Using the PLS-SEM Model to Measure the Impact of the Knowledge Economy on Sustainable Development in the Al-Jouf Region of Saudi Arabia

Abstract

Saudi Arabia has been increasingly using the knowledge economy, which employs digital technologies, to boost the country’s prosperity and growth. To measure the impact of the knowledge economy on sustainable development in the Al-Jouf region, in this research, a survey was utilized as the principal tool for gathering data from employees who occupy administrative positions in both public and private organizations in the region. The collected data were analyzed using the Partial Least Squares Structural Equation Modeling (PLS-SEM) methodology. The results indicate that information and communication technology (ICT) is the most important dimension in both public and private institutions, while the dimension of innovation, research, and development ranks last. Although ICT is significantly applied, there are shortcomings in other aspects of the knowledge economy in both public and private institutions. This study recommends developing the investment environment through economic incentives and institutional systems to make it more attractive to establish entrepreneurial activities. Additionally, it suggests the need to fund applied research and development and leverage the outcomes to develop innovative and entrepreneurial activities. Overall, the knowledge economy has a positive impact on sustainable development in the Al-Jouf region.

1. Introduction

The knowledge economy is a global phenomenon that has had a major impact on development in Saudi Arabia. By making use of digital technologies and new ways of working, the knowledge-based economy has enabled Saudi Arabia to become an increasingly prosperous nation [1]. However, it is important to consider how this increased prosperity can be maintained in a sustainable manner. This research examines the impact of the knowledge economy on sustainable development in Saudi Arabia, with a particular focus on the potential benefits and challenges associated with this phenomenon [2]. The knowledge economy has provided numerous opportunities for Saudi Arabia to become more prosperous and competitive in an increasingly globalized world. For example, it has enabled businesses to use advanced technologies, such as artificial intelligence (AI) and robotics, to increase efficiency, reduce costs, and improve quality. Furthermore, it has created new types of job opportunities that require specialized skills, such as web development, software engineering, and data analysis [2]. As a result of these advancements, Saudi Arabia’s economic output has increased significantly over the past decade. This research assesses the impact of the knowledge economy on sustainable development in Saudi Arabia, looking at its potential advantages and drawbacks.

The knowledge society is based on the creation, dissemination, and investment of knowledge in order to improve the quality of life and raise the standard of living; thus, the knowledge economy is the backbone of society in which knowledge is a commodity and a service [3]. It is the main engine of economic growth that depends on the availability of information and communication technologies and the use of innovation and human capital, which is one of the most valuable assets in it. For this purpose, nations and societies that aim for development and progress seek to rely on the knowledge economy, not only to achieve economic growth but also to achieve sustainable development. Knowledge-based dynamic skills posit positive influence on sustainable development aims, while the compositional element shows multifold impact, i.e., both direct as well as indirect. Additionally, knowledge-based capabilities show different effects on the attainment of sustainable development aims at various economic development stages [4].

The Kingdom of Saudi Arabia seeks to achieve balanced and integrated development in all its regions by carefully setting priorities for the regions, working with the private sector as an essential element in the investment process, engaging citizens, and improving administrative performance based on efficiency and effectiveness. The shift toward a knowledge economy is one of the most important pillars of sustainable development, where knowledge is the main driver of economic growth. Knowledge economies depend on the availability of communication and information technologies, the use of innovation and digitization to produce goods and services with high-added value, and the availability of qualified and highly skilled human resources. The growing interest in the shift toward a knowledge economy comes as a result of the benefits that are reflected in the economy regarding abundance, creating virtual markets and facilities that eliminate the limits of space and time, thus affecting the growth of projects. In addition, a knowledge-based economy encourages competition and reduces monopoly, which can influence investment positively [4]. Moreover, a knowledge economy can facilitate access to information and knowledge for decision makers, and the high returns resulting from investment in knowledge.

Knowledge monitors in the Kingdom of Saudi Arabia indicate that it is moving forward in the transition to a knowledge economy as it is more qualified than others for this transformation due to the supportive infrastructure. According to the Global Knowledge Index (GKI), the Kingdom of Saudi Arabia ranked 42 out of 138 countries globally in 2020, which was 10 places ahead of what it achieved in 2019, and this indicates progress and the efforts made in accordance with the Saudi Vision 2030. Sub-indexes vary, with the Technical Education and Vocational Training Index being ranked 12th, and the Higher Education Index being ranked 60th. For the Development and Innovation Index, which is considered an important indicator in the transition to a knowledge economy, and the Information and Communication Technology Index, the Kingdom of Saudi Arabia ranked 36th and 54th, respectively. Lastly, the Kingdom of Saudi Arabia ranked 80th in the indicator of economy, incentives, and institutional systems [5].

In order to shift toward a knowledge economy, the Kingdom seeks to transfer and localize knowledge and to produce knowledge internally through many channels, such as private sector companies, leading foreign companies, and scientific institutions, by establishing universities and research centers in the Kingdom. In addition, the Kingdom establishes different economic cities, parks, and valleys, and different projects to advance the transfer to a knowledge economy [6]. These include King Abdullah Economic City in Rabigh, Prince Abdulaziz bin Musaed Economic City in Hail, Dammam Technology District, and the NEOM project, which is the largest in the world as it supports nine specialized investment sectors, including energy, water, transportation, biotech, food, technical and digital sciences, media, entertainment, and livelihoods [7,8,9].

The Al-Jouf region has been growing with the development in the Kingdom of Saudi Arabia in the area of knowledge economy, especially in the field of educational services provided at all educational levels, including primary, intermediate, secondary, and university levels [10], in addition to its support for innovation, research, and entrepreneurship activities in order to create a supportive environment to shift toward a knowledge economy, as this may reflect positively on important economic indicators in the Al-Jouf region. The shift toward a knowledge economy in the Al-Jouf region will enhance investment opportunities, encourage competitiveness, and facilitate knowledge-based decisions, and this will certainly enhance the competitive advantages of businesses and institutions in the Al-Jouf region, thus influencing their growth, expansion, and job creation, and achieving sustainable development on the environmental, economic, and social dimensions. Hence, this study seeks to examine the requirements of the transition toward a sustainable knowledge economy in the Al-Jouf region by examining the prospects and challenges for the transition toward the knowledge economy in the Al-Jouf region as one of the aspects of achieving sustainable development in the region on the environmental, economic, and social dimensions.

