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The Links between Proactive Environmental Strategy, Competitive Advantages and Firm Performance: An Empirical Study in Vietnam

Author

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  • Binh Do

    (Department of Strategic Management, Thuongmai University, Ho Tung Mau Road, Hanoi 100000, Vietnam)

  • Ninh Nguyen

    (Department of Economics, Finance and Marketing, La Trobe Business School, La Trobe University, Bundoora, VIC 3086, Australia
    Business Sustainability Research Group, Thuongmai University, Hanoi 100000, Vietnam)

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.

Suggested Citation

  • Binh Do & Ninh Nguyen, 2020. "The Links between Proactive Environmental Strategy, Competitive Advantages and Firm Performance: An Empirical Study in Vietnam," Sustainability, MDPI, vol. 12(12), pages 1-22, June.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:12:p:4962-:d:373057
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    3. Ricky Y. K. Chan & Jennifer W. M. Lai & Namwoon Kim, 2022. "Strategic motives and performance implications of proactive versus reactive environmental strategies in corporate sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2127-2142, July.
    4. Rizwan Raheem Ahmed & Grigorios L. Kyriakopoulos & Dalia Streimikiene & Justas Streimikis, 2021. "Drivers of Proactive Environmental Strategies: Evidence from the Pharmaceutical Industry of Asian Economies," Sustainability, MDPI, vol. 13(16), pages 1-28, August.
    5. Muhammad Ibrahim & Rosli Mahmood, 2022. "Proactive Environmental Strategy and Environmental Performance of the Manufacturing SMEs of Karachi City in Pakistan: Role of Green Mindfulness as a DCV," Sustainability, MDPI, vol. 14(19), pages 1-14, September.
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    7. Paulius Šūmakaris & Kristina Kovaitė & Renata Korsakienė, 2023. "An Integrated Approach to Evaluating Eco-Innovation Strategies from the Perspective of Strategic Green Transformation: A Case of the Lithuanian Furniture Industry," Sustainability, MDPI, vol. 15(11), pages 1-33, June.
    8. Stanley Y. B. Huang & Shih-Chin Lee & Yue-Shi Lee, 2021. "Constructing an Adoption Model of Proactive Environmental Strategy: A Novel Quantitative Method of the Multi-Level Growth Curve Model," Mathematics, MDPI, vol. 9(16), pages 1-9, August.
    9. Kang Tan & Abu Bakkar Siddik & Farid Ahammad Sobhani & Muhammad Hamayun & Mohammad Masukujjaman, 2022. "Do Environmental Strategy and Awareness Improve Firms’ Environmental and Financial Performance? The Role of Competitive Advantage," Sustainability, MDPI, vol. 14(17), pages 1-24, August.
    10. Liu Yang & Han Qin & Quanxin Gan & Jiafu Su, 2020. "Internal Control Quality, Enterprise Environmental Protection Investment and Finance Performance: An Empirical Study of China’s A-Share Heavy Pollution Industry," IJERPH, MDPI, vol. 17(17), pages 1-15, August.

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