Role of the knowledge-based resources in promoting sustainability in small and medium enterprises (SMEs) is currently a topic of debate. Financial literacy has been identified as a vital knowledge resource for financial decision making, but insufficient attention has been given to how SMEs’ financial literacy affects their sustainability. Drawing upon a knowledge-based perspective, peaking order theory and dual process theory, we constructed an integrated model to examine the impact of financial literacy, access to finance and financial risk attitude on SMEs’ sustainability. The sample included 291 chief financial officers (CFOs) of SMEs in Sri Lanka. The output of structural equation modelling revealed direct positive effects of financial literacy, access to finance and financial risk attitude on sustainability. Financial literacy also emerged as a predictor of access to finance and financial risk attitude. Moreover, access to finance and financial risk attitude were found to be partial mediators of the relationship between financial literacy and SMEs’ sustainability. Theoretical implications and practical implications for policymakers, industry practitioners and academics interested in promoting sustainability amongst SMEs are discussed.

The knowledge-based view (KBV) in the development of small and medium-sized enterprises (SMEs) is a debatable topic in the current literature. Although convergence of technological and financial literacy (techno-finance literacy) is an essential knowledge-based tool to address rapid digitalization of business, the influence of techno-finance literacy in the development of SMEs is still not adequately researched. Drawing upon KBV, we developed a single-mediator structural model with an aim to explore the effect of techno-finance literacy and enterprise risk management (ERM) practices (applications) on the performance of SMEs. A self-administered structured questionnaire was employed to collect data from 319 chief financial offers (CFOs) in Sri Lankan SMEs. The outcome of our study highlights that techno-finance literacy is a significant determinant of two endogenous constructs, namely, SME performance and ERM practices. Furthermore, ERM practices of SMEs were also positively affected to the SME performance. Moreover, ERM practices were observed to have a partial mediation on the relationship between financial literacy and SME performance. These findings form the basis for theories in techno-finance literacy and SME performance, as well as present managerial implications to enhance the performance of SMEs.