Pathways to Sustainable Development: Digital Maturity, Sustainability Practices and Innovation Barriers in Social Economy and Conventional Enterprises

ABSTRACT Advancing sustainable development requires organisations to align digital capabilities with social and environmental objectives, yet the mechanisms by which digital maturity and sustainability practices drive innovation remain poorly understood across organisational contexts. Drawing on dynamic capabilities, the Resource‐Based View and institutional perspectives on hybrid organisations, this study examines how the technological dimension of digital maturity and sustainability practices—social and environmental—influence social and environmental innovation (SEI), and how innovation barriers moderate these effects when comparing social economy enterprises (SEE) and non‐social economy enterprises (NSEE). Using microdata from the Flash Eurobarometer 486 covering 27 EU Member States and 12 additional countries, we estimate PLS‐SEM models and conduct multigroup analysis. The findings show that digital maturity significantly strengthens SEI in both organisational types, with a stronger effect in SEE than in NSEE. Social practices foster both SEI and the adoption of environmental practices, but environmental practices follow different innovation pathways across organisational contexts: they operate as a more stable direct driver in NSEE, whereas in SEE their contribution becomes stronger under high levels of innovation barriers. Crucially, barriers to innovation do not act as a uniform constraint. They dampen the translation of environmental practices into innovation in NSEE, but stimulate this relationship in SEE, suggesting that institutional friction can operate either as a barrier or as an enabling condition depending on the organisational context. The study advances an integrative, context‐dependent framework showing that the conversion of digital and sustainability‐oriented capabilities into social and environmental innovation varies across SEE and NSEE, organisational contexts characterised by different purpose and governance logics, and depends on the institutional frictions firms face.