Enterprise digital transformation and sustainable development performance: The asymmetric roles of top management team faultlines

Abstract

Digital transformation (DT) is widely recognized as an essential driver for achieving the sustainable development goals (SDGs). However, empirical evidence regarding the effect of DT on sustainable development performance (SDP) is mixed, and the boundary conditions merit further investigation. Drawing upon organizational information processing theory, this research examines the influence of DT on SDP, specifically focusing on economic sustainability and environmental and social (E&S) sustainability. We also delve deep into the moderating role of top management team (TMT) faultlines (relationship‐related faultlines and task‐related faultlines). This research comprises an analysis of data collected from Chinese manufacturing firms spanning the period 2012–2021. The empirical results reveal that DT can positively affect E&S sustainability but negatively impact economic sustainability. TMT faultlines play a dual role in this association, with TMT relationship‐related faultlines exacerbating the negative effects of DT on economic sustainability, and TMT task‐related faultlines enhancing the positive impacts of DT on E&S sustainability, as well as mitigating the digitalization paradox. In addition, our results do not support the notion that TMT relationship‐related faultlines moderate the relationship between DT and E&S sustainability. This research contributes to the digitalization paradox and faultline literature by highlighting the distinct moderation mechanisms of TMT faultlines. These findings provide insights for managers in navigating the TMT subgroup dynamics and better supporting the success of digital sustainability transformation.