The resource‐based view, stakeholder capitalism, ESG, and sustainable competitive advantage: The firm's embeddedness into ecology, society, and governance

Abstract The main research question of the study is this: Is the firm embedded into ecology, society, and governance (ESG), or vice versa? Using the resource‐based view as a theoretical lens, and stakeholder capitalism as a paradigm anchored in the Dashgupat Review , we demonstrate in a panel data over 26 years that at the firm level, the relationship between sustained competitive advantage and the ESG footprint is concave shaped, and the impact inequality multiple gaps of the ESG footprint are 4.75 times the providing capacity of the natural and business environment. To solve the common method variance, endogeneity, and unobserved heterogeneity, system GMM is used as a method in a dataset of US manufacturing firms from 1992 to 2019. At the end, we argue that extant attributes of a resource base for sustained competitive advantage have an inherent flaw anchored in the resource‐based view, as they ignore the “environmental, social, and governance (ESG) friendliness” attribute of a resource. Managers need to rethink the objective of their firms if they want to survive in the new ESG‐friendly economy with stakeholder supremacy.