Corporate Organizational Capabilities, Proactive Environmental Strategy and Financial Performance

Abstract

The purpose of the current study is to investigate how organizational resources and capabilities affect corporate environmental strategy (CES) and performance based on an extended natural resource-based view (NRBV). In contrast with existing studies showing only partial relationships, such as the relationship between CES and firm performance, the current study investigates comprehensive relationships among core NRBV variables and develops an integrated model by combining a resource-based view (RBV), NRBV and competitive advantage theory. The NRBV, as an extension of Barney’s (1991) RBV, is the first model to advocate the importance of corporate capabilities with natural environmental consideration (Hart, 1995). However, this NRBV does not explicitly address the role of corporate proactive environmental strategy (PES) as a determinant of performance. To differentiate the current study with existing studies focusing on the relationship between PES and performance, the current study investigates the driving forces of PES in the nexus of the PES-performance. Further, it examines performance from both environmental and financial perspectives. As such, the model in this thesis identifies six key variables which include (i) organizational resources, (ii) organizational capabilities, (iii) PES, (iv) competitive advantage, (v) environmental performance, and (vi) financial performance. The current study used model comparison techniques and identified a two-tier structure of factors which are associated with organizational resources and capabilities before investigating causality. For the empirical analysis, the current study employed the structural equation modeling (SEM) using from participants in Korean manufacturing.