Digital Transformation and Sustainable Competitiveness: The ESG–Green Technology Innovation Pathway and the Moderating Role of Income Tax Burden

Abstract

As firms increasingly face sustainability pressures and digital disruption, understanding how digital transformation contributes to long-term competitiveness has become an important research and managerial challenge. However, the mechanisms through which digital transformation enhances sustainable competitiveness remain insufficiently understood, particularly in emerging economies undergoing sustainability transitions. This study develops and empirically tests a sequential sustainability transformation framework by examining the mediating roles of ESG performance and green technology innovation in the relationship between digital transformation and sustainable competitiveness, while also investigating the moderating role of income tax burden. Using panel data from 131 firms listed on the Stock Exchange of Thailand over the period 2021–2024, the study employs panel-data regression models, sequential mediation analysis, and moderation analysis to test the proposed framework. The findings indicate that the relationship between digital transformation and sustainable competitiveness operates primarily through ESG performance and green technology innovation rather than through a direct technological pathway. ESG performance serves as an important intermediary mechanism, while green technology innovation translates sustainability-oriented capabilities into competitive outcomes. The results further reveal that income tax burden positively moderates the relationship between digital transformation and green technology innovation, indicating that this positive relationship becomes stronger under higher levels of income tax burden. This study contributes to the literature by clarifying the sequential organizational mechanisms through which digital transformation is translated into sustainable competitiveness and by identifying income tax burden as a relevant financial boundary condition. The findings provide evidence that sustainable competitiveness is supported by complementary organizational mechanisms rather than technology adoption alone, while also highlighting the role of financial conditions in shaping sustainability-oriented innovation. The findings provide practical guidance for managers and policymakers seeking to integrate digital transformation, ESG-related governance, and green technology innovation to strengthen sustainable competitiveness in emerging economies.

1. Introduction

Despite substantial investments in digital transformation (DT), translating digital initiatives into sustained competitive benefits remains a complex organizational challenge [1,2]. Digital transformation can reshape organizational processes, capabilities, and value-creation mechanisms [1,2,3]. However, how these digital capabilities are translated into sustainability-oriented competitive outcomes remains an important research question, particularly as firms increasingly integrate digitalization with ESG and green innovation [4,5]. This challenge has become increasingly important as firms face growing stakeholder expectations regarding environmental and social responsibility and long-term value creation [6,7]. Against this backdrop, identifying the organizational mechanisms through which digital transformation contributes to sustainable competitiveness remains an important research priority.

Against this backdrop, digital transformation has become a strategic imperative that enables firms to develop and continuously reconfigure organizational capabilities in response to rapidly changing business environments. Recent advances in digital technologies, including artificial intelligence (AI), big data analytics, cloud computing, blockchain, and the Internet of Things (IoT), have fundamentally transformed how firms process information, allocate resources, optimize operations, and support managerial decision-making [1,2]. Beyond improving operational efficiency, digital transformation enables firms to integrate sustainability considerations into organizational processes by strengthening ESG-related governance practices [4,8] and fostering green technology innovation [5,9]. Consequently, digital transformation is increasingly recognized not merely as a technological initiative but as a strategic organizational capability that can support sustainable competitiveness through stronger organizational capabilities and sustainability-oriented innovation.

Prior research has established digital transformation as an important organizational transformation that can reshape business processes, organizational capabilities, and value-creation mechanisms [1,2]. Recent empirical studies further show that digital transformation can improve ESG performance [4,8] and facilitate green innovation [5,9]. Recent studies have also examined these sustainability relationships through different causal configurations, including ESG–green innovation–financial performance and digital finance–green innovation–ESG pathways [10,11]. Consequently, limited evidence explains the specific process through which digital transformation strengthens ESG performance, subsequently facilitates green technology innovation, and ultimately contributes to sustainable competitiveness. This gap is particularly relevant in emerging economies, where resource constraints and differences in digital readiness may shape firms’ ability to leverage digital technologies effectively [12].

At the same time, environmental, social, and governance (ESG) performance has become a central component of corporate sustainability strategies, extending beyond regulatory compliance and disclosure requirements to shape firms’ strategic decision-making and long-term value creation. Digital transformation can facilitate ESG performance by improving information processing, transparency, and organizational capabilities related to sustainability management [4,8]. As organizations increasingly integrate digital technologies into sustainability-related activities, they are better positioned to strengthen ESG performance and support green technology innovation [4,5]. Consequently, ESG performance is increasingly recognized not merely as a sustainability outcome, but also as a strategic organizational capability that may facilitate sustainability-oriented innovation and contribute to sustainable competitiveness.

Among sustainability-oriented innovation activities, green technology innovation (GTI) plays a pivotal role in enhancing environmental performance, improving resource efficiency, and strengthening sustainable competitiveness. GTI encompasses the development of environmentally friendly products, production processes, and organizational practices that enable firms to generate both long-term economic and environmental value [13,14]. Previous studies have shown that green technology innovation can enhance corporate advantage, enterprise competitiveness, and firm value [13,15,16]. However, limited evidence explains how digital transformation, ESG performance, and green technology innovation operate jointly as a sequential mechanism leading to sustainable competitiveness.

Previous studies have examined ESG performance as an outcome of digital transformation [8,17]. Recent research has also examined ESG performance as an antecedent of green innovation and subsequent firm outcomes [11]. However, limited evidence explains how ESG performance and green technology innovation operate as complementary sequential mechanisms within a broader pathway through which digital transformation enhances sustainable competitiveness. Addressing this gap is particularly relevant in emerging economies such as Thailand, where the translation of digital capabilities into sustainability-oriented competitive outcomes remains an important research issue.

Furthermore, digital transformation does not necessarily translate into green technology innovation. Although firms increasingly invest in digital technologies to enhance operational efficiency and strengthen organizational capabilities, such investments are not always directed toward sustainability-oriented innovation. The extent to which digital transformation fosters green technology innovation may therefore depend on financial conditions and fiscal incentives that shape firms’ strategic resource allocation [18,19]. In particular, income tax burden represents a financial condition that may influence firms’ resource allocation and investment incentives by affecting the internal resources available for innovation-related activities [19,20]. Consequently, this study examines income tax burden as a boundary condition that may influence the effectiveness of digital transformation in promoting green technology innovation.

To address these research gaps, this study develops and empirically examines a sequential sustainability transformation framework linking digital transformation, ESG performance, green technology innovation, and sustainable competitiveness. The proposed framework posits that digital transformation enhances sustainable competitiveness indirectly through ESG performance and green technology innovation. ESG performance functions as a strategic organizational capability that facilitates green technology innovation, which subsequently enhances sustainable competitiveness. In addition, this study incorporates income tax burden (ITB) as a contextual boundary condition that moderates the relationship between digital transformation and green technology innovation, recognizing that financial pressures may influence firms’ strategic resource allocation for sustainability-oriented innovation.

Drawing on panel data from firms listed on the Stock Exchange of Thailand during the period 2021–2024, this study makes three primary contributions to the literature. First, it develops and empirically validates a sequential sustainability transformation framework that explains how digital transformation enhances sustainable competitiveness through the complementary roles of ESG performance and green technology innovation, thereby extending prior studies that examine these relationships through separate or alternative causal mechanisms. This framework provides a more comprehensive explanation of the organizational mechanisms through which firms transform digital capabilities into sustainable competitiveness.

Second, the study extends the digital transformation and sustainability literature by incorporating income tax burden as a contextual boundary condition influencing the relationship between digital transformation and green technology innovation. In doing so, it recognizes that the effectiveness of digital transformation may depend not only on firms’ internal organizational capabilities but also on financial conditions that shape strategic resource allocation for sustainability-oriented innovation. This perspective broadens the understanding of how contextual factors may influence digital transformation outcomes and provides a more comprehensive explanation of firms’ sustainability transformation processes.

Third, by providing evidence from firms listed on the Stock Exchange of Thailand (SET), this study extends the growing literature on digital transformation and sustainability to an emerging-market context, where differences in digital readiness and resource constraints may affect firms’ ability to leverage digital technologies effectively [12]. The Thai setting provides evidence on how digital transformation, ESG performance, and green technology innovation jointly contribute to sustainable competitiveness within an evolving sustainability environment. This evidence contributes to a broader understanding of sustainability transformation processes in emerging markets.

The findings provide important practical implications for managers and policymakers by demonstrating how digital transformation can be strategically integrated with ESG performance and green technology innovation to enhance sustainable competitiveness. Specifically, the findings support managerial decision-making regarding digital investment and sustainability strategies while providing evidence to inform public policies that promote sustainability-oriented transformation and long-term value creation in emerging economies.

