This website uses cookies. By continuing to browse the site you are agreeing to our use of cookies.

Business Sustainability Strategies and Competitive Advantage

At the macro level, sustainable development should be transformed into firm-level sustainability management, starting with the notion that corporate entities should provide adequate attention to all the related sustainability dimensions (Cantele & Zardini, 2018). Corporations are key actors in the process of the environmental challenges of climate change because they are the major producers of greenhouse gases. Therefore, they are expected to develop new technologies and business models to lead the transition to a low-carbon society (Nyberg & Wright, 2012). However, since organizations, especially profit-oriented firms are established to achieve higher returns, their sustainability strategies should positively relate to competitive advantage. This paper aims to investigate the linkage between business sustainability strategies and competitive advantage among Nigerian companies.

Nigeria is the largest economy in Africa with a population above 180 million, with Gross Domestic Product (GDP) of over US$500 billion. The economy has recorded a significant increase in growth as the real GDP appreciated consistently from 2009 to 2011 by an average of 7 per cent. Significant contributors to the GDP of Nigeria are the primary (the raw materials industry); secondary (manufacturing and construction); and tertiary sectors(the service industry) of the industry. The industrial sector, however, accounts for a meagre proportion of economic activity (6 per cent) whereas the manufacturing sector contributes a tiny 4 per cent to GDP. The shift from primary production to secondary and ultimately to the tertiary activities was slow. 

Globally, there is an increasing demand for large-scale business transformations towards sustainability recognizing that firms play a critical role in achieving pro-environmental goals and reducing social inequality (Sullivan, Thomas & Rosano, 2018).  Traditional business methods have been criticized as not being able to deliver the required changes. However, with the growing need for companies to be transformed into an engine of sustainable development through social entrepreneurship, corporate citizenship, and pro-environmental behavior, many companies are taking strategic steps towards sustainability. The reality of commerce today is that the business owes a responsibility to society and the social legitimacy to operate is crucial for the organization’s survival. Empirical evidence supports that a firm can derive competitive advantage by implementing environmental, economic and social sustainability strategies (Pratano, Darmasetiawan, Yudiyarso & Jeong, 2018; Jiang, Chai, Shao & Feng, 2018). In the manufacturing industry, sustainability strategies can help firms save costs and reap competitive advantage (Henderson, Reinart, Dekhtyar & Migdal, 2018).

The sustainability strategy is particularly important because it seeks to reduce the adverse social and environmental effects while improving the organizational outcomes such as economic performance. While it is argued that sustainability strategies affect not only the individual corporation but also the environment, business community and society, it also improves the sustainability performance of other systems and participants (Baumgartner & Rauter, 2016). In this regard, Hopwood et al. (2005) discussed three approaches to corporate sustainability development. These approaches are transformation, reformation, and status quo. The proponents of the transformation approach stressed the importance of the active participation of people external to power centers. While the reform approach seeks alter to policy changes and regulations, the status quo approach emphasized economic development as key to both environmental and social problems. 

Recent empirical studies sought to understand the association between sustainability strategies and competitive advantage (Schaltegger & Wagner, 2017; Cantele & Zardini, 2018). However, these studies did not investigate the effect of all sustainability strategies on competitive advantage. Nevertheless, some of the studies demonstrated the business case for sustainability reporting suggesting that social, economic and formal practices dimensions of sustainability positively affect corporate performance (Cantele & Zardini, 2018). Thus, not much is known about the relationship between corporate sustainability strategies and competitive advantage, which brings us to the question: What is the effect of social, environmental, and economic sustainability strategies on the competitive advantage of manufacturing firms in Nigeria? From the research question, the paper tests the following hypothesis:

H1)     Social sustainability strategies significantly affect competitive advantage 

H2)     Environmental sustainability strategies significantly affect competitive advantage 

H3)     Economic sustainability strategies significantly affect competitive advantage 

The environmental setting of a country may involve social, political, cultural and economic conditions that are capable of affecting the life, growth and development of business entities. Though Nigeria is a nation with abundant natural and human resources, the expected level of political, education, and regulatory framework for the effective operation of businesses may be lacking. The recent report on the ease of doing business placed Nigerian Business environment at 169th out of 185 countries. Adopting effective strategies at the firm-level is useful in explaining how businesses can derive competitive advantage. This paper, therefore, provides empirical evidence on the relationship between sustainability strategies and competitive advantage, which will guide managers on the specific sustainable strategies that they could exploit to gain competitive advantage. By this, the paper makes a business case for adopting sustainability strategies.