2. Literature Review and Hypothesis

2.1. Sustainable Development

Sustainable development is a term used to describe economic growth and social progress that can be sustained over time. It involves creating an environment in which people, the economy, and the environment can continue to flourish while conserving natural resources. To achieve this, governments must ensure that policies are implemented that prioritize long-term sustainability rather than short-term gains [11]. The development of sustainability is considered a key driver of innovation. Sustainability in innovation serves as a key driver of innovation, which highlights the number of potential concerns that value investigation. It involves potential ways for the development of sustainable products and sustainable innovation underlying fundamental factors in the differences between organizations in their commitment to innovate through sustainable development [12]. Moreover, sustainable development requires the participation of all stakeholders, including businesses, civil society, and governments. It is also essential that all policies are based on evidence and that they take into account the needs of future generations.

2.2. Knowledge Economy

The knowledge economy is an economic system that is based on the production and distribution of information and services rather than goods. In the present time, sustainability concerns are becoming progressively urgent. A sustainable economy is based on the concept of resource efficiency. The sustainable condition of an economy is primarily about the long-run future, which is majorly unknown. Thus, the knowledge economy is not merely a theoretical concept but an innovative era, which has a central difference from the age of industrial and agrarian economies [13]. It relies heavily on digital technologies, such as artificial intelligence (AI) and robotics, and is characterized by new forms of work, such as freelancing, crowdsourcing, and online services [14]. The knowledge economy is based on the principles of collaboration and innovation, which leads to higher productivity, growth, and economic development. In Saudi Arabia, the knowledge economy has enabled businesses to become more competitive and efficient, while creating new job opportunities for the country’s growing population [15]. Moreover, the knowledge economy has enabled Saudi Arabia to develop its human capital and leverage the opportunities provided by technological advancements.

2.3. Knowledge Economy and Sustainable Development

The knowledge economy is an economic system based on the concept that knowledge or information alone can be used to create, develop, and sustain wealth. Knowledge-based economies rely heavily on technology and innovation to achieve higher levels of production and productivity. In today’s globalized world, knowledge-based economies have become increasingly important for economic growth and sustainable development [16]. The knowledge economy has the potential to reduce poverty and increase sustainability by making productive use of resources, creating jobs, and increasing economic efficiency. For example, research and development activities can lead to innovative technologies that help address social and environmental issues, such as renewable energy sources or improved agricultural practices [17]. In addition, knowledge-based industries are often considered to be more resilient to market fluctuations and economic downturns since they are less dependent on physical resources.

The implementation of SDGs is mainly reliant on proposing suitable targets and assuming relevant pointers, while goals mainly determine the suitability of a particular aspect of sustainable development. Saudi Arabia has majorly recognized the development of human capital, which is considered one of the key channels to attain economic divergence in the country [18]. In the model of a knowledge society, it is primarily agreed that innovation and knowledge creation are also the most essential factors in driving social and economic growth. However, recognizing a strategy that capitalizes on synergies and reduces trade-offs, while encouraging growth in the GDP, is a key challenge for most of the UN member states, particularly emerging countries, such as Saudi Arabia. Most developing countries are primarily experiencing social, economic, and environmental challenges consecutively that hinder the implementation of SDGs successfully. According to [18], government spending on economic growth and education has a positive influence, and training and education are considered significant factors to achieve SDGs as well as economic growth.

Furthermore, the knowledge economy can provide opportunities for entrepreneurship, creativity, and employment. Innovative products or services that are developed through research and development activities create new markets and generate revenue streams. This helps stimulate economic growth, create jobs, and foster greater economic stability. Additionally, the knowledge economy can lead to improved services and goods for consumers, as well as increased opportunities for investment and entrepreneurship [19]. The United Nations primarily work together with the government of Saudi Arabia and other domestic players to attain sustainable development goals (SDGs) and address development hurdles and opportunities in the country. In addition, the Vision 2030 of Saudi Arabia wishes to build a knowledge-based condition in the economy to attain social welfare and economic growth. In accordance with the Saudi Vision 2030, the key objective of the nation is to shift its economy into a knowledge-based condition by 2030. As a result, it is essential to quantify and recognize the influence of SDGs that may contribute to the accomplishment of the Saudi Vision 2030 objectives on the basis of policy objectives. It is also necessary to determine the strategic approach Saudi Arabia should implement to develop a knowledge-based economy [18]. For example, the country has seen an increase in educational opportunities and access to technology that is helping to drive economic growth and development. In addition, the rise in digital infrastructure is giving citizens access to more data and analytics that can help inform decision making [20]. This is creating new opportunities for entrepreneurs who are able to develop innovative solutions to address sustainability issues, such as water scarcity, air pollution, and energy efficiency.

Moreover, the influx of foreign investment into the Kingdom of Saudi Arabia is bringing new technologies and sources of finance, which can be used to further support economic growth and sustainable development initiatives. The government is also leveraging these resources by implementing various policies aimed at improving the public sector and encouraging private sector investment in innovative technologies [21]. Overall, the knowledge economy is having a positive impact on sustainable development in Saudi Arabia by providing access to new sources of finance, technology, and data. This is allowing entrepreneurs to develop solutions for environmental challenges, as well as creating new jobs and opportunities for citizens to participate in the knowledge economy.

2.4. Information and Communication Technology and Sustainable Development

Information and communication technology (ICT) is a rapidly growing sector in Saudi Arabia, driven by the nation’s commitment to digital transformation and development. ICT has revolutionized the way individuals and businesses access information, communicate, and interact with one another. As such, it plays an important role in fostering economic growth and sustainable development [22]. ICT can facilitate access to information necessary for decision making, such as data on climate change. It can also be used to better manage natural resources, such as water and land. Furthermore, ICT is being leveraged in the Kingdom of Saudi Arabia to create more efficient energy systems and reduce carbon emissions. Finally, ICT has enabled businesses to develop innovative products and services which have the potential to drive economic growth, while also promoting sustainability [23]. Overall, ICT has become a major factor in driving sustainable development in Saudi Arabia [24]. The government is investing heavily in digital infrastructure and encouraging private sector investment in ICT. This is leading to increased access to information, improved decision-making capabilities, and more efficient energy systems. As a result, ICT is playing an increasingly important role in creating jobs, stimulating economic growth, and improving the quality of life for citizens across the Kingdom.

