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Citation: Hajishirzi, R.; Costa, C.J.;
Aparicio, M. Boosting Sustainability
through Digital Transformation’s
Domains and Resilience.
Sustainability 2022,14, 1822. https://
doi.org/10.3390/su14031822
Academic Editors: Thijs L. J.
Broekhuizen and David J. Langley
Received: 30 December 2021
Accepted: 24 January 2022
Published: 5 February 2022
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4.0/).
sustainability
Article
Boosting Sustainability through Digital Transformation’s
Domains and Resilience
Reihaneh Hajishirzi 1, * , Carlos J. Costa 1and Manuela Aparicio 2
1Advance/ISEG (Lisbon School of Economics & Management), Universidade de Lisboa,
1200-109 Lisbon, Portugal; cjcosta@iseg.ulisboa.pt
2NOVA Information Management School (NOVA IMS), Universidade Nova de Lisboa,
1070-312 Lisbon, Portugal; manuela.aparicio@novaims.unl.pt
*Correspondence: reihaneh.hajishirzi@aln.iseg.ulisboa.pt
Abstract:
Sustainability is a must for all businesses in all industries. It can boost company image and
productivity while being aligned with customer needs. On the other hand, digital transformation
(DT) is vital for business environments, and organizations need to be resilient in the face of crises
such as COVID-19. The main objective of our study is to figure out how DT and organizational
resilience might help businesses become more sustainable. This study presents a model that explains
social, environmental, and economic sustainability considering the domains of DT and organizational
resilience. Our model is evaluated on the data gathered by 208 c-suite leaders from various Iranian
companies. The model was empirically validated through a quantitative method of Partial Least
Squares/Structural Equation Modeling (PLS/SEM) technique. The findings reveal that the five
studied factors have substantial impact on the sustainability of Iranian organizations including
data-driven, business process innovation, customer engagement, organizational resilience, and
competitive advantages.
Keywords:
business process innovation; sustainability; competitive advantage; digital transformation;
customer engagement
1. Introduction
In today’s business world, Digital Transformation (DT) and sustainability are two
major market factors for organizations [
1
]. Boston consulting group (BCG) [
2
] derives
a new mindset called “technology ecoadvantage”, which means utilizing cutting edge
technologies and digitized operations to develop lucrative solutions that bring sustainability.
There are a lot of advantages for firms if they include environmental, social and economic
sustainability while adopting their digital transformation strategies [3,4].
According to Rogers [
5
], DT has five domains: data, innovation, customer, competition
and value. He believes that data is created quickly with exponential growth [
6
,
7
], but
analyzing and generating meaningful information is challenging. Organizations that can
adopt a data-driven strategy will create more value [
5
,
8
]. Moreover, digital technologies
enable rapid innovation in the processes and products, which help firms be leaders in the
market [
5
,
9
]. In addition, digitalization changes customer experiences through customer
engagement [
5
,
10
] and creates success for organizations in a competitive environment
by focusing on platform business models and competitive advantages [
5
,
11
]. On the
other hand, organizational resilience is a dynamic capability for responding in times of
disruption and crisis [
12
–
14
]. In the face of the COVID-19 pandemic, organizations need to
strengthen their resilience by engaging with stakeholders, promoting virtual work, and
driving customer communication [
15
]. The firms that can predict the crisis have more social
and economic sustainability [16].
This study targets Iranian organizations, where DT and sustainability appear in the
beginning phases of implementation [
17
]. The literature emphasizes that there is still a need
Sustainability 2022,14, 1822. https://doi.org/10.3390/su14031822 https://www.mdpi.com/journal/sustainability
Sustainability 2022,14, 1822 2 of 16
for more research for Iranian companies which are located in an important geographical
area but not enough studies have been done in this regard [
18
–
20
]. In addition, more
research is still required to better understand of the effects of DT on sustainability [
21
,
22
].
Accordingly, the main objective of our research is to identify how can digital transformation
process enable a transition to more sustainable companies. Our specific objectives are:
•RQ1: What is the impact of digital transformation’s domains on sustainability?
•RQ2: What is the impact of organizational resilience on sustainability?
To achieve these objectives, we propose a new theoretical model. We conduct an
empirical study to understand the impacts of DT’s domains and organizational resilience
on social, environmental, and economic sustainability in Iranian companies. We gather and
analyze data from 208 actual firms to verify this approach.
The study results show that business process innovation, customer engagement, and
competitive advantage significantly affect sustainability (social, environmental, and eco-
nomic). This research contributes to the current literature on DT, sustainability, and organi-
zational resilience by focusing on data, innovation, customer engagement and competitive
advantage. It also contributes to improve understanding of organizational sustainability.
The following is a breakdown of the paper’s structure. Section 2contains the literature
review. In part 3, the conceptual model and hypotheses are provided, followed by a
description of how the empirical investigation was carried out in Section 4. The results and
comments are summarized in Section 5. The conclusion is offered in the final Section 6.
