Title
Path Dependency and Sustainability: Corporate Strategy as a Catalyst in the Second-Largest Brown Economy
Authors
Abstract
Purpose: This study examines whether path dependency (PD) constrains corporate sustainable performance (CSP) in China and whether corporate strategies, namely cost leadership (CL) and differentiation strategy (DS), condition this relationship. The study is motivated by the problem that firms may remain tied to historical routines even when sustainability pressures require strategic renewal.
Methodology: Using annual firm-level panel data from Chinese A-share listed firms from 2010 to 2022, the study estimates industry- and year-fixed-effects regressions and applies component-level validation, an alternative sustainability indicator, a change-on-change specification, and heterogeneity analysis to assess the stability of the findings.
Findings: The results show that PD is negatively associated with CSP, suggesting that historical routines, technological lock-in, and resource irreversibility restrict firms’ ability to improve sustainability outcomes. Cost leadership strengthens this adverse relationship by reinforcing efficiency-oriented routines, whereas the differentiation strategy weakens it by encouraging innovation, flexibility, and resource reconfiguration.
Practical implications: The findings are useful for managers because they show that sustainability improvement requires not only green investment but also a careful review of inherited routines and strategic priorities. Cost-oriented firms should ensure that efficiency pressures do not crowd out green experimentation, while differentiation-oriented firms can use innovation, eco-design, and market uniqueness to overcome path-dependent constraints.
Originality: This study is original because it connects path dependency with CSP and explains how competitive strategy changes the sustainability consequences of historical routines. Unlike prior studies that mainly examine green innovation, digital transformation, board characteristics, or environmental management systems as sustainability drivers, this study identifies PD as an organizational decision constraint and shows that CL and DS operate as opposite strategic boundary conditions.
Decision Sciences relevance: This study contributes to Decision Sciences by showing how strategic choices under historical constraints shape sustainability-related decision-making. It explains how managers’ reliance on past routines narrows feasible decision alternatives and how cost leadership or differentiation can either reinforce or reduce this constraint.
Keywords
Path Dependency, Corporate Sustainability, Strategic Orientation, Cost Leadership, Differentiation Strategy
Classification-JEL
G41, G11, G15
Pages
220-260
How to Cite
Farooq, U., Tabash, M. I., Alnaimi, A. A., Khudoykulov, S., Makhmudov, S., & Shaheen, L. M. (2026). Path Dependency and Sustainability: Corporate Strategy as a Catalyst in the Second-Largest Brown Economy. Advances in Decision Sciences, 30(4), 220-260.