Dynamic Capability Microfoundations and Sustainability Performance: Examining the Mediating Role of Supply Chain Collaborative Innovation
Keywords:
Sensing Capability, Seizing Capability, Transforming Capability, Supply Chain Collaborative Innovation, Sustainability Performance.Abstract
This study aims to analyze the impact of Dynamic Capability Microfoundations comprising Sensing Capability, Seizing Capability, and Transforming Capability on Sustainability Performance, with Supply Chain Collaborative Innovation (SCCI) serving as a mediating variable in bamboo handicraft SMEs in West Java. The study employs a quantitative methodology utilising an explanatory research design. Data was collected from 250 owners or managers of handmade SMEs, selected through purposive sampling methods. Data analysis was conducted via SEM-PLS through SmartPLS 4.0. The findings indicated that Seizing Capability and Transforming Capability positively and significantly influenced Sustainability Performance, however Sensing Capability did not exert a meaningful effect. Moreover, Sensing Capability and Seizing Capability exert a favourable and considerable influence on Supply Chain Collaborative Innovation, whereas Transforming Capability has no impact. This study demonstrates that Supply Chain Collaborative Innovation positively and significantly influences Sustainability Performance. In mediation analysis, Supply Chain Collaborative Innovation was demonstrated to completely mediate the association between Sensing Capability and Sustainability Performance, while partially mediating the relationship between Seizing Capability and Sustainability Performance. Mediation does not influence the link between Transforming Capability and Sustainability Performance. This study theoretically enhances Dynamic Capability Theory and Open Innovation Theory by demonstrating that each dimension of dynamic capability microfoundations employs distinct mechanisms to enhance Sustainability Performance, while also confirming the strategic significance of Supply Chain Collaborative Innovation as a means of converting dynamic capabilities into sustainable competitive advantage. The study's findings offer recommendations for SMEs to enhance their capacity to capitalise on opportunities, reform their organisations, and establish new collaborations within the supply chain to bolster business sustainability.
References
Abduh, T., Remmang, H., Abubakar, H., & Karim, A. (2024). Entrepreneurship and MSME market orientation toward creative industries: Society Era 5.0 in Makassar city. Asian Economic and Financial Review, 14(2), 76–87. https://doi.org/10.55493/5002.v14i2.4964
Achmad, F., & Wiratmadja, I. I. (2025). Organizational performance and competitive advantage in SMEs: The role of green innovation and knowledge management. Journal of Open Innovation: Technology, Market, and Complexity, 11(2), 1–16. https://doi.org/10.1016/j.joitmc.2025.100532
Alhidayatullah, Herlitah, & Suparno. (2025). Factors Affecting Sustainable Performance: Systematic Literature Review (SLR). International Student Conference on Business, Education, Economics, Accounting, and Management (ISC-BEAM), 1–17. https://journal.unj.ac.id/unj/index.php/isc-beam/article/view/61417
Al-Husain, R. A., Jasim, T. A., Mathew, V., Al-Romeedy, B. S., Khairy, H. A., Mahmoud, H. A., Liu, S., El-Meligy, M. A., & Alsetoohy, O. (2025). Optimizing sustainability performance through digital dynamic capabilities, green knowledge management, and green technology innovation. Scientific Reports, 15(1). https://doi.org/10.1038/s41598-025-04912-6
Ali, K., Amir, M., & Siddique Malik, M. (2023). Strategic Motives, Proactive Environmental Strategies and Corporate Performance: Role of Business Model Innovation and Competitive Intensity. In Pakistan Journal of Commerce and Social Sciences (Vol. 17, Number 2). https://doi.org/10.64534/Commer.2023.081
Alsawafi, A., Lemke, F., & Yang, Y. (2021). The impacts of internal quality management relations on the triple bottom line: A dynamic capability perspective. International Journal of Production Economics, 232. https://doi.org/10.1016/j.ijpe.2020.107927
Anwer, S., & Ahmed Siddiqui, D. (2019). Business Process Management Organizational Performance and Competitiveness: The Mediatory Role of Supply Chain Collaboration.