The remainder of this paper is organized as follows. Section 2 reviews the relevant literature and develops the research hypotheses. Section 3 presents the research design, data sources, variable measurement, and empirical methodology. Section 4 presents the empirical results. Section 5 reports the robustness checks. Section 6 discusses the findings and highlights their theoretical and practical implications. Finally, Section 7 concludes the study, acknowledges its limitations, and outlines directions for future research.

To further illustrate the motivation for this study and highlight its contribution relative to prior research, Figure 1 summarizes the major research gaps and positions the proposed framework within the existing literature.

2. Literature Review and Hypothesis Development

2.1. Digital Transformation and Sustainable Competitiveness

Digital transformation (DT) is widely recognized as a strategic organizational transformation that extends beyond the adoption of digital technologies to encompass the reconfiguration of business processes, organizational routines, and value creation mechanisms [2,3]. Rather than representing a purely technological initiative, DT enables firms to integrate digital resources with organizational capabilities, thereby improving strategic flexibility and supporting long-term organizational renewal [21].

From the perspective of Dynamic Capabilities Theory [21,22], the value of DT lies not in digital technologies themselves but in firms’ ability to sense opportunities, seize market opportunities, and continuously reconfigure organizational resources in response to environmental change. Digital technologies, including artificial intelligence (AI), big data analytics, cloud computing, blockchain, and the Internet of Things (IoT), provide firms with enhanced information-processing capabilities that improve decision-making, resource allocation, and cross-functional coordination [1,23]. Consequently, organizations that effectively integrate digital technologies into their strategic and operational activities are more likely to strengthen organizational adaptability, thereby enhancing their ability to achieve sustainable competitiveness.

Recent empirical evidence indicates that digital transformation can facilitate innovation, including green innovation [5,9]. However, the broader competitive benefits of digital transformation are not automatic. Digital investments do not automatically generate sustainable competitive advantages because successful digital transformation also requires complementary organizational capabilities and changes in existing organizational practices [1,2,23]. Likewise, digital transformation requires firms to adapt their business strategies, processes, and operations to the evolving digital environment, suggesting that technological adoption alone may be insufficient to generate broader organizational transformation [1,2].

These mixed findings suggest that the competitive value of DT depends on complementary organizational capabilities rather than on technology adoption alone. Previous studies emphasize that realizing value from digital transformation requires the integration of digital technologies with business strategies, organizational processes, and complementary organizational capabilities [3,24]. More recently, sustainability-oriented organizational capabilities have attracted increasing attention as potential mechanisms through which DT enhances firms’ long-term competitiveness. In particular, integrating digital technologies with ESG-related management practices and green technology innovation may enable firms to convert digital capabilities into sustainable competitive advantages more effectively. However, previous studies have examined ESG-related management practices and green technology innovation through different relationships and causal configurations, providing only limited understanding of how these capabilities jointly explain the relationship between digital transformation and sustainable competitiveness.

Building on this perspective, the present study argues that the relationship between DT and sustainable competitiveness is unlikely to be explained solely by direct technological effects. Instead, the strategic value of DT is expected to emerge through organizational mechanisms that strengthen ESG performance and stimulate green technology innovation, thereby supporting firms’ ability to achieve sustainable competitiveness.

2.2. ESG Performance and Sustainability-Oriented Innovation

ESG performance represents a firm’s ability to integrate environmental, social, and governance considerations into strategic decision-making and organizational operations. Rather than serving merely as a disclosure or compliance mechanism, ESG performance reflects firms’ commitment to sustainable value creation and responsible resource management. From the perspectives of Stakeholder Theory and the Resource-Based View (RBV), strong ESG performance enhances organizational legitimacy, strengthens stakeholder relationships, and improves firms’ capacity to develop valuable strategic resources that support long-term competitiveness [6,25,26].

Recent studies increasingly recognize ESG performance as an important organizational capability that supports sustainability-oriented innovation. Firms with stronger ESG performance are more likely to engage in green innovation and sustainability-oriented activities, thereby strengthening their capacity for environmentally responsible innovation [27,28]. This argument is also consistent with prior CSR research suggesting that firms with stronger sustainability and social responsibility practices are more likely to strengthen organizational innovation capability [29]. Collectively, these findings suggest that ESG performance functions not merely as a sustainability outcome but as a strategic organizational capability that creates the organizational conditions necessary for the development and implementation of green technology innovation.

Digital transformation can strengthen ESG performance by enhancing firms’ information-processing and sustainability management capabilities [17,30]. Nevertheless, the effectiveness of digital transformation in improving ESG performance may depend on complementary organizational capabilities rather than on technology adoption alone. Moreover, although recent studies have begun to examine how ESG performance contributes to green innovation and sustainable competitive advantage, limited evidence explains how this relationship operates within a broader sequential pathway linking digital transformation, ESG performance, green technology innovation, and sustainable competitiveness [28].

Although previous studies generally support the relationships among digital transformation, ESG performance, and sustainability-related innovation, these relationships have been examined through different causal configurations. Consequently, limited empirical evidence explains how ESG performance functions as an organizational mechanism linking digital transformation with subsequent green technology innovation and sustainable competitiveness within an integrated sequential pathway. Building on this perspective, the present study argues that ESG performance constitutes a critical intermediary through which digital transformation contributes to sustainability-oriented innovation and long-term competitive outcomes.

2.3. Strategic Role of Green Technology Innovation in Sustainable Competitiveness

Green technology innovation (GTI) represents the development and implementation of environmentally sustainable products, production processes, and technologies that simultaneously create economic value while reducing environmental impacts [13,31,32]. Unlike conventional innovation, GTI integrates environmental objectives into innovation activities, enabling firms to achieve both economic and environmental benefits through long-term strategic implementation. Accordingly, GTI is increasingly recognized as a strategic organizational capability that enhances sustainable competitiveness by fostering environmental adaptation, resource efficiency, and continuous sustainability-oriented innovation [14,16,31].

The theoretical foundation of GTI is closely associated with the Natural Resource-Based View (NRBV), which argues that environmentally responsible capabilities can become valuable, rare, and difficult-to-imitate strategic resources that generate sustainable competitive advantages [25,32]. From the NRBV perspective, firms create sustainable competitive advantage by transforming environmental investments into strategic organizational capabilities that enhance innovation, improve resource efficiency, and strengthen long-term competitiveness. Empirical studies demonstrate that green technology innovation can contribute to improved firm performance and enterprise competitiveness [16,33]. Collectively, these findings suggest that GTI serves not merely as an environmental innovation outcome but as a strategic organizational capability through which firms simultaneously improve environmental performance and strengthen sustainable competitiveness.

However, the competitive benefits of GTI are neither immediate nor automatic. Green technology innovation often requires substantial organizational resources, technological capabilities, and sustained implementation efforts before competitive benefits can be realized [14]. Consequently, differences in firms’ resource availability and organizational conditions may affect their ability to convert green innovation investments into sustainable competitive outcomes. This suggests that the effectiveness of GTI depends not only on firms’ innovation efforts but also on the organizational and institutional conditions that support the successful transformation of green innovation into sustainable competitiveness.

Recent studies increasingly suggest that GTI is shaped by the interaction between digital transformation and sustainability-oriented organizational capabilities rather than by technological investment alone. Digital transformation can facilitate green innovation and contribute to improved ESG performance [17]. Strong ESG performance can further support green innovation and sustainability-oriented activities [27,28]. Together, these complementary capabilities create favorable organizational conditions for the development and implementation of GTI. However, previous studies have examined these complementary capabilities through different relationships and causal configurations, providing limited empirical evidence on how their interaction jointly drives green technology innovation.

Building upon these theoretical arguments, the present study conceptualizes GTI as a strategic mechanism through which digital transformation and ESG performance jointly contribute to sustainable competitiveness. Accordingly, GTI is expected to mediate the relationship between digital transformation and sustainable competitiveness by enabling firms to transform digital capabilities into environmentally sustainable innovation, thereby creating long-term competitive value.

2.4. Hypotheses Development

2.4.1. Digital Transformation and ESG Performance

Drawing on Dynamic Capabilities Theory [21], digital transformation enables firms to continuously reconfigure organizational resources and integrate sustainability considerations into strategic decision-making. By strengthening information-processing capability, organizational learning, and strategic flexibility, digital transformation enhances firms’ ability to respond to evolving stakeholder expectations and environmental challenges, thereby improving ESG performance [4,8].

Consistent with this theoretical perspective, recent empirical studies demonstrate that digital transformation can strengthen corporate ESG performance [4,17,30]. Collectively, these findings suggest that digital transformation contributes to ESG performance when digital capabilities are effectively embedded into organizational processes and sustainability management practices, rather than through technology adoption alone.

