agriculture-to-urban and agriculture-to-industry land loss. In urbanized territories, the compositions of agricultura...

Open Geosciences

Alexey Naumov

Despite harsh climate, agriculture on the northern margins of Russia still remains the backbone of food security. Historically, in both regions studied in this article – the Republic of Karelia and the Republic of Sakha (Yakutia) – agricultural activities as dairy farming and even cropping were well adapted to local conditions including traditional activities such as horse breeding typical for Yakutia. Using three different sources of information – official statistics, expert interviews, and field observations – allowed us to draw a conclusion that there are both similarities and differences in agricultural development and land use of these two studied regions. The differences arise from agro-climate conditions, settlement history, specialization, and spatial pattern of economy. In both regions, farming is concentrated within the areas with most suitable natural conditions. Yet, even there, agricultural land use is shrinking, especially in Karelia. Both regions are prone to being af...

RELATED PAPERS

Geetanjali Chavan

Jairo Peraza

MARIANGELA LANDO

Nanda Dwi Haryanto

Cell Metabolism

Daniel Martinez

Bina' Al-Ummah

Mulyadi mulyadi

Stroke Research and Treatment

Jaime Masjuan

Dr. Bhagirathi Dwibedi

CITALA 2007

Mohamed Ben TABIB

European Journal of Cancer

Anna Demetriou

The Journal of Chemical Physics

Katja Lindenberg

Springer eBooks

Luis Olsina

Drug and Alcohol Dependence

Carlos Andres Bernal Aragon

Karl Aiginger

Journal of obstetrics and gynaecology Canada

Thomas Baskett

Profetika: Jurnal Studi Islam

muhammad danil

Felipe Simas

Nova Amelia Putri

Revista Anthropologicas

Luciana Campelo

Pakistan Journal of Biological Sciences

Saeed Ahmed

arXiv (Cornell University)

Giovanni Cerulli Irelli

International Journal of Biological Macromolecules

Deepak Tuli

Revue De Medecine Veterinaire

Mitat SAHIN

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

• View all journals
• Explore content
• About the journal
• Sign up for alerts
• 13 May 2024

'Einstein’s death shattered Bose — he tore off an unpublished research paper in grief'

You can also search for this author in PubMed   Google Scholar

Partha Ghose. Credit: Partha Ghose

Nature India : What inspired you to embark on a career in particle physics?

Partha Ghose : In 1961, I went to Imperial College London wanting to decipher what lies at the deepest core of matter. This was when physicists had already begun smashing atoms in colliders, churning out new transient particles to unveil the secrets of matter.

I was lucky to learn advanced physics from stalwarts in particle physics like Abdus Salam, P. T. Matthews and T. W. B. Kibble. In 1963, an opportunity to work briefly at CERN further spurred my interest in particle physics.

NI : How did you meet S. N. Bose?

PG : It was in mid-1963 that I met Bose, quite by chance. The famous Bengali pote Bishnu Dey, a relative of ours and Bose’s close friend, took me to meet Bose. They were immersed in discussion, and Bose suddenly turned to me and asked, ''Would you like to work with me?''. It was an offer I couldn’t refuse. He arranged everything very quickly and within days I joined his research group at the Saha Institute of Nuclear Physics in Calcutta as a junior scientist. I worked on particle physics, mainly on broken SU(3) symmetry which was in vogue at the time.

NI : How did Bose start interacting with Einstein and how was their relationship?

PG : Occasionally, Bose would reminisce about his interactions with Einstein. One day when I went to meet him at his residence, he started talking about the historic paper he sent to Einstein on 4 June 1924 along with a letter .

Bose told me that his deduction of the phase space factor in Planck’s law resulted in a factor of 4π instead of 8π. He went on to propose that the missing factor of 2 was due to the photon spin which could take only two values. In his letter back to Bose, “the old man” [Einstein] had crossed this portion out and said it was not necessary to talk about spin since the factor of 2 comes from the two states of polarisation of light.”

Bose said to me, ”I can understand a spinning particle, but what is the meaning of the polarization of a particle?” I asked him, "Sir, when the photon spin was eventually discovered, why didn’t you tell Einstein that you had already worked it out in 1924?” “How does it matter who discovered it,” he quipped. “It was eventually discovered, wasn’t it?”

