How do firms build dynamic capabilities to develop sustainable products? A multiple case study in the manufacturing industry

Abstract

In response to mounting pressure for organizations to meet sustainability requirements and improve their environmental footprint, companies are increasingly tasked with adapting their product portfolios to include environmentally sustainable solutions. However, little research has explored how firms develop the capabilities necessary to achieve this goal. In particular, there is a gap in understanding the microfoundations of dynamic capabilities–the specific skills, processes, and organizational activities–that enable firms to simultaneously pursue business objectives and environmental requirements during product development cycles. To address this gap, we conducted a multiple case study of 19 established manufacturing firms to examine the dynamic capabilities involved in developing environmentally sustainable products. Our findings reveal a dynamic process of profiting from environmentally sustainable product development and identify several microfoundations that enable these dynamic capabilities. For scholars, this study provides a detailed analysis of why and how microfoundations of dynamic capabilities support environmentally sustainable product development. We show that implementing these becomes a continuous process of strategic renewal for an organization. For manufacturing practitioners, our study provides a blueprint for initiating and enabling strategic activities for environmentally sustainable product development.