Co‐Producing Environmental Resilience: Integrating Stakeholder, Legitimacy, and Co‐Production Theories to Explain Firms' Responses to Environmental Risk

ABSTRACT Environmental risks challenge firms. While prior research assumes environmental resilience stems from communication or internal capability, this study reconceptualizes resilience as a relational capability co‐produced through firm‐stakeholder interactions. Integrating Stakeholder Theory, Legitimacy Theory, and Co‐production Theory, we test our framework using a two‐study design: Study 1 analyzes 93 multinational firms across 26 countries via hierarchical OLS, while Study 2 provides complementary evidence by tracking a matched sample of 139 Japanese firms using cross‐temporal lagged specifications. Our results indicate that stakeholder engagement alone does not mitigate environmental risk; resilience requires aligning external engagement with internal organizational readiness. Moreover, while substantive adaptation incurs immediate operational costs, our temporal evidence indicates that its financial implications are primarily contemporaneous and suggestive of temporal persistence, rather than demonstrating definitive long‐term financial causality. This study extends Co‐production Theory to corporate sustainability, reframing resilience as a strategic relational investment rather than a short‐term financial performance metric.