INSTITUTIONAL PRESSURE AND DYNAMIC CAPABILITIES ON SUSTAINABILITY PERFORMANCB IN MANUFACTURING SECTOR IN MATARA DISTRICT

Abstract

capabilities, and their influence on sustainability performance within the Sri Lankan manufacturing sector's Matara district found a perceived emphasis on both external pressures and internal capabilities as drivers of sustainability. Analyzing data from industry professionals revealed high mean scores for all three constructs, with a predominantly male sample featuring mid-career professionals and moderate educational diversity. Correlation analysis uncovered significant positive relationships between institutional pressure and dynamic capabilities, dynamic capabilities and sustainability performance, and sustainability performance with both environmental and social performance, highlighting their interconnectedness. However, regression analysis indicated that while dynamic capabilities significantly predicted environmental and social sustainability performance, institutional pressure did not exert a statistically significant influence. This suggests that despite perceived external pressures, organizations' internal capabilities to adapt and innovate play a more critical role in achieving sustainable outcomes. The study acknowledges limitations in the measurement scales used for sustainability performance metrics and recommends revisiting these for improved internal consistency. Future research could explore the specific mechanisms through which dynamic capabilities translate into enhanced sustainability performance, providing a more comprehensive understanding of how to promote sustainable development in the manufacturing industry.