Building on this theoretical and empirical foundation, this study proposes that firms with stronger digital transformation capabilities are more likely to achieve superior ESG performance because digital capabilities facilitate the integration of sustainability considerations into organizational processes and strategic decision-making. Accordingly, the following hypothesis is proposed:

Hypothesis 1.

Digital transformation has a positive effect on ESG performance.

2.4.2. ESG Performance and Green Technology Innovation

Stakeholder Theory suggests that firms create long-term value by responding effectively to the expectations of diverse stakeholder groups, including investors, customers, regulators, and local communities [26]. Within this perspective, firms with stronger ESG performance demonstrate a greater commitment to environmental responsibility, stakeholder engagement, and sustainable resource management. These organizational capabilities encourage managers to allocate resources toward environmentally responsible technologies and long-term sustainability initiatives, thereby facilitating green technology innovation.

The Natural Resource-Based View (NRBV) further explains that environmentally oriented organizational capabilities constitute valuable strategic resources that support innovation and sustainable competitive advantage [32]. Firms with superior ESG performance are therefore more likely to develop green technologies, environmentally friendly products, and sustainable production processes because ESG implementation strengthens organizational commitment to environmental innovation.

Empirical evidence generally supports these theoretical arguments. Recent empirical evidence indicates that ESG-related practices and performance can foster green innovation and sustainability-oriented innovation [27,28,34,35,36]. Collectively, these findings suggest that ESG performance contributes to green technology innovation by strengthening organizational capabilities and strategic commitment required for sustainability-oriented innovation, rather than through environmental investment alone. Drawing upon Stakeholder Theory, the NRBV, and the existing empirical evidence, this study argues that superior ESG performance provides favorable organizational conditions for developing green technology innovation.

Hypothesis 2.

ESG performance has a positive effect on green technology innovation.

2.4.3. Green Technology Innovation and Sustainable Competitiveness

The Natural Resource-Based View (NRBV) argues that environmentally responsible capabilities constitute valuable strategic resources that enable firms to achieve sustainable competitive advantage through superior resource utilization, environmental stewardship, and continuous innovation [32]. Within this perspective, green technology innovation (GTI) enables firms to develop environmentally friendly products, production processes, and operational practices that simultaneously improve economic performance and reduce environmental impacts. As a result, GTI strengthens firms’ ability to create long-term value while responding effectively to evolving environmental regulations and stakeholder expectations.

The Porter Hypothesis further suggests that environmental innovation can enhance firms’ competitiveness by stimulating efficiency improvements, technological upgrading, and strategic adaptation to regulatory and market pressures [37]. Rather than representing an additional operational cost, investments in green technology innovation may improve productivity, reduce resource consumption, and create sustainable sources of competitive advantage.

Empirical evidence generally supports these theoretical perspectives. Prior studies indicate that green technology innovation can contribute to improved firm performance and enterprise competitiveness [16,33]. Consistent with this evidence, Agustia et al. [15] documented the mediating role of environmental management accounting in the relationship between green innovation and firm value, suggesting that environmentally oriented innovation can generate strategic and economic benefits. Collectively, these findings suggest that green technology innovation enhances sustainable competitiveness by enabling firms to combine environmental responsibility with continuous innovation, resource efficiency, and long-term strategic value creation, rather than through environmental compliance alone. Drawing upon the Natural Resource-Based View, the Porter Hypothesis, and the existing empirical evidence, this study argues that firms with stronger green technology innovation are more likely to achieve sustainable competitiveness.

Hypothesis 3.

Green technology innovation has a positive effect on sustainable competitiveness.

2.4.4. Mediating Mechanisms Linking Digital Transformation and Sustainable Competitiveness

Although digital transformation enhances firms’ technological capabilities and organizational flexibility, its contribution to sustainable competitiveness is unlikely to occur through direct technological effects alone. Dynamic Capabilities Theory suggests that competitive advantage arises not merely from the adoption of digital technologies but from firms’ ability to continuously reconfigure organizational resources, integrate new capabilities, and adapt to changing environmental conditions [21,22]. Consequently, digital transformation is expected to generate sustainable value through organizational mechanisms that facilitate sustainability-oriented capability development rather than through technology adoption itself.

From the perspective of Stakeholder Theory [26], ESG performance represents an important organizational capability through which firms respond to the expectations of investors, customers, regulators, and other stakeholders. Digital transformation can strengthen ESG performance [17,30]. Strong ESG performance can strengthen organizational legitimacy and contribute to the development of strategic resources that support long-term competitive value [25,26]. Collectively, these theoretical and empirical arguments suggest that ESG performance serves not merely as a sustainability outcome but as an intermediate organizational mechanism through which digital transformation is translated into sustainable competitiveness. Accordingly, digital transformation is expected to enhance sustainable competitiveness indirectly through improved ESG performance.

Hypothesis 4.

ESG performance mediates the relationship between digital transformation and sustainable competitiveness.

Beyond the role of ESG performance, digital transformation may also contribute to sustainable competitiveness by facilitating green technology innovation. Recent empirical evidence indicates that digital transformation can facilitate green technology innovation and corporate green innovation [5,9]. From the Natural Resource-Based View (NRBV), these environmentally oriented innovations constitute valuable strategic capabilities that improve resource efficiency, reduce environmental impacts, and strengthen long-term competitiveness [32].

Collectively, these findings suggest that green technology innovation represents an important organizational mechanism through which digital transformation is translated into sustainable competitiveness. Building on this theoretical and empirical foundation, green technology innovation is expected to mediate the relationship between digital transformation and sustainable competitiveness.

Hypothesis 5.

Green technology innovation mediates the relationship between digital transformation and sustainable competitiveness.

Taken together, ESG performance and green technology innovation may operate as complementary mediating mechanisms within a sequential sustainability transformation process. Digital transformation may initiate this process by strengthening ESG performance [8]. Stronger ESG performance may subsequently facilitate green innovation and sustainability-oriented innovation [27,28].

This sequential process is consistent with the integration of Dynamic Capabilities Theory, Stakeholder Theory, and the Natural Resource-Based View (NRBV) [21,22,26,32]. Digital transformation provides the adaptive capabilities required to strengthen ESG-related organizational practices, while ESG performance creates the organizational conditions necessary for green technology innovation. Green technology innovation subsequently enables firms to transform sustainability-oriented capabilities into long-term competitive advantages through environmentally responsible products, processes, and operational improvements [16,32]. Collectively, these theoretical and empirical arguments suggest that ESG performance and green technology innovation operate as complementary and sequential organizational mechanisms, indicating that the competitive benefits of digital transformation are more comprehensively explained through a sequential mediation process than through isolated mediating effects.

Building on this theoretical and empirical foundation, this study proposes that digital transformation contributes to sustainable competitiveness through a sequential pathway in which ESG performance precedes and facilitates green technology innovation.

Hypothesis 6.

ESG performance and green technology innovation sequentially mediate the relationship between digital transformation and sustainable competitiveness.

2.4.5. The Moderating Role of Income Tax Burden

Although digital transformation enhances firms’ capabilities to support green technology innovation, its effectiveness may depend on firms’ financial conditions. From the perspective of Dynamic Capabilities Theory, firms require not only technological capabilities but also the ability to reconfigure organizational resources and sustain investment in sustainability-oriented innovation [21,22]. Green technology innovation often involves substantial investment, long implementation periods, and uncertain economic returns. Consequently, firms’ ability to transform digital capabilities into green technology innovation may vary according to the financial conditions under which strategic investment decisions are made.

Prior studies have primarily examined fiscal incentives for R&D and innovation, as well as environmental and green taxation as determinants of green innovation and green technology development [18,19,38,39,40]. Related evidence from corporate income taxation further indicates that corporate tax conditions can influence firms’ innovation activities, R&D investment, and resource allocation decisions [41,42]. However, limited evidence explains whether firms’ broader income tax burden influences their ability to convert digital capabilities into green technology innovation. Income tax burden may affect managerial resource allocation by altering the financial flexibility available for technology investment, operational improvement, and sustainability-oriented projects. At the same time, greater tax-related financial pressure may encourage firms to use digital technologies more strategically to improve resource efficiency, reduce operating costs, and identify innovation opportunities.

Building on the resource-allocation and financial-pressure perspectives, this study conceptualizes income tax burden as a boundary condition shaping the relationship between digital transformation and green technology innovation. Firms facing different levels of income tax burden may differ in their capacity and willingness to allocate resources toward sustainability-oriented innovation. Although a higher income tax burden may constrain financial resources available for innovation, it may simultaneously intensify managerial incentives to deploy existing digital capabilities more efficiently. In firms that have already developed digital capabilities, greater tax-related financial pressure may increase the strategic value of digital technologies for resource optimization, cost reduction, and the identification of sustainability-oriented innovation opportunities. Accordingly, the present study expects the efficiency-enhancing mechanism to outweigh the resource-constraining effect, thereby strengthening the positive relationship between digital transformation and green technology innovation. Based on this theoretical reasoning, the following hypothesis is proposed:

Hypothesis 7.

