Digital transformation, sustainable innovation, and circular economy: the innovative potential of start-ups in an emerging economy

Abstract

The main purpose of this paper is to explore how startup companies leverage the potential of digital transformation and circular business models to pursue sustainable development. For the purpose of supplementing and developing the Triple Bottom Line (TBL) and Business Experiment (BE) theories, this study employs a qualitative approach to establish a comprehensive scale, which can be applied to leaders, managers, and directors. After collecting 248 valid survey data from Vietnamese startups, the study's hypotheses were tested using the partial least squares technique for structural equation modeling (PLS-SEM). In the context of entrepreneurship, the research demonstrates the positive impact of digital transformation (DT) on sustainable innovation (SI) and circular business model innovation (CBMI), an aspect that has not been previously explored. Moreover, the study evaluates the impact of DT on sustainable corporate performance (SCP) and tests the mediating role of CBMI and SI. Additionally, based on studies on the characteristics of environmental dynamism (ED), we discovered a positive aspect in the moderating role of ED in the relationship between CBMI and SCP, between SI and SCP. Integrating digital technologies and fostering innovation can drive sustainable growth, while adopting a circular business model can reduce waste and create new revenue streams. Collaborating with stakeholders can help build a sustainable and resilient business ecosystem. This approach can help organizations thrive in a rapidly changing business environment. This study analyzes the important factors related to business model innovation and builds a dynamic business environment. Therefore, it makes a significant contribution to expanding the research literature on sustainable development and circular economic models in the era of digital transformation. The study also provides an in-depth understanding of the mediating mechanisms related to business model innovation and the moderating role of a vibrant business environment, which is an important contribution to the research community and managers in enhancing sustainable performance