Digital transformation and social sustainability: the mediating role of employees’ digital competencies

Abstract

Corporate Social Sustainability (CSS) has emerged as a cornerstone of contemporary organisational strategy. Indeed, the concept deliberately integrates equitable practices, employee empowerment, and community resilience into core operational frameworks. Digital transformation holds the potential to enhance CSS by fostering innovation, inclusivity, and operational efficiency; yet the process also presents risks, including labour displacement, data privacy concerns, and environmental challenges. This study examines how the digital competencies of employees mediate the relationship between digital transformation and CSS, drawing on the integration of the Resource-Based View and Stakeholder Theory to position these competencies as strategic organisational resources. The dual effects of digital transformation on CSS were unravelled based on longitudinal data from 452 publicly listed European firms collected over the 2015–2021 seven-year period as well as panel data techniques. The development of digital competencies proved to be essential to achieve CSS. Our findings contribute to the literature by demonstrating that employees’ digital competencies are a key mechanism through which digital transformation can be translated into socially sustainable outcomes. The combination of the Resource-Based View and Stakeholder Theory allowed clarifying how human capital capabilities enable firms to achieve social sustainability through digitalisation. The study findings offer organisations and policymakers actionable guidance for designing digital upskilling and inclusion strategies that effectively advance corporate sustainability goals.