2. LITERATURE REVIEW

 

2.1 Conceptual Issues

2.1.1 Sustainability Strategies

Sustainability entails the “use of the resources and the environment to meet the present needs, while at the same time not depriving future generations the ability to meet their needs” (Chapin, Carpenter, Kofinas & Folke). Sustainability strategy in business context, therefore, refers to corporate methods and approaches to tailor their current activities in line with the future needs and challenges. Baumgartner (2016) holds that sustainability strategies explain how issues of sustainability are practically tackled, which usually forms a part of the competitive organizational strategy in profit-oriented firms. Kurapatskie and Darnall (2012) provide an elaborate definition that at firm-level, sustainability is the capability to minimize as much as possible the impact of its business operations on the immediate natural environment, while meeting the current and potential stakeholders’ needs. This means that by being a nexus of relationships, companies can meet the concerns of its numerous stakeholders by adopting a several sustainability measures. Many studies demonstrated that sustainability strategies have the potential to mitigate the shortfall in production and also to develop new business methods to increase output (Yegbemey, Yegbemey & Yabi, 2017; Bui & Villiers, 2017). It also leads to competitive advantage by minimizing the adverse effects of environmental challenges (Wijethilake, 2017).

Based on the natural resource-based view of the firm, sustainability strategies are categorized into three; environmental, economic and social. The sustainable environmental practice means a long term environmental focus during both production and marketing. Studies have shown that adopting environmental practices, including water and energy saving, use of eco-friendly products and collection of solid wastes could lead to cost-saving and competitive advantage (Cantele & Zardini, 2018). Economic sustainability deals with various aspects of a firm that encompass both environmental and social aspects that reflect corporate performance. Typically, the economic dimensions involve sustainability activities that create profitability, liquidity and financial stability.

2.1.2 Competitive Advantage

Competitive advantage refers to the benefits that accrue to a firm by implementing value-creating strategies not being presently employed any current or potential competitors. Traditionally, competitive advantage relates to financial performance, which is achieved by cost or differentiation strategies (Cantele & Zardini, 2018). More generally, competitive advantage refers to a firm’s ability to achieve higher performance than its competitors (Pratano et al., 2019). It is a measure of performance that explains the economic benefits that a firm enjoys over its competitors as a result of its unique ways, such as the introduction of green products and processes. The popular measures of competitive advantage are an economic success, enhanced revenue, enhanced occupancy and customer satisfaction. For a firm to sustain its relevance today and in the future, it must devise ways to leave above its current and potential business rivals.

Two schools of thought are prominent in the explanation of competitive advantage: internal approach and external view. The internal approach emphasized the use of specific generic that allows a firm to compete on a low-cost basis or through uniquely differentiated products and services, or a mix of the two, that is, a hybrid of the low cost and differentiation approaches (Walsh & Dodds, 2017). The external approach relates competitive advantage to how firms respond to opportunities and threats in its business environment. Resource-based view holds that the firm can derive competitive advantage by differentiating its internal resources and capabilities from those of its rivals. Both the two schools of thought suggest that prudent management of future climate risks will create a longer-term competitive advantage against rivals who fail to take account of potential resource impacts.

2.2 Review of Empirical Studies

This paper follows Cantele and Zardini (2018) and Wijethilake (2017) in examining sustainability strategies in term of environmental, economic, and social strategies. These strategies are explained by the natural resource-based view of the firm. Most previous empirical studies focused on the effect of proactive sustainability strategies and organizational outcomes such as cost advantage (Christmann, 2000), competitive advantage (Porter & Kramer, 2006) and enhanced competitiveness (Bhupendra & Sangle, 2015). The literature on sustainability strategies and competitive advantage relationship from three perspectives of this paper (environmental, social and economic) is sparse. Most of the studies have considered only the environmental aspect of sustainability (Walsh & Dodds, 2017). 