Another study supported the ICT impact on economic development, human development, and environmental performance, where all the variables show a positive impact, showing that ICT can be used for accelerating and achieving sustainable development. However, it is required that the utmost attention needs to be given for balancing sustainable development decisions. Thus, policymakers should critically examine the environmental context and the development policies, which incentivize eco-friendly usage of technologies and ensure no or reduced effect on the environment, hence ensuring that ICT is a sustainable development catalyst [25].

Considering the involvement of Saudia Arabia in the ICT market, it is noted it has the largest ICT market in the Middle east and is positioned for becoming a technology service hub with international access in the Gulf and Red Sea and potential service in the Asian, African, and European markets [26].

However, another study observed the different effects of ICT on different countries, such as it has been identified to be favorable and significant in low-income regions, whereas no favorable relationship or significant effect has been found in high-income regions. Thus, for long-term sustainable development, ICT policies should be more focused toward the mitigation of issues in low-income countries [27].

Another study found the adverse effect of ICT, and the authors stated that ICT can be harmful to economic growth, particularly when there is no economic transformation. An argument identified here is that ICT only encourages the productivity and efficiency of developed countries, whereas, in low-income regions, there is no adequate human force which is required for the management of technology. Therefore, ICT is dangerous sometimes for sustainable development, depending on the economic, environmental, and social elements. In addition, these elements are inter-connected and make economic polices more complex [28].

This research proposes the following hypothesis:

H1. 

There are statistically significant positive influences of information and communication technology on supporting sustainable development among institutions in the Al-Jouf region at the level of significance (α ≤ 0.05).

2.5. Education, Human Resources, and Sustainable Development

Education is one of the key drivers for sustainable development in Saudi Arabia. The government has made significant investments in educational infrastructure and digital technology to improve access to high-quality education, particularly for women and youth. This is leading to increased opportunities for citizens to participate in the knowledge economy and contribute to economic growth [29]. Additionally, the nation’s human resources are increasingly becoming more skilled and educated, creating additional opportunities for entrepreneurship, research, and development. Furthermore, the government has implemented various policies to increase female employment, which is helping to promote gender equality and reduce unemployment in the country [30]. Overall, education is playing a major role in promoting sustainable development by improving access to knowledge and skills necessary for citizens to participate in the knowledge economy. The report notices that the rise in government spending by 1% has contributed to the economic growth and development of Saudi Arabia by 0.89. It is further asserted that training and education are also linked with the development of human capital that ultimately leads toward sustainable economic development. Therefore, Saudi Arabia has determined education as one of its primary goals under its 2030 sustainable agenda. A significant portion of the budget has been devoted to education and workforce training. It also aims to transform its economy into a knowledge-based economy by the years 2030, with human capital being the prime focus [18].

Finally, the government has also taken measures to improve workforce development and training in order to increase employment opportunities. Investments are being made in vocational education, job placement services, and other programs aimed at increasing employability of Saudi citizens [31]. This is helping to create a more diverse and skilled workforce that is better equipped to contribute to economic growth and sustainable development in the Kingdom. Overall, Saudi Arabia has made significant investments and implemented various initiatives in order to promote sustainable development. The nation is investing heavily in digital infrastructure, encouraging private sector investment in ICT, improving access to education, and supporting workforce development [32].

Sustainable development suggests that economic activities are primarily consistent with the rational and conservation utilization of natural resources, and the improvement and protection of ecosystems that cannot be attained only by using new technological perspectives, giving political regulations, or utilizing financial instruments. There is primarily a requirement for transformation in the way in which a society acts or thinks. Such transformation needs quality education as well as learning at a different level and in other social contexts. The aim of education is majorly emphasized by sustainable development, which is enhancing access to different levels of education and assisting individuals to build their skills, behaviors, as well as knowledge with which they need in the present time but also in the future [33]. All of these efforts are contributing toward creating a more prosperous and sustainable future for citizens across the Kingdom of Saudi Arabia.

This research also proposes the following hypothesis:

H2. 

There are statistically significant positive influences of education and human resources on supporting sustainable development in the Al-Jouf region’s institutions at the level of significance (α ≤ 0.05).

2.6. Economic Incentives, Institutional Systems, and Sustainable Development

In order to promote sustainable development, Saudi Arabia is taking steps to improve its institutional systems, in addition to the sustainable initiatives already mentioned above. To encourage private sector investment in environmentally beneficial activities, the government has implemented various economic incentives, such as tax breaks and subsidies (Bahman et al., 2023) [34]. Moreover, the country’s significantly high per capita energy use and CO₂ emissions, combined with its sensitive ecosystems, limited water resources, and coastal developments, make it highly susceptible to climate change. To combat this issue, Saudi Arabia has implemented sustainable urban planning strategies in major cities as part of its mitigation and adaptation efforts. However, the extent to which these strategies have been implemented remains unclear [35]. Additionally, the country has achieved a number of renewable energy targets set by its National Renewable Energy Program (NREP), including the installation of over 1 GW of solar power and over 200 MW of wind power capacity in 2020 [36]. These developments demonstrate that Saudi Arabia is making significant progress toward its goal of becoming one of the most sustainable economies in the world.

Overall, it can be seen that Saudi Arabia is taking several measures to ensure sustainable development within its borders. By embracing new technologies and investing in initiatives such as green finance and renewable energy projects, the nation is making great strides toward a greener future [37]. Through its efforts, it is sure to continue to take advantage of the opportunities that the knowledge economy provides and ensure a more prosperous and sustainable future for all.

This research proposes the following hypothesis:

H3. 

There is a statistically significant role for economic incentives and institutional systems in supporting sustainable development among institutions in the Al-Jouf region at the level of significance (α ≤ 0.05).

2.7. Innovation, Research, and Development, and Sustainable Development

Innovation and research and development (R&D) represent critical drivers of sustainable development in Saudi Arabia. The government’s substantial investments in R&D initiatives are strategically focused on cultivating innovation and facilitating the creation of new technologies, which not only have the potential to stimulate economic growth but also promote sustainable practices. [38]. Additionally, the nation has established technology parks, incubators, accelerators, and other programs to support entrepreneurs and innovators, while also providing tax incentives for businesses investing in R&D. The government is placing a strong emphasis on education and workforce development, as well as initiatives to promote the use of digital technology [39]. The aim is to create an environment where individuals are empowered by knowledge, with effective access to the skills required for success in the knowledge economy. This includes investing in higher education, STEM fields, and technical training programs.