Income tax burden positively moderates the relationship between digital transformation and green technology innovation.

2.5. Integrated Conceptual Framework

Building on the preceding literature review and hypothesis development, this study proposes an integrated conceptual framework that explains how digital transformation enhances sustainable competitiveness through ESG performance and green technology innovation while considering income tax burden as a boundary condition. Rather than assuming a direct relationship between digital transformation and sustainable competitiveness, the framework argues that digital transformation creates sustainable value by strengthening organizational capabilities that support sustainability-oriented transformation.

Specifically, digital transformation is expected to improve ESG performance by enhancing firms’ information-processing capability, organizational learning, and sustainability-related management practices. Stronger ESG performance subsequently facilitates the development of green technology innovation through improved sustainability governance, strategic resource allocation, and organizational commitment to environmentally responsible innovation. Green technology innovation, in turn, enables firms to transform sustainability-oriented capabilities into sustainable competitiveness by improving resource efficiency, environmental performance, and long-term value creation.

The proposed framework also recognizes that the effectiveness of digital transformation in promoting green technology innovation may depend on firms’ financial conditions. Accordingly, income tax burden is incorporated as a moderating variable influencing the relationship between digital transformation and green technology innovation. Firms experiencing different levels of tax-related financial pressure may differ in their willingness and capacity to allocate resources to sustainability-oriented innovation.

Overall, the conceptual framework integrates Dynamic Capabilities Theory, Stakeholder Theory, and the Natural Resource-Based View to explain the sequential organizational mechanisms through which digital transformation enhances sustainable competitiveness. Specifically, Dynamic Capabilities Theory explains how firms develop digital capabilities, Stakeholder Theory explains how these capabilities strengthen ESG performance, and the Natural Resource-Based View explains how green technology innovation transforms sustainability-oriented capabilities into sustainable competitiveness through environmentally responsible innovation and long-term value creation. Figure 2 illustrates the proposed conceptual framework and the hypothesized relationships examined in this study.

3. Research Design

3.1. Sample and Data Sources

This study employs a quantitative panel-data design to examine the relationships among digital transformation (DT), environmental, social, and governance (ESG) performance, green technology innovation (GTI), and sustainable competitiveness (SC). Financial and firm-level data, including ESG performance, were obtained from Bloomberg, while DT and GTI data were manually collected through content analysis of firms’ Form 56-1 One Reports and annual reports. The annual ESG100 rankings published by the Thaipat Institute were used as the sampling frame for selecting the study sample. The ESG100 provides an appropriate sampling frame because it identifies SET-listed firms recognized for outstanding environmental, social, and governance performance, making these firms particularly relevant for examining the proposed sustainability-oriented relationships [43]. Figure 3 summarizes the research methodology and the principal stages of the empirical analysis.

The study covers the period 2021–2024, with 2021 representing an important institutional and technological transition point in Thailand. The starting year coincides with the effective implementation of Form 56-1 One Report for financial periods ending from 31 December 2021 [44], providing a more structured and consistent source of corporate disclosure related to strategy, governance, technology, and sustainability. The period also captures the acceleration of digital initiatives during the COVID-19 disruption and their subsequent transition toward more selective and strategic implementation among Thai firms [45]. Comparable financial, ESG, and disclosure data were consistently available throughout this period.

The initial sample consisted of SET-listed companies included in the annual ESG100 rankings published by the Thaipat Institute during 2021–2024. Companies listed on the Market for Alternative Investment (mai), financial institutions, real estate investment trusts (REITs), and mutual funds were excluded because of differences in regulatory structures, financial reporting practices, and operating characteristics. Because the ESG100 rankings are updated annually, the sample composition varies across years. After applying these criteria and excluding firms with incomplete data, the final sample comprised 131 unique firms and 283 firm-year observations in an unbalanced panel: 66 observations in 2021, 70 in 2022, 74 in 2023, and 73 in 2024.

Thailand provides an appropriate emerging-market setting for examining how digital transformation, ESG performance, and green technology innovation jointly contribute to sustainable competitiveness under evolving institutional and sustainability conditions.

3.2. Variable Measurement

This study employs panel data from firms listed on the Stock Exchange of Thailand that were included in the ESG100 index during the period 2021–2024, yielding 283 firm-year observations. The empirical model includes an independent variable, mediating variables, a dependent variable, a moderating variable, and several control variables.

3.2.1. Independent Variable

Digital Transformation (DT): Digital transformation is measured using a text-based Digital Transformation Index (DTI) constructed from keyword-frequency analysis of firms’ annual reports and One Reports. Consistent with prior digital transformation research, the index captures the extent to which firms strategically integrate digital technologies into business operations, managerial processes, and sustainability-related activities [1,2].

The disclosure-based text-analysis approach is particularly suitable in emerging-market contexts because digital transformation reflects firms’ strategic orientation toward digital integration and organizational transformation. The DTI was developed using a multidimensional keyword dictionary covering major categories of digital technologies, including artificial intelligence and analytics, big data and data management, blockchain and distributed technologies, cloud computing and digital infrastructure, and digital technology applications. Detailed keyword categories are reported in Appendix A. The keyword dictionary was refined through iterative review and manual validation to ensure consistency with digital transformation disclosures in Thai listed firms.

Consistent with prior text-analysis approaches in digital transformation research [46], AI-assisted text analysis combined with manual coding procedures was employed to improve coding consistency and measurement reliability. The frequency of digital transformation-related keywords was identified, verified, and standardized across firms to construct the Digital Transformation Index (DTI). The index ranges from 0 to 1, with higher values indicating greater digital transformation intensity and stronger strategic integration of digital technologies within firms. The DTI demonstrated satisfactory internal consistency, with a Cronbach’s alpha coefficient of 0.89.

3.2.2. Dependent Variable

Sustainable Competitiveness (SC): Sustainable competitiveness is measured as Earnings Before Interest and Taxes (EBIT) divided by average total assets. This accounting-based measure reflects a firm’s ability to generate operating returns from its existing asset base while minimizing the influence of financing and tax decisions. Consistent with the Resource-Based View, firms that deploy valuable organizational resources more efficiently are expected to achieve superior operational performance and sustain competitive advantage over time [25]. Moreover, innovation-driven firms that effectively transform organizational resources into operating performance are more likely to strengthen long-term competitiveness [16]. Compared with market-based measures, the EBIT-to-average-assets ratio captures firms’ underlying operational capability and resource utilization efficiency, making it particularly appropriate for assessing sustainable competitiveness because it reflects long-term value creation rather than short-term market fluctuations.

3.2.3. Mediating Variables

(1) ESG Performance (ESG): ESG performance is measured using the Bloomberg ESG Disclosure Score, which ranges from 0 to 100 and captures firms’ environmental, social, and governance practices. This measure is widely used in sustainability and ESG research because of its consistency, comparability, and standardized coverage across firms and time [47].

(2) Green Technology Innovation (GTI): Green technology innovation is defined as the development or significant improvement of products, production processes, and service activities that reduce environmental impact and support sustainable development. Consistent with the prior sustainability and green innovation literature, GTI reflects firms’ capability to integrate environmental considerations into organizational innovation activities to improve both sustainability performance and long-term competitiveness [13,16].

In emerging-market contexts, disclosure-based measurement is particularly appropriate because sustainability-oriented innovation activities are often communicated through annual reports, sustainability reports, and One Reports rather than through standardized patent systems. Building upon prior green innovation and content-analysis approaches [33,48], this study constructs a multidimensional GTI index using a content-analysis approach based on firms’ annual reports and One Reports. The GTI framework covers green product innovation, green process innovation, and green service innovation. Detailed GTI dimensions and indicators are reported in Appendix B.

Each indicator was evaluated using a three-point scoring system ranging from 0 to 2, where higher scores indicate greater engagement in sustainability-oriented innovation activities and environmentally related technological development. To improve coding consistency and reduce subjectivity, AI-assisted text analysis was combined with manual validation procedures. The resulting GTI index demonstrated satisfactory internal consistency (Cronbach’s alpha = 0.89).

3.2.4. Moderating Variable

Income Tax Burden (ITB): Income tax burden is measured using the effective tax rate (ETR), calculated as total income tax expense divided by pre-tax profit, consistent with prior tax research [20]. Higher values indicate greater effective tax burdens faced by firms. The data were obtained from Bloomberg.