2. The Current State of the Art
According to Brundtland World Commission Report [
23
], sustainability is the devel-
opment that provides the current demands without harming future generation’s capacity
to fulfill their needs. Sustainability has three aspects: social, environmental, and eco-
nomic [
24
]. Social sustainability is concerned about the impacts that organizations have on
the available capacity of non-financial capital [
25
]. Environmental sustainability is a state
of stability, resilience, and coherence that permits humans to achieve their demands while
not surpassing the ability of their supporting ecosystem to renew the services required
to meet those needs, nor reducing biological variety via activities [
26
]. Finally, economic
sustainability pertains to the company’s growth, development, and productivity [
27
]. There
are several benefits for businesses which include environmental, social, and economic
sustainability in their DT strategy [
3
,
4
]. Previous research shows digitization improves
environmental sustainability [
28
]. The other study provides a literature review over DT
and sustainability and presents a framework with four key areas including: pollution
control, waste management, sustainable production, and urban sustainability [
21
]. Other
researchers study how the big companies have tackled sustainable development, covering
a variety of challenges in the digital transformation topic [29].
The resource-based view theory in information system literature, describes that orga-
nizations can achieve competitive advantages by increasing rare, valuable imitable, and
substitutable firm’s capabilities [
30
]. Previous study finds that IT capabilities are organiza-
tional capabilities and it can increase competitive advantages [
31
]. According to Rogers [
5
],
in digital age companies should build platforms—instead of just focusing on product
developments—to gain competitive advantage. Platform theory states that companies
can create value in network of other partners and rivals [
32
]. It is also important to study
the behavior of competitors and assess the value of the new entrants in the market [
33
].
Another line of research shows that innovation and technological capabilities have an
impact on sustainable competitive advantage [34].
Rogers [
5
] describes innovation as adding value to a company product, service or
process. Based on the theory of disruption [
35
], in complex and high-cost markets, compa-
nies, by applying innovation, can transform their market with convenient, cost-effective
and transparent solutions. In the digital era, startups can use new technologies like ar-
tificial intelligence, blockchain, Internet of things, cloud computing, and additive man-
ufacturing [
36
,
37
] and create new business models which make incumbents face digital
Sustainability 2022,14, 1822 3 of 16
disruption [
38
]. According to business model innovation theory [
39
], if incumbents want to
survive and create lean value, at first, they should understand the current business model
and focus on people and their relationships and behaviors. Business process innovation
deploys a novel and considerably enhanced production process and distribution mecha-
nism [
40
]. Another study proposes a framework of dynamic capabilities that organizations
can use for developing digital process innovation [41].
The resilience topic has been recently studied in management scholar [
42
,
43
] mainly
during the COVID-19 crisis. Organizational resilience refers to a company’s response
to being destroyed, and it emphasizes the ability to recover and flourish in the face of
adversity, crisis, or disaster [
44
]. It emphasizes a company’s capability to adapt, expand,
and survive in a changing environment [
45
]. To be resilient, organizations need to change
their culture [
46
] and become more agile. Resilient businesses focus on assessing what type
of business they want to be and how they can acquire a competitive edge that will help
them achieve it [47].
Table 1classified the previous research on DT domains and sustainability and deter-
mines the domains they use to measure organizational sustainability.
Table 1. Previous research on DT and sustainability.
Study Description Methodology Variables
Data Innovation Customer Competition Resilience
[48]
They propose a framework that shows the
impact of customer engagement on
company value.
Literature
Review • •
[49]
They present a model for applying big
data analytics on sustainable
customer market.
Quantitative
approach • •
[50]They construct a model for the impact of
big data on customer behavior.
Quantitative
approach • •
[51]
They present seven future trends, and the
first is about changing customer
experience, customer involvement, and
customer satisfaction.
Literature
Review • •
[52]
They propose a model to understand the
effect of innovation capability and
customer experience on relationships.
Quantitative
approach • •
[53]
They study several ICT companies to
understand the relationship between
customer engagement and business
process innovation.
Case Study • •
[54]
They present a framework that shows the
impact of customer engagement on
competitive advantage and
firm performance.
Quantitative
approach • •
[55]
They propose a framework that shows the
importance of customer engagement on
sustainable competitive advantage.
Qualitative
approach • •
[56]
This study shows that customer
experience could bring competitive
advantage and create value.
Qualitative and
Quantitative
approach
• •
[57]
This research shows that customer
engagement impacts
sustainable development
Quantitative
approach •
[58]
This article reveals that customer
engagement influences corporate
social responsibility.
Quantitative
approach •
Sustainability 2022,14, 1822 4 of 16
Table 1. Cont.
Study Description Methodology Variables
Data Innovation Customer Competition Resilience
[16]
They present a model that shows the
influence of organizational resilience
on sustainability.
Quantitative
approach •
[59]
This study constructs a conceptual model
to show the relationship between
resilience and sustainability.
Literature
Review • •
[60]This study investigates the competitive
advantage of the environmental behavior. Case Study •
[61]
This research proposes a model for
analyzing the impact of competitive
advantage on economic sustainability.
