Sustainability-Driven Digital Transformation and Customer Experience in Emerging Markets: The Interplay of Business Model Innovation and Value Co-Creation

Service industries are fast turning digital, and they are disrupting the manner in which firms organize and relate to their customers. Nevertheless, mechanisms that allow digital capa-bilities to be converted to a better customer experience remain poorly understood, especially in the emerging economies. This paper presents the Dual-mediation model to investigate the effects of digital supply chain integration (DSCI) and capabilities of digital customer engagement (DCEC) on customer experience outcomes (CXO) based on sustainable business model innovation (SBMI) and customer value co-creation (CVC) with references to Dynamic Capabilities Theory and Service-Dominant Logic. The data were collected by a cross-sectional survey of 360 managers of the banking, telecom, healthcare, and hospitality organizations in Pakistan and analyzed with the help of Partial Least Squares Structural Equation Modeling (PLS-SEM). The findings indicate that the customer experience is en-hanced well beyond what is feasible alone by means of sustainable business model innova-tion due to the digital supply chain integration, whereas customer experience is enhanced by the digital customer engagement capabilities through customer value co-creation. The results also show that the mechanisms of co-creation have the largest impact on the outcome of customer experience. The research is an addition to the body of literature on digital transformation because it illustrates how digital integration, innovation that is focused on sustainability, and relational co-creation can collectively convert digital capabilities into experiential value. The results also provide practical factors that should be considered by service companies when embarking on digital transformation programs to align the pro-grams with sustainability and customer engagement mechanisms.