Mohammed Almansour, Zainab Mohammed Osman Kodai, Alwia Saeed Osman Zobair, Salisu Mohammed, Gomaa Agag, Osman Alipour
This study examines how ERP enabled digital backbone transformation helps fashion retailers translate sustainability initiatives into green innovation and firm value. We integrate the Resource Based View and Institutional Theory to argue that enterprise wide digital backbones matter in retail because they improve coordination, traceability, and the credibility of sustainability claims. Study 1 uses 31 interviews with managers in UK fashion retail to identify two retail specific mechanisms: improved green innovation productivity through shared data and planning visibility, and stronger green innovation legitimacy through auditability and verification. Study 2 analyses a panel of 162 listed fashion retailers in 11 European countries from 2010 to 2024 and exploits staggered ERP adoption in a difference in differences design. ERP adoption is associated with higher green patents and a broader Green Innovation Index that combines green patent share, ESG verified environmental projects, and disclosed circularity initiatives. Post adoption gains in green innovation build gradually over time and are accompanied by higher firm value. The mediation pattern is consistent with green innovation operating as a central pathway through which ERP related digital transformation is linked to firm value, although we interpret this mechanism cautiously given the panel design. This study contributes by theorising digital transformation as a mechanism-based process rooted in operational backbone capabilities, explicitly distinguishing ERP-enabled transformation from broader, heterogeneous digital initiatives.