Quantitative
approach •
[34]This article presents a model for
sustainable competitive advantages.
Quantitative
approach • •
3. Research Model
The aim of this research is to figure out how DT domains influence the sustainability of
Iranian companies. The constructions, hypotheses, and theoretical model are all described
in this section. To propose our research model, we use digital transformation domains
which were introduced by Rogers [
5
]. Moreover, we use the organizational resilience
domain which has become an important construct during the COVID-19 pandemic.
This model is made up of eight different constructs, which are: Data-Driven (Data),
Business Process Innovation (Inn), Customer Engagement (Cus), Organizational Resilience
(Res), Competitive Advantage (CompetAdv), Economic Sustainability (EcoS), Environmen-
tal Sustainability (EnvS), and Social Sustainability (SocS). Table 2shows the definition of
the constructs.
Table 2. Construct Definition.
Construct Definition Reference
Data-Driven (Data)
In today’s digital world, data is continuously generated everywhere.
The challenge of data is turning it into valuable information.
Unstructured data is increasingly usable and practical. The value of
data is connecting it across silos. Data is a critical intangible asset for
value creation.
[5]
Business Process Innovation (Inn)
In today’s rapidly changing business environment, organizations
should be more responsive and agile to customers’ needs. They need
to apply innovative solutions and technologies in their processes to
reduce costs and improve quality.
[44]
Customer Engagement (Cus)
It deals with satisfying consumers by giving more value in
comparison to competitors to foster continuous relations based on
belief and trust.
[62]
Organizational Resilience (Res) Refers to an organization’s response to damage and it highlights the
ability to recover and grow under uncertainty, crisis, and emergency.
[63]
Competitive Advantage (CompetAdv)
When a company obtains a set of traits that enable it to work better
than its competitors, it gains a competitive advantage. The
competitive advantage is shown when a firm’s actions are more
profitable than its competitors or when it beats them in terms of other
essential incomes.
[64,65]
Economic Sustainability (EcoS)
It relates to the growth, development, and productivity of the
company. It means that we should optimize the usage of resources to
create long-term sustainable values in our organization.
[27]
Sustainability 2022,14, 1822 5 of 16
Table 2. Cont.
Construct Definition Reference
Environmental Sustainability (EnvS)
It refers to the maintenance of natural capital; for this reason, firms
should take care of waste emissions and use renewable and
nonrenewable resources very carefully.
[66]
Social Sustainability (SocS)
It is a technique for developing sustainable locations that encourage
wellness by understanding people’s requirements of their living and
working places. It relates to the physical and social infrastructures,
social amenities, and citizen participation mechanisms.
[67]
Figure 1indicates our proposed. It presents that data-driven (Data) and business
process innovation (Inn) affects customer engagement (Cus). Customer engagement (Cus)
influences social sustainability (SocS), environmental sustainability (EnvS), and competitive
advantage (CompetAdv). Organizational resilience (Res) has an impact on competitive
advantage (CompetAdv) and economic sustainability (EcoS). In addition, competitive
advantage (CompetAdv) affects social, environmental, and economic sustainability. Finally,
organizational resilience has a moderating effect on relation of competitive advantage and
economical sustainability.
Sustainability 2022, 14, 1822 5 of 16
Figure 1. Sustainability explained by digital transformation model.
According to OECD [68], the use of data and analytics provide value to customer
interactions. Previous study analyzes the impact of big data on consumer purchase inten-
tion and understood that it positively impacts the desire of customers on e-commerce [69].
Data mining helps firms find potential customers, define customer segmentation, and im-
prove customer retention [70]. Companies should invest in technologies to successfully
manage big data to boost customer engagement [71]. According to Rogers [5], data gath-
ering from customers becomes one of every organization’s most valuable assets. Data can
help determine which clients demand the most significant attention, and it is utilized to
help companies customize their client communications. Even firms can develop data-
driven business models that retrieve and sell external data to meet customers’ demands
[72]. Big data analysis increases customer attention and purchasing behavior [50]. The dif-
ficulty of obtaining data from various channels on customer engagement is one of the
most critical challenges [48]. Accordingly, the following hypothesis is suggested:
Hypothesis 1 (H1). Data-driven have a positive effect on customer engagement.
Today’s businesses are constantly under competitive pressure [73]. One of the ways
that companies can survive is to put customer engagement at the center of a firm’s inno-
vation process [74]. There is another perspective that the presence of innovation capabili-
ties influences the loyalty and reputation of the company [52]. Another line of research
analyzes the business process innovation in Apple, Google, and Microsoft to understand
the critical role of customer engagement in process innovation activities [53]. Other re-
searchers conduct a systematic literature review on digital innovations and business pro-
cess management. They present seven future trends, and the first is about changing cus-
tomer experience, customer involvement, and customer satisfaction [51]. Accordingly, the
following hypothesis is suggested:
Hypothesis 2 (H2). Business process innovation has a positive effect on customer engagement.
