Linking organizational dynamics to digital capabilities and ESG outcomes: a market-oriented approach

Environmental, Social, and Governance (ESG) represents a concept of sustainable development that integrates corporate governance, social responsibility, and environmental concerns. Most ESG research focuses on large-size publicly traded companies, and limited attention is paid to entrepreneurial firms. Our study explores how market orientation, organizational leadership, and organizational culture in entrepreneurial firms lead to digital capabilities and ESG performance of Chinese entrepreneurial organizations. This study outlines a comprehensive framework grounded on market orientation and resource-based theories. Using structural equation modeling, we empirically test our hypotheses where findings indicate that organizational leadership and market orientation positively influence digital capabilities and ESG performance. However, cultural factors insignificantly affect digital capabilities but positively relate to ESG performance. This research contributes to understanding corporate sustainability for academics, stakeholders, regulators, and policymakers and implies that to bolster ESG and digital performance; firms must strengthen their market orientation and provide strong leadership support. This study concludes with key theoretical and practical insights for advancing corporate sustainability.