From low‐hanging fruit to high‐impact sustainability transformations: unpacking dynamics of intra‐ and interorganizational capability traps

Why are organizations and markets slow to transform toward sustainability despite the abundant well‐recognized opportunities it provides? An important subset of the phenomena this question addresses involves decision‐makers recognizing the existence of opportunities but failing to undertake ambitious, effective, sufficient, or timely action. Building on existing research on capability traps, market formation, and managing sustainability, we focus on the forces constraining organizations from developing the capabilities and market infrastructures required for sustainability transformations. We characterize types of sustainability initiatives and, using causal loop diagramming, visualize structures that enable and constrain how organizations can navigate individually and collectively worse‐before‐better dynamics resulting from uncertain, nonlinear, and delayed returns. Being under day‐to‐day pressures and deeply intertwined within their environment, organizational actors find it difficult to recognize, undertake, maintain, and coordinate necessary efforts internally and externally. We discuss research implications and directions for future research on avoiding these traps and accelerating sustainability transformations. © 2023 The Authors. System Dynamics Review published by John Wiley & Sons Ltd on behalf of System Dynamics Society.