Drive sustainable corporate performance with digital transformation: the roles of environmental dynamism, sustainable innovation, and circular business model innovation

Abstract

In the era of digital transformation, understanding how startups can achieve sustainable corporate performance (SCP), assessed across economic, environmental, and social dimensions to capture the triple bottom line of sustainability, remains an urgent research priority. Although earlier research has confirmed the direct correlation between SCP and digital transformation (DT), little is known about the mediating roles of sustainable innovation (SI) and circular business model innovation (CBMI), especially in startup settings. Thus, this study examines how environmental dynamism (ED) modifies the interactions between DT and SCP through CBMI and SI. Based on the theories of contingency and dynamic capabilities, 496 executive directors and senior managers from startups that have adopted digital transformation in Vietnam participated in the survey. Using SmartPLS 3.3.2, results reveal that both CBMI and SI significantly mediate the DT–SCP relationship.ED provides a nuanced perspective on when and why environmental turbulence functions as a catalyst or a restraint for sustainability. Notably, it has a positive moderating effect on the SI–SCP relationship but a negative moderating effect on the CBMI–SCP link. Considering that the two moderating relationships' divergent nature results from the alignment of OIPT's organizational processing capacity with information-processing requirements. Agile paths like SI are strengthened in high-turbulence environments because they can quickly assimilate and take use of new information, while structural and resource-intensive breakthroughs like CBMI are hampered because they require substantial and stable coordination. The study advances theory by elucidating the situational character of environmental dynamics and distinguishing between the roles of CBMI and SI in sustainability transitions. In terms of management, the results provide specific tactics for company executives to match innovation goals with contextual volatility and for legislators to customize support structures that increase startup resilience in rapidly evolving environments.