Structural equation modelling of the impact of environmental capabilities on competitiveness

Purpose - The purpose of this paper is to investigate the influence of both environmental practices and corporate environmental performance on competitiveness. It determines the mediating effects of corporate environmental performance on the relationship between environmental practices and competitiveness. Design/methodology/approach - This study adopts a cross-sectional survey method. The data were collected from 155 industrial companies from Libya and analysed using structural equation modelling. Findings - The results indicate that environmental performance partially mediates the relationship between environmental practices and competitiveness. The mediating effects occur between competitiveness and green conventional practices, organisational practices and stakeholders’ integration. Research limitations/implications - The study used a self-reported questionnaire completed by managers in Libyan industrial companies. As such, the survey data might be subject to social desirability. Additionally, the results of the study may be generalised only to a similar environment and stage of development. Practical implications - The results can help companies better understand how to improve their current resources base by building incremental capabilities, which, in turn, protect the surrounding environment and enhance their competitiveness. Originality/value - This study is the first to have considered the issue of incremental capabilities in the environmental domain, which can contribute significantly to better understanding the role of incremental capabilities in improving the competitiveness of companies. Additionally, it provides empirical evidence on the state-of-art of environmental practices and their consequences in less-developed countries which are characterised by scarcity of research.