Conceptualizing green dynamic capabilities as a two-path model: Evidence from Danish manufacturing firms

Abstract

The theory of “dynamic capabilities” is often used to explain firms’ transition towards greener production, typically under the name of “green dynamic capabilities” (GDCs). Such studies typically conceptualize GDCs as a single construct and, in rarer cases, as a group of noninteracting constructs. This study takes a different approach by conceptualizing GDCs as a set of constructs organized under three stages during which dynamic capabilities are applied (i.e., “sensing”, “seizing”, and “transforming”). The constructs “market orientation” (MO), “sustainability orientation” (SO), “technological orientation” (TO), and “green process innovation” (GPI) are used as proxies for GDCs to develop a model describing two distinct paths from MO to GPI. The model is investigated through a survey of Danish manufacturing firms (n=337). The results confirm the hypotheses that SO and TO mediate the relationship between MO and GPI. Interestingly, there is no support for a direct relationship between MO and GPI, which implies that SO and TO fully mediate this relationship. Second, the results show that both mediation relationships are associated with competitive advantages in the form of increased product quality, whereas no support is found for effects on lead times and costs. Overall, the study adds to the understanding of GDCs by conceptualizing them as a set of constructs organized under three stages during which different GDCs are applied. This conceptualization offers future research a more nuanced operationalization of GDCs, which may lead to additional insights into their conditions and effects.