Empowering Sustainability Through Technologies: The Impact of Companies' Digital Capabilities and Digital Ambition

ABSTRACT Digital transformation, driven by advanced technologies including social media, mobile technology, analytics, cloud computing, and the Internet of Things, can potentially integrate sustainability into corporate practices and enhance resource efficiency, employee well‐being, and economic performance. This study examines how digital capabilities and ambition affect sustainability performance, highlighting the moderating roles of market competition and predictability. Through a survey of 207 Finnish small and medium‐sized enterprises, this study reveals that digital capabilities significantly enhance sustainability performance, whereas digital ambition may negatively affect sustainability performance. Competitive intensity strengthens the positive relationship between digital capabilities and sustainability and reduces the negative effects of digital ambition. Market predictability does not significantly influence these relationships, suggesting that internal strategic orientation is critical for achieving sustainability outcomes. This study highlights the need for resilient and adaptable strategies that prioritize sustainability alongside technological advancements to navigate the complexities of digital transformation and sustainability integration.