Previous work shows a framework that shows the impact of customer engagement
on competitive advantage and firm performance [54]. Another line of research shows the
importance of customer engagement on sustainable competitive advantage [55]. An em-
pirical study on the city transportation domain shows that customer experience leads to
competitive advantage and creates value [56]. On the other hand, previous studies show
Figure 1. Sustainability explained by digital transformation model.
According to OECD [
68
], the use of data and analytics provide value to customer in-
teractions. Previous study analyzes the impact of big data on consumer purchase intention
and understood that it positively impacts the desire of customers on e-commerce [
69
]. Data
mining helps firms find potential customers, define customer segmentation, and improve
customer retention [
70
]. Companies should invest in technologies to successfully manage
big data to boost customer engagement [
71
]. According to Rogers [
5
], data gathering
from customers becomes one of every organization’s most valuable assets. Data can help
determine which clients demand the most significant attention, and it is utilized to help
companies customize their client communications. Even firms can develop data-driven
business models that retrieve and sell external data to meet customers’ demands [72]. Big
data analysis increases customer attention and purchasing behavior [50]. The difficulty of
obtaining data from various channels on customer engagement is one of the most critical
challenges [48]. Accordingly, the following hypothesis is suggested:
Sustainability 2022,14, 1822 6 of 16
Hypothesis 1 (H1). Data-driven have a positive effect on customer engagement.
Today’s businesses are constantly under competitive pressure [
73
]. One of the ways
that companies can survive is to put customer engagement at the center of a firm’s innova-
tion process [74]. There is another perspective that the presence of innovation capabilities
influences the loyalty and reputation of the company [
52
]. Another line of research an-
alyzes the business process innovation in Apple, Google, and Microsoft to understand
the critical role of customer engagement in process innovation activities [
53
]. Other re-
searchers conduct a systematic literature review on digital innovations and business process
management. They present seven future trends, and the first is about changing customer ex-
perience, customer involvement, and customer satisfaction [
51
]. Accordingly, the following
hypothesis is suggested:
Hypothesis 2 (H2). Business process innovation has a positive effect on customer engagement.
Previous work shows a framework that shows the impact of customer engagement
on competitive advantage and firm performance [
54
]. Another line of research shows
the importance of customer engagement on sustainable competitive advantage [
55
]. An
empirical study on the city transportation domain shows that customer experience leads to
competitive advantage and creates value [
56
]. On the other hand, previous studies show
that customer engagement impacts sustainable development [
57
] and corporate social
responsibility [58,75]. Accordingly, the following hypotheses are suggested:
Hypothesis 3a (H3a). Customer engagement has a positive effect on social sustainability.
Hypothesis 3b (H3b). Customer engagement has a positive effect on competitive advantage.
Hypothesis 3c (H3c).
Customer engagement has a positive effect on environmental sustainability.
Organizational resilience should be linked to a competitive advantage for a com-
pany [
76
]. Resilient companies are focused on determining what type of firms they want to
be and how they may acquire a competitive advantage that will enable them to achieve
it [
47
]. An empirical study shows that organizational resilience positively affects economic
sustainability [
16
]. Researchers believe that organizational resilience must be viewed as a
subterm, comparable to the holistic perspective of sustainability [
59
]. There are also several
studies that show a moderating effect of organizational resilience [
77
–
79
]. Accordingly, the
following hypotheses are suggested:
Hypothesis 4a (H4a). Organizational resilience has a positive effect on competitive advantage.
Hypothesis 4b (H4b). Organizational resilience has a positive effect on economic sustainability.
Hypothesis 4c (H4c).
Organizational resilience has a moderating effect on a relation of competitive
advantage and economical sustainability.
Several researchers conducted empirical research and found that companies’ com-
petitive advantages are one of the most essential benefits of firms tackling sustainability
challenges [
80
]. A new perspective shows that the high-tech companies create high margin
businesses and sustainable competitive advantages when they develop imitable resources
and capabilities [
81
]. Moreover, scientists investigate the competitive advantage of environ-
mental behavior at a company level [
60
]. Another study shows that competitive activities
have a positive effect on sustainable competitive advantage and competitive advantage
has a positive impact on business performance [
61
]. The other line of research shows that
sustainable advantage has a positive effect on market performance [
34
]. Accordingly, the
following hypotheses are suggested:
Sustainability 2022,14, 1822 7 of 16
Hypothesis 5a (H5a). Competitive advantage has a positive effect on social sustainability.
Hypothesis 5b (H5b).
Competitive advantage has a positive effect on environmental sustainability.
Hypothesis 5c (H5c). Competitive advantage has a positive effect on economic sustainability.
4. Empirical Study & Results
We develop a study instrument using the measurement model (Appendix A) to survey
a random sample of Iranian businesses and organizations. Our measurement model is a
questionnaire divided into two sections: (1) questions regarding sample characteristics,
(2) questions regarding construct evaluations. On a seven-point scale, respondents may
choose their replies (1—Strongly Disagree to 7—Strongly agree).
