["Corporate Social Responsibility and Environmental Management, Volume 33, Issue 2, Page 2448-2464, March 2026. ", "\nABSTRACT\nThis study highlights the role of digital tools in digital transformation and digital supply chain performance using two types of innovation, that is, exploratory and exploitative. It also determines the moderating aspect of data‐driven supply chain. The sample was obtained in three stages and time‐lagged based on 364 manufacturing companies in the UAE. The results reveal that digital tools have a positive influence on digital transformation, which consequently promotes exploratory and exploitative innovation to a large extent. These inventions were discovered to mediate the relationship between digital transformation and supply chain performance positively. Additionally, it was demonstrated that data‐driven supply chains had a moderating effect on the connection between exploratory innovation and supply chain performance. The research is consistent with the technology‐organization‐environment and diffusion of innovation paradigms, providing the framework for new technologies' adoption into the industrial environment. It implies that the use of digital tools and data‐driven practices can help manufacturers become more efficient in their operations, become more innovative and more competitive in the global marketplace, which is rapidly changing.\n"]