Modeling the Impact of Technology and Sustainability Initiatives on Business Performance Using SEM

Abstract

Background: Businesses are under pressure to adopt advanced technologies and strengthen sustainability practices, yet the combined effect of these efforts on overall performance is still not well understood. Prior studies show mixed results, and most focus on single dimensions such as green innovation, ICT adoption or environmental performance. A comprehensive model linking technology adoption, sustainability initiatives and both financial and non-financial outcomes is still lacking.
Objective: The study aims to model how technology adoption and sustainability initiatives influence business performance, and to test whether these constructs interact to strengthen financial and non-financial outcomes. The study also examines the validity of a structural framework grounded in the Resource-Based View and Dynamic Capabilities Theory.
Methodology: A quantitative, cross-sectional research design was used. Data were collected from 410 managers across firms in the Delhi NCR region using a structured questionnaire. Established indicators measured technology adoption, sustainability initiatives and business performance. Covariance-Based Structural Equation Modeling (CB-SEM) was applied using AMOS, following a two-step approach with Confirmatory Factor Analysis and structural path assessment. Reliability, validity and model fit indices all met acceptable thresholds.
Findings: Technology adoption had a significant positive effect on sustainability initiatives and business performance. Sustainability initiatives also showed a strong positive effect on both financial and non-financial performance indicators. Mediation analysis indicated that sustainability initiatives partially mediate the link between technology adoption and business performance. The final model demonstrated good fit and confirmed the proposed relationships.
Conclusion: The results show that firms benefit most when technology adoption is complemented by well-designed sustainability initiatives. Together, these capabilities enhance competitiveness, operational efficiency and environmental outcomes. The study supports the view that technology and sustainability act as strategic resources that jointly contribute to stronger business performance.