📈 economics

Digital Transformation and ESG Performance in Sustainable Food Production: The Mediating Role of Green Innovation and Organizational Agility

This study empirically demonstrates that digital transformation enhances ESG performance in the food production sector by fostering green innovation, organizational agility, and sustainable food production practices.

Original authors: Pinnika Syam Yadav, P B Yadav, Preeti Kumari

Published 2026-08-04

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CC BY 4.0

Original authors: Pinnika Syam Yadav, P B Yadav, Preeti Kumari

Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

Imagine you are trying to bake the perfect cake, but you want to do it without wasting a single crumb, using only renewable energy, and making sure everyone who eats it is happy and healthy. This is the challenge facing the food industry today. They are under pressure to be "green" (good for the planet), "social" (good for people), and "governed" (run with honesty and rules). In the business world, this triple goal is called ESG performance. To reach it, companies are turning to Digital Transformation, which is like giving their factories a massive brain upgrade with computers, sensors, and smart software. But here is the tricky part: just buying the fancy new computer doesn't automatically make the cake better. You also need a baker who knows how to use it creatively (Green Innovation) and a kitchen team that can instantly change the recipe if the oven breaks or the ingredients run low (Organizational Agility). This study asks a big question: Does simply installing the smart technology fix the food production problems, or do companies need to change how they think and move first?

This research article, written by Pinnika Syam Yadav and her colleagues, dives deep into the food manufacturing sector to find the answer. They looked at 324 managers from various food companies, from bakeries to dairy plants, to see how these different pieces fit together. Think of the study as a detective story trying to solve a mystery: Why do some companies get better at being sustainable after going digital, while others struggle? The researchers tested a specific theory: that digital tools act like a spark, but that spark needs fuel (innovation and agility) to start a fire (sustainable production) that eventually lights up the whole house (ESG performance).

The study's main discovery is a bit surprising. It turns out that just hitting the "digital" button doesn't directly make food production more sustainable. It's like buying a high-tech video game console; having the console doesn't mean you can play the game well unless you also learn the controls and have a strategy. The data showed that Digital Transformation has a huge, positive effect on Green Innovation (creating eco-friendly products and processes) and Organizational Agility (the ability to adapt quickly). In fact, the link between digital tools and green innovation was very strong, with a statistical score of 0.594. Similarly, digital tools helped companies become more agile, though the link was a bit smaller at 0.146.

However, when the researchers checked if digital tools directly made food production more sustainable, the answer was a flat "no." The statistical score was -0.022, which is so close to zero that it means there is no direct connection. This means you can't just install the software and expect the factory to magically become green. Instead, the magic happens through the middlemen: Green Innovation and Organizational Agility. The study found that Organizational Agility is the superstar here, with the strongest link to sustainable food production at 0.613. This suggests that the speed and flexibility of the team matter more than the technology itself. When a company uses digital tools to become more agile and innovative, then they can produce food in a way that is truly sustainable.

Once a company achieves this sustainable food production, it sees a big boost in its ESG performance (the overall score for being a good corporate citizen), with a strong link of 0.451. Interestingly, digital transformation also helps ESG performance directly, with a score of 0.218, likely because digital tools make it easier to track data and be transparent. But the path through "sustainable food production" alone wasn't enough to explain the whole ESG boost; the study found that indirect path was weak and not statistically significant. This tells us that while making food sustainably is great, it's not the only reason digital tools improve a company's overall reputation and governance.

So, what does this all mean for the future? The paper suggests that food companies shouldn't just throw money at new technology and hope for the best. Instead, they need to use that technology to build a culture of creativity and speed. If a company wants to win the game of sustainability, they need to use their digital tools to help their teams invent greener ways to cook and to react faster to changes in the market or the environment. The study confirms that technology is a powerful tool, but it's the human ability to innovate and adapt that turns that tool into a sustainable victory. Without the "green" ideas and the "agile" mindset, the digital upgrade is just a very expensive paperweight.

Technical Summary: Digital Transformation and ESG Performance in Sustainable Food Production

Problem Statement
The food manufacturing sector faces escalating pressure to balance rising global demand with the urgent need for environmental sustainability, resource efficiency, and waste reduction. While digital transformation (DT) is widely recognized as a strategic lever for operational excellence, empirical findings regarding its direct impact on sustainability performance remain inconsistent. Specifically, there is a lack of clarity on how digital capabilities translate into tangible Environmental, Social, and Governance (ESG) outcomes within the food industry. Existing literature often treats DT as a direct driver of performance or focuses on isolated constructs, failing to adequately explore the mediating mechanisms—such as green innovation (GI), organizational agility (OA), and sustainable food production (SFP)—that bridge the gap between technology adoption and sustainable ESG results, particularly in emerging economies.

