Abstract
The popularity of achieving environmental sustainability among businesses is not exceptional in the green business literature. However, despite its popularity, businesses are still practically clueless about its benefits. This study employs the dynamic capabilities theory to investigate the relationship between environmental capabilities (i.e., environmental strategic focus, shared vision, management support, collaboration, and technological capabilities) and environmental innovation. To test the hypotheses, data from a sample of 124 firms were collected from managers of environmental management system 14001-certified Malaysian manufacturing firms. The collected data were analyzed using structural equation modeling with partial least squares version 3.0. The results indicated that environmental technological capabilities and environmental collaboration both have a positive impact in directly enhancing the firms’ environmental innovations. The findings of this study indicate the possibility that manufacturers can remain competitive by integrating environmental considerations at the strategic level; collaborating with suppliers, customers, and the local community for environmental solutions; and investing in environmental technological capabilities.
Highlights
Environmental degradation problems are on the rise in Malaysia
The reported non-predictive role of environmental strategic focus on environmental innovation fails to provide evidence to validate environmental strategic focus as environmental capabilities among environmentally proactive manufacturers in Malaysia, as underpinned by the dynamic capabilities theory of firm performance (Peteraf, 1993; Teece et al, 1997; Eisenhardt & Martin, 2000; Helfat & Peteraf, 2003)
The findings reveals environmental strategic focus, environmental collaboration and environmental technological capabilities serve as environmental capabilities as they enhance environmental innovation
Summary
Environmental degradation problems are on the rise in Malaysia. The country’s environmental performance index (EPI), a world ranking for environmental evaluation based on high-priority environmental issues, has declined from 51st position in year 2014 to 63rd position in year 2016 (Hsu et al, 2014; Hsu & Zomer, 2016). There were cases whereby industrial wastes were burned or dumped into rivers or bushes or just stored in the warehouses (Hassan et al, 2005) The severity of these irresponsible handling of environmental waste is evidenced by increasingly larger penalty imposed by Malaysian courts on cases of environmental pollutions and environmental crimes relating to manufacturing activities (Mustafa & Mohamed, 2015). These environmental damages caused climate change that has far-reaching damages to the well-being of the world
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