Sustainability in the Digital Age: How and When Digitalization Drives Sustainable Performance

The role of digitalization in driving firm development and growth is increasingly acknowledged. However, its potential to enhance sustainable performance (SP)—encompassing both environmental performance (EP) and financial performance (FP)—remains insufficiently explored within the sustainability literature. To address this gap, the present study adopts a dynamic capabilities perspective and develops a moderated mediation (MODMED) framework to investigate how digitalization influences EP and FP, with stakeholder integration as a mediating mechanism and entrepreneurial leadership (EL) as a boundary condition. Drawing on a multi‐informant dataset of 294 Chinese firms, based on responses from 588 individuals across diverse industries, the findings reveal that digitalization positively impacts both EP and FP through stakeholder integration. Furthermore, the MODMED analysis shows that EL significantly amplifies the indirect effects of digitalization on EP and FP via stakeholder integration. Overall, this study contributes to the business strategy and sustainable development literature by offering novel insights into the strategic role of digitalization in promoting sustainable performance and clarifying the pathways through which these outcomes are realized.