Digital Capability, Environmental Strategy Orientation, and Sustainable Organizational Performance: A Sequential Mediation Model of Environmental Management Accounting and Decision Quality

Despite increasing investments in digital transformation and sustainability initiatives, many organizations struggle to translate these efforts into measurable sustainable organizational performance, particularly in emerging economies, where resource constraints and institutional pressures persist. This study examines how digital capability and environmental strategy orientation contribute to sustainable organizational performance through the sequential mediating roles of environmental management accounting (EMA) integration and managerial decision quality. Drawing on dynamic capability theory and the natural resource-based view, this study proposes a moderated mediation model incorporating technology readiness and environmental regulatory pressure. Data were collected from 479 middle- and senior-level managers of ISO 14001-certified manufacturing firms in Pakistan and analyzed using partial least squares structural equation modeling (PLS-SEM). The results indicate that both digital capability and environmental strategy orientation significantly enhance EMA integration, which in turn improves managerial decision quality and ultimately drives sustainable organizational performance. The findings confirm the presence of sequential mediation through EMA integration and decision quality. Furthermore, technology readiness strengthens the relationship between digital capability and EMA integration, whereas environmental regulatory pressure does not significantly moderate the relationship between environmental strategy orientation and EMA integration. This study contributes to the sustainability literature by introducing a novel sequential mediation mechanism linking digital and strategic capabilities to sustainability outcomes through accounting-based processes. It also provides empirical evidence offering practical insights for managers and policymakers aiming to enhance sustainability performance. The findings provide context-specific insights from an emerging economy and contribute to advancing organizational sustainability in line with SDGs 8, 12, and 13.