Smart Cluster Management for Sustainable Regional Development: Integrating Digitalization, Innovation, and Strategic Decision-Making

Rapid digital transformation is reshaping regional innovation systems by strengthening connectivity, strategic capabilities, and sustainability-oriented development. This study aims to examine the role of digitalization, innovation and strategic capabilities in sustainable regional development in terms of smart cluster management. A longitudinal panel-data and decision-support analytical framework is used to estimate how regional digitalisation affects green innovation, while dynamic capabilities are examined as a strategic decision-making mechanism and local digital-policy implementation is tested as a governance moderator. The empirical results indicate that the digitalization of the region contributes significantly to improving the quality and quantity of green innovations, with the contribution to innovative quality being more pronounced. Dynamic capabilities become an important strategic tool that enables digital transformation to enhance outcomes of sustainability-oriented innovation. In addition, more effective digital policy implementation on the local level strengthens the positive impact of the digitalization of the region, notably on the level of quality of green innovation. The heterogeneity analysis also shows that the effects of digitalization are different by ownership structure, implying that the organizational characteristics affect the ability of firms to gain benefits from digitalized regional environments. Overall, the study confirms that digital infrastructure influences sustainable regional development, but also the strategic agility of firms, their ability to innovate and their effective institutional governance. The results offer theoretical and practical lessons for policymakers, regional authorities, and managers aiming at developing smart regional ecosystems by digitalization, innovation, and strategic decisions coordination.