The KSA actively supports SMEs through innovation encouragement and initiatives aimed at enhancing their competencies and success in the industrial sector. Such initiatives target increased efficiencies, access to facilities and funds, and the best investment opportunities in the supply chain. Hanaysha et al. (2021) established that marketing innovation has a significant impact on the sustainability of SMEs in the KSA, emphasizing its significance in promoting long-term success. Moreover, this study confirms the importance of innovation capabilities in assisting SME entrepreneurs in sustaining their businesses and improving competitive advantages [40].

Case-based reasoning (CBR) is a problem-solving approach that utilizes knowledge of previous experiences to solve new problems. CBR systems are effective at generating explanations since they represent knowledge in a way that enables reasoning and explanation generation. Hamrouni et al. (2021) suggest that using CBR in software tools for business model development could benefit business model design, sustainability, and innovation [41].

Aldieri et al. (2021) conducted a study to investigate production efficiency in the USA and Europe by examining knowledge spillovers from agricultural technological innovation. The authors utilized a sector-based panel dataset covering the period of 2002–2017 and employed non-parametric data envelopment analysis (DEA) and Tobit regression to analyze the data. The results showed that land-use spillovers had a negative effect on efficiency for American firms, whereas European firms experienced a positive effect on efficiency [42].

Furthermore, Saudi Arabia has committed to increasing its renewable energy capacity over the next decade, aiming for 9.5 GW of solar power generation by 2023 and 30 GW by 2030. These investments will help reduce emissions and make the nation more resilient against climate change impacts. Additionally, sustainability-focused projects, such as green building codes and incentives, have been established by local authorities across the country in order to promote the development of sustainable cities. Overall, the knowledge economy is having a positive impact on sustainable development in Saudi Arabia [18]. The nation’s commitment to innovation, R&D, and renewable energy will ensure that economic growth is achieved in an environmentally responsible manner. With continued investment into education and workforce development, sustainable development initiatives are expected to flourish in years to come.

This research proposes the following hypothesis:

H4. 

There is a statistically significant role for innovation, research, and development in supporting sustainable development in the Al-Jouf region among the sample members at the level of significance (α ≤ 0.05).

The study model is depicted in Figure 1.

3. Methodology

This study mainly relied on the design of an electronic questionnaire as a central tool for data collection. The first page of the questionnaire was presented to introduce the sample members to the objectives of the study. The first part was also devoted to collecting the respondents’ demographic data, including the following:

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Gender, with two nominal categories.

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Age, with three quantitative categories.

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Academic qualification, with five ordinal categories.

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Sector, with two nominal categories.

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Number of employees, with four quantitative categories.

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Experience gained, with four quantitative categories.

Part Two: Statements related to the knowledge economy in the Al-Jouf region. This part included a set of questions to identify the knowledge economy, which is placed in four dimensions (information and communication technology; education and human resources; economic incentives and institutional systems; and innovation, research and development).

Part Three: Statements related to sustainable development in the Al-Jouf region. This part included a set of questions to identify sustainable development, which is placed in three dimensions (the economic dimension, the social dimension, and the environmental dimension).

The study population consisted of public and private sector institutions in the Al-Jouf region. As for the study sample, a number of these institutions were selected. The analysis unit included 162 employees from these institutions who have administrative assignments. This study was correlational in nature, with data being collected using a self-administered questionnaire. The data collection was carried out from June 2022 to December 2022. The self-administered questionnaire’s 5-point Likert scale was adapted from previous scholars, as shown in

Table 1. Variables of study.

Items	Authors
Knowledge economy
Information and Communication Technology (ICT)	[24,25]
Education and Human Resources (HER)	[31,32,34,35]
Economic Incentives and Institutional Systems (EII)	[37,38,39,40]
Innovation, Research, and Development (IRD)	[43,44,45,46,47]
Sustainable Development	[11,22,31,44]
Social Dimension
Economic Dimension
Environmental Dimension

, to improve identification of associations among the variables in the proposed framework. The minimal interference instrument met the suggested content, construct, and criterion-related validity.

In general, according to the order of the dimensions of the knowledge economy in terms of relative importance, the dimension of information and communication technology gets the first place, as shown in

Table 2. Questionnaire development.

Statements	Items	Code	Arithmetic Average	Source	Alpha
Use of Information and Communication Technology (ICT)	Owning computers	ICT1	4.061	[24,25]	0.896
	Using computers	ICT2
	Internal network	ICT3
	External network	ICT4
	Using the Internet	ICT5
	Using modern technology	ICT6
	Spending on communication technology	ICT7
Education and Human Resources	Knowledge development opportunities	EHR1	3.554	[31,32,34,35]	0.929
	Culture of access to knowledge	EHR2
	Ease of education and training	EHR3
	Agreements with research and scientific centers	EHR4
	Adapting training programs to their needs	EHR5
	Preserving creators and highly knowledgeable people	EHR6
	Attracting highly qualified and skilled people	EHR7
Economic Incentives and Institutional Systems	Economic incentives	EII1	3.603	[37,38,39,40]	0.867
	Easy to get data	EII2
	Exchange of information and data	EII3
	Flexible import technology	EII4
	A stimulating investment environment	EII5
	Laws and legislation stimulating investment in technology	EII6
	Clarity of the legal and legislative framework	EII7
Innovation, Research, and Development	Innovation and renewal of production	IRD1	3.505	[43,44,45,46,47]	0.909
	Innovation and renewal of products	IRD2
	Innovation and renewal of administrative systems	IRD3
	Innovation and renewal in the field of communication	IRD5
	Funding of applied research projects	IRD6
	Benefit from the results and outputs of scientific and applied research	IRD7

. The dimension of innovation, research and development, on the other hand, ranks in the fourth and last place. This means that institutions in the public and private sectors in the Al-Jouf region are applying the dimension of information and communication technology by owning computers, as well as internal and external communication networks, and adopting modern technologies.

4. Results

In order to reach a model that is more valid for estimation and more suitable for a research environment, the model must have high validity and reliability. So, the relationships between the constructs were analyzed using the Smart PLS 4 program by calculating the trajectory modeling algorithms (PLS algorithms). These algorithms estimate the trajectory models using latent variables. We also estimated the measurement and structural model of the data [43].

