Government support, co-creation, and digital transformation on the road to sustainable innovation

This study examines whether and how different types of government support (financial, technological, market) impact the three types of co-creation efforts (product, process, and knowledge co-creation) of SMEs and how these, in turn, impact sustainable innovation outcomes. It also investigates whether digital transformation mediates the positive relationship between the three types of co-creation and sustainable innovation. The conceptual model is tested on an original dataset of 188 SMEs in France, collected in 2025. Findings indicate that product co-creation is positively affected by government technological support, and knowledge co-creation by market support. The mediation effect of digital transformation is confirmed for the relationship between product co-creation and sustainable innovation, while process and knowledge co-creation directly lead to sustainable innovation. The implications of the study for research, policy and practice are discussed.