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Do Environmental Strategy and Awareness Improve Firms’ Environmental and Financial Performance? The Role of Competitive Advantage

Author

Listed:
  • Kang Tan

    (School of Economics and Management, Southwest Jiaotong University, Chengdu 610031, China)

  • Abu Bakkar Siddik

    (School of Management, University of Science and Technology of China (USTC), Jinzhai Road, Hefei 230026, China)

  • Farid Ahammad Sobhani

    (School of Business and Economics, United International University, Dhaka 1212, Bangladesh)

  • Muhammad Hamayun

    (Department of Management Science and Commerce, Bacha Khan University, Charsadda KPK 25100, Pakistan)

  • Mohammad Masukujjaman

    (Department of Business Administration, Northern University Bangladesh, Dhaka 1230, Bangladesh)

Abstract

Drawing upon the natural-resource-based view (NRBV), this study assesses the role of environmental strategy (ENS) and environmental awareness (ENA) in enhancing firms’ environmental and financial performance. Additionally, we hypothesize a mediating role of firms’ competitive advantage among these associations. We analyze several hypothesized relationships using survey data from 240 Bangladeshi manufacturing SMEs. The partial least squares structural equation modeling (PLS-SEM) findings suggest that environmental strategy strongly affects organizational competitive advantage and environmental performance. We also observe that environmental awareness substantially affects competitive advantage and environmental and financial performance. Finally, our statistical findings reveal that competitive advantage mediates the linkage between ENS and ENP as well as ENA and ENP. However, ENS was found to have an insignificant effect on firms’ financial performance. These crucial findings extend the NRBV, ENS, and ENA literature. Our research provides managers of manufacturing organizations and policymakers with a valuable model for managing environmental strategy and environmental awareness to enhance environmental and financial performance. It may assist manufacturing SME managers in strengthening their internal resources, such as ENS and ENA, to improve their competitive advantage and organizational outcomes.

Suggested Citation

  • 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.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:17:p:10600-:d:897648
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    References listed on IDEAS

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