3.2.5. Control Variables

To control for firm-specific characteristics that may influence sustainable competitiveness, this study includes several control variables commonly used in sustainability and innovation research. Firm Age (AGE) is measured as the natural logarithm of firm age to capture organizational maturity and experience. Board Size (BS) is measured as the number of board members and is commonly used to capture board characteristics related to corporate governance. Leverage (LEV) is measured as total liabilities divided by total assets to capture financial risk and capital structure effects. Property, Plant, and Equipment (PPE) is measured as fixed assets divided by total assets and reflects firms’ capital intensity and operational infrastructure [4,8].

Table 1. Variable Definitions and Measurements.

Variable		Symbol	Measurement
Independent Variable
	Digital Transformation	DT	Digital Transformation Index (DTI) constructed from keyword frequency analysis of firms’ One Reports. Higher values indicate greater digital transformation intensity.
Dependent Variable
	Sustainable Competitiveness	SC	Earnings Before Interest and Taxes (EBIT) divided by average total assets, reflecting firms’ operational performance and efficiency in utilizing organizational resources.
Mediating Variables
	ESG Performance	ESG	Bloomberg ESG Disclosure Score ranging from 0 to 100, reflecting firms’ environmental, social, and governance practices.
	Green Technology Innovation	GTI	Green Technology Innovation Index based on 14 indicators constructed from annual reports and One Reports. Higher scores indicate greater engagement in green innovation activities.
Moderating Variable
	Income Tax Burden	ITB	Effective tax rate (ETR), calculated as total income tax expense divided by pre-tax profit. Higher values indicate greater effective tax burdens faced by firms.
Control Variables
	Firm Age	AGE	Natural logarithm of firm age.
	Board Size	BS	Number of board members.
	Leverage	LEV	Total liabilities divided by total assets.
	Property, Plant, and Equipment	PPE	Fixed assets divided by total assets.

summarizes the definitions and measurements of all variables used in the empirical analysis.

3.3. Model Specification

3.3.1. Panel Regression Framework

This study employs a panel regression framework using firm-level panel data over the period 2021–2024. Panel-data estimation is suitable because it allows the analysis of both cross-sectional and longitudinal variations while controlling for unobserved firm-specific heterogeneity [49].

Both fixed-effects (FE) and random-effects (RE) models are estimated, and the Hausman specification test is employed to determine the appropriate model specification. To improve estimation robustness, robust standard errors clustered at the firm level are applied following [50] to address heteroskedasticity and autocorrelation issues. In addition, year dummy variables are included to control for macroeconomic and time-specific effects across periods.

Firm-level control variables, including Firm Age (AGE), Board Size (BS), Leverage (LEV), and Property, Plant, and Equipment (PPE), are incorporated to account for differences in firm characteristics, governance structure, financial risk, and capital intensity across firms.

3.3.2. Regression Models

To test the proposed hypotheses, the following panel regression models are estimated:

ESG Performance Model (H1)

ESG_i,t = β₀ + β₁DT_i,t + β_kControls_i,t + μ_i + λ_t + ε_it

(1)

Equation (1) examines the effect of digital transformation on ESG performance.

Green Technology Innovation Model (H2)

GTI_i,t = β₀ + β₁DT_i,t + β₂ESG_i,t + β_kControls_i,t + μ_i + λ_t + ε_it

(2)

Equation (2) examines the effects of digital transformation and ESG performance on green technology innovation.

Sustainable Competitiveness Model (H3–H6)

SC_i,t = β0 + β₁GTI_i,t + β₂ESG_i,t + β₃DT_i,t + β_kControls_i,t + μ_i + λ_t + ε_it

(3)

Equation (3) examines the effects of digital transformation, ESG performance, and green technology innovation on sustainable competitiveness.

Moderation Model (H7)

GTI_i,t = β₀ + β₁DT_i,t + β₂ITB_i,t + β₃(DT_i,t × ITB_i,t) + β_kControls_i,t + μ_i + λ_t + ε_it

(4)

Equation (4) examines the moderating effect of income tax burden on the relationship between digital transformation and green technology innovation, where β₀ denotes the intercept, β₁–β_k represent the estimated coefficients, i denotes firms, t denotes years, μ_i captures unobserved firm-specific effects, λ_t represents year fixed effects, and εᵢₜ denotes the idiosyncratic error term.

3.3.3. Mediation and Moderation Testing

The sequential mediation effect of digital transformation on sustainable competitiveness through ESG performance and green technology innovation (DT → ESG → GTI → SC) is evaluated by examining the indirect effects across the proposed sequential mediation framework. The indirect effects are estimated as the product of the relevant path coefficients within the mediation model. The indirect effects are estimated using the product-of-coefficients approach, whereby the relevant path coefficients are multiplied to quantify the indirect effects through ESG performance and green technology innovation [51]. This approach enables the examination of the direct, specific indirect, sequential indirect, and total indirect effects within the proposed mediation framework.

The moderating effect of income tax burden is examined by incorporating the interaction term between digital transformation and income tax burden (DT × ITB) into the green technology innovation model. A positive and statistically significant interaction coefficient indicates that income tax burden strengthens the relationship between digital transformation and green technology innovation.

3.4. Estimation Strategy

The empirical analysis proceeds in three stages. First, baseline panel regression models are estimated to examine the direct relationships among digital transformation, ESG performance, green technology innovation, and sustainable competitiveness. The preferred panel-data specification is selected based on the Hausman specification test, and firm-clustered robust standard errors are applied throughout the analysis to account for heteroskedasticity and within-firm serial correlation.

Second, mediation analyses are conducted to evaluate the indirect and sequential mediation effects of digital transformation on sustainable competitiveness through ESG performance and green technology innovation. The mediation results are interpreted by examining both the significance and magnitude of the indirect effects estimated from the proposed panel regression models.

Third, moderation analysis is performed to assess whether income tax burden influences the relationship between digital transformation and green technology innovation. The moderating effect is evaluated by examining the statistical significance and direction of the interaction coefficient between digital transformation and income tax burden.

Finally, robustness analyses are conducted to assess the stability of the empirical findings under alternative model specifications. Two supplementary analyses are performed. First, an alternative non-financial measure of sustainable competitiveness, proxied by marketing efficiency (income divided by marketing expenses), is employed to examine whether the baseline findings remain consistent across different measures of sustainable competitiveness. Second, a one-year lagged digital transformation variable (L_DT) is used to evaluate the temporal robustness of the proposed relationships. Both robustness analyses are estimated using the same random-effects specification with year fixed effects and firm-clustered robust standard errors as the baseline models to ensure the comparability of the empirical results.

4. Results

4.1. Descriptive Statistics and Correlations

Table 2. Descriptive Statistics.

Variable	N	Mean	SD	Min	Max
SC	283	0.012	0.731	−1.428	3.341
DT	283	0.214	0.133	0.01	0.747
ESG	283	70.385	19.295	24.3	100
GTI	283	0.973	0.369	0.071	1.857
ITB	283	0.071	0.376	−0.742	0.858
AGE	283	18.49	13.19	1.000	49.000
BS	283	11.04	2.788	7.000	18.000
LEV	283	0.118	0.992	−1.802	1.744
PPE	283	0.335	0.942	−2.109	2.134

Note: Descriptive statistics for AGE are reported in years for ease of interpretation, whereas the natural logarithm of firm age [ln(Age)] is used in the regression analysis. LEV and PPE are reported as standardized (z-score) variables.

presents the descriptive statistics of the study variables. The results indicate variation across firms in terms of sustainable competitiveness, digital transformation, ESG performance, green technology innovation, and firm characteristics.

Sustainable competitiveness (SC) shows dispersion across observations, reflecting differences in firms’ operational performance. Digital transformation (DT) also varies across firms, indicating differences in the adoption and integration of digital technologies. ESG performance has a relatively high average value, although variation remains across firms, suggesting differences in ESG-related practices and governance activities.

Green technology innovation (GTI) demonstrates variation across observations, indicating differences in firms’ engagement in green innovation activities. Income tax burden (ITB) also varies across firms, reflecting differences in effective tax rates and tax-related financial conditions.

Overall, the descriptive statistics suggest sufficient variation in the variables for the subsequent panel regression analysis.

Table 3. Correlation Matrix.

Variable	SC	DT	ESG	GTI	ITB	AGE	BS	LEV	PPE
SC	1
DT	0.483 **	1
ESG	0.556 **	0.553 **	1
GTI	0.577 **	0.616 **	0.614 **	1
ITB	0.327 **	0.231 **	0.263 **	0.343 **	1
AGE	−0.018	−0.039	−0.079	−0.070	−0.053	1
BS	0.130 *	−0.014	0.140 *	0.138 *	0.129 *	0.107	1
LEV	0.232 **	0.141 *	0.175 **	0.127 *	0.101	−0.119 *	0.093	1
PPE	0.111	0.052	0.054	0.042	0.020	0.040	0.263 **	0.166 **	1

Note: ** p < 0.05, * p < 0.10.

presents the correlation matrix of the study variables. The results indicate that digital transformation (DT), ESG performance (ESG), and green technology innovation (GTI) are positively and significantly correlated with sustainable competitiveness (SC), providing preliminary support for the proposed hypotheses.