The following is an overview of the reliability and validity of the study model:

a

Stability: Stability was assessed by examining the factors’ saturations with their underlying constructs. More than one stability index was calculated: Cronbach’s alpha, composite reliability, and average variance extracted.

Figure 2 indicates that there are three variables related to the dimensions of the knowledge economy, namely IRD4, ICT1, and EII2, with their latent structures achieving ramifications of factors less than 0.7. To correct this, these factors must be deleted in order for the model to achieve high stability coefficients [44].

b

Convergent Validity: Convergent validity refers to the degree of agreement between two or more measures in the same construct or model. The convergent validity was calculated by reviewing the extracted variance for each factor. Convergent validity is achieved if the extracted variance values are not less than 0.5 [45,46].

Figure 3 and

Table 3. Convergent validity indicators for the dimensions of the knowledge economy.

Variables	Items	Loadings	Cronbach’s Alpha (CA)	Composite Reliability (CR)	Average Variance Extracted (AVE)
Information and Communication Technology	ICT2	0.757	0.896	0.92	0.659
	ICT3	0.743
	ICT4	0.854
	ICT5	0.842
	ICT6	0.85
	ICT7	0.818
Education and Human Resources	EHR1	0.847	0.929	0.943	0.701
	EHR2	0.894
	EHR3	0.799
	EHR4	0.866
	EHR5	0.822
	EHR6	0.822
	EHR7	0.808
Economic Incentives and Institutional Systems	EII1	0.744	0.867	0.898	0.597
	EII3	0.784
	EII4	0.695
	EII5	0.744
	EII6	0.85
	EII7	0.809
Innovation, Research, and Development	IRD1	0.862	0.909	0.943	0.701
	IRD2	0.861
	IRD3	0.813
	IRD5	0.768
	IRD6	0.859
	IRD7	0.809

Source: Prepared by the researchers based on Smart PLS 4 outputs.

show the results of the statistical analysis of the convergent validity test of the study data and model using Smart PLS 4.

From Table 3 and Figure 3, the convergent validity indicators of the four dimensions of the knowledge economy (ICT, education and human resources, economic incentives and institutional systems, and innovation and R&D) achieved high values for the measures and variables used. The factors loadings ranged between 0.695 and 0.894, which indicated good stabilizers. The Cronbach’s alpha (CA) and composite reliability (CR) coefficient values ranged from 0.867 to 0.943, and the mean variance extracted values (AVE) ranged from 0.597 to 0.701.

Additionally, from

Table 4. Convergent validity indicators for the dimensions of sustainable development.

Variables	Items	Loadings	Cronbach’s Alpha (CA)	Composite Reliability (CR)	Average Variance Extracted (AVE)
Economic dimension	ECD1	0.827	0.934	0.948	0.751
	ECD2	0.858
	ECD3	0.833
	ECD4	0.9
	ECD5	0.917
	ECD6	0.861
Social dimension	SOD1	0.809	0.918	0.936	0.71
	SOD2	0.828
	SOD3	0.855
	SOD4	0.875
	SOD5	0.832
	SOD6	0.853
Environmental dimension	END1	0.912	0.944	0.955	0.782
	END2	0.905
	END3	0.873
	END4	0.896
	END5	0.838
	END6	0.879

Source: Prepared by the researchers based on Smart PLS 4 outputs.

and Figure 3, the convergent validity indicators for the three dimensions of sustainable development (the economic dimension, the social dimension, and the environmental dimension) achieved very high values for the measures and variables used. The factors loadings ranged between 0.809 and 0.917, which indicated good coefficients of stability. The Cronbach’s alpha coefficients (CA) and composite reliability (CR) values ranged between 0.918 and 0.955, and the mean variance extracted values (AVE) ranged between 0.710 and 0.782.

It is clear from the above Table 4 that all mean variances (AVE) are greater than 0.5, and all composite reliability coefficients (CR) are significant and statistically acceptable because they are greater than 0.7. In addition, all Cronbach’s alpha coefficients (CA) are statistically acceptable because they are greater than 0.7 and within the recommended range according to [45,46].

c

Discriminant Validity: Discriminant validity refers to the logical spacing of the statements of a variable and its non-repetition and overlap with other variables. This was confirmed by testing the discriminant validity matrix between the variables and dimensions of the study. This was performed by comparing the bilinear correlations between the obtained factors with the extracted variance estimates for the construct. Discriminant validity is determined when it is confirmed by noting the diagonal elements (the root square of the average value of the common variance (AVE) for each construct), which values must be greater than the associated values in rows and columns.

Table 5. The results of the discriminant validity of the items.

	ICT	SOD	ECD	END	EII	IRD	EHR
ICT	0.812
SOD	0.683	0.842
ECD	0.713	0.720	0.867
END	0.651	0.750	0.764	0.884
EII	0.625	0.506	0.599	0.444	0.773
IRD	0.777	0.721	0.651	0.612	0.589	0.829
EHR	0.761	0.77	0.814	0.768	0.639	0.768	0.847

Source: Prepared by the researchers based on Smart PLS 4 outputs.

shows the indicators of discriminant validity according to [45,46,47]. Table 5 shows that all the diagonal values are higher than the associated values in the rows and columns and range between 0.773 and 0.884. This indicates the items’ discriminant validity.

If the HTMT criterion is less than 0.90, the two reflective structures are nearly identical and have a weak relationship [46].

Table 6. HTMT discriminant validity test.

	ICT	SOD	ECD	END	EII	IRD	EHR
ICT
SOD	0.741
ECD	0.771	0.789
END	0.699	0.803	0.809
EII	0.687	0.539	0.639	0.458
IRD	0.849	0.776	0.698	0.652	0.646
EHR	0.822	0.786	0.712	0.816	0.676	0.824

Source: Prepared by the researchers based on Smart PLS 4 outputs.

shows that the items are reliable and valid since all values are less than 0.90. Thus, the model’s discriminant validity (HTMT) can be trusted since the HTMT result achieves the minimum values and it is confirmed that there are no multiple collinearities. It is noted that the square root value of AVE for the use of information and communication technology is 0.821, showing that this element has discriminant validity. Additionally, the social dimension has the value of 0.842, the economic dimension has the value of 0.867, the environmental dimension has the value of 0.884, the dimension of economic incentives and institutional systems has a value of 0.773, the dimension of innovation, research, and development has a value of 0.892, and the dimension of education and human resources has the value of 0.847. Therefore, it is concluded that all these constructs fulfill the discriminant validity requirement based on the criteria defined by this study, that is, the discriminant validity can be established when the AVE construct square root is more than it correlation with other constructs and all the elements have the highest loadings on their related constructs [48,49,50].

