Driving Innovation in Agri-Startups Through Sustainable Supply Chain Integration: Evidence from Vietnam

2.1 Innovation in agri-startups

Innovation capacity refers to a firm's ability to innovate consistently throughout the entire innovation process [10]. This process is continuous and characterized by three main steps: efforts, activities, and results. Efforts encompass all resources, such as human and financial capital, that a firm invests in innovation activities, including R&D, training, and study tours, which may lead to innovations. Agri-startups play a vital role in transforming modern agriculture by integrating technology and innovative business models to enhance productivity, sustainability, and profitability. These ventures apply advanced tools such as precision agriculture, biotechnology, robotics, and digital platforms to improve efficiency and transparency across the agricultural value chain [2, 4, 11]. Innovation in agri-startups can be categorized into domains including technology innovation, farming practice innovation, market access innovation, and business model innovation. Technology innovation emphasizes the application of advanced tools and digital technologies to enhance efficiency, accuracy, and environmental performance. Innovation in agri-startups is transforming by addressing challenges such as climate change, resource scarcity, and the need for sustainable practices [12].

Dadi et al. [11] highlighted the role of technological innovations, relating to the use of IoT, AI, and automation, to improve efficiency, yield prediction, and resource management in agriculture. Farming practice innovation focuses on adopting sustainable agricultural methods that optimize inputs and reduce environmental impact [1, 13]. Agri-startups employ new business models that disrupt traditional agricultural practices, such as precision agriculture, farm-to-fork logistics, and direct-to-consumer sales platforms. These innovations positively impact sustainability and the environment by reducing agriculture's ecological footprint through sustainable farming practices, organic farming, and climate-smart agriculture [6, 14, 15].

Furthermore, market access innovation aims to improve farmers’ and startups’ connection to markets through digitalization and transparency. Innovations in this domain facilitate smallholder farmers’ participation in value chains by leveraging digital tools such as mobile platforms, e-commerce applications, and blockchain-based supply chain traceability. Innovations in market access for smallholder farmers focus on utilizing mobile platforms for market information, e-commerce solutions, and blockchain-based supply chain traceability [11, 16]. Besides, business model innovation in agri-startups reflects the development of new value propositions and revenue models aligning with sustainability goals and consumer trends. Several studies highlight that policies and regulations influence innovation in agricultural startups, particularly through intellectual property, biotechnology, financing, infrastructure, and digital access. Strengthening leadership, fostering strategic partnerships, and adapting to local contexts are essential for their success [17, 18].

The innovation capacity of a firm is heavily dependent on access to information, which is crucial for achieving a sustainable competitive advantage. This advantage is realized by effectively leveraging both internal and external resources. Internal resources, such as R&D infrastructure, qualified staff, managerial experience, openness to new ideas, financial structure, and firm size, play a significant role in this process [5]. Agri-startups benefit from an environment that promotes the active involvement of both suppliers and customers in the innovation process [17].

Additionally, engagement in a sustainable supply chain is particularly vital for agri-startups to enhance their innovation capacities. The supply chain serves as a platform where a firm’s internal and external resources are integrated and transformed into innovation capabilities. Engagement in sustainable supply chains is essential for agri-startups to strengthen their innovation capacity by integrating internal and external resources into innovative capabilities [19]. Effective supply chain integration enhances collaboration, optimizes resource use, and reduces risks in innovation implementation [20]. By leveraging complementary technologies and partnerships, agri-startups can improve innovation outcomes and achieve sustainable competitive advantages [17].

2.2 Sustainable supply chains and factors

A sustainable supply chain is a network of businesses and processes that manage the flow of goods and services while minimizing environmental, social, and economic impacts [13]. It incorporates sustainable practices throughout the supply chain, from sourcing raw materials to production, distribution, and end-of-life disposal or recycling. According to Carter and Rogers [21], the goal of a sustainable supply chain is to reduce carbon footprints, ensure ethical labor practices, support local communities, and enhance long-term economic viability without compromising the ability of future generations to meet their needs. In agriculture, it promotes practices such as precision farming, organic production, and fair trade to address resource depletion and social inequities [22]. Emphasizing transparency, technology adoption, and stakeholder collaboration enhances efficiency, resilience, and long-term sustainability across the agricultural value chain.

