<![CDATA[Purpose – This study aims to examine the relationship between sustainability innovation and firm performance among Small and Medium Enterprises (SMEs), with firm competitiveness as a mediating variable. The research seeks to explain how sustainability-oriented innovation contributes to improving competitiveness and achieving long-term business success amid increasing global sustainability demands. Design/Methodology/Approach – This study employs a quantitative research approach. Data were collected through a structured questionnaire distributed to SME owners, top management, managers/supervisors, and employees. A total of 173 valid responses were analyzed using Structural Equation Modeling (SEM) to examine the relationships among constructs and latent variables. The study applies the Triple Bottom Line theory as a theoretical foundation to explain the role of sustainability innovation in enhancing competitiveness and performance. Findings – The findings reveal that sustainability innovation has a positive and significant effect on firm performance. Sustainability innovation also positively and significantly influences firm competitiveness, while firm competitiveness has a positive and significant effect on firm performance. Furthermore, firm competitiveness significantly mediates the relationship between sustainability innovation and firm performance. These results indicate that sustainability innovation serves as an important strategic factor in strengthening competitiveness and improving SME performance. Originality/Value – This study contributes to the sustainability and strategic management literature by clarifying the mediating role of firm competitiveness in the relationship between sustainability innovation and firm performance. The research provides practical implications for SME stakeholders and policymakers by emphasizing the importance of integrating sustainability innovation into business strategies to achieve competitiveness, improved performance, and sustainable growth.]]>
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