Audretsch, D. B., Belitski, M., Caiazza, R., & Phan, P. (2023). Collaboration strategies and SME innovation performance. Journal of Business Research, 164. https://doi.org/10.1016/j.jbusres.2023.114018
Babelytė-Labanauskė, K., & Nedzinskas, Š. (2017). Dynamic capabilities and their impact on research organizations’ R&D and innovation performance. Journal of Modelling in Management, 12(4), 603–630. https://doi.org/10.1108/JM2-05-2015-0025
Bataineh, M. J., Sánchez-Sellero, P., & Ayad, F. (2024). The role of organizational innovation in the development of green innovations in Spanish firms. European Management Journal, 42(4), 527–538. https://doi.org/10.1016/j.emj.2023.01.006
Bernal-Torres, C. A., Torres-Guevara, L. E., Álvarez-Aros, E. L., Barrera-Canto, J. L., & Ojeda-López, R. N. (2025). Collaborative work in the implementation of Industry 4.0 technologies and its relationship with business sustainability in an emerging economy. International Journal of Innovation Studies, 9(3), 218–230. https://doi.org/10.1016/j.ijis.2025.05.002
Bogers, M., Chesbrough, H., Heaton, S., & Teece, D. J. (2019). Strategic Management of Open Innovation: A Dynamic Capabilities Perspective. California Management Review, 62(1), 77–94. https://doi.org/10.1177/0008125619885150
Bossink, B. (2025). Experiments and demonstrations for environmentally sustainable technological innovation: Reviewing insights and proposing a model. In Journal of Cleaner Production (Vol. 519). Elsevier Ltd. https://doi.org/10.1016/j.jclepro.2025.145971
Chaudhuri, R., Singh, B., Agrawal, A. K., Chatterjee, S., Gupta, S., & Mangla, S. K. (2024). A TOE-DCV approach to green supply chain adoption for sustainable operations in the semiconductor industry. International Journal of Production Economics, 275. https://doi.org/10.1016/j.ijpe.2024.109327
Chesbrough, H. W. (2003). Open Innovation The New Imperative for Creating and Profiting from Technology (Vol. 658).
Corrales-Estrada, A. M., Gómez-Santos, L. L., Bernal-Torres, C. A., Rodriguez-López, J. E., & Sandoval-Reyes, J. (2025). Dynamic capabilities contribution to organizational performance: the mediator role of business continuity ordinary capabilities. Cogent Business and Management, 12(1). https://doi.org/10.1080/23311975.2025.2493315
Dukhaykh, S., & Alangri, N. (2026). Dynamic Capabilities and Sustainable Competitive Advantage in SMEs: The Roles of Innovation and Organizational Learning. Sustainability (Switzerland), 18(3), 1–21. https://doi.org/10.3390/su18031320
Elkington, J. (1997). Enter the Triple Bottom Line.
Elsebaie, N., Fokina, O., Lukashenko, I., Mottaeva, A., & Fatkullina, A. (2023). Territorial expansion and sustainable development: a case study of regional small businesses. BIO Web of Conferences, 65. https://doi.org/10.1051/bioconf/20236503002
Ferradás-González, A., Pérez-Rico, C., & Adá-Lameiras, A. (2024). Transforming sorted and performance of waste recovery companies: Circular Economy, Sustainability Technology and SDGs. Sustainable Technology and Entrepreneurship, 3(3). https://doi.org/10.1016/j.stae.2024.100082
Fontoura, P., & Coelho, A. (2022). How to boost green innovation and performance through collaboration in the supply chain: Insights into a more sustainable economy. Journal of Cleaner Production, 359. https://doi.org/10.1016/j.jclepro.2022.132005
Gadatsch, A. (2023). Business Process Management: Analysis, Modelling, Optimisation and Controlling of Processes. In Business Process Management: Analysis, Modelling, Optimisation and Controlling of Processes. Springer Fachmedien Wiesbaden. https://doi.org/10.1007/978-3-658-41584-6
Ghosh, S., Hughes, M., Hughes, P., & Hodgkinson, I. R. (2022). Digital transformation of industrial businesses: A dynamic capability approach. Technovation, 113(102414), 1–47.
