Sustainable leadership under fire: dynamic capabilities and ESG adoption in conflict-affected, resource-constrained environments

Introduction This study examines when and how sustainable leadership is associated with environmental, social, and governance (ESG) adoption under extreme institutional and resource constraints. By integrating the dynamic capabilities perspective with institutional void theory, it develops a mechanism-and-boundary-condition model in which dynamic capabilities transmit the relationship between sustainable leadership and ESG adoption, while conflict intensity and resource scarcity (CIRS) constrain direct and capability-based pathways. Methods Survey data were obtained from 248 senior managers of medium-to-large enterprises operating across four major commercial centers in Yemen and analyzed using partial least squares structural equation modeling. Results Sustainable leadership was positively associated with dynamic capabilities ( β = 0.576, p < 0.001) and ESG adoption ( β = 0.287, p < 0.001), while dynamic capabilities were positively associated with ESG adoption ( β = 0.462, p < 0.001). Dynamic capabilities mediated the sustainable leadership–ESG relationship (indirect effect = 0.266, 95% CI [0.194, 0.345]). CIRS negatively moderated both the sustainable leadership–ESG relationship ( β = −0.118, p = 0.010) and the dynamic capabilities–ESG relationship ( β = −0.151, p = 0.003). Consistent with second-stage moderated mediation, the conditional indirect effect weakened as environmental hostility increased (index = −0.087, 95% CI [−0.148, −0.031]). Discussion The study contributes by showing that environmental hostility constrains the extent to which sustainability-oriented managerial intent and adaptive organizational capabilities are translated into ESG action.