There is flourishing literature on how companies can employ sustainability strategies for competitive advantage. These studies have produced inconsistent results. Walsh and Dodds (2017) analyzed the sustainability strategies for the competitive advantage of hotels in North America. The study found that the hotels employed low cost, differentiated, and a mix of the two approaches (hybrid) to gain competitive edge over their rivals. Wijethilake (2017) analyzed the mediating role of sustainability control systems on the relationship between proactive strategies on sustainability performance of Sri Lankan multinational companies. The result from the Partial Least Square regression indicated that proactive strategy positively affects sustainability performance and that environmental and social strategies revealed a partial mediation. Hockerts (2015) showed four sustainability strategy dimensions (efficiency gains, risk reduction, new market creation, and social branding) and how a firm can employ them to derive competitive advantage.

In a similar context, Pratano et al. (2019) examined the interaction influence of inter-organizational learning on the effect of green entrepreneurial and market orientation on sustainable competitive advantage using a survey of the manufacturing industry in Indonesia. The study found that green entrepreneurial orientation and market orientation positively affect competitive advantage and inter-organizational learning strengthens the relationship. Green entrepreneurship and market orientation are forms of proactive approaches that have a bearing on the potential opportunities and risk-taking behavior, which could lead to improved organizational performance. 

Kurapatskie and Darnall (2012) sought to analyze which aspect of sustainability activities based on the Hart and Milstein (2003) framework relate to greater financial payoffs using firms in U.S as the sample. The study found that the two sustainability strategies (higher-order and lower-order) positively relate to higher financial payoffs. However, higher order sustainability financial benefits are greater than that from lower-order sustainability activities. The higher-order sustainability strategies concern the development of new products and processes in response to environmental challenges and issues relating to community and human well-being (Kurapatskie & Darnall, 2012). The low-order is about modifying existing products and processes by engaging stakeholders in a way that enables the firms to consider people and companies involved in the life cycle of their existing products and processes.

Further Bargus-Feminias et al. (2013) found result supporting that proactive environmental strategy leads to improved performance and competitiveness of small service companies. The study data were collected from 448 employees of 50 companies located in Madrid, Spain. In conclusion, the paper advocated for the implementation of proactive strategies in the form of water-saving practices, energy-saving practices, and good maintenance of heating installations. Overall, the paper highlighted the role of firms’ environmental policy as a universalstrategy, which will help them achieve a customer-focus competitive advantage. 

While the above studies demonstrated the business case for sustainability strategies, other scholars argue that though it is necessary, the adoption of sustainability strategies is not a sufficient condition for corporate success (Danso et al., 2019). Danso et al. (2009) further argued that since there are alternative means of achieving competitive advantage, each of the wide-ranging strategies could affect the firm’s sustainability investments and the benefits derivable from it. Some streams of literature also examined the association between corporate sustainability orientation and competitive advantage by proposing a modified theory of the environmental sustainability orientation relationship to performance. In this regard, with a sample of small and medium enterprises manufacturing companies in Ghana, Danso et al. (2019) found that higher performance can be achieved by firms that employ the low-cost or integrated strategy. The study further revealed that the differentiated strategy has no significanteffect on corporate success.

The review of empirical studies shows that previous studies focused mainly on environmental sustainability strategies, while they neglected the social and economic issues. This paper adds to the stream of literature by examining how all three sustainability approaches relate to competitive advantage. Also, most of these previous studies did not consider sustainability and competitive advantage relationship in the light of climate change adaptation and mitigation. Thus, this paper analyzes the effect of climate change sustainability strategies on competitive business advantage in manufacturing firms in Nigeria.

2.3 Theoretical Framework

The resource-based theory holds that valuable, expensive to copy organizational resources and capabilities provide the strategic sources of competitive advantage. The most important submission of the resource-based theory is that firms’ internal factors lead to sustained competitive advantage (Hart, 2003). No doubt the resource-based view is influential in explaining how internal and external factors affect sustainable competitive advantage (Hart, 1995). The resource-based view model asserts that a company will often employ an increasingly proactive environmental strategy if it has or can acquire resources and transform those resources into competences instrumental to driving competitive advantage and higher returns.