We use data-driven and business process innovation domains to measure the effect of
customer engagement. Further, we use customer engagement and organizational resilience
to measure the competitive advantage effect. In addition, we apply customer engagement
and competitive advantage to measure social sustainability and environmental sustain-
ability. Finally, we use competitive advantage and organizational resilience to measure
economic sustainability.
We apply the two-step PLS/SEM method for data analysis using the SmartPLS 3.0
tool [
82
,
83
]. This section describes the structural model outcomes after presenting the
measurement model data [84].
4.1. Sample Characterization
Our data consists of 208 responses collected from May to November 2021, using our
questionnaire which was distributed via Google form. Table 3shows the characteristics of
the respondents. About 89% of respondents are male and 47.59% respondents are between
31 to 40 years old. Respondents include small to big companies in various industries,
including manufacturing, services, and construction.
Table 3. Descriptive statistics of respondent characteristics.
Respondent Characteristics (n = 208)
Gender
Female 23 11.05%
Male 185 88.95%
Age
18–30 30 14.42%
31–40 99 47.59%
41–50 55 26.45%
51–60 20 9.62%
>60 4 1.92%
Organization Characteristics
Age of the Organization
<2 31 14.90%
2–5 43 20.67%
6–10 35 16.83%
11–20 51 24.52%
>20 48 23.08%
Sustainability 2022,14, 1822 8 of 16
Table 3. Cont.
Respondent Characteristics (n = 208)
Industry
Charity/not for profit 0 0%
Construction/Property 8 3.64%
Consumer Packaged Goods 4 1.82%
Education 8 3.18%
Energy/Mining 20 9.55%
Entertainment/media 4 1.82%
Financial services 20 9.09%
Hospitality/Catering 0 0%
IT and technology 69 31.36%
Legal 1 0.45%
Manufacturing 26 11.82%
Pharmaceutical 10 4.54%
Private healthcare and services 4 1.82%
Professional/Business services 17 7.73%
Public sector (incl. local and central government, etc.) 13 5.91%
Retail 4 1.82%
Telecommunications 2 0.91%
Transport, distribution, and logistics 9 4.09%
Utilities 1 0.45%
4.2. Measurement Model Assessment
We use the PLS technique to determine if the constructs were trustworthy or not. Table 4
summarizes the measurement model results across different metrics including outer loading,
composite reliability, Cronbach’s Alpha, and average variance extracted (AVE). The outer
loading is about an indicator weight, and it should be over 0.70 [
85
]. The composite reliability
shows the internal consistency in scale items and it should be more than 0.70 [
86
]. Cronbach’s
Alpha is another metric of dependability, and if it is more than 0.7, it indicates that the study
is internally consistent [
87
]. The average variance extracted (AVE) indication shows the
constructs’ convergent validity, and it should be more than 0.5 [88].
Table 4. Measurement model results.
Construct Items Outer Loading Composite Reliability Cronbach’s Alpha AVE Discriminant Validity?
Data
Data1 0.932
0.907 0.848 0.766 Yes
Data2 0.912
Data3 0.773
Inn
Inn1 0.864
0.950 0.934 0.792 Yes
Inn2 0.878
Inn3 0.923
Inn4 0.912
Inn5 0.870
Cus
Cus1 0.873
0.841 0.830 0.745 Yes
Cus2 0.865
Cus3 0.851
Sustainability 2022,14, 1822 9 of 16
Table 4. Cont.
Construct Items Outer Loading Composite Reliability Cronbach’s Alpha AVE Discriminant Validity?
Res
Res1 0.803
0.936 0.917 0.708 Yes
Res2 0.873
Res3 0.854
Res4 0.868
Res5 0.806
CompetAdv
CompetAdv1 0.818
0.926 0.901 0.716 Yes
CompetAdv2 0.818
CompetAdv3 0.850
CompetAdv4 0.859
CompetAdv5 0.883
EcoS
EcoS1 0.902
0.935 0.897 0.829 Yes
EcoS2 0.931
EcoS3 0.897
EnvS
EnvS1 0.885
0.918 0.866 0.788 Yes
EnvS2 0.865
EnvS3 0.912
SocS
SocS1 0.902
0.943 0.910 0.838 Yes
SocS2 0.955
SocS3 0.904
Moderating effect
CompAdv_EcoS_Res
1.386 1.000 1.000 1.000 Yes
We verify that all indicators are credible because all item loadings are more significant
than 0.773. Our data analysis shows that all the constructs are consistent because they are
above 0.841. All AVEs are over 0.708 and demonstrate convergent validity. All Cronbach’s
Alpha readings for all structures in our analysis are more than 0.830.
4.3. Structural Model Assessment
To analyze the structural model’s quality, we use a PLS and bootstrapping approach
using 5000 subsamples [
89
]. Figure 2summarizes our findings of the structural model.
Table 5demonstrates our hypotheses test results. These results indicate that our proposed
hypotheses (Section 3) are all supported as justified below.
Sustainability 2022, 14, 1822 9 of 16
Figure 2. Sustainability explained by digital transformation model results. ** significant at p < 0.01;
*** significant at p < 0.001.
Table 5. Hypothesis test results.
