Sustainable Business Practices And Competitive Advantage: Evidence From Emerging Indian Enterprises

Abstract

This study examines how sustainability-driven dynamic capabilities (SDDC) translate into competitive advantage among emerging Indian enterprises, with eco-innovation and stakeholder co-creation as sequentially ordered mediators and institutional regulatory pressure as a boundary-condition moderator. Primary survey data were collected from 347 senior managers and founders of emerging Indian enterprises incorporated between 2009 and 2019 with annual revenues between INR 10 crore and INR 500 crore. Five industry sectors and five Indian states were represented. Partial least squares structural equation modelling (PLS-SEM) with 10,000-iteration bootstrapping was employed using SmartPLS 4.0. SDDC positively and significantly influences competitive advantage both directly (β = 0.287, p < 0.001) and indirectly through eco-innovation (β = 0.198) and stakeholder co-creation (β = 0.167). The serial mediation path (SDDC → Eco-Innovation → Stakeholder Co-Creation → Competitive Advantage) is the strongest indirect pathway (β = 0.142), accounting for 17.9% of total effect variance. Institutional regulatory pressure significantly amplifies the SDDC–eco-innovation relationship (β = 0.193, p < 0.01). This paper introduces SDDC as a theoretically coherent three-dimensional construct (eco-sensing, eco-seizing, eco-reconfiguring) and provides the first empirical test of serial mediation through eco-innovation and stakeholder co-creation in the SDDC–competitive advantage relationship for Indian enterprises. The findings reframe sustainability-induced competitive advantage as a staged, sequentially mediated capability-conversion process.