Digital transformation and environmental, social and governance performance: a technology–organization–environment framework

Purpose Based on the Technology–Organization–Environment (TOE) framework, this study explores how digital transformation (DT) impacts corporate environmental, social and governance (ESG) practices and improves ESG performance. Design/methodology/approach This study employs a multiple linear regression model and mediator-effect model to test the mechanism by which DT improves ESG performance. Findings DT improves corporate ESG performance by reinforcing a competitive organizational culture and by enhancing dynamic capabilities. Market competition amplifies the positive impact of DT on ESG performance, whereas political connections do not affect the relationship between the two. The impact of DT on ESG performance varies across different industry types, industry characteristics and corporate life cycle stages. Research limitations/implications This study not only enriches the theoretical research concerning the economic and non-economic impacts of DT but also establishes a theoretical framework to analyze how enterprises improve ESG performance through DT. Practical implications This study provides actionable insights for corporate managers, while concurrently establishing a theoretical foundation and offering practical policy recommendations for governments to support enterprises’ DT. Originality/value This study emphasizes that the positive impact of DT does not arise spontaneously; instead, it necessitates collaborative evolution across technology, organization and environment. This insight deepens the understanding of DT’s complexity, circumvents the oversimplification of DT as a mere adoption of a digital tool and provides a more holistic analytical perspective for future research.