Green Strategy Meets Digital Tech: How Vietnamese Factories Turn Sustainability Into Performance

Manufacturers across the developing world are being squeezed from two directions at once. On one side, customers, regulators and communities demand cleaner, greener production; on the other, the relentless march of digital technology is rewriting how factories are run. A new study of 602 Vietnamese manufacturing firms suggests that these two pressures are not competing burdens but complementary opportunities, and that the firms that thrive are those whose environmental ambitions actively drive both their digital transformation and their green innovation.

The research, published in the journal Discover Sustainability by a team from HUTECH University and Van Lang University in Ho Chi Minh City, set out to answer a question that has been surprisingly underexplored: does a proactive environmental strategy push firms toward digital transformation and green innovation at the same time, and do those two channels then carry the firm toward better sustainable performance? Drawing on the Resource-Based View and Dynamic Capabilities Theory, the authors built an integrated model and tested it statistically across a large, diverse sample of enterprises.

The theoretical framing matters. The Resource-Based View holds that firms win when they possess valuable, rare and hard-to-imitate resources, while Dynamic Capabilities Theory emphasises the ability to sense change, seize opportunities and reconfigure operations accordingly. A proactive environmental strategy, in this reading, is not merely compliance or public relations. It is an organisational-level resource that can be converted into dynamic capabilities, specifically the technological and innovative capacities that let a firm monitor, manage and reduce its environmental footprint while staying commercially competitive.

To test this, the researchers surveyed senior managers at 602 manufacturing enterprises and analysed the data using partial least squares structural equation modelling, or PLS-SEM, in the software package SmartPLS 4. This technique allows researchers to estimate multiple cause-and-effect pathways simultaneously and to assess how well each proposed link holds up in the data. The measurement scales, adapted from established literature, asked managers to rate statements about everything from top-management commitment and environmental training to the use of IoT sensors, artificial intelligence and eco-design principles.

The headline finding is clear: proactive environmental strategy is positively associated with both digital transformation and green innovation, and each of those, in turn, is positively associated with sustainable performance. The pattern is consistent with partial mediation, meaning that part of the benefit of an environmental strategy flows through these two channels rather than acting directly. Notably, the analysis found the two pathways to be parallel and comparably weighted, rather than one dominating the other. Digital transformation and green innovation function as complementary mechanisms, not rivals.

The digital pathway is particularly striking in its practical detail. Managers reported using IoT sensors to monitor energy consumption and emissions in real time across facilities, and deploying artificial intelligence or advanced analytics to optimise resource flows and cut waste. Digital technologies, respondents said, had fundamentally changed how firms monitor, manage and report their environmental impact. In other words, the environmental agenda is giving firms a concrete reason to invest in digital tools, and those tools then deliver the granular data needed to make sustainability measurable.

The green innovation pathway runs alongside it. Firms with proactive environmental strategies reported developing new products with significantly lower environmental impact than existing alternatives, investing substantially in research and development for clean technologies and processes, and embedding eco-design principles of reduce, reuse and recycle throughout product development. Sustainable performance itself was assessed across three dimensions: reduced greenhouse gas emissions and environmental discharges, improved financial results through resource-efficiency savings, and growing revenue from environmentally certified or green-labelled products and services.

Where does the environmental strategy come from in the first place? The study identified four antecedents that predict it: organisational support, dynamic environment, green transformational leadership and stakeholder pressure. Organisational support showed up as strong top-management commitment, dedicated budgets for environmental initiatives and employee training. Dynamic environment captured rapidly shifting competitive, customer and regulatory conditions. Green transformational leadership described leaders who articulate a compelling green vision, challenge employees to think creatively about environmental problems and inspire active contribution to environmental goals. Stakeholder pressure reflected customers demanding environmental certification, rising regulatory compliance burdens and growing community expectations.

One of the most interesting results is a null finding. The researchers tested whether industry type, specifically resource-intensive versus high-technology manufacturing, moderates the link between environmental strategy and digital transformation. It does not. The relationship appears stable across manufacturing contexts, which is good news for policymakers and managers alike: the strategy-to-digital connection is not confined to high-tech sectors but holds for heavy industry too. This suggests that the mechanisms at work are organisational rather than sector-specific, rooted in how firms marshal resources and respond to dynamic environments.

The implications reach well beyond Vietnam. Emerging economies are industrialising fast, and their manufacturing sectors face intense scrutiny over emissions and resource use. This study offers evidence that the dual transition, green and digital, can be managed as a single coherent strategy rather than two separate programmes. For managers, the message is that leadership vision, internal support and responsiveness to stakeholders build the environmental strategy that then unlocks both digital capability and innovation. For researchers, the integrated model demonstrates how two classic theories can be combined to explain how strategic intent becomes operational capability. As global supply chains increasingly demand verified sustainability, firms that treat environmental strategy as a driver of technological renewal may find themselves ahead of the curve, converting regulatory pressure into competitive advantage rather than cost.

Subject of Research: The relationship between proactive environmental strategy, digital transformation, green innovation and sustainable performance in Vietnamese manufacturing firms

Article Title: Environmental strategy and digital transformation: pathways to green innovation and sustainable performance in Vietnamese manufacturing firms

Article References: Tran, V. T., Nguyen, T. B., Le, N. N. T., Ngo, N. N. T., & Mai, B. D. (2026). Environmental strategy and digital transformation: pathways to green innovation and sustainable performance in Vietnamese manufacturing firms. Discover Sustainability. https://doi.org/10.1007/s43621-026-04755-9

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04755-9

Keywords: proactive environmental strategy, digital transformation, green innovation, sustainable performance, Vietnamese manufacturing, emerging economies, PLS-SEM, Resource-Based View, dynamic capabilities, green transformational leadership, stakeholder pressure, sustainability