Hypothesis Independent
Variable
Dependent
Variable Moderator F
2
Effect
Size p-Value Findings Conclusion
H1 Data-Driven
Customer
Engagement - 0.150 Medium 0.000
Positively & Statistically
Significant *** (β^ = 0.418, p <
0.001)
Supported with
large effect
H2 Business Process
Innovation
Customer
Engagement - 0.127 Small 0.000
Positively & Statistically
Significant *** (β^ = 0.384, p <
0.001)
Supported with
large effect
H3a Customer
Engagement Social Sustainability - 0.376 Large 0.000
Positively & Statistically
Significant *** (β^ = 0.552, p <
0.001)
Supported with
large effect
H3b Customer
Engagement
Competitive
Advantage - 0.057 Small 0.004
Positively & Statistically
Significant ** (β^ = 0.253, p <
0.05)
Supported with
medium effect
H3c Customer
Engagement
Environmental
Sustainability - 0.128 Small 0.000
Positively & Statistically
Significant *** (β^ = 0.360, p <
0.001)
Supported with
large effect
H4a Organizational
Resilience
Competitive
Advantage - 0.193 Medium 0.000
Positively & Statistically
Significant *** (β^ = 0.465, p <
0.001)
Supported with
large effect
H4b Organizational
Resilience
Economic
Sustainability - 0.120 Small 0.001
Positively & Statistically
Significant ** (β^ = 0.308, p <
0.05)
Supported with
medium effect
H4c Organizational
Resilience
Economic
Sustainability
Competitive
Advantage 0.021 Small 0.030
Positively & Statistically
Significant ** (β^ = 0.077, p <
0.05)
Supported with
medium effect
H5a Competitive
Advantage Social Sustainability - 0.046 Small 0.016
Positively & Statistically
Significant ** (β^ = 0.192, p <
0.05)
Supported with
medium effect
H5b Competitive
Advantage
Environmental
Sustainability - 0.082 Small 0.000
Positively & Statistically
Significant *** (β^ = 0.288, p <
0.001)
Supported with
large effect
H5c Competitive
Advantage
Economic
Sustainability - 0.356 Large 0.000
Positively & Statistically
Significant *** (β^ = 0.538, p <
0.001)
Supported with
large effect
Figure 2.
Sustainability explained by digital transformation model results. ** significant at p< 0.01;
*** significant at p< 0.001.
Sustainability 2022,14, 1822 10 of 16
Table 5. Hypothesis test results.
Hypothesis Independent Variable Dependent Variable Moderator F2Effect Size p-Value Findings Conclusion
H1 Data-Driven
Customer Engagement
- 0.150 Medium 0.000 Positively & Statistically Significant ***
(βˆ = 0.418, p< 0.001) Supported with large effect
H2 Business Process
Innovation
Customer Engagement
- 0.127 Small 0.000 Positively & Statistically Significant ***
(βˆ = 0.384, p< 0.001) Supported with large effect
H3a
Customer Engagement
Social Sustainability - 0.376 Large 0.000 Positively & Statistically Significant ***
(βˆ = 0.552, p< 0.001) Supported with large effect
H3b
Customer Engagement
Competitive
Advantage - 0.057 Small 0.004 Positively & Statistically Significant **
(βˆ = 0.253, p< 0.05) Supported with medium effect
H3c
Customer Engagement
Environmental
Sustainability - 0.128 Small 0.000 Positively & Statistically Significant ***
(βˆ = 0.360, p< 0.001) Supported with large effect
H4a Organizational
Resilience
Competitive
Advantage - 0.193 Medium 0.000 Positively & Statistically Significant ***
(βˆ = 0.465, p< 0.001) Supported with large effect
H4b Organizational
Resilience
Economic
Sustainability - 0.120 Small 0.001 Positively & Statistically Significant **
(βˆ = 0.308, p< 0.05) Supported with medium effect
H4c Organizational
Resilience
Economic
Sustainability
Competitive
Advantage 0.021 Small 0.030 Positively & Statistically Significant **
(βˆ = 0.077, p< 0.05) Supported with medium effect
H5a Competitive
Advantage Social Sustainability - 0.046 Small 0.016 Positively & Statistically Significant **
(βˆ = 0.192, p< 0.05) Supported with medium effect
H5b Competitive
Advantage
Environmental
Sustainability - 0.082 Small 0.000 Positively & Statistically Significant ***
(βˆ = 0.288, p< 0.001) Supported with large effect
H5c Competitive
Advantage
Economic
Sustainability - 0.356 Large 0.000 Positively & Statistically Significant ***
(βˆ = 0.538, p< 0.001) Supported with large effect
Sustainability 2022,14, 1822 11 of 16
We start to explain this section by reporting the p-values and
β
ˆ. H1 is supported
with large effect because data-driven account for 41.8 percent of the variation in customer
engagement (
β
ˆ = 0.418, p< 0.001). H2 is supported with large effect because business pro-
cess innovation explains 38.4 percent of the variation in customer engagement (
βˆ = 0.384
,
p< 0.001
). H3a is supported with large effect because customer engagement explains
55.2 percent of variation in social responsibility (
β
ˆ = 0.552, p< 0.001). H3b is supported
with medium effect because customer engagement explains 25.3 percent of the variation
in competitive advantage (
β
ˆ= 0.253, p< 0.05). H3c is supported with large effect because
customer engagement explains 36 percent of the variation in environmental sustainability
(
β
ˆ = 0.360, p< 0.001). H4a is supported with large effect because organizational resilience
explains 46.5 percent of the variance in competitive advantage (
β
ˆ = 0.465, p< 0.001. H4b is
supported with medium effect, and organizational resilience accounts for 30.8 percent of the
variation in economic sustainability (
β
ˆ = 0.308, p< 0.05). H4c is supported with medium
effect because the moderating effect of organizational resilience explains 7.7 percent of
variation in relation between competitive advantage and economic sustainability. H5a is
supported with medium effect because competitive advantage explains 19.2 percent of
the variation in social sustainability (
β
ˆ = 0.192, p< 0.05). H5b is supported with large
effect because competitive advantage explains 28.8 percent of variation in environmental
sustainability (
β
ˆ = 0.288, p< 0.001). H5c is supported with large effect because compet-
itive advantage explains 53.8 percent of variation in economic sustainability (
β
ˆ = 0.538,
p< 0.001).