To check the model fit: The structural model of the study was evaluated by using the set of criteria and statistical methods shown in

Table 7. Criteria for the study model’s structural fit.

Variables	Coefficient of Determination (R2)	Explanatory Power (F2)	Predictive Power (Q²)
Knowledge economy toward sustainable development	0.777	/	0.566
Information and communication technology	/	0. 430	/
Education and human resources	/	0.771	/
Economic incentives and institutional systems	/	0.384	/
Innovation, research, and development	/	0.152	/

. The structural model mainly examines the hypothetical and conceptual validity using the four variables that are constructed in the Table 7. R-squared is the most effective manner to comprehend the model’s predictability and residuals, as well as the appropriateness of the proposed model based on PLS. The following findings examine the extent to which each predictor describes the dependent variable, as well as how the variables influence sustainable development. The value of the coefficient determination for the knowledge economy in terms of sustainable development in the table is R² = 0.777. The coefficient of determination (R²) is used to measure the proportion of variance in the dependent variable that the model is able to account for. The value of the coefficient of determination for the trajectory of the knowledge economy toward sustainable development in the model is R² = 0.777. This indicates that 77.7% of the variance in the dimensions of sustainable development is explained by the knowledge economy. To determine the impact of the dimensions of knowledge economy on sustainable development in the Al-Jouf region, according to the factor (F²), the impact of education and human resources on sustainable development reaches a value of 0.771, which is a strong impact compared to that of innovation, research, and development. For this dimension, it is 0.152, which is a below-average effect. However, the impact of both ICT (0.430) and economic incentives (0.384) can be rated as above average [50]. The blindfolding test was also used to clarify the ability of the knowledge economy variable to predict changes in the sustainable development variable. Table 7 indicates that the value of Q² is 0.566.

All of the above findings confirm that the dimensions of the knowledge economy do play a role in predicting and explaining variation in sustainable development, and, thus, they can be used to test the study hypotheses.

Testing the Study Hypotheses

Based on the foregoing, and after making sure that there is no overlap between the dimensions of the variables and that the study data follow a normal distribution, as well as ensuring the quality of the model, it was possible to test the hypotheses of the study. We used the least squares analysis (PLS) based on the bootstrapping test to analyze the direct and indirect influences of the study variables. The R² value presented in table shows the estimation of the variables and evaluates the level of estimation of the dependent variable by an independent variable [49]. In the following table, the R² value is 0.77, showing that the predicted variance that can be explained by the independent variables is 77.7%. Other than this, Q² is a blindfolding method that determines wither the model is relevant or irrelevant. The Q value should be more than 0 to represent that the model is relevant [50]. The Table 7 shows that the Q² value is 0.566; thus, it can be stated that there is high predictive relevancy of this model.

The main hypothesis (H1): There is no statistically significant role at the level of significance (α ≤ 0.05) for the dimensions of knowledge economy (information and communication technology; education and human resources; economic incentives and institutional systems; and innovation, research, and development) in supporting sustainable development in its three dimensions (the economic dimension, the social dimension, and the environmental dimension) in the Al-Jouf region.

Table 8. Results of the bootstrapping test for the impact of the knowledge economy on sustainable development.

Trajectory	Original Sample	Mean Sample	Standard Error	t-Value	Level of Significance (p-Value)	Decision
Knowledge Economy -> Sustainable Development	0.837	0.837	0.034	24.88	0	Hypothesis accepted **

Significant at ** p ≤ 0.01.

and Figure 4 show that from the trajectory coefficient and t-value, there is a statistically significant impact of the knowledge economy on supporting sustainable development in the Al-Jouf region since the trajectory coefficient reaches 0.837 at the level of significance (α ≤ 0.05). The calculated value reaches 24.880, and this confirms the incorrectness of accepting the first null hypothesis; accordingly, it confirms the acceptance of the alternative hypothesis: There is a statistically significant role at the level of significance (α ≤ 0.05) for the dimensions of knowledge economy (information and communication technology; education and human resources; economic incentives and institutional systems; and innovation, research, and development) in supporting sustainable development in its three dimensions (the economic dimension, the social dimension, and the environmental dimension) in the Al-Jouf region.

In order to verify the role of each dimension of the knowledge economy in supporting sustainable development in the Al-Jouf region, the first main hypothesis was divided into four sub-hypotheses as follows:

• The first sub-hypothesis (H1₁): There is a statistically significant role for information and communication technology in supporting sustainable development among the institutions in the Al-Jouf region at the level of significance (α ≤ 0.05).
• The second sub-hypothesis (H1₂): There is a statistically significant role for education and human resources in supporting sustainable development among the institutions in the Al-Jouf region at the level of significance (α ≤ 0.05).
• The third sub-hypothesis (H1₃): There is a statistically significant role for economic incentives and institutional systems in supporting sustainable development among the institutions in the Al-Jouf region at the level of significance (α ≤ 0.05).
• The fourth sub-hypothesis (H1₄): There is a statistically significant role for innovation, research, and development in supporting sustainable development among the sample members in the Al-Jouf region at the level of significance (α ≤ 0.05).

Table 9. Results of the bootstrapping test for the impact of the dimensions of knowledge economy on sustainable development.

Trajectory	Original Sample	Mean Sample	Standard Error	t-Value	Significance Level p	Decision
Use of information and communication technology -> sustainable development	0.181	0.182	0.123	1.475	0.045	Hypothesis Accepted *
Education and Human Resources -> Sustainable Development	0.729	0.725	0.083	8.803	0.000	Hypothesis Accepted **
Economic Incentives and Institutional Systems -> Sustainable Development	−0.046	−0.044	0.070	0.648	0.412	Hypothesis Rejected **
Innovation and R&D -> Sustainable Development	0.041	0.046	0.071	0.585	0.558	Hypothesis Rejected **

Significant at ** p ≤ 0.01, * p < 0.05.

and Figure 4 show the t-values, the coefficients of the trajectories, and the levels of significance that show the direct impact of the dimensions of knowledge economy on sustainable development in the Al-Jouf region. The results of this study can be summarized as follows:

The statistical analysis and t-value suggest that the use of information and communication technology dimension has a significant impact on supporting sustainable development for the public and private sector institutions in the Al-Jouf region. The t-value for this dimension is 1.475 at a significance level of α ≤ 0.05. Therefore, the null hypothesis is rejected, and the alternative hypothesis is accepted, which states that information and communication technology plays a crucial role in supporting sustainable development in its economic, social, and environmental dimensions in the Al-Jouf region.

