Digital Readiness Meets Sustainable Business Strategy: Leveraging Data‐Driven Innovation to Transform Entrepreneurial Orientation Into ESG Performance

ABSTRACT Today's organizations encounter increasing pressure to address sustainability challenges. This study explores how sustainable entrepreneurial orientation influences environmental, social, and governance outcomes through data‐driven innovation capabilities and green technological advancements. Grounded in the dynamic capabilities perspective, it highlights the mediating roles of innovation capabilities and green technologies while examining how sustainable entrepreneurial culture and technology readiness strengthen the relationship between innovation efforts and green outcomes, offering insights into achieving enhanced sustainability performance across organizational contexts. By using a time‐lagged design across three waves, and drawing data from manufacturing SMEs in China, our results reveal a positive relationship between sustainable entrepreneurial orientation, data‐driven innovation capabilities, green technological innovation, and environmental, social, and governance outcomes. Further, the findings suggest that the sequential mediation mechanism is supported by sustainable entrepreneurial culture and readiness to adopt sustainable technologies to attain superior environmental, social, and governance outcomes. The study provides theoretical implications and practical insights for contemporary organizations aiming to enhance their environmental, social, and governance practices amid the sustainability challenges.