This paper, therefore, views sustainability strategies as a resource because all organizations do not implement it. The development of such complex strategies may be difficult for some organizations; hence, it is difficult to imitate. First, the capability to develop a sustainability strategy is people-oriented and dependent on unique skills developed through employee involvement. Second, implementation of these strategies requires other resources obtained as a result of a unique path over time (Barney, 1991). Besides, Benitez-Amado and Walczuch (2012) maintain that sustainable strategy is a dynamic organizational capability, which could positively affect competitive advantage and lead to superior corporate success. This means that it is a resource that is rare, valuable, not easy to copy, cannot be substituted and hasadvantages that the company can appropriate. Thus, the resource-based view offers an appropriate lens for explaining the relationships among climate change strategies, business sustainability strategies and competitive advantage.

3. METHODOLOGY

This study is a quantitative approach used to examine the relationship between business sustainability and competitive advantage. These relationships are investigated based on the RBV concept that a firm that implements sustainability strategies is expected to achieve sustainable competitive advantage above its rivals. The quantitative method is relevant to test theories by examining the associationamong variables (Creswell, 2014), where the researcher uses numerical data to represent the phenomena being studied (Hair et al., 2010). This paper also adopts the correlational design, which is commonly employed when the goal is to test the ability of independent variables to predict an outcome variable. The survey method is also employed to collect data from target respondents and analyze same using descriptive and inferential statistics. 

The population for this paper is the entire manufacturing firms that are registered with the Manufacturers’ Association (MAN) in Nigeria. According to MAN, there were three thousand (3,000) registered manufacturing firms as of December 2019. The companies are categorized into five (5) subsectors, namely; agricultural firms, consumer goods companies, industrial goods firms, conglomerates, and pharmaceutical and healthcare. The manufacturing sector is the second major contributor to the GDP of Nigeria. 

The sample was selected using a convenient sampling technique. This is a nonprobability sampling technique that is employed when the researcher considers factors such as proximity, availability and willingness to fill questionnaires as criteria for selecting subjects. Given the limited time and the sample frame, the paper considers the convenient sampling technique as appropriate. Thus, all companies assessed are included in the sample frame based on convenience (availability, proximity, and willingness to volunteer) and the nature of the study.

Data for this paper were collected from primary source only. The data were collected from questionnaires administered through the personal email of the respondents, who are managers of the selected companies. Several related studies have used the survey instrument for data collection (Bui & Villiers, 2017; Cantele & Zardini, 2018). The researcher made use of closed-ended questionnaires as the instrument for data collection. The closed-ended questionnaire is appropriate for quantitative study for easier coding, tabulation and analysis. Since this is a cross-sectional study, the data were collected at one time period.

The study utilized both the descriptive and inferential statistics to analyze the data. In the descriptive section, the researcher used frequency, mean, standard deviation of the variables. In the inferential section, the study uses OLS regression as technique of data analysis. Also, the researcher utilized SPSS statistical software to examine the correlation among the variables, to test the study hypotheses, and perform diagnostic tests.The variables were measured using the five-point Likert Scale. Five-point Likert scale is argued to be a better measurement item with less measurement error. Respondents were asked to what extent they agreed with the statements and their responses range from Strongly Disagreed (1), Disagreed (2), Neutral (3), Agreed (4) and Strongly Agreed (5). Several authors suggest that the five-point Likert Scale is more reliable than higher or lower scales with no midpoint (Dawes, 2008).

The equation below examines the effect of sustainability strategies on competitive advantage (CMA).

CMAi=0+1SOCi+2ENVi+3ECOi+i                                               

Table 1 below explains the constructs and the measurement items.

Table 1

Construct, Number of Items and Sources

S/N

Construct

Acronym

No. of Items

Source

1.

Sustainability Strategies 

     
 

Social

SOC

4

Cantele & Zardini (2018)

 

Environmental

ENV

6

Cantele & Zardini (2018)

 

Economic

ECO

3

Cantele & Zardini (2018)

 

Competitive Advantage

CMA

3

Wijethelake (2017)

The questionnaire was subjected to face validity, content validity and construct validity to ascertain its reliability. Opinions of academics and experts were sought concerning clarity, understandability and relevance of the questions to the domain. Also, experts’ opinions were sought regarding adequacy, suitability, contents and arrangements of the items designed to measure the constructs. The draft questionnaire was sent to academics and professionals in Nigeria for their advice and inputs on both the face and content validities.

