Driving Sustainability‐Oriented Innovation Through Digital Transformation: Mediating Roles of Resource Orchestration and Value Co‐Creation

ABSTRACT This research investigates how digital transformation in the context of United States manufacturing firms leads to sustainability‐oriented innovation through the mediating influence of resource orchestration and value co‐creation and the moderating influence of sustainability orientation. Based on the Dynamic Capabilities View, the study uses document‐based content analysis from the annual and sustainability reports of 94 publicly listed manufacturing companies from 2019 to 2023, resulting in 470 firm‐year observations. A coding framework was applied to compile firm‐level disclosure across the five variables of the study. Partial least squares structural equation modeling was used to examine the relationships hypothesized. The findings suggest that digital transformation has a weak, direct positive impact on sustainability‐oriented innovation but a stronger indirect impact when mediated by resource orchestration and value co‐creation. Sustainability orientation plays a significant moderating role that strengthens two out of three indirect paths to sustainability‐oriented innovation. The results suggest that combining technology with a company's internal capabilities and sustainability principles produces the greatest effects. The study has practical importance for managers and policymakers as well as theoretical importance by extending the Dynamic Capabilities View to consider sustainability orientation as a contingency for the effectiveness of sustainability‐oriented innovation.