Digital Transformation and Supply Chain Integration Impact on Firm Performance: The Role of Green Practices in Achieving Sustainable Supply Chain Performance

Abstract

This study investigated the relationship between digital transformation (DT), supply chain integration (SCI), green practices (GP), sustainable supply chain performance (SSCP), and firm performance (FP). Prior studies have provided early explanations regarding DT and SCI as well as their association with sustainable supply chain performance. However, empirical evidence demonstrating the direct impact of digital transformation and supply chain innovation through green practices on sustainable supply chain practices to enhance functional performance remains limited. To address this limitation, primary data were obtained from 70 experts employed in manufacturing firms in Indonesia using a questionnaire survey conducted between September and October 2025. A conceptual model incorporating DT, SCI, GP, SSCP, and FP was developed and subsequently analyzed using partial least squares structural equation modeling (PLS-SEM) through Smart PLS 4.0 software. The results showed that DT significantly enhances both GP and SCI, while GP and SCI also have a positive influence on SSCP. Moreover, SSCP exerts a substantial beneficial effect on FP. Additionally, GP and SCI function as intermediaries between DT and SSCP, with SSCP mediating the connection between GP and FP, as well as between SCI and FP. This research is the first investigation into the synergistic effects of digital transformation on environmentally sustainable practices and supply chain integration, aimed at improving sustainable supply chain efficiency and enhancing overall corporate performance within the manufacturing industry