Assessing the impact of public digitalization on sustainability: the mediating role of technological innovation in the context of the EU

Public sector digitalization and technological innovation are increasingly being recognized as key drivers of sustainable development. To maintain sustainable growth, it is imperative for economies within the European Union (EU) to adopt public digitalization and technological innovation practices to mitigate the risk of negative economic and environmental outcomes. However, the interplay between these two factors and their impact on sustainability remain underexplored. We draw insights from the Triple Bottom Line (TBL) theory to develop and test a theoretical model to assess the mediating role of technological innovation in the relationship between public digitalization and sustainability in the context of the European Union (EU). Using a panel dataset of EU countries from 2018 to 2023, this study employs structural equation modeling (SEM) to analyze the direct and indirect effects of public digitalization and technological innovation on sustainability. The findings suggest that public digitalization positively and significantly influences technological innovation, which, in turn, fosters sustainability progress. Moreover, our findings confirm that technological innovation positively mediates the relationship between public digitalization and sustainability. These findings provide valuable insights for policymakers and practitioners seeking to harness the power of public digitalization and technological innovation to achieve sustainable development goals. This study highlights the importance of promoting technological innovation as a catalyst for public digitalization and a driver of sustainability progress in the EU.