Exploring the Impact of Digital Transformation on the Nexus between Financial Reporting Relevance and Sustainable Development Performance
Lei Chen, LeongMow Gooi , Xinyi Gao, See-Nie Lee, Fangnan Wei
Keywords:
sustainable development performance; digital transformation; financial reporting relevance; second-order structural equation model; small and medium-sized enterprises (SMEs); corporate sustainability
Abstract:
In today’s rapidly evolving digital economy, small and medium-sized enterprises (SMEs) face increasing challenges in aligning financial transparency with sustainability goals, particularly under resource constraints. While prior studies have examined financial reporting quality or digital transformation separately, the combined effect of financial reporting relevance (FRR) and digital transformation (DT) on sustainable development performance (SDP) remains underexplored, especially in emerging markets.
This study extends the Resource-Based View (RBV) by conceptualizing FRR as a strategic resource and enriches the Technology–Organization–Environment (TOE) framework by demonstrating how information quality interacts with technological and institutional conditions. Using survey data from 400 Chinese SME managers and a structural equation model with bootstrapped mediation tests, we find that FRR significantly improves SDP both directly and indirectly through DT, confirming DT’s role as a partial mediator that translates decision-useful information into sustainability practices.
Empirically, the Chinese context provides a counterpoint to EU/OECD settings with mature disclosure regimes, highlighting how policy incentives and uneven digital readiness shape transformation pathways. Practically, SMEs can enhance sustainability by integrating FRR with ERP, AI, and analytics tools, while policymakers should combine financial reporting reforms with digital capacity-building programs.
Overall, this study clarifies how and under which institutional conditions FRR and DT jointly drive sustainability, advancing theory and offering actionable insights for SME competitiveness in the digital era.
Fulltext download:
 Exploring the Impact of Digital Transformation on the Nexus between Financial Reporting Relevance and Sustainable Development Performance [PDF file] [Filesize: 602.58 KB]
 10.7441/joc.2026.SI.01
Chen, L., Gooi, L. M., Gao, X., Lee, S.-N., & Wei, F. (2026). Exploring the Impact of Digital Transformation on the Nexus between Financial Reporting Relevance and Sustainable Development Performance. Journal of Competitiveness, 18(SI), 1–28. https://doi.org/10.7441/joc.2026.SI.01
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