Several studies identify various factors affecting the sustainable supply chain, including high-tech applications, logistics, distribution, market access, sourcing, collaboration, sustainable practices, risk management, and strategy. According to Mastos et al. [3], the success of effective supply chain management relies on strong linkages between providers and recipients, thereby ensuring timely delivery and accurate transactions. In particular, high-tech applications such as IoT, blockchain, AI, drones, and digital platforms play a key role in enhancing supply chain visibility, traceability, and efficiency in agri-startups, as they support the monitoring of goods and information flows. Moreover, these technologies, together with cold chain management and optimized transportation, reduce losses, lower costs, and maintain product quality [11, 23]. Furthermore, logistics and distribution are crucial for moving perishable products efficiently from farm to market. However, challenges such as poor rural infrastructure or fragmented supply chains can be mitigated through rural logistics hubs, cooperatives, and digital aggregation platforms [24]. In addition, sustainable logistics practices—including eco-friendly transport, renewable energy in storage, and sustainable packaging—contribute to environmental stewardship while simultaneously enhancing operational efficiency [9].

Similarly, market access and sourcing significantly affect agri-startups’ performance. Specifically, efficient distribution channels, access to market information, financial resources, and supportive regulatory frameworks improve revenue streams and enable sustainable growth [1]. In this regard, digital marketplaces, fintech, and mobile applications help farmers connect directly with buyers, thereby ensuring transparency, traceability, and access to finance, while also supporting rural development and strengthening supply chain resilience [25]. Equally important, sustainable practices—including organic farming, eco-friendly packaging, precision agriculture, and renewable energy use—help balance profitability with environmental and social responsibility, thus enhancing overall supply chain sustainability [3, 9]. At the same time, risk management remains central, as it addresses climatic, market, operational, financial, technological, and regulatory uncertainties. Accordingly, strategies such as diversification, insurance, technology adoption, and proactive supply chain planning improve resilience and operational stability.

Besides, collaboration with suppliers, distributors, technology providers, research institutions, and farmer cooperatives strengthens supply chain efficiency, market access, and innovation [25]. In particular, strategic partnerships, joint ventures, and alliances integrate resources across sectors, thereby reducing costs and fostering growth. Moreover, regulatory and policy support, including simplified processes, financial incentives, and IP protection, further enable agri-startups to innovate, expand, and maintain supply chain resilience [26, 27].

2.3 Impact of integrating the sustainable supply chain on innovation

Some studies highlight that integrating agri-startups into sustainable supply chains is increasingly recognized as a catalyst for innovation within the agricultural sector. According to Kühne et al. [10], participation in such supply chains compels these startups to develop technologies and practices aligned with environmental and social sustainability goals. This often results in innovations aimed at reducing waste, optimizing resource use, and enhancing traceability throughout the supply chain. Effective integration within the supply chain supports innovation capacity and mitigates the risks associated with implementing innovations, such as through joint cost management [28]. The supply chain serves as a critical platform where both internal and external resources are combined and transformed into innovative capacities [19]. By leveraging these resources, agri-startups can become more innovative and achieve a sustainable competitive advantage. Utilizing complementary capacities and technologies within the supply chain enables startups to address challenges related to innovation implementation [5]. Participation in such a chain enhances market access, competitiveness, and brand differentiation, allowing agri-startups to respond to rising consumer demand for sustainably produced goods and foster customer loyalty. Moreover, sustainable supply chains improve operational efficiency through resource optimization, energy-efficient technologies, and waste reduction, while also increasing resilience by diversifying suppliers and reducing reliance on single sources. Importantly, engagement in sustainable practices encourages innovation, as startups develop new processes, products, and business models to meet ESG criteria, manage environmental risks, and attract funding, ultimately supporting long-term growth and adaptability [15, 28].

Besides, some studies show that sustainable supply chains provide startups with access to networks of like-minded partners and stakeholders who prioritize sustainability. This fosters a collaborative environment that enhances knowledge sharing and co-innovation, supplier flexibility, supply agility, and company performance are interrelated, and IT capabilities support the adoption of supply chain technologies and improve operational performance [12, 25]. Additionally, Shashi [26] used structural equation modeling to show that high firm performance necessitates strong external and internal integration, as well as significant value addition. Involvement in sustainable supply chains promotes the adoption of precision agriculture technologies, which reduce environmental impact and increase productivity. The emphasis on transparency and traceability in these supply chains often leads to the integration of blockchain and IoT technologies, enhancing visibility and accountability of supply chain operations [19]. This adoption supports startups in offering innovative solutions that further improve supply chain efficiency and sustainability.

Moreover, engaging with sustainable supply chains can enhance an agri-startup’s market positioning by addressing the increasing consumer demand for sustainably produced food. This market advantage often drives further innovation, as startups seek to differentiate their products and services in a competitive landscape [5]. However, Weaver [20] points out challenges, including the significant investments needed to meet sustainability standards and the potential for increased operational complexity. Despite these challenges, Zhow et al. [13] found that the overall impact of integrating into sustainable supply chains is positive. It not only fosters business growth but also advances broader environmental and social goals. The symbiotic relationship between sustainable supply chains and agri-startups is crucial for driving innovation that aligns with global sustainability objectives, ultimately benefiting both the agricultural sector and society at large.

