Strategic Transformation for Sustainable Manufacturing: A Review of Dynamic Capabilities and Organizational Performance

Abstract

Against the background of increasing environmental pressure, rapid advances in digital technology, and rising stakeholder expectations, sustainable development has become an important strategic task for manufacturing firms. Strategic transformation is widely regarded as a key pathway to long-term competitiveness, yet firms often achieve very different outcomes from similar transformation efforts. This paper reviews research on strategic transformation, dynamic capabilities, and sustainable organizational performance and develops an integrated analytical framework based on dynamic capability theory. It argues that strategic transformation encompasses not only green upgrading and digital renewal, but also systematic changes in strategic direction, resource allocation, organizational structure, and business models. Through stronger capabilities to sense change, seize opportunities, and reconfigure resources, firms can convert transformation investments into economic, environmental, social, innovation, and resilience outcomes. Leadership, a learning-oriented culture, digital maturity, industry characteristics, and institutional support influence this conversion process. By integrating different streams of transformation research within a unified capability perspective, the paper identifies future research priorities concerning transformation configurations, the microfoundations of dynamic capabilities, short- and long-term performance differences, organizational resilience, and manufacturing in emerging economies.