Enhancing green product competitiveness through proactive capabilities of manufacturing firms

Abstract

The development of innovative green products that can compete in unpredictable markets is a challenge for manufacturing firms. Hence, firms need to reconfigure their strategies by considering and strengthening the appropriate set of internal capabilities to achieve effective green product development. Therefore the initiatives implemented by firms in relation to their green practices and green innovation are attracting increasing scholarly attention. However, thus far only a few studies have explicitly explored the relationship between the proactive capabilities of manufacturing firms in the context of green product innovation. Thus, this study investigates the environmental proactivity (EP) and strategic flexibility (SF) of firms, and how these proactive capabilities affect green product innovation (GPI). In addition, it explores the role of GPI in enhancing product competitive advantage (PCA). The data for this study was obtained from 157 respondents representing manufacturing firms in Malaysia. Structural equation modelling was used for the statistical analysis. The results showed that SF partially mediates the relationship between EP and GPI, which indicates that SF facilitates GPI implementation. The results also revealed that GPI acts as a full mediator between SF and PCA, proving that GPI is the crucial factor that can translate SF into competitive advantage. Thus, based on the dynamic capabilities perspective, this study offers insights into the importance of flexibility and innovation in the context of green manufacturing as a means to enhance green product features and remain competitive in the market.