Abstract Using the resource-based perspective and the organizational change literature, we conceptually describe and empirically test a new and important organizational capability known as organizational capacity for change (OCC). The purpose of this paper is to empirically explore the relationship between an organization's capacity for change and its environmental performance within Bulgaria, a uniquely appropriate transition economy trying to grow economically without major new degradation to its highly diverse natural environment. We found a strong positive association between OCC and environmental performance after controlling for industry sector, organizational size, and organizational profitability. In addition, we found that the greater the differences in OCC from the perspective of top management, midmanagement, and frontline workers, the worse the firm's environmental performance. However, this relationship was most pronounced when there were differences in the perceptions of top managers and frontline workers.