The impact of dynamic capabilities on competitive advantage in Vietnamese steel exporting enterprises under the carbon border adjustment mechanism

Abstract

The European Union's implementation of the Carbon Border Adjustment Mechanism (CBAM) poses significant challenges for Vietnam's steel export sector, which heavily depends on the EU market. CBAM imposes carbon taxes on imports with high emissions, particularly steel, raising costs and demanding stricter emissions data transparency. The Vietnamese steel industry struggles with outdated technologies, limited innovation investments, and unclear institutional policies, which weaken its competitive advantage in the global market. This study explores how dynamic capabilities diversification can enhance the competitiveness of Vietnamese steel enterprises in response to CBAM. It focuses on technological and green innovation as crucial factors that can provide new competitive advantages. The study also emphasizes the role of institutional environment policies, legal frameworks, and the global business climate in shaping innovation and competitiveness. Using a mixed-methods approach, including surveys of steel-exporting enterprises and expert interviews, the research examines how firms have been leveraging innovation to adapt to CBAM. Lessons from international experiences in institutional reform, green finance, and technological innovation are also incorporated to guide Vietnamese firms in expanding their sustainable export markets. Based on these findings, the authors propose recommendations to promote green transition, boost innovation, and improve the institutional environment, helping Vietnamese steel enterprises adapt to CBAM, enhance competitiveness, and grow sustainable export markets.