A recent study by Kaunas University of Technology highlights the critical role of dynamic organizational capabilities in advancing green transition efforts within manufacturing companies.
A recent study by Kaunas University of Technology (KTU) management scholars has identified essential organizational capabilities for manufacturing companies to successfully navigate the green transition.
By analyzing data from 139 manufacturing companies, the research underscores the importance of dynamic capabilities — financial and technological expertise coupled with adaptability to regulations and evolving consumer demands — in fostering sustainable business practices.
Lina Dagilienė, head of the KTU Circular Economy Research Group and corresponding author of the study, explains that companies need the ability to integrate sustainability into their routine operations to address the systemic challenges posed by the green transition.
“Dynamic capabilities’ concept perfectly covers flexibility and adaptability, and how they can help to integrate sustainability into companies’ business-as-usual activities, such as sourcing, production, waste management and other endeavors,” Dagilienė said in a news release.
According to the study, the ability to adapt existing organizational routines and practices, especially for established companies, is vital.
“The companies, which have been on the market for a while, have their own established routines. For them, the biggest challenge lies in changing or disrupting existing activities and practices, rather than starting afresh. This is not easy,” Dagilienė added.
Co-author Viktorija Varaniūtė, an associate professor and researcher at KTU’s School of Economics and Business, highlights the significance of financial investment for achieving better outcomes.
“Our results show that manufacturing companies that invest more than 10% of their revenues in circularity actions achieve significantly better results. Such investments can be in new technologies, waste management processes, and cleaner production,” Varaniūtė said in the news release.
The research indicates that collaboration with external partners and the integration of internal resources are crucial for implementing innovative solutions. While the study focuses on manufacturing companies in Lithuania, the findings are deemed adaptable across various markets within the EU context.
The study acknowledges the relevance of different industries and company sizes, pointing out that small companies or startups may need different strategies due to limited resources and expertise.
The researchers utilized a strategic approach they termed “zooming-in and zooming-out” perspectives toward dynamic capabilities.
Zooming-out capabilities involve monitoring the external environment for opportunities and adapting in advance to regulatory changes. Zooming-in capabilities focus on managing internal processes and continuously improving competencies and knowledge.
These capabilities play a crucial role in product design and waste management, according to Dagilienė.
“Most of the surveyed companies made production for other large European companies, zooming-out type capabilities (reacting to future changes, meeting focal companies’ expectations) therefore appeared to be an important dynamic characteristic. At the same time, specific knowledge and skills (zooming-in) are needed while implementing technological solutions, e.g., how to have more sustainable packaging solutions,” added Dagilienė.
The study, published in the journal Business Strategy and the Environment, illustrates the importance of external financial support, green credit schemes and tax policies in integrating financial resources for a successful green transition. This highlights the necessity for manufacturing companies to leverage available financial opportunities to improve sustainability.
Overall, the research emphasizes turning disadvantages into opportunities, promoting the dynamic capabilities perspective as a strategic advantage for companies facing the green transition. The researchers also note the role of consumer acceptance of green products, emphasizing the importance of dynamically assessing market needs for a successful circular transformation.