How Corporate Digital Capability Fosters Sustainable Employee Innovation Behavior in ASEAN IT Services: The Roles of Innovation Atmosphere and Knowledge Sharing

Abstract

Against the rapid expansion of the digital economy in Southeast Asia, improving firms’ digital capability has become increasingly important for sustaining employee innovation in the IT services sector. However, existing research has mainly emphasized organizational or performance outcomes and has paid less attention to the internal mechanisms through which corporate digital capability shapes employees’ sustainable innovation behavior, especially in the heterogeneous institutional and cultural context of ASEAN. Drawing on Conservation of Resources theory and Social Information Processing Theory, this study examines the relationship between corporate digital capability and sustainable employee innovation behavior, with innovation atmosphere and knowledge sharing as mediating mechanisms. Using cross-sectional survey data collected from 257 employees in IT services firms across five ASEAN countries, and employing hierarchical regression analysis with bootstrap mediation testing, this study finds that corporate digital capability positively promotes sustainable employee innovation behavior (β = 0.38, p < 0.01). The results further show that innovation atmosphere and knowledge sharing serve as important mediating pathways through which digital capability is translated into employee-level innovation outcomes (indirect effects: 0.20, 95% CI [0.10, 0.31] for IA; 0.19, 95% CI [0.11, 0.28] for KS). In addition, innovation atmosphere strengthens knowledge sharing, forming a sequential mechanism (indirect effect = 0.26, 95% CI [0.15, 0.37]) that further supports sustainable innovation behavior. This study contributes to the literature by clarifying how digital capability affects sustainable employee innovation at the micro level, by distinguishing the organizational climate and knowledge exchange mechanisms involved in this process, and by providing context-sensitive evidence from ASEAN’s diverse digital transformation environment. The findings also provide practical insights for firms and policymakers seeking to strengthen sustainable innovation capacity through digital capability building, supportive organizational climates, and stronger knowledge-sharing practices. Specifically, policymakers should align DEFA-funded digital skill programs with organizational climate interventions that foster psychological safety and cross-border collaboration, while managers in resource-constrained SMEs can leverage low-cost measures such as monthly idea recognition schemes, public endorsement of reasonable failure, and designated cross-border knowledge brokers to amplify the innovation returns of digital investments.