Environmental Strategy and Competitive Advantage: The Role of Small‐ and Medium‐Sized enterprises' Dynamic Capabilities

Abstract

Drawing on the resource‐based theory and institutional theory, we develop a framework to explain the processes by which the environmental strategy of small‐ and medium‐sized enterprises (SMEs) contributes to their competitive advantage. We test our assumption using data collected from 214 UK‐based SMEs in the technology sector. We find that the effects of environmental strategy can lead to development of their marketing competence, as well as research and development (R&D) competence, which ultimately contributes to superior financial performance. We also find that a reciprocal causal relationship exists between SMEs' marketing and R&D competences. Combined, we reveal the presence of a serial multiple mediation relationship between SMEs' environmental strategy and financial performance through marketing competence and then R&D competence, or vice versa. Our study offers important academic and managerial implications, and also points out future research directions. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment

Sustainability‐oriented capabilities for eco‐innovation: Meeting the regulatory, technology, and market demands

“…Kabongo and Boiral () identify technological innovations, control of residual flows, human resource capabilities (including hiring and training), green management capabilities (including green marketing and interconnectedness within the company), higher order learning, and strategic growth as key organizational capabilities that drive eco‐efficiency. Ko and Liu () and Pacheco et al () posit that organizational capabilities such as R&D and marketing capabilities are higher order capabilities that enable firms to benefit from their green strategies. S. Lee and Klassen () consider the role of organizational learning and lean production capabilities as important drivers of carbon management practices.…”

“…Market sensing capabilities are also highlighted as crucial for the development of EI (Dangelico & Vocalelli, ; Dangelico, ; Ko & Liu, ) and insufficiencies in understanding market signals and trends are known to be behind unsuccessful EI that are not well received by customers (Ottman, Stafford, & Hartman, ). Market research helps firms generate market intelligence through collecting and processing information on customer and competitor orientations and is crucial for building strong market sensing capabilities that act as a sustainable advantage (Heusinkveld, Benders, & van den Berg, ).…”

Effects of Socially Responsible Supplier Development and Sustainability‐Oriented Innovation on Sustainable Development: Empirical Evidence from SMEs

“…Companies that regard sustainability as an important innovation issue are more likely to acquire long-term competitiveness and growth opportunities (Provasnek et al, 2016). For SMEs that adopt a sustainable, entrepreneurially oriented strategy, engaging in SOI practices can increase their commitment to sustainability and develop their dynamic capabilities, thereby improving their competitive advantage (Ko and Liu, 2016;Jansson et al, 2017). Given the importance of SOIs for the long-term survival of SMEs, it is necessary to further clarify the innovative approaches and tools used by SMEs that lack resources (Halme and Korpela, 2014;Johnson, 2015).…”

Dynamic Capability of the Firm as Driver of Green Supply Chain Management Implementation

“…Implementing green supply chain practice has been referred to as a refining and elaborating process and structure designed to implement and maintain sustainable competitive advantages [8,9]. In the early stages of GSCM, studies focused on strategies to quickly respond to changes in the business environment such as regulations, stake holder pressure, and ethical concerns [10].…”