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The green transition journey: How digital platforms and AI capabilities drive green ambidexterity innovation, circular economy and sustainable performance

Year: 2026

Type: article

Abstract: Despite growing attention to sustainability in SMEs, limited research explains the capability-building mechanism through which digital and AI capabilities enable green transition and circular economy outcomes under resource constraints. Drawing on Dynamic Capability Theory, this study examines how digital platform capability and AI capability foster green transition and ambidextrous green innovation, thereby enhancing circular economy practices and sustainable performance. Using survey data from 286 Vietnamese SMEs and applying hierarchical regression and polynomial regression with response surface analysis, the findings show that digital capability exerts a stronger effect on green transition than AI capability. Both exploratory and exploitative green innovation significantly improve sustainability outcomes, though through distinct pathways. Balanced innovation maximizes circular economy practices, whereas imbalance may weaken circularity but improve performance. The study advances dynamic capability theory by clarifying the innovation-mediated pathway linking digital transformation to sustainability in emerging-economy SMEs.

Source: World Development Sustainability

DOI: 10.1016/j.wds.2026.100296

Author: Cong Doanh Duong

Institution: National Economics University

Language: English

Topic: Environmental Sustainability in Business

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Responsible consumption and production, Climate action, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,400