Resilience, Dynamic Capabilities, and ESG: the Strategic Connection

ABSTRACT The world is becoming increasingly volatile and requires sustainable solutions that can leverage internal strengths to achieve strong ESG performance. In this regard, the current work investigates the mediating role of dynamic capabilities (DCs) in the relationship between organizational resilience (OR) and ESG performance. For this purpose, firm‐level panel data from 7570 Chinese enterprises are utilized in the present work. This study develops a multidimensional framework to explore both direct and indirect effects of OR, based on various theories. For empirical analysis, the hierarchical OLS regression is used. The results reveal that OR has a positive influence on ESG performance and significantly enhances DC, which in turn improves ESG outcomes. Moreover, DC partially mediates the relationship between OR and ESG. This highlights its strategic role in translating adaptive potential into sustainable value creation. The study also applied various robustness tests that confirm the baseline results. Further analysis reveals that OR significantly enhances ESG performance in large‐scale, nonmanufacturing, and financially unconstrained firms, particularly in economically developed eastern regions. The effect intensifies in the post‐pandemic period, highlighting OR as a key driver of sustainable strategies under crisis conditions. These results can provide a definitive guide on how policymakers should structure their strategies, as well as contribute to the advancement of empirical literature on sustainable businesses. Emerging markets require resilient and sustainable business models to achieve strategic management and sustainable results.