Exploring the Drivers of Green SMEs: A Multidimensional Qualitative Study

Despite growing global attention to sustainable entrepreneurship, limited understanding persists regarding how financial, institutional, and leadership dynamics jointly shape the green transition of small and medium-sized enterprises (SMEs). Responding to this gap, the present study offers a novel, ecosystem-based perspective that examines how multiple drivers and barriers co-evolve to influence SME sustainability transitions. Drawing from institutional theory and the resource-based view, and using the United Arab Emirates as a representative context, the paper presents qualitative evidence from 96 stakeholders—including government officials, SME leaders, academics, consultants, and finance professionals. Findings include evidence of the complex interplay between internal capabilities and external institutional structures that determine the pace and depth of green transformation. The findings reveal that financial challenges—particularly high borrowing costs, investor risk aversion, and the absence of specialized green finance instruments—constitute the most significant barriers to sustainability adoption. Conversely, government support mechanisms, technological advancement, and leadership commitment act as powerful enablers, promoting innovation and resilience. The study further demonstrates that SMEs’ ability to signal environmental and social value to investors depends on coherent policy frameworks and integrated public–private financing mechanisms. By integrating insights informed by theory and empirical data, this research proposes a multidimensional framework linking green finance accessibility, institutional readiness, and organizational capability development, advancing theoretical understanding of SME sustainability transitions. The findings provide actionable guidance for policymakers, financial institutions, and ecosystem stakeholders seeking to strengthen national green SME ecosystems and offer comparative insights for other economies pursuing sustainable and inclusive growth.