Methodology
The study employs a quantitative, cross-sectional research design to empirically test a conceptual framework integrating the Resource-Based View (RBV) and Dynamic Capability Theory (DCT).

Data Collection: Primary data was collected via a survey using a five-point Likert scale from 324 managers (including production, operations, supply chain, sustainability, and digital transformation managers) across various food manufacturing sub-sectors (dairy, beverages, processed foods, bakery, edible oils, and packaged foods) in India.
Sampling: Purposive sampling was utilized to ensure respondents possessed relevant expertise in their organizations' digital and sustainability initiatives.
Analysis: The study utilized SmartPLS 4.0 for Partial Least Squares Structural Equation Modeling (PLS-SEM). The analysis included:
- Measurement Model Assessment: Evaluation of indicator reliability (outer loadings > 0.70), internal consistency (Cronbach's alpha and Composite Reliability > 0.70), convergent validity (AVE > 0.50), and discriminant validity (HTMT ratios < 0.90).
- Structural Model Assessment: Testing of direct and indirect (mediation) effects using bootstrapping with 5,000 resamples.
- Predictive Relevance: Assessment via $R^2$ , $Q^2_{predict}$ , RMSE, and MAE values.

Key Findings
The empirical results support a model where digital transformation influences ESG performance primarily through the development of organizational capabilities rather than through direct technological application alone.

Direct Effects:
- DT $\rightarrow$ Green Innovation (GI): Significant positive influence ( $\beta = 0.594, p < 0.001$ ).
- DT $\rightarrow$ Organizational Agility (OA): Significant positive influence ( $\beta = 0.146, p = 0.029$ ), though the magnitude is smaller than that on GI.
- DT $\rightarrow$ Sustainable Food Production (SFP): Not significant ( $\beta = -0.022, p = 0.585$ ). This indicates that digital transformation alone does not directly drive sustainable production practices.
- DT $\rightarrow$ ESG Performance: Significant positive direct influence ( $\beta = 0.218, p = 0.001$ ).
- GI $\rightarrow$ OA: Significant positive influence ( $\beta = 0.487, p < 0.001$ ).
- GI $\rightarrow$ SFP: Significant positive influence ( $\beta = 0.214, p < 0.001$ ).
- OA $\rightarrow$ SFP: Significant positive influence ( $\beta = 0.613, p < 0.001$ ), representing the strongest relationship in the model.
- SFP $\rightarrow$ ESG Performance: Significant positive influence ( $\beta = 0.451, p < 0.001$ ).
Mediation Effects:
- GI and OA as Mediators: Both Green Innovation and Organizational Agility serve as significant mediators between Digital Transformation and Sustainable Food Production. This confirms that DT enhances SFP by first fostering green innovation and agility.
- SFP as a Mediator: The indirect path from Digital Transformation to ESG Performance through Sustainable Food Production was found to be insignificant ( $\beta = -0.010, p = 0.591$ ). This suggests that while SFP improves ESG, it does not fully account for the mechanism by which DT improves ESG; other organizational mechanisms (e.g., governance, direct transparency) likely play a role.

Key Contributions

Theoretical Integration: The study integrates RBV and DCT to propose that digital resources create value not merely through adoption but by becoming embedded in complementary organizational capabilities (GI and OA).
Sector-Specific Insight: It addresses a gap in literature by focusing specifically on the food manufacturing industry in an emerging economy context, where institutional support for sustainability varies.
Mechanism Clarification: The research clarifies that the relationship between DT and sustainability is not linear. It demonstrates that without the intermediate development of green innovation and organizational agility, digital investments may not yield sustainable production outcomes.
Nuanced Mediation: By identifying that SFP does not significantly mediate the DT-ESG relationship, the study highlights the complexity of ESG performance, suggesting that operational sustainability is only one component of broader ESG outcomes.

Significance and Claims
The paper claims to provide an empirical framework that offers practical insights for food production firms and policymakers. Its primary significance lies in shifting the managerial perspective from viewing digital transformation as a standalone technology investment to viewing it as a strategic catalyst for building organizational capabilities.

The authors assert that for food manufacturers to achieve improved ESG outcomes, investments in digital technologies must be paralleled by strategies that cultivate green innovation and organizational agility. The study concludes that while digital transformation has a direct positive impact on ESG, its ability to drive sustainable food production is entirely dependent on the firm's capacity to innovate and adapt. Consequently, the research advocates for a holistic approach where digital tools are leveraged to enhance decision-making speed, resource efficiency, and innovation ecosystems, thereby supporting long-term sustainability goals and competitive advantage.

Technical Summary: Digital Transformation and ESG Performance in Sustainable Food Production

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