Organizational Rootedness, Territorial Dynamic Capabilities and Environmental Priorities: Evidence From European Regional Firms

ABSTRACT This study examines organizational rootedness as the degree of territorial integration that differentiates environmental priorities in regional firms. Although its constitutive function in shaping environmental engagement is recognized, its ordering function in determining which initiatives become more salient is less clear. We examine whether higher‐ and lower‐rooted regional firm patterns prioritize environmental initiatives differently, how their priorities vary under social and economic pressures, and how these pressures are associated with eco‐innovation orientation in higher‐rooted patterns. The conceptual framework integrates organizational embeddedness with territorial dynamic capabilities: the first conceptualizes the different degrees of firms' territorial integration, whereas the second explains how this integration supports readaptation processes and eco‐innovative development under pressures. Using a novel database from 145 EU regions, we identify distinct priorities in environmental initiatives, reordered under contextual pressures. Furthermore, in higher‐rooted patterns, eco‐innovation orientation tends to be stronger under economic than social pressures. The findings suggest that managers should treat environmental sustainability as a territorially ordered portfolio of initiatives.