Strategic Digital Transformation and Firm Sustainability under Industry 5.0: Evidence from Manufacturing Sector in China

Abstract

This research uses empirical data from 360 Chinese manufacturing firms listed on the Shanghai and Shenzhen stock markets to investigate the effects of strategic digital transformation on firm sustainability in the context of Industry 5.0. The research objective is to determine how strategic digital transformation (four dimensions: business transformation and operational strategy, digital intelligence and analytics, strategic digital leadership, and culture and organization development) affect ESG performance. Additionally, the research looks into the moderating influence of eco-incentive finance and the mediating role of green innovation (greenovation). Results indicate that organizational culture and strategic digital leadership significantly improve ESG outcomes, and greenovation has a beneficial impact on firm sustainability. While eco-incentive finance does not significantly alter the relationship between strategic digital transformation and firm sustainability, and neither business transformation and operational strategy nor digital intelligence and analytics demonstrate any distinct effects. These findings demonstrate how significant organizational culture and leadership are to promoting sustainable manufacturing practices. The research also emphasizes that to reach China's "dual-carbon" targets for 2030 and 2060, eco-finance laws must be implemented more strictly and digital initiatives must be in line with ESG objectives. Under the Industry 5.0 paradigm, it provides actionable advice for manufacturers and regulators on how to promote high-quality, low-carbon development through integrated digital and sustainability initiatives.