Digital Green Transformation and Sustainable Performance: The Mediating Role of Green Process Innovation and Supply Chain Agility

Abstract

This study investigates how Digital Green Transformation Capability (DGTC) enables manufacturing firms to achieve superior Sustainable Performance (SP) through Green Process Innovation (GPI) and Sustainable Supply Chain Agility (SSCA). Building on Resource Orchestration Theory (ROT) and Socio Technical Systems (STS) theory, the research introduces a dual alignment orchestration framework that integrates digital and green transformation as interdependent capability systems. Using data from 516 manufacturing firms in Canada and the United States, the study employs PLS SEM and PROCESS Model 6 to test serial mediation effects. DGTC’s effect on SP is examined through sequential paths: DGTC, GPI, SSCA and SP. Moderating effects of Data Governance Quality (DGQ) and Institutional Pressure (IP) are also assessed. Results confirm that DGTC significantly enhances GPI and SSCA, which sequentially mediate its impact on SP. DGQ strengthens the DGTC and SSCA relationship, while IP amplifies the SSCA and SP path. The model demonstrates high predictive validity (GoF = 0.59; Q² = 0.34; PLSpredict RMSE < LM benchmarks). Cross country and sectoral analyses confirm robustness across manufacturing contexts. This study contributes by (1) introducing Green Process Innovation as a micro level mechanism linking DGTC to sustainable outcomes, (2) conceptualizing Dual Alignment Orchestration as a dynamic capability integrating digital and sustainability domains, and (3) developing the DGTC Strategic Response Matrix that translates theoretical insights into managerial strategy. The findings enrich the emerging discourse on Industry 5.0, where agility, innovation, and data governance jointly underpin sustainable competitiveness.