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The Links between Proactive Environmental Strategy, Competitive Advantages and Firm Performance: An Empirical Study in Vietnam

Binh Do () and Ninh Nguyen ()
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Binh Do: Department of Strategic Management, Thuongmai University, Ho Tung Mau Road, Hanoi 100000, Vietnam
Ninh Nguyen: Department of Economics, Finance and Marketing, La Trobe Business School, La Trobe University, Bundoora, VIC 3086, Australia

Sustainability, 2020, vol. 12, issue 12, 1-22

Abstract: The acceleration of environmental problems has put firms under high pressure to assume their social and environmental responsibility. This study aims to investigate the links between proactive environmental strategy, competitive advantages and firm performance. It also explores the control effects of firm size and industry type on the adoption of such a strategy. Data were obtained from 232 firms that participated in the program on benchmarking and announcing sustainable companies in Vietnam. Findings from structural equation modelling reveal that the adoption of a proactive environmental strategy generates both differentiation and cost leadership competitive advantages. Furthermore, differentiation competitive advantages enhance firm performance in both the short term (i.e., product, financial and production performance) and long term (i.e., strategic performance). Interestingly, a proactive environmental strategy is more prevalent among larger firms and those in service industries. This study’s findings provide support for firms to pursue a proactive environmental strategy and have several implications for policymakers in developing policies that aim at promoting environmental practices in firms.

Keywords: proactive environmental strategy; differentiation competitive advantage; cost leadership competitive advantage; product performance; strategic performance; production performance; financial performance; sustainability; emerging economy; Vietnam (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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