The mediating role of digital transformation between management, innovation, and sustainability in MSEs

Abstract Purpose: This study examines the extent to which digital transformation (DT) mediates the relationships among managerial controls, operations management, marketing, and innovation practices and the adoption of sustainable (ESG) practices in microand small enterprises (MSEs). Originality/relevance: The study addresses the gap at the intersection of digital transformation, sustainability, and management practices in MSEs, particularly in emerging economies. Although there has been consolidated research on digitalization in large corporations, the effects of DT on smaller organizations-as seen through the ESG lens-remain underexplored. Design/methodology/approach: A quantitative survey was conducted with 503 Brazilian MSEs. The analysis employed descriptive statistics, Spearman correlations, and mediation modeling via generalized linear models (GLMs), with robustness checks (Sobel test) and assessment of common method bias (Harman’s single-factor test). Findings: The analyses confirm that DT plays a positive and significant mediating role, evidencing its function as an organizational mechanism that converts management practices into the adoption of ESG ones. The largest indirect effect was observed for managerial controls, followed by marketing; operations management exhibited positive direct and indirect effects, whereas innovation practices showed a smaller yet consistent positive indirect effect. Taken together, the findings indicate that digitally enabled control routines and stakeholder engagement strengthen the incorporation of ESG practices, while process digitalization and innovative reconfiguration reinforce this trajectory. Contribution/implications: This study contributes to both theory and practice by providing empirical evidence that DT functions as a strategic mediating mechanism linking managerial, operational, marketing, and innovation practices to the adoption of sustainable (ESG) practices in MSEs.