Artificial intelligence in accounting and sustainability performance: moderated-mediating model with IT capability and circular economy

Abstract

Purpose: Drawing on dynamic capabilities theory (DCT), this study investigates how firms leverage two specific internal capabilities—artificial intelligence in accounting (AIA) and information technology capability (ITC)—to enhance sustainability performance (SUP) within a circular economy (CE) framework. We conceptualize CE activities as a strategic reconfiguration mechanism and ITC as a critical supporting capability. Design/methodology/approach: We tested a moderated mediation model using partial least squares structural equation modeling (PLS-SEM) with observational data collected from 395 large firms listed on the Vietnamese stock market. Findings: The results indicate that AIA positively influences SUP through the full mediation of CE activities, highlighting a key pathway through which digital capabilities translate into sustainability outcomes. Furthermore, ITC positively moderates the relationship between AIA and CE activities, demonstrating that the effectiveness of AIA in driving CE-oriented reconfiguration is substantially amplified when firms possess strong foundational IT capabilities. Practical implications: Managers should prioritize developing a synergistic capability structure by integrating AIA deployment with robust ITC to strengthen CE strategies and improve SUP. Originality/value: This study addresses a significant gap in the DCT literature by offering one of the first empirical investigations into how a specific digital capability (AIA) interacts with a foundational supporting capability (ITC) to shape an environmental strategy (CE reconfiguration) and subsequent performance in an emerging market context. It identifies the capability synergy (AIA × ITC) that enables successful digital-to-sustainability transformation, providing a foundational perspective on how AI can be leveraged to achieve competitive sustainable advantage