Similarly, the results indicate that the dimension of education and human resources has a significant impact on supporting sustainable development in the public and private sector institutions in the Al-Jouf region. The t-value for this dimension is 8.803, which is statistically significant at the level of significance (α ≤ 0.01). Therefore, the null hypothesis is rejected, and the alternative hypothesis is accepted, which states that information and communication technology plays an essential role in supporting sustainable development in its economic, social, and environmental dimensions in the Al-Jouf region.

On the other hand, the third sub-hypothesis test results, which show an impact factor of −0.046, a t-value of 0.648, and a p-value of 0.412, and the fourth sub-hypothesis test results, which show an impact factor of 0.041, a t-value of 0.585, and a p-value of 0.558, suggest that the dimension of economic incentives and institutional systems and the dimension of innovation, research, and development do not have a statistically significant impact. Hence, the null hypothesis is accepted, which means that there is no significant role for these dimensions in supporting sustainable development in the Al-Jouf region according to the sample members’ views.

5. Discussion

Based on the data analysis, this research obtains a number of results, which are outlined in the following points:

5.1. The Relationship between the ICT Dimension and Sustainable Development

First, according to the order of the dimensions of the knowledge economy in terms of relative importance, the dimension of information and communication technology obtains the first place, while the dimension of innovation, research, and development comes in the fourth and last place. The results indicate that there exists a statistically significant role for ICT technology in supporting sustainable development among different institutions in the Al-Jouf region at the significance level of α ≤ 0.05.

The widespread use of information and communication technology (ICT) in both public and private institutions in the Al-Jouf region reflects its significant role in supporting sustainable development.

However, despite the significance of ICT, it is essential to prioritize innovation, research, and development in the region to shift toward a knowledge-based economy. Adopting policies and strategies that support these areas can lead to economic growth, job creation, and improved living standards. Investment in innovation can help diversify the economy and improve the quality of products, processes, and services offered by institutions. This implies that while ICT is important in supporting sustainable development, it should not be the only focus of institutions.

5.2. The Relationship between the Dimension of Economic Incentives and Institutional Systems and Sustainable Development

Second, the hypothesis states that economic incentives and institutional systems have a significant relationship with sustainable development. However, based on the results provided, this hypothesis is rejected. One possible reason for the rejection of this hypothesis is that sustainable development is a complex concept that involves many factors beyond just economic incentives and institutional systems. It may be influenced by environmental factors, social factors, and cultural factors as well. Therefore, a narrow focus on economic incentives and institutional systems may not fully capture the complexity of sustainable development. Additionally, the nature of economic incentives may not always align with the goal of sustainable development. For example, a company may be incentivized to maximize profits, even if this comes at the expense of environmental sustainability or social responsibility. Institutional systems may also prioritize short-term economic gains over long-term sustainability. Thus, the relationship between economic incentives, institutional systems, and sustainable development may not always be positive. Furthermore, the context in which economic incentives and institutional systems operate may play a crucial role in determining their impact on sustainable development. What works in one context may not necessarily work in another. Therefore, a more nuanced understanding of the local context and the specific factors that influence sustainable development is necessary to fully understand the relationship between economic incentives, institutional systems, and sustainable development.

5.3. The Relationship between the Dimension of Education and Human Resources and Sustainable Development

Third, the results also indicate that the dimension of education and human resources has a statistically significant impact on supporting sustainable development for the public and private sector institutions in the Al-Jouf region. The high positive coefficient of 0.729 indicates a strong correlation between education and human resources and sustainable development in the studied region. This result is consistent with previous research that has shown a strong relationship between education and sustainable development. Education is essential for creating a sustainable future as it provides individuals with the necessary knowledge and skills to understand and address environmental, economic, and social challenges. Moreover, education helps individuals develop critical thinking skills and make informed decisions, which are important for promoting sustainable practices.

Human resources, which refer to the skills, knowledge, and abilities of individuals in a society, also play an important role in sustainable development. Human resources can be harnessed to promote sustainable practices, such as through innovation and entrepreneurship, which can lead to economic growth and environmental conservation.

The statistical significance of the result, with a p-value of 0.000, further supports the validity of the relationship between education and human resources and sustainable development in the studied region. This result suggests that policies and strategies aimed at promoting education and investing in human resources could have a positive impact on sustainable development in the region.

5.4. The Relationship between the Dimension of Innovation, Research, and Development and Sustainable Development

Fourth, as for the dimension of innovation, research, and development (which is the weakest dimension related to knowledge economy in the Al-Jouf region), there is a need to fund applied research projects and benefit from the results and outputs of scientific and applied research in order to better develop this aspect in public and private institutions. The findings also exhibits that there is no statistically significant role for innovation and R&D in assisting sustainable development in the Al-Jouf region, according to the views of the involved members, at the significance level of (α ≤ 0.05). Thus, there is a requirement to provide support through R&D and to take advantages of the results to build entrepreneurial and innovative activities.

Al-Jouf University, indeed, may have a key role in developing this aspect and establishing partnerships with these institutions to provide many research opportunities and employ the knowledge economy dimensions, in addition to linking research in the industry to provide innovations, patents, and commercial benefits derived from research through the commercialization and marketing of these institutions, as well as contributing to the development of human resources in these institutions.

5.5. The Relationship between Knowledge Economy and Sustainable Development:

The main hypothesis test indicates that there is a significant and positive correlation between the knowledge economy and sustainable development. The statistical analysis reveals a coefficient of 0.034 and a p-value of 0.837, demonstrating that the relationship between the two variables is statistically significant.

The knowledge-based economy is closely related to the development of information and communication technology, innovation, and human capital. It represents a shift from traditional industries that rely on natural resources and labor to industries that rely on knowledge, creativity, and innovation. This shift is critical for sustainable development as it allows the efficient use of resources, higher productivity, and the production of high-value products and services. Investing in a knowledge-based economy requires a focus on education and human resources. Education equips individuals with the skills and knowledge needed to adapt to changing technologies and economic conditions and innovation. Human resources are essential for creating, disseminating, and applying knowledge.