We additionally report the F
2
indicator to determine if a concept is significant or not.
This metric indicates a substantial influence if it is more than 0.350 (F
2
> 0.350), a modest
influence if (0.350 > F
2
> 0.150), and a low influence if (0.150 > F
2
> 0.020) [
90
]. Our findings
demonstrate that all the hypotheses are positive and significant, however their impact sizes
vary. H3a, and H5c have large effects, H1, and H4a medium effects, and H2, H3b, H3c, H4b,
H4c, H5a, and H5b small effects. In Table 5, you can find a summary of the consequences.
5. Discussion
This research applies digital transformation domains that were introduced by Rogers [
5
],
and the theories of organizational resilience, disruption, business model, resource-based
view, and platform, to propose a theoretical model for boosting organizational sustainabil-
ity through digital transformation. In this model, social, environmental, and economic
sustainability was measured by the effects of digital transformation’s domain and organiza-
tional resilience.
Rogers [
5
] explains why businesses must reconsider their customers, data, innovation,
and value and describes how they can use them, but he doesn’t propose a model. Another
study evaluates the direct effects of competition, customer, data, and innovation on sustain-
ability, but does not consider their interactions with each other [
91
]. In contrast, we propose
a theoretical model to study direct and indirect relations between these domains to sustain-
ability. In addition, we add a new domain of organizational resilience and study its effect
on sustainability. Moreover, we validate our theoretical model with our empirical study.
To propose the model, we design the constructs and their relationships based on some
findings in previous research. Prior work shows that customer experience and innovation
capabilities provide a competitive advantage and create value [
48
,
52
,
56
]. The other line of
research shows that IT capabilities, digital platforms, and technological capabilities increase
competitive advantages [5,31,34].
Our study shows that data-driven and business process innovation significantly affect
customer engagement, where the impact of data-driven is higher than innovation. More-
over, the customer engagement significantly affects competitive advantage. Therefore, we
discover an indirect effect of data and innovation on competitive advantage. Our results
are aligned with findings in previous work.
In this research, we find that, the impact of competitive advantage on economic
sustainability is greater than its effect on social and environmental sustainability. On the
Sustainability 2022,14, 1822 12 of 16
other hand, competitive advantage effect is about 1.7 times greater than the impact of
organizational resilience on economic sustainability. It validates the conclusions of earlier
researchers who debated that competitive advantage and organizational resilience have an
impact on sustainability [16,34,59,61,80,81].
Regarding customer perspective, a previous study presents a framework that demon-
strates how customer engagement affects competitive advantage and company perfor-
mance [
54
]. We also found that customer engagement has more impact on social and
environmental sustainability than environmental sustainability. But these impacts are more
than competitive advantage effects on social and environmental sustainability.
6. Conclusions and Implications
This study aims to understand the effect of digital transformation on sustainability.
For this reason, the research model consists of data-driven, business process innovation,
customer engagement, competitive advantage, organizational resilience, social sustainabil-
ity, environmental sustainability, and economic sustainability. The research model explains
33.3% environmental sustainability, 54.5% economic sustainability, and 46.6% social sustain-
ability. We found that competitive advantage has more impact on economic sustainability
instead of social and environmental sustainability. Further, competitive advantage has
more effect on economic sustainability than organizational resilience. In addition, customer
engagement has more effect on social sustainability than environmental sustainability.
The study’s theoretical implications add to the increasing knowledge by proposing
a theoretical model that integrates digital transformation theory with organizational re-
silience and sustainability. We also conducted an empirical study to evaluate the research
model to determine how sustainability is explained by digital transformation and organiza-
tional resilience.
