Strategic Shift to Sustainable Competitive Advantage With Biodiversity Purpose: An Adaptive Capacity Approach

ABSTRACT Drawing on adaptive capacity research, this study provides an assessment of the sustainable competitive advantage of a strategic shift with social purpose, leveraging green revenue to drive biodiversity outcomes. The study employs panel regression analysis on a distinctive dataset for the period 2015–2024, focusing on S&P 1500 firms. Using the Treatment model and additional logistic regression, this study reveals that corporations that switch their strategy to green achieve a competitive advantage in terms of better biodiversity outcomes and greater profitability. This finding is consistent with the resource advantage theory and survives numerous robustness tests. The result is more prominent for firms that support UN Sustainable Development Goal 15 (Life on land) and have a biodiversity commitment. Next, the study documents that eco‐innovation capacity mediates the relationship between the strategic shift to green power and biodiversity outcomes (hereinafter, the firm's ability to reduce its biodiversity impact), with higher eco‐innovation capacity leading to greater biodiversity impact reduction. This study's findings expand the adaptive capacity, strategic shift, and eco‐innovation literature and provide insights into the multifaceted aspects of biodiversity activities.