Green Digital Transformation and Sustainable Growth of Small and Medium-sized Enterprises in Vietnam

Technical Summary: Green Digital Transformation and Sustainable Growth of SMEs in Vietnam

Problem Statement
Small and medium-sized enterprises (SMEs) in Vietnam face the dual challenge of navigating rapid technological advancements and escalating environmental pressures, including climate change and carbon emission reduction mandates. While the "twin transition" of digital and green transformation is recognized as a critical driver for sustainable development, existing literature has largely investigated these phenomena in isolation. Furthermore, many Vietnamese SMEs struggle with significant barriers, including financial constraints, limited human capital, and managerial capabilities required to implement these transformations effectively. There is a lack of empirical evidence explaining the specific mechanisms through which digital transformation facilitates sustainable growth, particularly within the context of Vietnamese SMEs.

Methodology
This study employs a quantitative research design grounded in an integrated theoretical framework combining Dynamic Capability Theory (DCT), the Resource-Based View (RBV), and the Natural Resource-Based View (NRBV).

• Data Collection: Primary data were collected from 388 valid responses from SMEs operating in Vietnam. The sample included business owners, directors, and managers with substantial knowledge of their firms' strategic activities.
• Analytical Technique: The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 3 software.
• Measurement: Constructs were measured using a five-point Likert scale adapted from established literature. The study evaluated reliability (Cronbach's Alpha, Composite Reliability), validity (Convergent and Discriminant validity via HTMT), and structural relationships (path coefficients, t-values, effect sizes, and predictive relevance via Q²).

Key Contributions
The paper makes three primary contributions to the existing literature:

1. Theoretical Integration: It unifies DCT, RBV, and NRBV into a single framework to explain the relationship between digital transformation and sustainable growth, moving beyond the siloed examination of digital or green strategies.
2. Mechanism Elucidation: It identifies and empirically validates the mediating roles of Green Transformation Capability, Green Innovation, and Organizational Adaptability in the pathway from digital transformation to sustainable growth.
3. Contextual Evidence: It provides empirical evidence specific to the Vietnamese SME context, a sector critical to the national economy yet underrepresented in studies regarding the "twin transition."

Results
The structural model analysis yielded the following statistically significant findings:

• Digital Transformation (DT) as a Driver: DT positively and significantly influences both Green Transformation Capability (β = 0.667, p < 0.001) and Organizational Adaptability (β = 0.613, p < 0.001).
• Path to Innovation: Green Transformation Capability significantly promotes Green Innovation (β = 0.564, p < 0.001).
• Impact on Sustainable Growth:
  • Organizational Adaptability has the strongest positive effect on Sustainable Growth (β = 0.374, p < 0.001).
  • Digital Transformation has a direct positive effect on Sustainable Growth (β = 0.285, p < 0.001).
  • Green Innovation positively affects Sustainable Growth (β = 0.088, p = 0.011), though the effect size is smaller compared to other variables.
• Control Variable: The Business Field (industry sector) was found to have a significant positive effect on sustainable growth (β = 0.469), indicating that industry characteristics influence sustainability outcomes.
• Model Fit: The model demonstrated strong predictive relevance, explaining 78.4% of the variance in Sustainable Growth (R² = 0.784) and showing adequate Q² values for all endogenous constructs.

Significance and Claims
The authors claim that the study provides empirical evidence that digital transformation is not merely a technological upgrade but a strategic platform that enables firms to simultaneously pursue growth and sustainability. The findings suggest that digital transformation acts as a foundational capability that enhances a firm's ability to reconfigure resources (DCT) and leverage intangible assets (RBV) to meet environmental demands (NRBV).

The paper asserts that for Vietnamese SMEs, the path to sustainable growth involves a sequential process where digital adoption strengthens green capabilities and organizational flexibility, which in turn fosters green innovation and adaptability. The study concludes that managers should align digital roadmaps with sustainability strategies rather than treating them as isolated initiatives. From a policy perspective, the authors suggest that government support should focus on financial assistance and technical consulting to help SMEs overcome barriers to this dual transformation.

The authors maintain a modest tone regarding the study's scope, acknowledging limitations such as the cross-sectional design (preventing longitudinal analysis) and the exclusive focus on Vietnamese SMEs, which may limit generalizability to other national contexts or larger corporations. They propose that future research should incorporate longitudinal approaches and additional variables such as organizational culture and digital leadership.