Complementarity Between Digital Capability and Environmental Sustainability Practices: A Firm-Level Study of Expected Future Operating Performance

Abstract Book of the 9th International Conference on Future of Business, Management and Economics

Year: 2026

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Complementarity Between Digital Capability and Environmental Sustainability Practices: A Firm-Level Study of Expected Future Operating Performance

Fatemeh Tabatabaei, Michele Cincera, and Jacques Bughin

ABSTRACT:

Management research has developed separate accounts of digital capability and environmental sustainability practices, but their joint performance relevance remains unspecified. We theorize them as bounded firm-level domains whose association with expected future operating performance depends on their joint configuration. Drawing on complementarity theory, we argue that environmental sustainability practices create recurring operating demands for measurement, monitoring, and coordination as firms pursue pollution prevention, circularity, and energy conservation, and that digital capability enables firms to address those demands. Using a cross-sectional survey of 4,051 large enterprises across 13 countries and 19 industries, we examine whether digital capability and environmental sustainability practices are complementary in their association with expected future operating performance. The dependent variable combines a firm-level revenue scale with executives’ expected revenue growth and operating margin over six- and twelve-month horizons, conditional on prior operating performance. The interaction between the two domains is positive and statistically significant, consistent with complementarity. Because the design is cross-sectional and observational, and the outcome captures managerial expectations rather than realized performance, we interpret the estimates as conditional associations rather than causal effects. The study specifies and tests a bounded firm-level complementarity mechanism linking digital capability and environmental sustainability practices to expected future operating performance.

Keywords: Advanced Technologies; Conditional Association; Managerial Expectations; Organizational Configuration; Survey Research