Navigating ethical minefields: micro‐foundations of corporate political work in ethical and sustainable business performance

In an era of rising geopolitical tensions and environmental instability, corporate political activities have become increasingly intertwined with ethical challenges and sustainability requirements. This study investigates the influence of environmental dynamics and corporate ethical responsibility on interorganizational conflict and sustainable performance within international B2B service organizations. Drawing on stakeholder theory, institutional theory, and resource dependence theory, we formulate and evaluate a model in which ethical duty serves as both a direct mitigator of conflict and a moderator of the relationship between environmental uncertainty and interfirm tensions. Using a mixed‐methods research strategy, we integrate quantitative data from 377 firms with qualitative case‐study insights, demonstrating that environmental dynamics substantially diminish organizations' ethical commitments and exacerbate interorganizational conflict, thereby undermining sustainable performance. Firms with heightened ethical responsibility are better able to mitigate the adverse effects of environmental instability on conflict. The findings are corroborated by qualitative insights from a case study of a large infrastructure firm, demonstrating how ethical governance and stakeholder alignment help organizations manage regulatory ambiguity and relational challenges. This research disaggregates corporate politics by examining conflict and ethical responsibility, thereby enhancing micro‐foundational insights into political labor and its consequences for sustainability in intricate institutional contexts.