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

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  • Wai Wai Ko
  • Gordon Liu

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

Suggested Citation

  • Wai Wai Ko & Gordon Liu, 2017. "Environmental Strategy and Competitive Advantage: The Role of Small‐ and Medium‐Sized enterprises' Dynamic Capabilities," Business Strategy and the Environment, Wiley Blackwell, vol. 26(5), pages 584-596, July.
    • Handle: RePEc:bla:bstrat:v:26:y:2017:i:5:p:584-596
    DOI: 10.1002/bse.1938
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    Cited by:

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    5. Petr Petera & Jaroslav Wagner & Renáta Pakšiová, 2021. "The Influence of Environmental Strategy, Environmental Reporting and Environmental Management Control System on Environmental and Economic Performance," Energies, MDPI, vol. 14(15), pages 1-20, July.
    6. Tiago Fernando Musetti & Marcelo Seido Nagano & Alceu Gomes Alves Filho, 2024. "Analysis of strategic behavior in micro and small technology–based firms in brazil," Journal of International Entrepreneurship, Springer, vol. 22(1), pages 62-93, March.
    7. Na Zhang & Bon‐gang Hwang & Xiaopeng Deng & Yan Ning, 2020. "Achieving transient competitive advantage in high‐speed rail projects bidding: Sustainable development perspective," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(6), pages 1738-1754, November.
    8. Sebastian Ion Ceptureanu & Eduard Gabriel Ceptureanu & Doina Popescu & Olguta Anca Orzan, 2020. "Eco-innovation Capability and Sustainability Driven Innovation Practices in Romanian SMEs," Sustainability, MDPI, vol. 12(17), pages 1-18, August.
    9. Maria Clara da Cunha Bezerra & Cláudia Fabiana Gohr & Sandra Naomi Morioka, 2021. "Linking Cluster Characteristics and Organizational Capabilities for Sustainability—Framework Development and Application," Sustainability, MDPI, vol. 13(3), pages 1-26, January.
    10. Hanne Knight & Phil Megicks & Sheela Agarwal & M.A.A.M. Leenders, 2019. "Firm resources and the development of environmental sustainability among small and medium‐sized enterprises: Evidence from the Australian wine industry," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 25-39, January.
    11. Leonidou, Leonidas C. & Eteokleous, Pantelitsa P. & Christodoulides, Paul & Strømfeldt Eduardsen, Jonas, 2023. "A dynamic capabilities perspective to socially responsible family business: Implications on social-based advantage and market performance," Journal of Business Research, Elsevier, vol. 155(PA).
    12. Nor'Aini Yusof & Amin Akhavan Tabassi & Muneera Esa, 2020. "Going beyond environmental regulations—The influence of firm size on the effect of green practices on corporate financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 32-42, January.
    13. Stekelorum, Rebecca & Laguir, Issam & ElBaz, Jamal, 2020. "Can you hear the Eco? From SME environmental responsibility to social requirements in the supply chain," Technological Forecasting and Social Change, Elsevier, vol. 158(C).
    14. Svetlana Ignjatijević & Jelena Vapa Tankosić & Nemanja Lekić & Duško Petrović & Sandra Brkanlić & Bojan Vapa & Vladimir Tomašević & Nikola Puvača & Radivoj Prodanović & Irena Milojević, 2022. "Agro-Environmental Practices and Business Performance in the Wine Sector," Agriculture, MDPI, vol. 12(2), pages 1-21, February.
    15. Bomi Song & Donghyun Choi, 2018. "Dynamic Capability of the Firm as Driver of Green Supply Chain Management Implementation," Sustainability, MDPI, vol. 10(7), pages 1-16, July.
    16. Polina Baranova & Fred Paterson, 2017. "Environmental capabilities of small and medium sized enterprises: Towards transition to a low carbon economy in the East Midlands," Local Economy, London South Bank University, vol. 32(8), pages 835-853, December.
    17. Md. Aftab Uddin & Shetu Ranjan Biswas & Swadip Bhattacharjee & Mouri Dey & Monowar Mahmood, 2021. "Inspiring employees' ecological behaviors: The roles of corporate environmental strategy, biospheric values, and eco‐centric leadership," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2367-2381, July.

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