Dynamic capabilities for socio-economical sustainability management: evidence from international clothing firms in Ethiopia industrial zones

This paper introduces the strategic micro-foundational construct of dynamic capabilities and explores their causal relationship with socio-economical sustainability variables by considering relational capabilities and focusing on the external environment as a mediating factor. The study used a case study approach targeting export-oriented international clothing firms investing in the industrial zones of Ethiopia. Primary data were gathered for the measurement variables and presented with descriptive and multivariate statistics. Moreover, a system dynamics model was applied to model the dynamic relationship and understand the dynamic capability growth for socio-economical sustainability. The findings show that the firm's accumulated operational capabilities have not significantly influenced socio-economical sustainability. However, a firm's dynamic capabilities to sense, seize, and reconfigure sustainability requirements from the external environment through relational capabilities were more influential. In this regard, it was understood that the firms have a good opportunity to adopt a dynamic capability-driven strategic management approach for sustainable development.