The questionnaire was distributed among a few numbers of the manufacturing firms as a pilot study to evaluate the questionnaire before complete distribution. Cronbach alpha was used to ascertain the reliability of the 100 retrieved questionnaires. After a review of the items, the final questionnaire was drafted and fully redistributed. The Cronbach Alpha for the pilot study indicated that the items passed the reliability tests with the values ranging between 0.60 and 0.94.

4. RESULTS AND DISCUSSIONS

The section presents the results of the research. First, the demographic profile of subjects is presented, followed by descriptive statistics of the variables. Next, correlation matrix and regression analysis are presented.

Table 2 below shows the demographic profile of the respondents

Table 2

Demographic Profile of Respondents

 

Frequency

Valid Percent

Cumulative Percent

Gender

     

Male

116

62.6

62.6

Female

70

37.4

100.0

Qualification

     

Bachelor Degree

100

53.8

53.8

Master Degree

62

33.3

87.1

Doctoral Degree

24

12.9

100.0

Age

     

25 – 34 

86

46.0

46.0

35 – 44

57

30.5

76.5

45 – 60 

38

20.3

96.8

Above 55

6

3.2

100.0

Years in Business

     

0 – 5 years

87

46.8

46.8

6 – 10 years

56

30.1

76.9

11 – 15 years

19

10.2

87.1

Above 16 years

24

12.9

100.0

Type of Business

     

Diversified Products

48

26.0

26.0

Agriculture

17

9.1

35.1

Pharmaceutical

14

7.3

42.4

Consumer goods

57

31.0

74.4

Industrial goods

36

18.3

92.7

Others

14

7.3

100.00

Management Level

     

Operational manager

59

31.6

31.3

Tactical manager

59

31.6

63.3

Strategic manager

68

36.8

100.0

Department

     

Operations

43

23.1

23.1

Productions

41

22.0

45.1

Sales/Marketing

51

27.4

72.5

Finance

14

7.5

80.0

Management

37

20.0

100.0

Table 2 shows that 116 respondents (62.6%) are male, while the remaining 70 (37.4%) are female. This indicates that male employees dominate the management of manufacturing firms in Nigeria. Nigeria and indeed, most African countries have a higher proportion of male in their corporate workforce. The Table further reveals that a good number of the respondents 100 (48.6%) have graduate degrees or its equivalent. 62 (33.3%) respondents have a master degree, while 24 (12.9%) hold a doctoral degree. This implies that Nigerian manufacturing firms are composed of literate individuals in their top management position. 

Table 2 further reveals that 86 (46%) of the respondents are between the ages of 25 to 34, 57 (30.5%) are between 35 and 44 years old, 38 (20.3%) are in the age bracket of 45 to 60 years, while 6 (3.2%) is above 60 years of age. The result indicates that the Nigerian workforce is composed of individuals between 25 to 45 years. The Table also shows that 24 companies (12.9%) have been in business for the past 16 years. The statistics also show that 87 (46.8%) of the workforce have business experience from zero to five years and 56 (30.1%) have 6 to 10 years’ experience, 19 (10.2%) have above 16 years of experience, suggesting that most of the companies in the sample are relatively new and they have been in operation for the past 10 years. 

In addition, the Table shows that 48 (26%) of the companies engage in the production of diversified goods, while 57 (31%) produce consumer goods and 36 (18.3%) industrial products.17 (9.1%), 14 (7.3%) and 14 (17.3%) are into agriculture, pharmaceuticals and others, respectively. These show the manufacturing firms predominantly engage in the production of consumer goods or diversified products. Pharmaceuticals, construction and others have the least representation with six enterprises each.

Table 2 further shows that 59 (31.6%) of the subjects are in the operational and tactical management level, while 68 (36.8%) are in the strategic management level. Similarly, 51 (27.4%) work in the Sales/Marketing department, 43 (23.1%) in operation, and 41 (22%) in production. Also, 37 (20%) are in the General Management level, while 14 (7.5%) work in the Finance Department, indicating that the majority of the subjects are from Sales/Marketing, Operation and Production departments.

Descriptive Statistics of Variable

The descriptive statistics show the basic characteristics of the data. In this study, the mean, standard deviation, and coefficient of variation are used to explain the summary statistics.

Table 3

Descriptive Statistics of Variables

Variable

Mean

Std. Dev.