Hair, J., & Alamer, A. (2022). Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example. Research Methods in Applied Linguistics, 1(3). https://doi.org/10.1016/j.rmal.2022.100027
Hair, J. F. (2021). Next-generation prediction metrics for composite-based PLS-SEM. Industrial Management and Data Systems, 121(1), 5–11. https://doi.org/10.1108/IMDS-08-2020-0505
Halbusi, H. Al, Soto-Acosta, P., Popa, S., & Hassani, A. (2024). The Role of Green Digital Learning Orientation and Big Data Analytics in the Green Innovation-Sustainable Performance Relationship. IEEE Transactions on Engineering Management, 71, 12886–12896. https://doi.org/10.1109/TEM.2023.3277078
Herlitah, H. (2025). Empowered to lead: how women’s strategic leadership drives sustainable competitive advantage in SMEs. Strategy & Leadership. https://doi.org/10.1108/SL-05-2025-0113
Herzallah, A. M., Iriqat, R. A. M., Zaki, K., Khalifa, G. S. A., Abdelhalim Abdelfadel, T. A., Hamed, M. H., & Elnagar, A. K. (2025). Sustainable innovation as a catalyst: linking green supply chain practices to corporate reputation in emerging markets. Cleaner Logistics and Supply Chain, 16. https://doi.org/10.1016/j.clscn.2025.100245
Huang, J., Yang, B., Zhou, B., & Ran, B. (2025). Sustainable knowledge integration: Enhancing green development resilience. Journal of Innovation and Knowledge, 10(2). https://doi.org/10.1016/j.jik.2025.100671
Hunziker, S., & Blankenagel, M. (2024). Research Design in Business and Management A Practical Guide for Students and Researchers. https://ashcards.springernature.com/login
Iranto, D., Herman, H., Ahmad, G. N., Suparno, S., & Narmaditya, B. S. (2025). Empowering small and medium enterprises: A model for digital literacy and credit utilization. Humanities and Social Sciences Letters, 13(4), 1287–1303. https://doi.org/10.18488/73.v13i4.4494
Ji, H., Huang, J., Sun, K., & Xing, Z. (2025). Does environmental, social, and governance (ESG) performance lead to ambidextrous innovation? Integrating stakeholder and institutional theories. Journal of Innovation and Knowledge, 10(5). https://doi.org/10.1016/j.jik.2025.100804
Journeault, M., Perron, A., & Vallières, L. (2021). The collaborative roles of stakeholders in supporting the adoption of sustainability in SMEs. Journal of Environmental Management, 287. https://doi.org/10.1016/j.jenvman.2021.112349
Jum’a, L., Alkhodary, D., & Mandahawi, N. (2025). Supply Chain Collaboration, Innovation, and Sustainability Performance: Evidence from Manufacturing Firms in Jordan. Sustainability (Switzerland), 17(21), 1–21. https://doi.org/10.3390/su17219384
Khurana, S., Luthra, S., Haleem, A., Kumar, A., & Mannan, B. (2022). Can sustainability be achieved through sustainable oriented innovation practices? Empirical evidence of micro, small and medium scale manufacturing enterprises. Sustainable Development, 30(6), 1591–1615. https://doi.org/10.1002/sd.2330
Le, T. T. (2022). How do corporate social responsibility and green innovation transform corporate green strategy into sustainable firm performance? Journal of Cleaner Production, 362. https://doi.org/10.1016/j.jclepro.2022.132228
Lei, G., Zhong, C., Zhang, J., & Zheng, Y. (2025). Environmental reward–punishment policy and collaborative green innovation in China: Lessons for global environmental management. Journal of Environmental Management, 395. https://doi.org/10.1016/j.jenvman.2025.127681
Li, H. (2022). Green Innovation, Green Dynamic Capability, and Enterprise Performance: Evidence from Heavy Polluting Manufacturing Enterprises in China. Complexity, 2022. https://doi.org/10.1155/2022/7755964
Li, J., Li, G., Xie, J., & Zhang, G. (2024). Dynamic simulation of policy-driven green technology innovation networks: Digital empowerment and collaborative efficiency. Heliyon, 10(16). https://doi.org/10.1016/j.heliyon.2024.e36622
Liu, Z., Jiao, C., Zhang, Y., & Wang, J. (2023). Linking Supply Chain Collaboration, Collaborative Advantage, and Firm Performance in China: The Moderating Role of Government Subsidies. Sustainability, 15(21), 15329. https://doi.org/10.3390/su152115329
Madhavan, M., Sharafuddin, M. A., & Chaichana, T. (2022). Impact of Business Model Innovation on Sustainable Performance of Processed Marine Food Product SMEs in Thailand—A PLS-SEM Approach. Sustainability (Switzerland), 14(15). https://doi.org/10.3390/su14159673
Masocha, R. (2018). Does environmental sustainability impact innovation, ecological and social measures of firm performance of SMEs? Evidence from South Africa. Sustainability (Switzerland), 10(11). https://doi.org/10.3390/su10113855
Mohaghegh, M., Blasi, S., & Größler, A. (2021). Dynamic capabilities linking lean practices and sustainable business performance. Journal of Cleaner Production, 322. https://doi.org/10.1016/j.jclepro.2021.129073
Pascucci, T., Cardella, G. M., Hernàndez-Sànchez, B., & Sànchez-Garcìa, J. C. (2022). Environmental Sensitivity to Form a Sustainable Entrepreneurial Intention. Sustainability (Switzerland), 14(16), 2–17. https://doi.org/10.3390/su141610398
Pricopoaia, O., Cristache, N., Lupașc, A., & Iancu, D. (2025). The implications of digital transformation and environmental innovation for sustainability. Journal of Innovation and Knowledge, 10(3). https://doi.org/10.1016/j.jik.2025.100713
Qiu, L., Jie, X., Wang, Y., & Zhao, M. (2020). Green product innovation, green dynamic capability, and competitive advantage: Evidence from Chinese manufacturing enterprises. Corporate Social Responsibility and Environmental Management, 27(1), 146–165. https://doi.org/10.1002/csr.1780
Rahman, S. A., Taghizadeh, N. S., Tipu, S. A. A., & Far, S. M. (2025). Leveraging dynamic capabilities for digital transformation: Exploring the moderating role of cost in environmental performance of SMEs. Journal of Open Innovation: Technology, Market, and Complexity, 11(2). https://doi.org/10.1016/j.joitmc.2025.100523
Sakas, D. P., Nasiopoulos, D. K., & Taratuhina, Y. (2021). Computational and Strategic Business Modelling.