Specifically, DT is positively associated with both ESG and GTI, while ESG also exhibits a positive association with GTI. These findings are consistent with the proposed conceptual framework linking digital transformation, ESG performance, and green technology innovation. In addition, income tax burden (ITB) is positively associated with GTI, suggesting that tax-related financial conditions may be linked to firms’ engagement in green technology innovation activities.

Importantly, the pairwise correlations among the explanatory variables remain below the commonly accepted threshold of 0.80, indicating that multicollinearity is unlikely to pose a serious concern [52].

4.2. Regression Results

Table 4. Panel Regression Results.

Variables	(1) ESG	(2) GTI	(3) SC	(4) GTI Moderation
DT	0.365 ***	0.199 ***	0.07	0.263 ***
ESG	–	0.280 ***	0.373 ***	–
GTI	–	–	0.516 ***	–
ITB	–	–	–	0.202 ***
DT_ITB	–	–	–	0.395 ***
AGE	−0.038	−0.017	0.032	−0.029 *
BS	0.089 ***	0.046 **	0.012	0.050 **
LEV	0.048 *	0	0.095 **	0.013
PPE	−0.012	−0.011	0.045	−0.014
Year FE	Yes	Yes	Yes	Yes
Clustered SE	Yes	Yes	Yes	Yes
Model	RE	RE	RE	RE
Observations	283	283	283	283
R2	0.389	0.486	0.439	0.514

Note: z-statistics based on robust standard errors clustered at the firm level are reported in parentheses. *** p < 0.01, ** p < 0.05, * p < 0.10. All models include year fixed effects. The random-effects model was selected based on Hausman specification test results.

reports the panel regression results examining the relationships among digital transformation (DT), ESG performance (ESG), green technology innovation (GTI), sustainable competitiveness (SC), and the moderating role of income tax burden (ITB). All models include year fixed effects and clustered robust standard errors, while the random-effects specification was selected based on the Hausman specification test results.

Model (1) shows that digital transformation has a positive and statistically significant effect on ESG performance (β = 0.365, p < 0.01), supporting Hypothesis 1. This finding suggests that firms with stronger digital transformation are more likely to improve ESG-related practices, including transparency, governance quality, and sustainability-oriented management activities.

Model (2) indicates that both digital transformation (β = 0.199, p < 0.01) and ESG performance (β = 0.280, p < 0.01) positively influence green technology innovation, supporting Hypothesis 2. The results imply that firms with stronger ESG performance are more likely to engage in sustainability-oriented innovation activities and environmentally adaptive technological development.

Model (3) demonstrates that ESG performance (β = 0.373, p < 0.01) and green technology innovation (β = 0.516, p < 0.01) positively affect sustainable competitiveness, providing support for Hypothesis 3. In contrast, the direct effect of digital transformation on sustainable competitiveness becomes statistically insignificant (β = 0.070, p > 0.10) after ESG performance and green technology innovation are incorporated into the model. This finding suggests that the effect of digital transformation on sustainable competitiveness is primarily transmitted through ESG-related practices and green technology innovation rather than through a direct pathway. These findings provide support for the proposed mediation relationships in Hypotheses 4–6.

Model (4) reports the moderating effect of income tax burden on the relationship between digital transformation and green technology innovation. The results show that income tax burden positively influences green technology innovation (β = 0.202, p < 0.01). More importantly, the interaction term between digital transformation and income tax burden is positive and statistically significant (β = 0.395, p < 0.01), supporting Hypothesis 7. This finding indicates that firms facing higher income tax burdens are more likely to utilize digital transformation capabilities to support sustainability-oriented innovation activities. Figure 4 further illustrates that the positive relationship between digital transformation and green technology innovation becomes stronger under higher income tax burden conditions.

Overall, the findings suggest that digital transformation contributes to sustainable competitiveness indirectly through ESG performance and green technology innovation. In addition, income tax burden strengthens firms’ incentives to transform digital capabilities into sustainability-oriented innovation activities.

Figure 4 further illustrates the moderating effect of income tax burden on the relationship between digital transformation and green technology innovation. The slope for firms with high income tax burden is steeper than that for firms with low income tax burden, indicating that the positive effect of digital transformation on green technology innovation becomes stronger under higher income tax burden conditions.

4.3. Sequential Mediation Analysis

The mediation analysis presented in

Table 5. Sequential Mediation Effects of ESG Performance and Green Technology Innovation.

Mediation Path	Effect Type	Coefficient (β)
DT → SC	Direct effect	0.07
DT → ESG → SC	Indirect effect via ESG	0.136
DT → GTI → SC	Indirect effect via GTI	0.103
DT → ESG → GTI → SC	Sequential indirect effect	0.053
Total indirect effect	–	0.292
Total effect	–	0.362

Note: Indirect and sequential indirect effects were estimated using the product-of-coefficients approach based on the panel regression estimates reported in Table 4. All regression models include year fixed effects and clustered robust standard errors.

examines the transmission mechanisms through which digital transformation influences sustainable competitiveness. The indirect and sequential indirect effects were estimated using the product-of-coefficients approach based on the panel regression results reported in Table 4.

The results indicate that digital transformation influences sustainable competitiveness primarily through ESG performance and green technology innovation. The indirect effect through ESG performance (0.136) and the indirect effect through green technology innovation (0.103) are both larger than the direct effect of digital transformation on sustainable competitiveness (0.070). This finding suggests that the competitive value of digital transformation is mainly realized through ESG-related practices and sustainability-oriented innovation activities rather than through a direct pathway.

Moreover, the sequential indirect effect through ESG performance and green technology innovation (0.053) provides additional evidence supporting the proposed sequential mediation relationship. The results imply that digital transformation strengthens ESG-related practices, which subsequently facilitate green technology innovation and improve sustainable competitiveness.

Overall, the mediation analysis supports the proposed view that the relationship between digital transformation and sustainable competitiveness operates indirectly through ESG performance and green technology innovation, consistent with Hypotheses 4–6.

5. Robustness Checks

To further assess the robustness of the empirical findings, an additional analysis is conducted using an alternative non-financial measure of sustainable competitiveness. The alternative measure is proxied by marketing efficiency, calculated as income divided by marketing expenses and obtained from Bloomberg. This indicator captures firms’ ability to convert marketing expenditures into organizational and market-related competitive performance. The robustness analysis examines whether the proposed sustainability transformation framework remains valid beyond the accounting-based measure of sustainable competitiveness.

Table 6. Robustness Test Using an Alternative Measure of Sustainable Competitiveness.

Variable	Non-Financial Sustainable Competitiveness
DT	−0.016
ESG	0.123 **
GTI	0.091 *
AGE	0.014
BS	−0.002
LEV	−0.01
PPE	0.048 **
Year FE	Yes
Clustered SE	Yes
Model	RE
Observations	283
R2	0.115

Note: z-statistics based on robust standard errors clustered at the firm level are reported in parentheses. ** p < 0.05, * p < 0.10. All models include year fixed effects. The random-effects model was selected based on Hausman specification test results.

reports the robustness analysis using an alternative non-financial measure of sustainable competitiveness obtained from Bloomberg. The alternative measure is proxied by marketing efficiency, calculated as income divided by marketing expenses. The results remain generally consistent with the baseline findings. ESG performance continues to exhibit a positive and statistically significant effect on the alternative non-financial measure of sustainable competitiveness (β = 0.123, p < 0.05), while green technology innovation also maintains a positive effect (β = 0.091, p < 0.10). In contrast, the direct effect of digital transformation remains statistically insignificant.

Overall, the robustness analysis suggests that the proposed sustainability-oriented mediation relationships are not limited to the accounting-based measure of sustainable competitiveness and remain generally consistent when an alternative non-financial measure of sustainable competitiveness is employed.

Table 7. Lagged Robustness Test Using One-Year Lagged Digital Transformation.

