Cycling Between Shaping and Being Shaped: How Firms Tackle the Grand Challenges of Sustainability

ABSTRACT Prior research on dynamic capabilities for sustainability (DCfS) highlights how organizations confront the grand challenges by adapting to exogenous changes. This subordinates the external‐facing, forward‐looking approach of shaping through which organizations endogenously design external environments. Shaping as a collaborative and ecosystem‐changing activity is crucial as it highlights firms' agency in addressing the unprecedented uncertainty posed by the grand challenges. Further, assessing how firms adopt both shaping and adapting to tackle these challenges yields a conjunctive conceptualization of DCfS, advancing the conversation on firm‐environment interactions in the context of sustainability. We conduct a longitudinal study on the evolutionary process of DCfS in a semiconductor manufacturing firm. Our process model reveals firm actions constituted in shaping and adapting loops that recur reliably over time and decouples the coevolutionary mechanisms of shaping and adapting DCfS. We establish a sequential influence of shaping on adapting and counterintuitively discover the path independence of shaping and noncontingent origins of adapting. We discuss the role of temporal structuring in oscillating between shaping and adapting and introduce temporal leaps as a previously unaddressed temporal structuring mechanism, advancing research on strategy and sustainability.