In general, empirical studies consistently demonstrate a positive relationship between participation in sustainable supply chains and the innovation of agri-startups. Sustainable supply chains play a critical role in enhancing business operations by improving access to information, capital, and markets. Literature identifies various determinants affecting supply chains, including technology, logistics, market access, collaboration, sustainable practices, and risk management. For agri-startups, these factors are particularly shaped by high-tech applications such as IoT, AI, precision farming, blockchain-based traceability, and digital platforms, which enable efficient, transparent, and resilient supply chain operations. The reliance on advanced technologies distinguishes agri-startups from traditional agricultural enterprises, making tech adoption a central driver of sustainable supply chain performance. Besides, some studies have employed various models, such as linear regression, binomial logistic regression, multinomial logit models, and structural equation modeling, to explore the impacts of sustainable supply chains on operational performance and innovation. However, while many studies address these factors and their influence on agri-startups' effectiveness and innovation, there is a notable gap in research specifically focusing on the impact of sustainable supply chains on innovation in developing countries like Vietnam.

4.1 Impact of integrating sustainable supply chains on innovation in agri-startups

Table 5 reports the OLS regression results examining how participation in sustainable supply chains influences innovation across four dimensions of agri-startups. The results show that elements and their scales have Cronbach Alpha = 0.859 (>0.7); KMO = 0.835 (>0.5), Bartlett test with significant = 0.000, Eigen value = 1.201 (>1), Approx.Chi-Square is 62.62. Variables have factor loading from 0.593 to 0.772 (>0.5). The F-test for the regression model is significant (p < 0.05), indicating overall statistical fitness. All variables show significant effects with p-values below 0.05.

Table 5. Determinants of sustainable supply chains impacting innovation in agri-startups

The results of the OLS model show that a notable finding is the role of risk management, which is the strongest and most consistent positive effect across models, particularly in business model innovation (0.320). This result underscores that the ability to anticipate disruptions, diversify suppliers, and adopt forecasting tools significantly enhances the resilience and innovative capacity of agri-startups. Effective risk management enables firms to allocate resources more efficiently, minimize operational interruptions, and remain adaptive, consistent with previous studies emphasizing risk governance as a critical driver of firm-level innovation.

Besides, hi-tech applications (IoT, AI/ML, blockchain) also contribute positively to innovation, although their coefficients remain modest (ranging from 0.020 to 0.124). This finding suggests that while the adoption of advanced technologies enhances efficiency and supports innovation, many agri-startups may still be in the early stages of digital adoption or face barriers such as high investment costs and limited digital skills. The positive association aligns with the literature [23], reinforcing that digital transformation remains an essential but underutilized driver of innovation in the agricultural sector.

Collaboration emerges as another influential factor, with consistently positive coefficients across all innovation categories. Participation in networks, data sharing with partners, and coordination mechanisms enable startups to access technical expertise, share resources, and reduce uncertainties. This aligns with theories of relational collaboration, which highlight how inter-organizational partnerships foster knowledge exchange and co-innovation. Similarly, strategic orientation shows positive effects in all models (0.077-0.160). Agri-startups with clear digital transformation strategies and leadership commitment to technology investment demonstrate stronger innovation outcomes. This finding echoes Dyer and Singh’s view that strategic clarity plays a crucial role in enabling firms to realize innovation benefits through resource alignment and goal-driven actions [30].

Although sustainability practices have positive coefficients across models, the effects are relatively small (0.020-0.063). This suggests that while environmental and social initiatives contribute to innovation, many agri-startups may still regard sustainability as compliance-driven rather than innovation-driven. As sustainability practices mature, stronger impacts on innovation might emerge, as documented in studies emphasizing how sustainability enhances competitiveness, market access, and long-term efficiency.

Several control variables such as age, type of production, labor size, and region, show mixed or insignificant effects, indicating that demographic and structural characteristics play a less central role compared to strategic, technological, and collaborative factors. Notably, logistics and distribution exhibit a negative association with farming practice innovation (-0.246), possibly reflecting the challenges of infrastructure gaps, transportation costs, or cold-chain limitations that hinder the adoption of advanced farming techniques.

