As environmental sustainability becomes a strategic imperative, green innovation (GI) is emerging as a pivotal approach to achieving both ecological and economic goals. This paper synthesizes insights from multi-dimensional studies to explore the nexus of industrial innovation, digital infrastructure, supply chain intelligence, and the competitiveness of small and medium-sized enterprises (SMEs) in driving sustainable development. Drawing on the resource-based and natural resource-based view theories, we examine how research and development (R&D), foreign investment, and industrial expenditures influence the environmental and sales performance of new products. Additionally, we investigate the role of digital infrastructure in enhancing green innovation efficiency (GIE) through mechanisms such as industrial agglomeration and knowledge spillovers. The integration of Internet of Things (IoT) and Artificial Intelligence (AI) in supply chain management is highlighted as a critical enabler of operational efficiency and environmental performance. Furthermore, we analyze how SMEs can adopt AI-driven green innovation strategies to overcome financial and organizational constraints and gain sustainable competitive advantages. This paper contributes a comprehensive framework that emphasizes digital enablement and eco-innovation as dual levers to strengthen industrial sustainability and competitiveness, especially in developing economies. Policy recommendations are provided to foster coordinated efforts between industry and government to scale green technologies and digital infrastructure equitably.