Organizational Capabilities and ESG Performance: Evaluation of Strategic and Technological Capabilities for Innovation Performance of SMEs

Abstract

The growing importance of Environmental, Social, and Governance (ESG) performance has become a critical focus for companies striving for sustainability and competitive advantage, particularly in the high-tech manufacturing sector. This study investigates how coopetition capabilities and market orientation shape ESG performance, emphasizing the mediating roles of innovation capabilities, digital infrastructure, and data analytics capabilities (DAC). The research focuses on Chinese SMEs within the high-tech manufacturing industry. The findings reveal that coopetition capabilities positively influence digital infrastructure and innovation capabilities but do not significantly impact DAC. Similarly, market orientation enhances digital infrastructure and innovation capabilities but does not impact DAC. Moreover, digital infrastructure and innovation capabilities contribute significantly to ESG performance, whereas DAC remains decoupled from sustainable outcomes. The interplay between coopetition, market orientation, and ESG outcomes is mediated exclusively through digital infrastructure and innovation capabilities. In this framework, firm size and age emerge as important contextual factors that positively impact ESG performance. This study contributes to the ESG literature by integrating the concepts of coopetition and market orientation, showcasing their pivotal roles in cultivating strategic and technological capabilities geared toward sustainable value creation. The insights underscore that high-tech SMEs can leverage coopetition and market alignment strategies to strengthen innovation and infrastructure, enabling improved ESG performance and supporting long-term sustainable growth.