How Entrepreneurial Orientation Drives Sustainable Innovation Performance in Chinese Entrepreneurial Firms: The Role of Digital Transformation and Strategic Agility

Sustainable innovation performance has become critical for entrepreneurial firms. This study examined the capability-based drivers of sustainable innovation performance by integrating entrepreneurial orientation, digital transformation, and strategic agility. Survey data were collected from 350 entrepreneurial firms in China and analyzed using partial least squares structural equation modeling (PLS-SEM). Results showed that entrepreneurial orientation positively influences sustainable innovation performance both directly and indirectly through digital transformation. In contrast, strategic agility exhibits a significant negative moderating effect on the entrepreneurial orientation and digital transformation relationship, revealing an important capability tension. This study advanced dynamic capabilities theory by demonstrating that innovation performance depends on the alignment and balance of sensing, seizing, and reconfiguring capabilities rather than their isolated presence. The findings supported sustainable growth of entrepreneurial firms by encouraging resource efficiency, environmental sustainability, and digitally enabled sustainable business models. Socially, the study supported sustainable innovation systems that enhance societal benefits under responsible digital development.