Dynamic Capabilities, Environmental Management Capabilities, Stakeholder Pressure and Eco-Innovation of Chinese Manufacturing Firms: A Moderated Mediation Model

Abstract

Growing social and academic concerns toward environmental sustainability are constantly driving attention toward eco-innovation as an effective solution to environmental problems. Extant studies on drivers of eco-innovation have not fully investigated the interaction mechanisms between different factors. Drawing upon the resource-based view, stakeholder theory, and environmental literature, this paper aims to explore the mechanisms of how firm capabilities and perceived stakeholder pressure interact to facilitate eco-innovation. Based on survey data collected from 169 Chinese manufacturing firms, the results of regression analysis based on bootstrap resampling method show that environmental management system (EMS) completely mediates the relationship between dynamic capabilities (including absorptive capability and reconfiguring capability) and eco-innovation (including eco-process and eco-product innovation). Furthermore, the relationship between absorptive/reconfiguring capabilities and EMS, as well as the direct and indirect relationship between absorptive capability and eco-process innovation, is contingent upon stakeholder pressure. The direct and indirect effects become stronger when managers perceive higher stakeholder pressure. This paper contributes to answering why firms undertake environmental activities beyond compliance through specifying the interaction between firm capabilities and stakeholder pressure.

Eco-dynamic capability: A surest way to sustainability performance of SMEs?

“…According to research by Arend (2014), in order to deal with the always shifting sustainable environment, businesses must be adaptable and flexible through a process of continual learning, developing and modifying themselves adaptively. According to Arend (2014), Chen and Chang (2013) and Huang and Xiao (2023), dynamic capabilities are necessary for enabling businesses to attain such adaptive flexibility and create on-going changes. By so doing, organisations with strong EDC are able to meet the green demands of customers and the trends of the industry.…”

“…According to Kang and He (2018), the focus of the RBV theory is on how heterogeneous firm resources result in a variety of strategic choices, even in comparable situations. According to the RBV, EDC is a valuable organisational resource that may not be imitated and gives businesses a long-term competitive advantage and increased performance (Huang & Xiao, 2023). In addition, the stakeholder theory postulates that organisations tend to have a good reputation when they meet or exceed stakeholders' expectations, which improves company performance (Afum et al, 2020).…”

“…Moreover, from the findings on EDC and ENSP, we could infer that SMEs that embrace EDC initiatives will be able to minimise energy consumption, minimise waste and emissions in their operations and minimise environmental impacts on their products or services (Huang & Xiao, 2023). In congruence with Ha et al (2023), the findings of our study suggest that SME administrators can effectively adapt their business strategies to attain greater financial results and a comparative position in the market whilst utilising green initiatives to grow their businesses and preserve the natural environment in a sustainable manner.…”

“…Thus, many academics have focussed on the crucial issue of how dynamic capabilities affect organisations' performance and many have forecast a favourable repercussion of dynamic capabilities on performance (Huang & Xiao, 2023). In the manufacturing sector, for instance, Felsberger, Qaiser, Choudhary and Reiner (2022), Eikelenboom and de Jong (2019) and Mousavi, Bossink and van Vliet (2018) have proven how innovation geared towards accomplishing environmental goals uses dynamic capacities.…”

“…In the tourism sector too, it has been demonstrated by Duarte Alonso, Kok and O’Brien (2020), Forés, Camisón-Zornoza and Fernández-Yáñez (2023) and Reyes-Santiago, Sanchez-Medina and Dıaz-Pichardo (2019) that dynamic capability is indeed necessary for firm sustainability performance. Huang and Xiao (2023) proclaimed that given how rapidly the environment changes, businesses must continually update their resources and skills to be able to recognise and benefit from emerging opportunities and build lasting advantages over rivals.…”