Open Innovation and Sustainable Performance: The Role of Supply Chain Digital Capability and Sustainability Leadership

Abstract

Supply chains are under simultaneous pressure to digitalize operations and improve environmental performance. However, firms often struggle to convert open innovation collaboration into measurable sustainability outcomes. This study develops and tests a capability–leadership transmission mechanism to explain how open innovation intensity shapes sustainable innovation performance in Iranian manufacturing supply chains. Using survey data from 232 firms and analyzed with Smart-PLS 4.0, the findings show that open innovation intensity significantly enhances supply chain digital capability, defined as the ability to deploy and integrate digital technologies to support real time visibility and coordinated supply chain decision making. This capability subsequently strengthens digital sustainability leadership, enabling leaders to align digital transformation strategies with environmental priorities and mobilize supply chain partners toward sustainability initiatives. Digital sustainability leadership then improves sustainable innovation performance, confirming a sequential mediation effect. The results highlight that innovation collaboration becomes environmentally impactful only when firms develop the digital capability foundation that empowers sustainability-oriented leadership. Managerial implications emphasize digital capability development and leadership alignment as essential drivers of digitally enabled environmental transformation.