In a second paper, which also Einstein translated into German and got published in Zeitschrift fur Physik , Bose proposed a probability law for interactions between matter and radiation. According to Einstein, it was inappropriate. He added a comment to the paper giving some reasons for his disagreement with Bose.

The first paper with Einstein’s strong endorsement made Bose famous. He moved to Paris on a two-year sabbatical from Dhaka University, worked in Maurice de Broglie’s and Marie Curie’s labs and arrived in Berlin in 1925 to finally meet Einstein. They discussed several issues including Bose’s new hypothesis of probabilistic interactions, but Einstein stuck to his point.

Despite their differences, Bose regarded Einstein as his master in physics. On 18 April 1955, Einstein died. The news shocked him into silence. He was writing a paper and was looking forward to discussing it with Einstein at a forthcoming conference in Switzerland to celebrate fifty years of Special Relativity. Bose tore that paper into shreds.

NI : Many say that S. N. Bose missed out on a Nobel Prize for physics.

PG : He deserved the prize for his seminal contribution to quantum theory. It led to the classification of particles into bosons and fermions and the prediction and discovery of Bose-Einstein condensates. Besides, his theories helped us understand superconductivity and superfluidity. Bose’s theories and insights shaped the works of many physicists. Some went on to win Nobel Prizes. But Bose, despite being recommended several times, was never considered for the prize.

NI : Apart from physics, you learned music, and played first-class cricket. Do you think science helps enrich music?

PG : Science can help explain music. The best example of this in India is Sir C. V. Raman who had a keen ear for Indian classical music. He could detect five harmonics in the 'mridangam' and the 'tabla' sounds. He did some experiments with Indian drums and circular membranes with central loads. He sprinkled white powder on them to see the patterns of vibrations formed as he kept changing the loads and the manner of striking. This led to a new understanding of the generation of harmonics in stretched membranes. His research in musical instruments earned him the Fellowship of the Royal Society of London even before he got the Nobel Prize for his work on light scattering.

NI : S. N. Bose advocated popularizing science in Bengali. Is it easier to communicate science through one’s mother tongue?

PG : Science is based on logic and requires precise language for its expression and understanding. Non-native speakers find it difficult to grasp the nuances of scientific terms in English. They often acquire wrong notions when they read science in English.

The language in which one dreams is one's mother tongue. Science can therefore take root and flourish in a country only when its citizens start dreaming about science in their mother tongue.

NI : What is your advice for young Indian students who want to pursue a career in physics?

PG : I will quote Bose’s last advice to me. ''Don't jump onto foreign bandwagons. Try to understand things in your way and say something new.''

Bose read the works of all leading quantum theorists of his time, including Einstein, with a critical mind, identified their shortcomings and went on to propose revolutionary new statistics. These days I see an undue rush to publish papers in reputed foreign journals, increase citations, and get quick recognition and promotion. This leads to derivative science.

doi: https://doi.org/10.1038/d44151-024-00054-2

Postdoc in CRISPR Meta-Analytics and AI for Therapeutic Target Discovery and Priotisation (OT Grant)

APPLICATION CLOSING DATE: 14/06/2024 Human Technopole (HT) is a new interdisciplinary life science research institute created and supported by the...

Human Technopole

Research Associate - Metabolism

Houston, Texas (US)

Baylor College of Medicine (BCM)

Postdoc Fellowships

Train with world-renowned cancer researchers at NIH? Consider joining the Center for Cancer Research (CCR) at the National Cancer Institute

Bethesda, Maryland

NIH National Cancer Institute (NCI)

Faculty Recruitment, Westlake University School of Medicine

Faculty positions are open at four distinct ranks: Assistant Professor, Associate Professor, Full Professor, and Chair Professor.

Hangzhou, Zhejiang, China

Westlake University

PhD/master's Candidate

PhD/master's Candidate    Graduate School of Frontier Science Initiative, Kanazawa University is seeking candidates for PhD and master's students i...

