Sustainable Business Model Innovation and Digital Transformation Capability: Testing the Organisational Agility as Mediator and Green Innovation Orientation as Moderator in the Indian Retail Sector

Abstract

Introduction: Digital transformation has become a critical capability for retailers seeking to develop sustainable business models; however, limited understanding exists regarding how digital capabilities translate into sustainability-oriented innovation, particularly in emerging market contexts. The aim of this study was to examine Digital Transformation (DT) Capability and Sustainable Business Model Innovation (SBMI) association in the Indian retail sector. The study also investigated Organisational Agility (OA) as mediator and Green Innovation Orientation (GIO) as moderator. Methodology: On the basis of Dynamic Capabilities Theory and the Natural Resource-Based View, this study developed and empirically tested an integrated framework using survey data from Indian retail organisations and analysed it through PLS-SEM. Results: The findings revealed that DT Capability significantly enhances SBMI and OA, while OA partially mediates the DT Capability–SBMI relationship. Although GIO positively influences SBMI, its moderating effect on the DT Capability–SBMI relationship is negative, indicating that GIO contributes positively to SBMI directly but slightly weakens the positive relationship between DT Capability and SBMI at higher levels of GIO. Conclusion: This study made contribution to digital transformation and sustainability literature as it highlighted the importance of capability alignment rather than isolated technological or environmental investments.