The green digital capability trap: why do some startups fail to convert advanced digital technologies into environmental performance?

Abstract

Digital technologies are among the principal drivers of the development of startup ecosystems, as they make it possible to achieve environmental improvements through advanced capabilities and performance levels comparable to those of traditional sectors. Differences in levels of digital capability are observed with increasing frequency, which gives rise to the need for a deeper understanding of the mechanisms that shape environmental outcomes. In order to identify and analyse the role of digital capability in environmental performance, a SEM approach and regression analysis were applied for comparison. In this study, a research framework was established on the basis of empirical analysis in order to develop a startup assessment model that accounts for differences in digital capability. A structural equation model was developed to assess the environmental performance of startups under varying digital capability conditions and to analyse the interrelationships. The structure of relationships, which incorporates digital capability factors as the main variables, was analysed through the SEM approach (regression-based structural equation modeling). Constraints in converting digital capability into practical outcomes generate a pronounced gap between technology adoption and environmental performance, as a result of which green innovation and sustainable development outcomes decline; this situation is explained by the regression results. The results show that different levels of digital capability, as well as the strategies applied in the startup performance model, may lead to changes in environmental outcomes, innovation capabilities, operational efficiency and sustainability indicators. This framework is useful for identifying environmental performance opportunities under conditions in which the digital capability trap is present. The findings of the study assist startups in managing the balance between digital investments, technology use and environmental goals, as well as in improving sustainable decision-making processes.