The importance of corporate responsibility for society and environments is emphasized by increasing influence of firms on various stakeholders. Firms strengthen environmental, social, and governance (ESG) activities, which are critical elements for sustainable management. However, there are inconsistent findings on the relationship between ESG activities and firms’ financial performance in prior studies because of the lack of full consideration of internal mechanisms and external conditions. To overcome this limitation, this study investigates the mediating effect of non-financial performance and the moderating effect of the institutional environment on the relationship between firms’ ESG activities and their financial performance in a unified moderated mediation model. Samples for empirical analyses were collected by a survey from 304 small and medium-sized Chinese manufacturers. The results of a mediation analysis reveal that each ESG activity has a positive effect on firms’ financial performance, and the impact of ESG activities on financial performance is completely mediated by non-financial performance. The results of a moderated mediation analysis further indicate that the mediating effect varies depending on the level of institutional pressure from the government, consumers, and competitors. The study suggests the need for interdisciplinary research in sustainable management and institutional theory and emphasizes the importance of sustainable management for performance improvement in a changing environment.

The purpose of our study is to examine the mechanisms that link environmental dynamism to firms’ innovation performance. Although there have been extensive studies on the effect of environmental dynamism on innovation performance, they have focused primarily on its direct effect and have resulted in rather inconsistent research findings. Thus, to explain the relationship between environmental dynamism and innovation performance more clearly, we intend to investigate the mechanisms through which environmental dynamism influences innovation performance in this study. Specifically, we aim to examine the mediation effects of strategic prospecting, absorptive capacity, and combined strategic prospecting–absorptive capacity on the relationship between environmental dynamism and innovation performance. Based on data collected from 266 small and medium-sized firms in Korea, our study has found that, assuming a causal interdependence between the mediators, both strategic prospecting and combined strategic prospecting–absorptive capacity mediate the relationship between environmental dynamism and innovation performance. It has also been found, however, that absorptive capacity alone does not mediate the relationship between environmental dynamism and innovation performance, while absorptive capacity mediates the relationship when it is linked to strategic prospecting. The results of our study further reveal that no direct effect of environmental dynamism on innovation performance exists, implying that the significant effect of environmental dynamism on innovation performance demonstrated in previous studies may be spurious in nature. Based on the findings, we present conclusions, theoretical and practical implications, and limitations with future research directions.

The importance of external knowledge acquisition for innovation by firms is well established. In particular, there has been an increasing focus on the two distinct modes of firms’ external search strategies, which have a differential effect on their learning and innovation: search breadth and depth. By applying organizational ambidexterity lens, we hypothesize that pursuing high levels of both external search strategies is beneficial to achieve a balance between exploitative and explorative innovation, which, in turn, has a positive impact on the firm’s innovation performance. We also hypothesize that, even among the firms that maintain high levels of both search strategies, firms with higher absorptive capacity better achieve a balance between both modes of innovation, thereby producing higher performance. The findings on a multi-industry sample of Koran manufacturing firms confirm our hypotheses and imply that it is essential for firms to develop capabilities for different modes of external search activities in conjunction with internal absorptive capacity for superior innovation performance.

Focusing on the fit between external environmental demands and internal capabilities (external fit), as well as the fit among internal capabilities (internal fit) from a dynamic capabilities perspective, this study explores the mechanisms through which environmental dynamism enhances firm innovation performance. By employing a unified moderated mediation model based on data from 254 small- and medium-sized manufacturing firms in Korea, this research reveals that explorative learning mediates the relationship between environmental dynamism and firm innovation performance. This study further reveals, however, that this mediating effect varies depending on the levels of absorptive capacity and exploitative learning. Specifically, the mediating effect of explorative learning on the relationship between environmental dynamism and innovation performance is stronger in firms with high levels of both absorptive capacity and exploitative learning. These results show that the positive impact of environmental dynamism on innovation performance is not consistently observed across all firms. For instance, when operating in dynamic environments, firms lacking absorptive capacity tend to face challenges in achieving explorative learning successfully, and those with high absorptive capacity but weak exploitative learning are also likely to struggle to achieve high innovation performance. These findings highlight the critical roles of dynamic capabilities in cultivating and harmonizing various internal organizational factors to respond to environmental changes more effectively and enhance innovation performance.

The purpose of this study is to investigate the mediation effects of external knowledge acquisition on the relationships between environments (dynamism, complexity, and hostility) and innovation. Although prior studies have extensively examined the relationships between environments and innovation or innovativeness, the results of the studies appear to lack consistency. To help clarify the relationships between environments and innovation, this study intends to examine the impact of environments on innovation through external knowledge acquisition, and it is argued that environments are likely to motivate or force firms to acquire new knowledge from the outside, which, in turn, tends to enhance their ability to innovate. Based on data collected from manufacturing SMEs in China through a questionnaire survey, we have found that dynamism, complexity and hostility have all positive total effects on innovation and that they also have positive influences on firms’ external knowledge acquisition. Besides, we have found that external knowledge acquisition has a complete mediation effect on the relationships between all three environmental dimensions and innovation. The results further show that the positive direct effects of all three environmental dimensions on innovation disappear completely when external knowledge acquisition is considered as a mediator. These results imply that the significant relationships between three respective environmental dimensions and innovation demonstrated in prior studies may be spurious. Based on these findings, we have presented key conclusions, implications, and limitations with the direction of future research.