The impact of Digital Transformation on Sustainability: a qualitative comparative analysis

Digitalization and sustainability are among the main challenges and drivers for change that are nowadays crucial for companies aiming at being competitive actors in the market. With reference to digitalization, it is important to distinguish the transition from analog to digital processes from a proper digital transformation, which in fact is a way more complex issue that covers different aspects of an organization, implying the need of a comprehensive transformation. When it comes to defining sustainability, it is proper to describe it as ‘the ability to maintain or support a process overtime’, but another valid definition is the one given by the United Nations Brundtland Commission, defining it as ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’. Digitalization and sustainability are commonly analyzed and ruled separately, although they are strictly connected and there is the need to understand how they influence each other due to their interconnectedness. In particular, the purpose of this research will be to study how digitalization is affecting sustainability, and consequently a firm’s impact and performance. Both direct and indirect effects will be taken into account, trying to evaluate to what extent those effects are positive or negative. When talking about direct effects we are referring to tangible and short-term results that the implementation of digital technologies could have on the organization. For instance, reduction of resources consumption and increased energy efficiency due to the installment of smart tools. On the other hand, indirect effects are those occurring in the long-term fostered by changes in organizational culture and structure. An example could be the creation of a sustainable supply chain, favored by an improved responsibility culture which has been spreading throughout the years inside the company. The focus of the study will be on a qualitative comparative analysis of two SMEs operating in two different sectors: manufacturing industry and textile industry. Regarding SMEs, their relevance is due to their organizational flexibility but limited resources availability, thereby making interesting to analyze how they manage two such complex issues as digitalization and sustainability. With respect to the choice of the sectors, it is said that digitalization is revolutionizing many aspects of those industries, mainly thanks to Artificial Intelligence (AI), Internet of Things (IoT), and consequently Industry 4.0. Also, sustainability has always been a crucial matter for the companies to deal with, and nowadays it is even more relevant if analyzed together with the digital transformation process. The methodology of this research includes gathering data from primary sources through interviews conducted with relevant actors of the above-mentioned companies, as well as secondary sources represented by documents such as firms’ reports and certifications. The findings show an overall positive impact of digital transformation on sustainability, even though we reported concerns mainly related to AI tools’ intensive energy requirements, as well as high development and maintenance costs of digital infrastructures. Concluding with the distinction between direct and indirect effects, which appears to be feasible, and it seems that there are more concrete evidence of short-term direct impacts, whilst the longer-term indirect impacts are still difficult to appraise.