Purpose In the dynamic landscape of 2023, global challenges are amplified by escalating conflicts and the COVID-19 aftermath. Developing nations like Vietnam face a critical juncture, requiring diversified economies for enhanced livelihoods and poverty reduction. However, this growth necessitates increased energy consumption, potentially escalating carbon emissions. Green innovation (GI) emerges as a beacon of hope, offering products and services designed for a minimal carbon footprint. Beyond socio-economic advancement, GI aligns with sustainable development goals. This study aims to examine the influence of knowledge management (KM) and digitalization (DG) on GI, particularly in sustainable competitive advantage. Design/methodology/approach Using structural equation modeling and drawing upon a survey administered to 301 Vietnamese enterprises. Findings The findings illuminate diverse underpinnings between green product and process innovation, unravel the intricate relationship between KM, DG and GI, and provide crucial insights for firms seeking sustainable competitive edges. Originality/value This multidimensional approach significantly enriches the understanding of these pivotal elements in contemporary business landscapes.