Variables	ESG	GTI	Financial SC	Non-Financial SC
L_DT	−0.029	0.065 *	0.003	−0.040
	(−0.608)	(1.828)	(0.054)	(−1.374)
ESG	—	0.495 ***	0.268 ***	0.093
		(8.204)	(3.146)	(1.387)
GTI	—	—	0.596 ***	0.140 *
			(4.664)	(1.759)
AGE	−0.066	0.013	0.073	−0.004
BS	0.021	0.051	−0.057	0.001
LEV	0.100 ***	−0.012	0.078	−0.009
PPE	0.031	−0.027	0.056	0.053 *
Year FE	Yes	Yes	Yes	Yes
Clustered SE	Yes	Yes	Yes	Yes
Model	RE	RE	RE	RE
Observations	148	148	148	148
R2	0.07	0.394	0.372	0.156

Note: L_DT represents one-year lagged digital transformation. z-statistics based on robust standard errors clustered at the firm level are reported in parentheses. *** p < 0.01, * p < 0.10. All models include year fixed effects. The random-effects model was retained for consistency with the baseline estimations and the robustness-oriented nature of the supplementary lagged analyses.

reports the lagged robustness analysis using one-year lagged digital transformation (L_DT). The results remain generally consistent with the baseline estimations. Lagged digital transformation maintains a positive association with green technology innovation, suggesting that digital transformation contributes to the development of sustainability-oriented innovation capabilities over time. ESG performance also continues to exhibit a strong positive relationship with green technology innovation, while green technology innovation remains positively associated with both the financial and non-financial measures of sustainable competitiveness.

In contrast, the direct lagged effect of digital transformation on sustainable competitiveness remains statistically insignificant, indicating that the contribution of digital transformation to sustainable competitiveness operates primarily through indirect sustainability-related organizational mechanisms rather than through immediate direct effects. Overall, the lagged estimations provide additional support for the proposed sequential mediation framework.

6. Discussion

This study advances the understanding of how digital transformation contributes to sustainable competitiveness by uncovering a sequential and process-based mechanism linking digital transformation, ESG performance, green technology innovation, and sustainable competitiveness. While prior research has established that digital transformation can reshape organizational processes, capabilities, and value-creation mechanisms [1,2], the results of this study indicate that the competitive value of digital transformation does not arise through a simple direct pathway. Instead, digital transformation enhances sustainable competitiveness primarily through ESG-related practices and green technology innovation. Extending prior research on the organizational outcomes of digital transformation, the findings reveal that its direct effect becomes statistically insignificant once ESG performance and green technology innovation are incorporated into the model. This evidence suggests that digital transformation creates sustainable competitive value by strengthening sustainability-oriented organizational capabilities rather than through technology adoption alone. Accordingly, this study extends the digital transformation and sustainability literature by demonstrating that intermediate organizational mechanisms, rather than digital technologies themselves, are the primary drivers through which digital transformation generates long-term sustainable competitiveness.

From the perspective of Dynamic Capabilities Theory, digital transformation enables firms to continuously reconfigure organizational resources and capabilities in response to changing technological and sustainability demands. Complementing this perspective, the Resource-Based View suggests that these digitally enabled capabilities become valuable strategic resources that strengthen firms’ abilities in data integration, transparency, operational coordination, and sustainability-related decision-making. These capabilities subsequently improve ESG performance by enhancing environmental management practices, governance quality, and organizational accountability. This interpretation is consistent with recent evidence showing that digital transformation can improve corporate ESG performance [4,8]. The present findings extend this evidence by showing that ESG performance serves as an intermediate organizational mechanism through which digital resources are translated into sustainability-oriented competitive outcomes. Accordingly, ESG performance should be viewed not merely as a disclosure outcome but as an important organizational mechanism embedded within digitally transformed organizational processes.

The findings further indicate that ESG performance plays a critical enabling role in shaping firms’ sustainability-oriented innovation activities. Firms with stronger ESG performance are more likely to reduce stakeholder-related uncertainty, improve organizational legitimacy, and obtain access to financial and institutional resources that support long-term innovation investment. This interpretation aligns with Stakeholder Theory [26], which emphasizes the importance of stakeholder relationships in facilitating resource mobilization, and the Resource-Based View and Natural Resource-Based View [25,32], which emphasize the strategic value of organizational and environmentally oriented capabilities. Consistent with previous empirical evidence [27,35], the present findings indicate that firms with stronger ESG performance are better positioned to develop green technology innovation. However, this study extends the existing literature by demonstrating that ESG performance functions not merely as an indicator of corporate sustainability but as an active organizational capability that enables the transformation of digital capabilities into sustainability-oriented innovation. The findings therefore extend prior ESG research by positioning ESG performance as an active strategic mechanism that facilitates sustainability-oriented innovation rather than merely representing a passive reporting outcome.

Among the proposed mechanisms, green technology innovation exhibits the strongest direct contribution to sustainable competitiveness. This finding suggests that sustainability-oriented innovation represents the primary channel through which firms transform ESG-related capabilities into measurable competitive outcomes. Consistent with prior studies, green innovation and green technological innovation can strengthen corporate advantage and enterprise competitiveness [13,16]. Beyond its environmental benefits, green technology innovation strengthens firms’ technological capabilities and creates strategic advantages that support long-term sustainable competitiveness. While previous studies have primarily examined the direct relationship between green innovation and firm performance, the present findings further demonstrate that green technology innovation constitutes the final strategic mechanism through which digital transformation and ESG performance jointly generate sustainable competitiveness. However, this study extends the literature by situating green technology innovation within a sequential transformation process linking digital transformation, ESG performance, and sustainable competitiveness. This interpretation is further supported by the systematic review of [31], which conceptualizes green innovation as a strategic implementation process involving organizational actions and capabilities. Their review emphasizes that successful green innovation depends on the integration of organizational resources, sustainability-oriented capabilities, and institutional support to generate long-term competitive and environmental value. Accordingly, the present findings provide empirical evidence that digital transformation and ESG performance jointly facilitate the implementation of green technology innovation, thereby strengthening sustainable competitiveness.

The empirical results further demonstrate that the direct effect of digital transformation on sustainable competitiveness becomes statistically insignificant after ESG performance and green technology innovation are incorporated into the model. This finding implies that digital transformation alone may be insufficient to generate sustainable competitiveness. Instead, the findings suggest that firms may realize greater long-term competitive benefits when digital capabilities are effectively integrated with ESG-oriented governance practices and sustainability-oriented innovation activities. Extending prior research on the organizational implications of digital transformation [1,2], the present findings indicate that the competitive benefits of digital transformation are realized predominantly through sequential sustainability-oriented organizational capabilities. This result provides empirical support for the proposed sequential mediation framework and highlights the importance of ESG performance and green technology innovation as complementary organizational mechanisms rather than independent mediators. In this sense, ESG performance and green technology innovation operate as critical transmission mechanisms through which digital transformation contributes to sustainable competitiveness.

Importantly, this study also highlights the moderating role of income tax burden in strengthening the relationship between digital transformation and green technology innovation. The findings indicate that the positive relationship between digital transformation and green technology innovation becomes stronger among firms facing higher income tax burdens. One possible explanation is that greater tax-related financial pressure encourages firms to improve operational efficiency, optimize resource allocation, and pursue environmentally adaptive innovation strategies that strengthen long-term competitiveness. This interpretation is broadly consistent with prior evidence showing that environmental and green taxation can influence firms’ resource allocation and green innovation activities, although these effects may vary across institutional and financial conditions [38,39,40]. While prior studies have generally examined the direct effects of taxation on corporate investment or environmental performance, the present findings demonstrate that income tax burden also functions as an important boundary condition influencing how effectively digital transformation is translated into green technology innovation. This result extends the emerging literature by integrating taxation into the digital transformation–sustainability framework, thereby highlighting the importance of institutional and financial conditions in shaping sustainability-oriented innovation. In this context, digital transformation provides firms with technological and informational capabilities that facilitate sustainability-oriented innovation under higher financial pressure conditions.

From a theoretical perspective, these findings extend Dynamic Capabilities Theory [21] by demonstrating that the competitive value of digital transformation depends on firms’ ability to continuously reconfigure organizational resources under financial pressure conditions. Rather than generating sustainable competitiveness directly, digital transformation creates value by enabling organizational capabilities that facilitate ESG performance and green technology innovation. The findings are also consistent with the Natural Resource-Based View (NRBV) [32], which argues that environmentally oriented organizational capabilities constitute strategic resources for achieving sustainable competitive advantage. Furthermore, the findings reinforce Stakeholder Theory [26] by suggesting that sustainability-oriented governance and stakeholder engagement facilitate the transformation of digital capabilities into green technology innovation and sustainable competitiveness. Collectively, these findings extend the existing literature by integrating Dynamic Capabilities Theory, Stakeholder Theory, and the Natural Resource-Based View into a unified sequential sustainability transformation framework that explains how digital transformation generates sustainable competitiveness through complementary organizational capabilities rather than through technology adoption alone. Therefore, the effectiveness of digital transformation in generating sustainable competitiveness depends on the alignment of dynamic organizational capabilities and sustainability-oriented governance, while financial conditions may further shape firms’ ability to translate digital capabilities into green technology innovation.

