Driving sustainable innovation through digital technology adoption in China’s manufacturing industries

Purpose This study aims to examine how digital technology adoption (DTA) can increase the sustainable innovation performance (SIP) in the Chinese manufacturing industries. It particularly examines the mediating role of digital innovation orientation (DIO) and the moderating role of digital dynamic capability (DDC). Design/methodology/approach A questionnaire survey was used to gather data on 348 senior and middle managers of 87 high-tech, textile and electronics manufacturing firms, through a time-lag methodology. The structural equation modeling and moderated mediation analysis were used to test hypotheses. Findings The findings confirm that DTA affects SIP significantly in a positive way. The DIO of a firm mediates this relationship, which means that the adoption of technology leads to sustainable results mainly through the development of a strategic orientation toward digital innovation. Also, the relationship between DTA and SIP, through DIO and DDC, has a positive moderating and mediated effect. Practical implications To policymakers, the research highlights the importance of having policies to facilitate not only technology diffusion but also the building of organizational capacity so that the digital investments can be translated into sustainable competitive advantages and innovation-based industrial upgrading. Originality/value The study contributes to the literature by combining the view of digital innovation and the dynamic capability perspective with a refined adoption orientation performance model. It goes beyond the estimation of the direct effects to disaggregate the most important mediating and moderating processes, DIO and DDC, that describe the effects of digital adoption on sustainable innovation.