Abstract
The acceleration of environmental problems has put firms under high pressure to assume their social and environmental responsibility. This study aims to investigate the links between proactive environmental strategy, competitive advantages and firm performance. It also explores the control effects of firm size and industry type on the adoption of such a strategy. Data were obtained from 232 firms that participated in the program on benchmarking and announcing sustainable companies in Vietnam. Findings from structural equation modelling reveal that the adoption of a proactive environmental strategy generates both differentiation and cost leadership competitive advantages. Furthermore, differentiation competitive advantages enhance firm performance in both the short term (i.e., product, financial and production performance) and long term (i.e., strategic performance). Interestingly, a proactive environmental strategy is more prevalent among larger firms and those in service industries. This study’s findings provide support for firms to pursue a proactive environmental strategy and have several implications for policymakers in developing policies that aim at promoting environmental practices in firms.
Highlights
The acceleration of environmental problems is not a national issue but a global one
Given that environmental parameters are complicated and that the proactivity levels of environmental strategies differ in different countries and industries [44,75], the consequences of proactive environmental strategies should vary across different contexts
We have sought to examine the outcomes of proactive environmental strategies, which represent firms’ high levels of commitment to tackle environmental issues through the integration of five dimensions, namely, product, production process, organizational systems, supply chain and recovery, and external relationship [13] in the context of Vietnam
Summary
The acceleration of environmental problems (e.g., air pollution, natural resource depletion and climate change) is not a national issue but a global one. Firms in all areas have been under higher pressure to assume their social responsibility and change in ways that improve natural environment [1]. Numerous stakeholders including governments, non-government organizations, community and others are increasingly urging these firms to minimize their impact on the natural environment [2,3,4]. In this situation, managers have been confronted with greater pressure to shift their strategies toward a more environmentally sustainable orientation. Some studies reported the positive impacts of an environmental strategy on a firm’s financial performance, others showed negative impacts and some research even did not show any significant differences in firm performances when adopting an environmental strategy [5,6,7,8,9]
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