Overall, the findings highlight that sustainable competitiveness in the digital era is not driven by technology adoption alone, but by the integration of digital capabilities, ESG-oriented governance, and sustainability-oriented innovation activities within a coherent strategic framework. This interpretation complements the findings of [53], which showed that corporate environmental responsibility engagement contributes to firm value through corporate innovation. Extending this perspective, the present study demonstrates that sustainability-oriented organizational practices not only enhance financial outcomes but also strengthen sustainable competitiveness through the integration of digital capabilities and green technology innovation. The robustness analysis further indicates that the main relationships remain generally consistent when an alternative non-financial measure of sustainable competitiveness and lagged digital transformation are considered, providing additional support for the proposed sustainability transformation framework. Such an integrated approach may be particularly relevant in emerging economies, where differences in digital readiness can shape firms’ ability to leverage digital technologies effectively [12].

From a managerial perspective, the findings suggest that digital transformation alone may be insufficient to generate sustainable competitive advantages. Instead, firms should integrate digital transformation strategies with ESG-related practices and green innovation initiatives to fully realize the strategic value of digital capabilities. This integrated approach enables managers to allocate organizational resources more effectively, strengthen sustainability-oriented decision-making, and enhance long-term competitiveness rather than pursuing isolated digital investments with limited strategic impact. From a policy perspective, the findings indicate that sustainability-oriented competitiveness may benefit from coordinated support for digital transformation, ESG-related governance, and long-term green innovation. Prior evidence that environmental and green taxation can influence green technology innovation further highlights the potential role of policy conditions in shaping firms’ sustainability-oriented innovation decisions [38,39]. The findings also suggest that public policies promoting digital transformation should be accompanied by ESG initiatives and incentives for green technology innovation, thereby creating an institutional environment that supports sustainable competitiveness, particularly in emerging economies.

Taken together, this study contributes to the literature by demonstrating that digital transformation, ESG performance, green technology innovation, and financial conditions jointly form an interconnected sustainability-oriented transformation process. These findings complement prior studies documenting the positive organizational outcomes of digital transformation [1,2] by showing that its contribution to sustainable competitiveness is primarily realized through ESG performance and green technology innovation rather than through a direct effect. Thus, rather than contradicting prior evidence, the findings clarify the organizational mechanisms through which the competitive benefits of digital transformation may emerge.

7. Conclusions

This study develops and empirically validates a sequential sustainability transformation framework explaining how digital transformation contributes to sustainable competitiveness through ESG performance and green technology innovation among Thai ESG100-listed firms during the period 2021–2024. The findings demonstrate that digital transformation enhances sustainable competitiveness not through a simple direct technological effect, but primarily through interconnected sustainability-oriented organizational mechanisms involving ESG performance and green technology innovation. By identifying these complementary organizational mechanisms, this study extends the digital transformation and sustainability literature beyond technology-centric explanations and provides empirical evidence that sustainable competitiveness is supported by the integration of digital capabilities, sustainability-oriented governance, and green technology innovation.

Specifically, ESG performance and green technology innovation operate as interconnected and complementary mediating mechanisms. ESG performance functions as a strategic enabling mechanism that strengthens stakeholder trust, organizational legitimacy, and access to strategic resources, while green technology innovation serves as an important channel through which sustainability capabilities are transformed into tangible competitive outcomes. The findings further indicate that the direct effect of digital transformation on sustainable competitiveness becomes statistically insignificant after ESG performance and green technology innovation are incorporated into the model. This result suggests that digital transformation alone may be insufficient to generate sustainable competitiveness unless firms effectively integrate digital capabilities with ESG-related practices and green innovation activities. These findings are consistent with a sequential sustainability transformation process through which digital transformation contributes to sustainable competitiveness via ESG performance and green technology innovation rather than through technology adoption alone.

Importantly, this study also identifies the moderating role of income tax burden (ITB) in strengthening the relationship between digital transformation and green technology innovation. The findings indicate that the positive relationship between digital transformation and green technology innovation becomes stronger under higher levels of income tax burden. This finding extends the digital transformation and sustainability literature by demonstrating that financial conditions shape the effectiveness with which digital capabilities are translated into sustainability-oriented innovation. The robustness analysis further indicates that the main relationships remain generally consistent when an alternative non-financial competitiveness indicator is employed, providing additional support for the proposed sustainability transformation framework.

7.1. Theoretical Implications

This study offers several important theoretical contributions. First, it develops and empirically examines a sequential sustainability transformation framework explaining how digital transformation influences sustainable competitiveness through ESG performance and green technology innovation rather than through a direct technological pathway alone. Second, the study reconceptualizes ESG performance as an active strategic mechanism that facilitates the transformation of digital capabilities into green innovation activities rather than treating ESG solely as a reporting or outcome variable. Third, the findings identify green technology innovation as an important direct contributor to sustainable competitiveness, highlighting its role as a strategic mechanism through which sustainability-oriented organizational capabilities are translated into competitive outcomes.

In addition, this study extends Dynamic Capabilities Theory by demonstrating that the strategic value of digital transformation depends on firms’ ability to continuously reconfigure organizational resources under financial pressure conditions. The findings also complement the Natural Resource-Based View and Stakeholder Theory by highlighting the roles of environmentally oriented capabilities and stakeholder-oriented governance in transforming digital capabilities into sustainable competitive advantage. Collectively, these findings contribute to the literature by integrating Dynamic Capabilities Theory, Stakeholder Theory, and the Natural Resource-Based View into a unified theoretical framework that explains sustainable competitiveness through complementary organizational mechanisms operating within a sequential sustainability transformation process.

7.2. Managerial Implications

The findings suggest that digital transformation alone may be insufficient to generate long-term sustainable competitiveness. Firms are more likely to achieve sustained competitive advantages when digital transformation is strategically integrated with ESG-related practices and green innovation activities. Managers should therefore position digital transformation as a strategic enabler of ESG-related governance, stakeholder engagement, and green innovation.

In addition, ESG initiatives should be translated into concrete green technology innovation projects rather than being treated solely as disclosure or compliance activities. This integrated approach enables managers to allocate organizational resources more effectively, strengthen sustainability-oriented decision-making, and improve firms’ ability to achieve long-term competitive advantages through coordinated digital and sustainability strategies. The findings also suggest that the positive relationship between digital transformation and green technology innovation becomes stronger under higher levels of income tax burden. Accordingly, managers should align digital transformation initiatives with ESG strategies and long-term green innovation planning to strengthen sustainable competitiveness.

7.3. Policy Implications

The findings highlight that strengthening competitiveness in a sustainability-driven economy may benefit from integrated policy frameworks that extend beyond ESG disclosure requirements alone. Policymakers should promote coordinated strategies that support the alignment of digital transformation, ESG-related governance, and green technology innovation.

In particular, policies that encourage firms to allocate resources toward sustainability-oriented innovation activities may strengthen the effectiveness of digital transformation in improving long-term competitiveness. The findings further suggest that policy interventions should emphasize the simultaneous development of digital capabilities, ESG, and innovation ecosystems rather than promoting these initiatives independently. Digital infrastructure development, ESG-related standards, and innovation-support mechanisms should therefore be implemented in a coordinated manner to accelerate sustainability-oriented transformation among firms, particularly in emerging economies.

7.4. Limitations and Future Research Directions

This study is subject to several limitations. First, the analysis focuses exclusively on firms included in the ESG100 rankings published by the Thaipat Institute. Because these firms generally exhibit stronger sustainability engagement and ESG-related governance practices than other listed firms, the findings may not be fully generalizable to all firms listed on the Stock Exchange of Thailand. Future research may extend the analysis to a broader sample of listed firms or compare ESG100 and non-ESG100 firms to further examine the generalizability of the proposed sustainability transformation framework. Second, the use of secondary data may limit the ability to capture firm-level strategic intentions and managerial decision-making processes. Third, the relatively short observation period may not fully capture the long-term effects of digital transformation and green innovation activities.

In addition, although this study applies panel-data estimation with clustered robust standard errors, lagged robustness analysis, and multiple measures of sustainable competitiveness, potential endogeneity concerns may still remain due to reverse causality and omitted variable bias. Therefore, the findings should be interpreted primarily as evidence of association rather than strict causal relationships. Future research may employ dynamic panel models, instrumental-variable approaches, or generalized method of moments (GMM) estimation to further address endogeneity concerns.

Future studies may also examine whether the sequential sustainability transformation process identified in this study differs across industries with varying levels of digital maturity, environmental regulation, and institutional development. Such investigations would provide a deeper understanding of the contextual conditions under which digital transformation generates sustainable competitiveness. In addition, cross-country comparative studies may provide further insights into how institutional environments influence the effectiveness of the proposed sustainability transformation framework.