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Green Dynamic Capabilities and Just Energy Transition in Asia: Evidence From Green and Non‐Green Firms

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  • Naila Rafique
  • Zhe Liu
  • Mushtaq Hussain Khan

Abstract

In line with the objectives of the COP26 climate summit, this paper aims to (1) introduce a novel firm‐level just energy transition (JET) index to assess firms' progress toward a fair and inclusive energy transition, and (2) advance the environmentalism strand of literature by examining how green dynamic capabilities (GDCs) enable this transition. Additionally, it investigates whether, following the Paris Agreement, the influence of GDCs on the JET differs between green and non‐green firms. For our empirical investigation, we use a balanced panel of 11,132 firm‐year observations from 484 firms operating across 11 industries in 12 Asian countries between 2002 and 2024. Using a difference‐in‐differences (DiD) approach that focuses exclusively on the Paris Agreement as an exogenous shock, we demonstrate that GDCs have a significantly positive impact on the JET when supported by strong external institutional frameworks, such as the Paris Agreement. We also show that green firms with strong green capabilities lead inclusive energy transitions by effectively responding to institutional pressures post‐Paris Agreement. In contrast, non‐green firms lag behind due to weaker sustainability orientations and limited capability deployment, reducing their responsiveness to policy signals. Our results underscore the strategic value of integrating GDCs with institutional legitimacy to drive sustainable transformation. This research contributes to dynamic capabilities theory and the resource‐based view by positioning GDCs as pivotal levers for aligning strategic intent with global sustainability imperatives.

Suggested Citation

  • Naila Rafique & Zhe Liu & Mushtaq Hussain Khan, 2026. "Green Dynamic Capabilities and Just Energy Transition in Asia: Evidence From Green and Non‐Green Firms," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 33(1), pages 1405-1430, January.
    • Handle: RePEc:wly:corsem:v:33:y:2026:i:1:p:1405-1430
    DOI: 10.1002/csr.70238
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