Emerging technologies and sustainable governance: exploring efficiency and institutional inertia in China’s public sector ecosystem

Purpose This study aims to examine how emerging technologies shape the cost-efficiency and sustainability performance of public governance institutions. It explores the influence of digital transformation, technological complexity and bureaucratic inertia on environmental policy outcomes, accounting for departmental heterogeneity and interorganizational coordination. Design/methodology/approach Grounded in an adaptation of production network theory and public management literature, a multilevel framework conceptualizes government departments as interdependent production units. Using a panel dataset from 31 Chinese provinces (2010–2023), the study employs fixed-effects regression, spatial network models (to proxy for interdepartmental spillovers) and stochastic frontier analysis. Key constructs include a novel Digital Transformation Index, a Sustainable Governance Performance Score and a newly operationalized latent measure of bureaucratic inertia derived from administrative process indicators. Findings Digital transformation significantly enhances sustainable governance performance, particularly in technologically complex departments, while bureaucratic inertia constrains efficiency. Nonlinear effects reveal diminishing returns, and spatial analysis confirms province-level spillovers that amplify systemic sustainability gains. Originality/value This study advances public management theory by systematically adapting production network logic to the public sector and by quantifying bureaucratic inertia using a novel, empirically grounded latent construct. It offers evidence-based insights for optimizing institutional efficiency and accelerating progress toward sustainable development goals through coordinated digital transformation, while acknowledging limitations in measuring direct interdepartmental flows.