Furthermore, a comparative assessment of the four regression models reveals substantial differences in how these factors shape distinct types of innovation. Model 1 related to technology innovation demonstrates the strongest influence from risk management (0.257), collaboration (0.225), and strategic orientation (0.160), suggesting that technological innovation depends heavily on coordinated partnerships, structured planning, and the ability to anticipate operational risks. Model 2 related to farming practice innovation shows overall weaker effects, with distance (0.773) and access to the internet (0.744) emerging as the most important drivers, indicating that improvements in farming techniques are more sensitive to geographical accessibility and digital connectivity than to internal capabilities. According to the results on market access innovation in Model 3, this model demonstrates the highest explanatory power (R² = 0.704). The findings show that market and sourcing (0.138), collaboration (0.103), and hi-tech application (0.087) make substantial contributions. This indicates that innovations in market access are primarily driven by external linkages and digital tools. Finally, the predominant role of risk management is highlighted with 0.320, implying that business model transformation requires robust risk-mitigation mechanisms and strong strategic foresight in the model 4 related to pertaining to business model innovation. These differences collectively indicate that while supply chain participation encourages innovation across all dimensions, each type of innovation responds to a unique configuration of drivers shaped by both internal capabilities and external conditions.

The results confirm that integrating into sustainable supply chains encourages agri-startups to innovate by exposing them to higher market demands, quality standards, and collaborative ecosystems. To maximize innovation outcomes, targeted policies such as digital skill training, risk management support, logistics infrastructure upgrades, and incentives for sustainability practices are essential. Strengthening these areas will help build a more competitive, efficient, and resilient agri-startup ecosystem.

4.2 The impact of factors on the sustainable supply chains of agri-startups

The regression model results in Table 6 provide a comprehensive view of the factors influencing environmental, social, and economic sustainability in the supply chains of Vietnamese agri-startups. All three models are statistically significant (F-test, p < 0.05), indicating the adequacy of the model specifications (see Tables 2 and 3). Across the models, the findings highlight the role of high-tech applications, logistics, digital platforms, and sustainability-oriented practices in shaping the performance of sustainable supply chains.

For environmental sustainability, several factors exhibit strong positive effects. Farm-to-fork logistics is the most influential factor, indicating that short and transparent food supply routes substantially strengthen environmental outcomes by reducing emissions, shortening transportation distances, and minimizing waste with 0.509. Eco-friendly production also contributes significantly, emphasizing the importance of environmentally responsible production methods in reducing pollution and improving resource efficiency with 0.363. In addition, resource management (0.278) positively affects environmental sustainability, suggesting that systematic control of inputs such as water, fertilizer, and energy helps startups optimize resource use and limit environmental degradation. Conversely, certain high-tech variables including IoT, AI, and yield prediction exhibit small or negative coefficients, implying that the environmental benefits of digital technologies may depend on the maturity of implementation or supporting infrastructure.

Table 6. The impact of factors on the sustainable supply chains of agri-startups

Model 2 related to social sustainability is driven primarily by precision farming with 0.448, which demonstrates the strongest effect among all predictors. Precision farming enhances labor safety, reduces physical workload, and supports community well-being through more stable and predictable production processes. Other contributors include automation (0.160), eco-friendly production (0.081) and direct-to-consumer platforms (0.078), all of which promote improved working conditions, stronger producer–consumer trust, and greater social transparency. However, factors such as IoT (–0.252) and region (–0.395) show negative associations, suggesting disparities in technology readiness or challenges related to regional infrastructure. This indicates that achieving social sustainability requires not only technology adoption but also equitable access and supportive institutional conditions.

Economic sustainability in the Model 3 is significantly influenced by digital market channels and logistics innovations. Farm-to-fork logistics (0.206) and e-commerce (0.131) show positive and meaningful effects, implying that startups capable of accessing digital markets and shortening the supply chain experience higher returns, improved price stability, and reduced transaction costs. Blockchain (0.119) also enhances economic sustainability by improving traceability and product credibility, thereby supporting premium pricing and market expansion. While eco-friendly production (0.076) and precision farming (0.077) demonstrate moderate positive effects, the insignificant or negative coefficients for some high-tech variables (e.g., IoT, yield prediction) suggest that these technologies may require substantial investment before economic gains materialize.

The results indicate that sustainable supply chains in agri-startups are shaped by a combination of technological adoption, environmentally responsible practices, and modern logistics systems. Farm-to-fork logistics emerges as the most consistent driver across all three sustainability pillars, particularly environmental and economic dimensions. Meanwhile, precision farming plays a dominant role in social sustainability. The findings underscore the need for targeted policies such as capacity building, subsidy support for digital tools, and investments in logistics infrastructure to enable agri-startups to fully leverage sustainable supply chain practices and enhance long-term resilience.