The Impact of Algorithmic Entrepreneurship and Multilateral Sustainable Development: Examining the Mediating Role of Data-Driven Capabilities

Document Type : Research Paper

Authors

1 Technological Entrepreneurship, Faculty of Entrepreneurship, University of Tehran, Tehran, Iran

2 Technological Entrepreneurship, Faculty of Entrepreneurship, University of Tehran,Tehran, Iran

10.22059/jed.2025.402395.654581

Abstract

Objective: The convergence of digitalization and sustainability is reshaping modern business, highlighting new entrepreneurial forms like Algorithmic Entrepreneurship (AE) the automation or augmentation of core entrepreneurial functions by intelligent systems. While the potential of AE and related digital technologies to advance sustainable development is widely acknowledged, the precise mechanisms through which they foster sustainable outcomes remain empirically unexamined and theoretically underexplored. This study addresses this critical gap by investigating the relationship between AE and Multilateral Sustainable Development (MLSD), defined as the firm-level achievement of balanced economic, social, and environmental value for multiple stakeholders (e.g., shareholders, society, employees). It proposes and tests a model where this relationship is critically mediated by Data-Driven Entrepreneurship (DDE) the practice of using data analytics as a foundational resource for creating and managing ventures. The central research question examines this mediating pathway, hypothesizing that AE positively influences DDE, which in turn positively influences MLSD.

Method: This study employed a quantitative, deductive research approach with a cross-sectional survey design to test the hypothesized model. Data was collected from 500 founders and senior managers of technology-based SMEs and startups operating in Tehran, Iran, a key regional entrepreneurial hub. Participants were selected using a stratified random sampling approach to ensure proportional representation across industry sectors and firm sizes. The measurement instrument was a structured questionnaire with all items rated on a seven-point Likert scale. Key constructs were measured using validated scales adapted from prior literature: a 5-item scale for AE, a 5-item scale for DDE, and a 9-item scale for MLSD, which was operationalized as Triple-Bottom-Line (TBL) performance. A rigorous three-stage validation protocol—including an expert content validity panel, a meticulous translation/back-translation procedure, and a full psychometric assessment—ensured the instrument's robustness. The model was tested using Partial Least Squares Structural Equation Modeling (PLS-SEM).

Results: The measurement model demonstrated excellent reliability and validity, meeting all standard criteria for quantitative research. Internal consistency was confirmed with Cronbach’s Alpha and Composite Reliability values exceeding the 0.70 threshold for all constructs. Convergent validity was established with Average Variance Extracted (AVE) values well above 0.50 , and discriminant validity was confirmed via the Fornell-Larcker criterion and Heterotrait-Monotrait (HTMT) ratios, which were all below the 0.85 threshold. The structural model analysis revealed significant findings, and all four hypotheses were supported. A strong positive effect of AE on DDE was found (β=0.600,p<0.001), supporting H2. DDE, in turn, had a strong positive effect on MLSD (β=0.501,p<0.001), supporting H3. Crucially, a significant and positive indirect effect of AE on MLSD through DDE was confirmed (β=0.301,p<0.001), supporting the mediation hypothesis (H4). The direct effect of AE on MLSD also remained significant (β=0.199,p<0.001), establishing DDE's role as a partial mediator. The model successfully explained a substantial 54.8% of the variance in MLSD.

Conclusion: This study concludes that Data-Driven Entrepreneurship (DDE) is a crucial, partial mediator in the positive relationship between Algorithmic Entrepreneurship (AE) and Multilateral Sustainable Development (MLSD). The primary finding is that while AE offers direct sustainability benefits, its full potential is realized by fostering the data capabilities that translate algorithmic insights into measurable triple-bottom-line outcomes. Algorithms act as analytical engines, but DDE provides the strategic framework necessary for value creation. This research contributes to the Resource-Based View (RBV) and Dynamic Capabilities Theory (DCT) by framing AE and DDE as critical, hard-to-imitate organizational capabilities for achieving a sustainable competitive advantage in a digital world. Practically, the findings advise entrepreneurs to strategically pair algorithmic tools with a robust data-centric culture to drive sustainable innovation. For policymakers, it highlights the need to support digital ecosystems through funding and infrastructure while establishing clear ethical guidelines to ensure responsible technological progress. Key limitations include the context-specific sample and cross-sectional design, pointing to future research needs in diverse settings and with longitudinal data to establish causality.

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Journal of Entrepreneurship Development
Volume 18, Issue 5
February 2026
Pages 243-266

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