The significant and positive relationship between the knowledge economy and sustainable development implies that investing in the former can have positive outcomes for the latter. A knowledge-based economy can create jobs, increase productivity, and enhance the quality of life for individuals, while reducing negative environmental impacts. To sum up, the accepted hypothesis suggests that a knowledge-based economy can contribute to sustainable development. It underscores the importance of investing in education, human resources, and innovation to promote economic growth, reduce poverty, and safeguard the environment. This finding has implications for policymakers and practitioners who aim to promote sustainable development by investing in the knowledge economy.

This study only focuses on the relationship between certain dimensions of knowledge economy and sustainable development, and it does not consider other factors that may contribute to sustainable development, such as social and cultural factors. Moreover, this study is cross-sectional in nature, which means that causality cannot be inferred from the observed relationships. Finally, this study only considers the perceptions and attitudes of institutions toward knowledge economy and sustainable development, and it does not take into account the perspectives of other stakeholders, such as communities and individuals. Despite these limitations, this study provides valuable insights into the relationship between the knowledge economy and sustainable development in the Al-Jouf region and provides a foundation for future research in this area.

6. Conclusions

Knowledge economy is recognized to be a key system utilized by firms to keep their information and knowledge fully gathered and up to date, which could help in creating and developing economic wealth as well as sustainability. It has been recognized in the literature that knowledge-based economies majorly depend on technology and innovation to obtain high level of production operations as well as efficiency. Furthermore, the academic literature has revealed that information and communication technology, as well as education, plays key role in promoting sustainable development in the case of Saudi Arabia. With respect to human resources, the literature indicates that the Kingdom of Saudi Arabia is taking multiple initiatives to improve workforce development and training to level up employment opportunities. Moreover, current research further reveals that the Kingdom of Saudi Arabia has also been involved in providing economic incentives to firms with respect to tax and subsidies, which help them in promoting sustainable growth of the economy.

Through the results of this research, it is identified that with respect to the economic dimension, the social dimension, and the environmental dimension, there is a statistically substantial role of ICT, education and human resource, and economic incentives and institutional systems in promoting sustainable development in the Al-Jouf region among public and private institutions., while there is no substantial role of innovation and R&D in promoting sustainable growth based on the statistical outcomes.

6.1. Limitations

This study had several limitations related to the place of the study, in addition to the fact that there was a small response rate from institutions in the private sector. Moreover, there was a lack of information and data related to indicators that reflect the knowledge economy in the region due to the difficulty of obtaining data. Therefore, this study relied on the results of the questionnaire in analyzing the context. The use of academic literature was constrained due to the scarcity of information in terms of economy in the region, making the justification for the results quite challenging. Moreover, due to the time limitation of the study, the researchers were unable to collect and compute large amount of data by involving participants from public sector institutions as well.

Furthermore, the utilization of qualitative research method with quantitative research method could have boosted the credibility of this research since some of the results are inconsistent with the empirical findings supported by other researchers. In addition to this, the use of the interview approach would have provided more useful findings and insights based on real experiences and perceptions regarding knowledge economy and sustainability with respect to information and communication technology; education and human resources; economic incentives and institutional systems; and innovation, research, and development and their impacts on sustainable development.

6.2. Recommendations

With regard to recommendations, and based on the results and data analysis, the study recommends the following points:

First, there is the importance of working to provide indicators and data that reflect the reality of the knowledge economy in the Al-Jouf region and to involve institutions in the public and private sectors in achieving this. It is recommended for public and private sectors to collect large amounts of data on their economic operations to better reflect on the knowledge economy in the Al-Jouf region. It is also recommended for public and private institutions to analyze their KPI indicators in order to better promote sustainable development through the use of information and communication technology.

Second, there is the importance of working on developing an incubating and stimulating environment for technical projects and innovations through the development of a geographical area concerned with this aspect along the lines of successful local and international experiences, e.g., the Silicon Valley area, which links universities located in the same region and existing projects in support of the most important dimensions of knowledge economy. It is recommended that the government must take initiatives in opening incubators that are readily accessible by firms to run multiple innovative projects. Furthermore, training initiatives offered by the government would also improve the skillset of employees, which could, in turn, result in innovation and great production efficiency. In addition to this, it is recommended for universities to build a stronger research and development department by recruiting professionals from diverse backgrounds that would help in promoting sustainability as well as leveling up the economy of Saudi Arabia.

Third, it is important to benefit from the experience of the banking and financial sector in applying the dimensions of knowledge economy in its field of work and spreading the experience to other sectors in the region in terms of decision making, adopting modern technologies, continuous research and development, and achieving revenues based on knowledge and innovation, in addition to continuing to develop and train its human capital. This includes the utilization of technological tools, such as block chain, AI, and robotics, as well as analytical tools for strategic analysis, decision making, resourcing, business analysis, etc. Moreover, the government’s and the firms’ initiatives in training their employees about new software and technologies would also assist in improving economies while also boosting wealth sustainability.

Fourth, it is important to provide a number of initiatives to support research and development and pioneering activities that involve both the university and industry by providing and facilitating funding for innovators and researchers, establishing innovation laboratories, and forming research and practical teams composed of faculty members and students to work on developing innovations and pioneering ideas that will benefit the region and enhance opportunities for growth and expansion at the local and international levels.

Fifth, it is important to motivate institutions in the private and public sectors to adopt strategies that support the application and development of the dimensions of knowledge economy, especially innovation, research, and development.

Sixth, it is important to motivate institutions in the public and private sectors in the Al-Jouf region to implement and activate the dimensions of sustainable development, especially the environmental dimension.

6.3. Future Implications

This research study will help policy makers in grabbing meaningful and useful insights on the role of information and communication technology, education and human resource management, and economic incentives and institutional systems to make policies based on the results identified in this research. In addition to this, the research results will help researchers in carrying out more research on the basis of this study in order to better analyze the dimensions and the impact of ICT, R&D, and education and human resources on sustainable development, particularly in the case of the Al-Jouf region. Since there is a dearth of academic literature specifically on this subject, researchers have the opportunity to carry out systematic review on similar research topics. Moreover, the addition of other Saudi Arabian regions must be taken into consideration by researchers to better identify more useful underpinnings and practical data.