Digital Technology Ecosystems and Sustainable Firm Performance: The Mediating Role of GSCM and Circular Economy Under Institutional Pressure

This study examines how integrated digital technology ecosystems (IDTE) improve sustainable firm performance (SFP). With the transformation of IDTE, firms should incorporate complementary dimensions to achieve long-term efficiency. The study employs the dynamic capabilities view (DCV) and institutional theory to examine the complex impact of IDTE on SFP, mediated by the effects of green supply chain management (GSCM) and circular economy practices (CEP). Additionally, the study investigates the moderation effect of institutional pressure (IP) on the impact of IDTE on GSCM and CEP. PLS-SEM was applied to analyze 260 valid responses collected from IT and logistics and supply chain managers of MNEs. Contrary to our hypothesis, IDTE does not directly improve SFP. However, the IDTE-SFP relationship is significantly mediated by GSCM and CEP. Institutional pressure (IP) significantly affects how legislative frameworks, market dynamics, and stakeholder expectations influence sustainable practices, thereby amplifying the impact of IDTE's GSCM and CEP. Thus, MNEs should purposefully link IDTE to sustainability-focused capabilities for long-term benefits. Our findings underscore the importance of Gulf Cooperation Council (GCC) governments and MNEs in supporting integrated digital technology ecosystems that promote GSCM and CEP to achieve SFP.