Saunila, M., Ukko, J., & Kinnunen, J. (2024). Sustainability partnership as a moderator in the relationship between business sustainability and firm competitiveness. Business Strategy and the Environment, 33(2), 123–133. https://doi.org/10.1002/bse.3493
Schilke, O., Hu, S., & Helfat, C. E. (2018). Quo Vadis, Dynamic Capabilities? A Content-Analytic Review of the Current State of Knowledge and Recommendations for Future Research. https://ssrn.com/abstract=3069608Electroniccopyavailableat:https://ssrn.com/abstract=3069608Electroniccopyavailableat:https://ssrn.com/abstract=3069608
Shmueli, G., Sarstedt, M., Hair, J. F., Cheah, J. H., Ting, H., Vaithilingam, S., & Ringle, C. M. (2019). Predictive model assessment in PLS-SEM: guidelines for using PLSpredict. European Journal of Marketing, 53(11), 2322–2347. https://doi.org/10.1108/EJM-02-2019-0189
Sousa-Zomer, T. T., Neely, A., & Martinez, V. (2020). Digital transforming capability and performance: a microfoundational perspective. International Journal of Operations and Production Management, 40(8), 1095–1128. https://doi.org/10.1108/IJOPM-06-2019-0444
Suddaby, R., Coraiola, D., Harvey, C., & Foster, W. (2020). History and the micro-foundations of dynamic capabilities. Strategic Management Journal, 41(3), 530–556. https://doi.org/10.2307/26898596
Suparno, S., Saptono, A., Iranto, D., Disman, D., & Widhiastuti, R. (2022). Development of Small and Medium Enterprises during Covid-19 Period: The Role of Literacy, Attitude and Productive Economic Behavior. Academic Journal of Interdisciplinary Studies, 11(5), 98–113. https://doi.org/10.36941/ajis-2022-0128
Teece, D. J. (2018). Business models and dynamic capabilities. Long Range Planning, 51(1), 40–49. https://doi.org/10.1016/j.lrp.2017.06.007
Teece, D. J., Evans, D., & Helfat, C. (2023). The Dynamic Competition Paradigm: Insight and Implications. In COLUMBIA BUSINESS LAW REVIEW (Vol. 2023).
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509–533. https://doi.org/10.1002/(SICI)1097-0266(199708)18:7<509::AID-SMJ882>3.0.CO;2-Z
Teece, D., Peteraf, M., & Leih, S. (2016). Dynamic capabilities and organizational agility: Risk, uncertainty, and strategy in the innovation economy. California Management Review, 58(4), 13–35. https://doi.org/10.1525/cmr.2016.58.4.13
Tegethoff, T., Santa, R., Bucheli, J. M., Cabrera, B., & Scavarda, A. (2025). Sustainable development through eco-innovation: A focus on small and medium enterprises in Colombia. PLoS ONE, 20(1). https://doi.org/10.1371/journal.pone.0316620
Valdivieso-Uvidia, J. M., Expósito-Langa, M., & Belso-Martínez, J. A. (2025). Green innovation and sustainable performance: The mediating role of sustainability orientation in cluster environments. Green Finance, 7(3), 520–544. https://doi.org/10.3934/GF.2025020
Wei, X., Fang, G., & Yu, X. (2025). From collaboration to green transformation: How strategic alliances drive green total factor productivity through dynamic capabilities? Journal of Innovation and Knowledge, 10(5). https://doi.org/10.1016/j.jik.2025.100783
West, J., & Bogers, M. (2017). Open innovation: current status and research opportunities. Innovation: Organization and Management, 19(1), 43–50. https://doi.org/10.1080/14479338.2016.1258995
Xie, X., Liu, X., & Chen, J. (2023). A meta-analysis of the relationship between collaborative innovation and innovation performance: The role of formal and informal institutions. Technovation, 124. https://doi.org/10.1016/j.technovation.2023.102740
Xie, X., & Wang, M. (2025). Firms’ digital capabilities and green collaborative innovation: The role of green relationship learning. Journal of Innovation and Knowledge, 10(2). https://doi.org/10.1016/j.jik.2025.100663
Zabel, C., O’Brien, D., & Natzel, J. (2023). Sensing the Metaverse: The microfoundations of complementor firms’ dynamic sensing capabilities in emerging-technology ecosystems. Technological Forecasting and Social Change, 192(2), 1–20. https://doi.org/10.1016/j.techfore.2023.12256
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 TEC EMPRESARIAL
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
