This study analyzes the application of “dynamic capabilities” in the context of agile production in 99 Italian manufacturing companies. The objective is to investigate whether and how agile manufacturing affects the economic, environmental, and social performance of these companies. In this study we argue that agile manufacturing, treated as a dynamic capability, can contribute to improving firm performance indirectly, as it involves a transformation of resources and business processes. However, two transformational capabilities are identified as mediating mechanisms in the relationship between agile production and sustainable business performance: internal learning and reconfiguration capabilities. The results of the study indicate that both transformational capabilities are necessary to maximize the positive effects of agile production on sustainable business performance. This study makes an important contribution to the understanding of the role of dynamic capabilities in agile production and the ways in which these capabilities can contribute to corporate sustainability on multiple fronts.