Coefficient of Variation

Social Sustainability

3.995

0.907

0.227

Environmental Sustainability

3.668

1.021

0.278

Economic Sustainability

3.780

0.941

0.250

Competitive Advantage

3.672

1.007

0.274

 

Table 3 also shows that the mean for Social Sustainability Strategies (Soc. Sust.) is 3.995, while the standard deviation is 0.907. This indicates that the respondents have agreed with the statements on Social Sustainability Strategies and the deviation. Also, Environmental Sustainability Strategies (Env. Sust.) has an average of 3.668 and a standard deviation of 1.021, suggesting that the subjects have moderately agreed with the statements concerning the variable. The standard deviation of 1.021 indicates a moderate variation concerning the responses among the subjects. For Economic Sustainability Strategies (Eco. Sust.), the Table reveals a mean and standard deviation of 3.780 and 0.941, respectively. This suggests that the respondents have agreed with statements concerning Economic Sustainability Strategies and that the responses are clustered around the mean.

Table 3 also shows that Competitive Advantage (Cmp. Adv.) has a mean of 3.672 and a standard deviation of 1.007, implying that the respondents have moderately agreed with the three statements regarding competitive advantage. There is a moderately wide variation in the responses, as suggested by the standard deviation of 1.007.

Table 4

Reliability Test of Constructs

Constructs

Loadings

Average Variance Extracted

Composite Reliability

Cronbach Alpha

Social Sustainability Strategy

 

0.748

0.922

0.887

SOS1

0.872

     

SOS2

0.867

     

SOS3

0.883

     

SOS4

0.837

     

Environmental Sustainability Strategy

 

0.750

0.947

0.933

ENV1

0.869

     

ENV2

0.886

     

ENV3

0.871

     

ENV4

0.881

     

ENV5

0.842

     

ENV6

0.848

     

Economic Sustainability Strategy

 

0.787

0.917

0.864

ECO1

0.875

     

ECO2

0.893

     

ECO3

0.877

     

Competitive Advantage

 

0.783

0.916

0.862

CMA1

0.875

     

CMA2

0.893

     

CMA3

0.887

     

Table 4 is the measurement model indicating the factor loading, individual items reliability and the composite reliability. This indicates that items pass the individual items reliability test. Hair et al. (2014) suggested that items with loadings between 0.40 and 0.70 should be considered for deletion because they do not guarantee the value of reliability. They also pointed out that it is desirable to use a few best items in order to achieve a better model fit. The model also shows that the Cronbach Alpha values are between 0.637 and 0.933. Sekaran (2003) suggested that Cronbach Alpha values should not fall below 0.60 to guarantee internal consistency reliability. Hence, the model in Figure 4 above confirms that the measures of the variables have passed the internal consistency reliability.

Pearson Correlation

Pearson correlation shows the relationship between the study variables. It is useful in understanding the direction and extent of the relationships a well as in explaining the adequacy of the choice of variables. Gujarati (2003) notes that correlation values above 0.80 suggest the existence of harmful collinearity among the independent variable. Table 5 below is the Pearson correlation table.

Table 5

Pearson Correlation

Variable

SOC SUST

ENV SUS

ECO SUST

CMP ADV

SOC SUST

1.000

0.661**

0.621**

0.620**

ENV SUST

 

1.000

0.691**

0.597**

ECO SUST

   

1.000

0.716**

CMP ADV

     

1.000

Table 5 further shows that all the business sustainability strategies have positive correlations with competitive advantage. Specifically, the correlation values for Social Sustainability Strategies, Environmental Sustainability Strategies and Economic Sustainability Strategies are 0.620, 0.597 and 0.716, respectively. These results show that improvement in the business sustainability strategies, all things remain unchanged, will lead to an increase in competitive advantage.

Table 6 presents the multiple regression result regarding the hypotheses on sustainability strategies and competitive advantage

Table 6

Business Sustainability Strategies and Competitive Advantage

Variable

Coefficient

T. Value

Prob.

Constant

0.229

0.977

0.330

Soc. Sust.

0.240

3.080

0.002

Env. Sust.

