Exploring the obstacles in adopting digital capabilities for enhancing environmental sustainability in entrepreneurial firms

Digital transformation (DT) presents both significant opportunities and challenges for entrepreneurial firms, necessitating a realignment of their strategies to integrate innovation and creativity. Aligning strategies with DT can foster innovation, drive business transformation, and enhance environmental sustainability. However, several obstacles hinder this alignment, impeding firms’ progress and threatening their long-term sustainability. Addressing these challenges is crucial to building a strong foundation for sustainable growth. This study investigates the obstacles to aligning digital capabilities in entrepreneurial firms for sustainable growth. A systematic literature review (SLR) and thematic analysis (TA) were conducted to identify the obstacles. Subsequently, a multi-layer grey decision-making trial and evaluation laboratory (G-DEMATEL)-based analytic network process (G-ANP) (G-DANP) approach is used to analyse these obstacles, determining their importance and interrelationships. The study identifies seven key barriers, with the most critical being firms’ lack of readiness, which drives all other challenges. In contrast, the absence of a coherent sustainability policy is the least influential. Notably, limited digital skills and the underuse of DT tools amplify other obstacles. By mapping the influence and dependency among barriers, the analysis reveals how managerial backing and policy coherence can significantly alter the entire landscape. The findings equip entrepreneurial firms with clear priorities—build capacity, engage leadership, and target readiness—to drive sustainable digital adoption.