Kanazawa University

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Quick links

• Explore articles by subject
• Guide to authors
• Editorial policies

Exploring the role of risk gene CNTN4 and APP in neuronal development

Dr asami oguro-ando tells us about the research published in her new open biology paper, a study which explores the pivotal role of the gene cntn4 and app in neuronal development..

Please could you tell us a little bit about your article?

We are excited to announce our recent publication, " CNTN4 Modulates Neural Elongation through Interplay with APP ," featured in Open Biology . This study delves into the intricate relationship between risk gene the neuronal cell molecule contactin-4 (CNTN4) and amyloid precursor protein (APP), elucidating their roles in neurodevelopmental disorders and Alzheimer's disease. We've detailed how CNTN4, a neuronal cell adhesion molecule, is instrumental in shaping neuronal morphology and spine density. Additionally, our findings reveal a co-dependent interaction between CNTN4 and APP crucial for neurite outgrowth, alongside a novel compensatory expression mechanism between these proteins.

What is the significance of CNTN4 and why did you choose to focus on this?

CNTN4 caught our attention during our research into 3p26 deletion syndrome—a condition linked with Autism Spectrum Disorders (ASD), as cited in Gandawijaya et al., 2021 . While CNTN4 is identified as a candidate gene for ASD, its functional roles were not well understood. This gap in knowledge spurred us to explore how CNTN4 functions within the brain, particularly its interactions with proteins involved in neurodegenerative diseases like Alzheimer's.

Co-authors Madeline Eve and Asami Oguro-Ando, University of Exeter.

Were there any surprising findings from the study?

Our research uncovered that CNTN4 not only contributes to neural elongation in the Frontal Cortex but also regulates its expression alongside APP, a protein implicated in Alzheimer's disease. It was quite remarkable to discover that CNTN4, a gene linked to developmental processes, also plays a role in modulating factors involved in Alzheimer's disease. This intersection of developmental and neurodegenerative pathways offers exciting new insights into the broader implications of these proteins.

What’s next for you or your group’s research?

Looking ahead, our group is keen to further dissect the molecular mechanisms underpinning the interaction between CNTN4 and APP and explore their wider implications for disorders like Alzheimer's and ASD. Our next steps involve clarifying how the CNTN4-APP interaction impacts neural activity. Understanding this interaction is crucial as it represents a fundamental step towards a comprehensive grasp of neurodevelopmental and neurodegenerative disorders.

Group members at the University of Exeter including co-authors Josan Gandawijaya, Rosie Bamford and Madeline Eve. 

How did you find the Review Commons process and publishing with Open Biology ?

Our experience with Review Commons was exceptionally constructive. The streamlined peer review process facilitated a more efficient publication route, allowing us to refine our research with valuable feedback effectively. The impartial comments from reviewers who were not targeting a specific journal and the positive feedback aimed at enhancing our paper's quality were particularly striking. This process not only expedited our ability to share significant findings but also elevated the quality of our publication through rigorous peer evaluations. We are thoroughly satisfied with the outcome in Open Biology and are deeply appreciative of the genuine engagement from the journal in handling our revisions.

Dr. Oguro-Ando is a researcher and lecturer at the University of Exeter Medical School and has been interested in life science since she was a child, especially, how lives play rolls in plasticity to the environment. Asami’s group research aim is to further our understanding of the molecules, cells and circuits that underlie neurodevelopmental disorders affecting mental health including Autism is critical for developing more effective therapies for these disorders.

Open Biology accepts papers via Review Commons saving authors time by facilitates quicker, informed decisions without restarting the peer review process. We are looking to publish more high-quality research articles in cellular and molecular biology. Find out more about our author benefits and submission process .

Image credits: Hero image: Human neuroblastoma SH-SY5Y cells. Credit: Asami Oguro-Ando.  Photo credits: Asami Oguro-Ando. 

Buchi Okereafor

Publishing Editor

Email updates

We promote excellence in science so that, together, we can benefit humanity and tackle the biggest challenges of our time.

Subscribe to our newsletters to be updated with the latest news on innovation, events, articles and reports.

What subscription are you interested in receiving? (Choose at least one subject)