Exploring dynamic capabilities and green innovations in born sustainable firms

Abstract

Born sustainable firms aim to regenerate the environment and drive positive societal changes since their establishment. Therefore, they need to leverage dynamic capabilities and their micro-foundations to reach their strategic aims. This paper investigates how dynamic capabilities—and their micro-foundations—influence the transition of such firms towards carbon neutrality. It assumes a holistic approach, analyzing the contribution of the firm’s ecosystem to the development of its dynamic capabilities. Finally, the role of green innovations on the path toward carbon neutrality is evaluated. The adopted research method is based on a single longitudinal case study concerning a small organic wine-born sustainable firm implementing a sustainable and circular business model. Our findings clearly show that a firm's dynamic capabilities—belonging to the sensing, seizing, and reconfiguring clusters—play a critical role even in the case of micro and small companies, which are rarely investigated in the extant literature. However, due to the traditional resource poverty characterizing such companies, dynamic capabilities must be rooted in micro-foundations developed through interactions with partners within the firm's ecosystem. At the same time, developed capabilities allow the company to create and exploit a set of green innovations, which, in turn, push forward the net zero goal.