There are also practical implications. The findings reveal customers’ significant role in
gaining valuable capabilities and competitive advantages in the organizations. Therefore,
the companies should engage, attract, inspire, and collaborate with customers more in
all aspects of organizations. For this reason, they can use valuable and meaningful data
as strategic assets to engage more customers. They need to apply innovative solutions
and technologies to reduce costs and improve quality to respond to customers’ needs.
Companies can involve their customers by gamification strategies to grant them rewards.
For example, the customers of Starbucks can earn stars when they scan their barcode
from the My Starbucks Reward app. On the other hand, competitive advantage will
increase satisfaction with the company’s performance in sales, profit, and cash flow. Also,
competitive advantage impacts developing more environmentally friendly products that
use fewer natural resources and decrease pollution. It can enhance a company’s social
recognition and empowerment in society. Therefore, the c-suite leaders can find competitive
advantages for their companies by obtaining a set of traits that enable their firms to
work better than their competitors to achieve more sustainability. Furthermore, suppose
managers increase the resilience of their companies in response to the crisis and highlight
the ability to recover and grow under uncertainty and emergency. In that case, they can
achieve more competitive advantage and economic sustainability.
Author Contributions:
Conceptualization, R.H., C.J.C. and M.A.; methodology, R.H., C.J.C. and
M.A.; software, R.H., C.J.C. and M.A.; validation, R.H., C.J.C. and M.A.; formal analysis, R.H., C.J.C.
and M.A.; investigation, R.H., C.J.C. and M.A.; resources, R.H., C.J.C. and M.A.; data curation, R.H.,
C.J.C. and M.A.; writing—original draft preparation, R.H., C.J.C. and M.A.; writing—review and
editing, R.H., C.J.C. and M.A.; visualization, R.H., C.J.C. and M.A.; supervision, R.H., C.J.C. and
M.A.; project administration, R.H., C.J.C. and M.A.; funding acquisition, C.J.C. All authors have read
and agreed to the published version of the manuscript.
Funding:
The authors acknowledge financial support via ADVANCE-CSG from the Fundação para a
Ciência and Tecnologia (FCT Portugal) through research grant number UIDB/04521/2020, and we
gratefully acknowledge the financial support from FCT—Fundação para a Ciencia e Tecnologia, I.P.,
Sustainability 2022,14, 1822 13 of 16
(Portugal), national funding through research grant UIDB/04152/2020—Centro de Investigação em
Gestão de Informação (MagIC).
Institutional Review Board Statement:
The study was conducted according to the guidelines of the
Declaration of Helsinki, and approved by the Ethics Committee of NOVA IMS (NFSYS2022-1-37926,
on 1/3/2022).
Informed Consent Statement:
Informed consent was obtained from all subjects involved in the study.
Conflicts of Interest: The authors declare no conflict of interest.
Appendix A
Table A1. Measurement model.
Construct Measurement Items Authors
Data-Driven
—Our data strategy is focused on how to turn data into new value.
—We manage our data as a strategic asset we are building over time.
—Our data is organized to be accessible by all divisions of the company.
[5]
Business process innovation
—Team leaders in our organization honor cutting-edge ideas for the innovation of
business processes.
—Our top management rewards employees who present pioneering ideas for enhancing the
performance of business processes.
—Our organization welcomes concepts for fundamental innovations that increase the
performance of business processes.
—Our organization encourages thinking “outside the box” to create innovative solutions in
business processes.
—Managers of our organization are open to radical changes that enhance the performance of
business processes.
[92]
Customer Engagement
—We are focused on our customers’ changing digital habits and path to purchase.
—We use marketing to attract, engage, inspire, and collaborate with customers.
—Our customers’ advocacy is the biggest influence on our brand and reputation.
[93]
Organizational Resilience
—We have a focus on being able to respond to the unexpected.
—We proactively monitor our industry to have an early warning of emerging issues.
—We have clearly defined priorities for what is important during and after a crisis.
—There would be good leadership from within our organization if we were struck by a crisis.
—Our organization maintains sufficient resources to absorb some unexpected change.
—We can make tough decisions quickly.
[94]
Competitive Advantage
—Compared with competitors, the quality of the company’s products or services is very good.
—Compared with competitors, the profitability of this company is very high.
—Compared with competitors, the company’s product market share has grown rapidly.
—Compared with competitors, the company has a better reputation.
—Compared with competitors, our products are in an advantageous position in the market.
[95]
Economic Sustainability
—Please indicate your level of satisfaction with your company’s performance in sales.
—Please indicate your level of satisfaction with your company’s performance in Net Profit.
—Please indicate your level of satisfaction with your company’s performance in Cash Flow.
[96]
Environmental Sustainability
—Compared with our major competitors, our products are more environmentally friendly.
—Compared with our major competitors, our production process requires fewer natural resources.
—Compared with our major competitors, our production process decreases
environmental pollution.
[96]
Social Sustainability
—Our company enhances our social recognition in society.
—Our company improves our empowerment in society.
—Our company provides freedom and control.
[96]
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