Navigating Multilevel Environmental Pressures and Harnessing Digital Transparency as a Catalyst for Sustainable Innovation: Pathways to Enhanced Environmental Performance

ABSTRACT This study examines how firms leverage sustainable innovation propensity and digital sustainability transparency as strategic resources to navigate multilevel environmental pressures and achieve environmental and innovation performance. The central theory guiding this research is the resource‐based view, which posits that firms gain competitive advantage through the effective management of valuable, rare, and inimitable resources. We collected the primary data from 182 employees of manufacturing firms in the United States and United Kingdom. The study found a positive association between various environmental pressures—competitors, government and employees, top management environmental awareness, and digital sustainability transparency. The results further signify that sustainability innovation propensity mediates the constructive association between digital sustainability transparency and innovation performance, as well as between digital sustainability transparency and environmental performance. The findings imply how an organization navigates the social environment and the external pressures coming from the government, competitors, and the employees. Organizational environmental changes and green business strategies can be effectively implemented through anticipatory environmental scanning and stakeholders' involvement. To manage these pressures, organizations are encouraged to establish a sustainability directorate, whose role would be to codify these signals into managerial implications continually.