Dynamic Capabilities and an ESG Strategy for Sustainable Management Performance

Abstract

This research explores the dynamic capabilities required for firms to implement environmental, social, and governance (ESG) strategies, and investigates sustainable management performance that can be created based on them. By using dynamic capabilities theory, we integrate sustainable management and the ESG literature to suggest a research model and identify the factors that act as the catalysts achieving sustainability. The data used for the analysis were collected from 78 firms listed on the Korea Exchange (KRX) with assets totaling more than 2 trillion Korean won. In this study, the partial least squares structural equation model (PLS-SEM) is applied. We found that absorptive capability and adaptive capability significantly affect sustainable management performance through implementation of the ESG strategy as a mediating variable. In particular, a firm’s implementation of an ESG strategy is a significant determinant that impacts sustainable management performance. We also believe our model contributes to the current knowledge by filling several research gaps, and our findings offer valuable and practical implications not only for achieving sustainable growth but also for creation of competitive advantage.

Demystifying the roles of organisational smart technology, artificial intelligence, robotics and algorithms capability: A strategy for green human resource management and environmental sustainability

“…Scholars have affirmed that the design and successful adoption of advanced technology such as STARA is a firm's capability that promotes its ability to continuously implement ES practices (Hofmann et al, 2012). This is achieved through conscious effort by the firm to sense, seize and integrate internal and external resources such as STARA capabilities in response to environmental challenges to meet stakeholders' expectations (Liang et al, 2022; Teece, 2007; Teece et al, 1997) while creating and sustaining competitive advantage in a highly competitive business environment. We note that by sensing the environment for opportunities and knowledge, seizing identified opportunities and knowledge and reconfiguration of such knowledge into OSC, organisations can successfully develop green knowledge and OSC for ES (Bianchi et al, 2022).…”

Eco-dynamic capability: A surest way to sustainability performance of SMEs?

“…The evaluation of social sustainability performance (SSP), on the other hand, involves assessing the positive contributions an organisation makes to society and mitigating any negative social impacts (Liang, Lee, & Jung, 2022). Eco-dynamic capabilities, or the skills to recognise, act on and change environmental chances and threats (Li, Hassan, Murad, & Mirza, 2023), have been linked to better SSP in several studies (Rebs, Thiel, Brandenburg, & Seuring, 2019; Shang, Chen, & Li, 2020).…”

Principles of Management Systems for Positive Impact Factories

“…The existing literature mainly studies the opportunities and possibilities of integrated management systems (IMS) concerning the sustainable management of companies [29][30][31][32][33][34][35][36]. Jorgensen and Herreborg, as well as Souza et al, choose a different approach since they discuss the combination of different management systems towards a sustainable system in their analysis [37,38].…”