Enabling sustainability: how digital technology drives green product innovation through green dynamic capabilities

Purpose This study aims to examine how digital technology application drives green product innovation in manufacturing firms through green dynamic capabilities. Design/methodology/approach Drawing on survey data from middle and senior managers across 290 Chinese manufacturing firms of diverse sizes and ownership types, we examine chain mediation effects using Hayes' (2017) PROCESS macro. Findings Digital technology application significantly enhances green product innovation, with green dynamic capabilities serving as heterogeneous mediators. Specifically, green opportunity sensing, green exploitative knowledge search and internal/external green knowledge integration capabilities mediate this relationship, whereas exploratory green knowledge search does not. We identify two sequential pathways: (1) an internal pathway where digital technologies enhance green opportunity sensing capability, which strengthens internal green knowledge integration capability, ultimately improving green product innovation outcomes, and (2) an external pathway where digital technologies enhance green opportunity sensing capability, which activates green exploitative or exploratory knowledge search capability and external knowledge integration capability, collectively driving green product innovation. Originality/value This study advances the literature by distinguishing green product innovation from general green innovation. By developing a multidimensional framework of green dynamic capabilities, it uncovers how digital resources are transformed into innovation outcomes through specific sensing–searching–integrating sequences. These findings extend dynamic capability theory by mapping internal and external capability evolution pathways in the digital context and offer strategic guidance for manufacturers leveraging digitalization for sustainability.