Empowering Firms to Enhance Sustainable Supply Chain Strategies for Competitive Environmental Performance: Firm‐Level Evidence on Governance and Sustainable Business Model Innovation

ABSTRACT Amid growing global pressure to reconcile industrial growth with environmental sustainability, the adoption of green supply chain strategies (GSCS) in manufacturing remains critically underexplored in emerging markets. Despite rising sustainability rhetoric, many firms still lack clear mechanisms to translate environmental ambitions into practice, and prior research has largely emphasized institutional pressures while underexamining firm‐level intent and internal capabilities. This study addresses this gap by examining how sustainability targets (ST) influence GSCS adoption among manufacturing firms in Sub‐Saharan Africa (SSA). Grounded in Dynamic Capability Theory and the Natural Resource‐Based View, the study further investigates the mediating role of digital transformation (DT) and the moderating effect of sustainable governance (SG). Using panel data from 467 SSA manufacturing firms over 2010–2023, we employ a rigorous econometric framework that combines dynamic panel estimators with instrumental variable and selection correction approaches to mitigate endogeneity, simultaneity, and selection concerns. The results show that ST significantly promote GSCS adoption in a nonlinear (inverted U‐shaped) manner, indicating that moderate targets are most effective, whereas overly ambitious targets may weaken implementation. DT partially mediates this relationship by facilitating execution and coordination, while SG strengthens it through enhanced oversight and accountability. Heterogeneity analyses reveal that these effects vary across ownership structures, regional blocs within SSA, and industry groups. Overall, the findings offer actionable implications for managers and policymakers by highlighting the importance of aligning sustainability ambition with digital and governance capabilities to advance sustainable industrial transformation in SSA.