Unlocking Sustainability: A Hierarchical Approach to Environmental Dynamic Capabilities in Supply Chain Transformation

ABSTRACT This study addresses the challenges posed by globalization, sustainability, and rapid technological change, which increase the complexity and dynamism of the business environment. To tackle these challenges, companies must transition from traditional, static approaches to a more systemic, integrated, and dynamic perspective. Achieving sustainable supply chains requires integrating environmental innovations and dynamic capabilities within the green supply chain management (GSCM) framework. This research proposes and empirically validates a hierarchy of environmental dynamic capabilities based on the dynamic capability view (DCV) and GSCM approaches. Furthermore, it examines the contingency effects of firm size, age, and export orientation using contingent theory (CT). The theoretical model underwent testing through a survey involving 261 individuals in Colombia's manufacturing industry. The findings confirm the existence of a hierarchy of environmental dynamic capabilities, where high‐order capabilities influence the creation, transformation, and reconfiguration of lower order capabilities to address environmental protection and sustainability challenges. Additionally, only firm size was found to positively moderate the development of environmental dynamic capabilities. This study makes a significant contribution by being the first to propose and empirically validate a hierarchical model of environmental dynamic capabilities. The findings provide valuable insights for managers to refine sustainability strategies, improve forecasting, and manage risks. The study highlights the importance of synergy between higher order capabilities in achieving sustainability in supply chains rather than relying on independent efforts. The proposed hierarchy serves as a framework for policymakers to make informed decisions, focus critical investments, and promote interorganizational and interindustrial relationships for a smoother sustainable transition.