0.150

1.975

0.050

Eco. Sust

0.512

6.841

0.000

R- Squared

0.570

   

Adj. R- squared

0.563

   

F. Stat

80.440

   

Probability

0.000

   

Durbin Watson

1.951

   

The results in Table 6 demonstrates that the R-Squared and Adjusted R-Squared for the model are 0.570 and 0.563, respectively, implying that business sustainability strategies explain 57% of the changes in competitive advantage. The F. change value and Probability of 80.440 and 0.000, respectively indicates the model is adequate in explaining the modeled relationship. The Durbin Watson value of 1.951 shows that the result is free from serial correlation.

H1)     Social sustainability strategies significantly affect competitive advantage Concerning the individual variables, the Table 4.6 reveals that social sustainability strategies have a significant positive effect on competitive advantage (β = 0.240; t = 3.080; p = 0.002). Hence, hypothesis four (H4a) is supported. 

H2)     Environmental sustainability strategies significantly affect competitive advantage

The Table also shows that environmental sustainability strategies have significant positive influence on competitive advantage (β = 0.150; t = 1.975; p = 0.050). The second Hypothesis (H4b) is also supported. 

H3)     Economic sustainability strategies significantly affect competitive advantage

Similarly, the result indicates that economic sustainability strategies have significant positive effect on competitive advantage (β = 0.512; t = 6.841; p = 0.000). Thus, the third hypothesis (H4c) is supported.

Table 7

Multicollinearity Test

Variable

Variance Inflation Factor

Tolerance Value

Social Sustainability Strategies

0.482

2.075

Environmental Sustainability Strategies

0.410

2.441

Economic Sustainability Strategies

0.483

2.071

 

Table 7 above demonstrates that the Variance Inflation Factor (VIF) and Tolerance Values (TV) are below 10.0 and above 0.10, respectively. The highest VIF value is 3.187, and the lowest TV is 0.314. Gujarati (2003) suggests that VIF values indicate the existence of multicollinearity. In the same vein, Hair et al. (2014) assert that exact correlation exist among variables when the tolerance level is below 0.20, and the variance inflation factor (VIF) is above 5. From the Table, the values indicate that there is an absence of excessive and harmful collinearity among the independent variables.  This result supports the low correlation coefficients reported in Table 4 (Pearson Correlation), which indicates a mild relationship among the pairs of variables.

Business Sustainability Strategies and Competitive Advantage

The results in Table 7 indicate that all business sustainability strategies have a significant positive effect on competitive advantage. The relationship is stronger for economic sustainability, followed by social sustainability strategies and then environmental sustainability strategies. However, this paper found that manufacturing firms’ economic success depends on their sustainability strategies. A similar result was found by Walsh and Dodds (2017) who reported that the ability to compete, retain customers, and earn higher financial performance in the hotel industry. Thus, this study supports the findings of past studies, including Walsh (2017), who found that low-cost sustainability strategies enhance organizational competitiveness. 

Despite the importance of sustainability strategies pointed out by many previous studies, empirical findings in this research front are only beginning to emerge. The evidence from this study suggests sustainability strategies involving low-cost strategy, waste management, and water conservation provides a strategic competitive advantage for manufacturing firms. Previous studies observed that it is intuitively logical that companies that employ low-cost strategy will gain improved performance (Cantele & Zardini, 2018). The finding of this paper seems to suggest that economic sustainability strategy has a more substantial impact on competitive advantage, followed by social sustainability strategies and environmental sustainability strategies. The explanation for this could be because companies see economic sustainability strategies as a way of differentiating themselves as a sustainable brand image. In a similar context, Yagbemey et al. (2017) found that effective management of water due to land-use changes could lead to greater economic return from their production.

Manufacturing companies perceive environmental sustainability strategies as critical in achieving economic success. This suggests that reduction in energy consumption, reduction and recycling of waste, and reduction in water consumption positively affect competitiveness. Also, implementation of systems to reduce harmful emissions, adoption of systems to reduce packaging environmental impacts, and an ex-ante target for the reduction of the firm’s carbon footprint significantly affect organizational competitiveness. The result demonstrates that companies, which employ these environmental initiatives, tend to record impressive organizational success.

5.CONCLUSIONS

This paper investigated the relationship between sustainability strategies and competitive advantage in the context of manufacturing firms in Nigeria. The paper sought to answer the broad objectives: What is the relationship between business sustainability strategies and competitive advantage?

Based on the analysis presented in the previous section, thepaper found that all business sustainability strategies positivelyrelates to competitive advantage, with economic sustainability strategy revealing the strongest relationship, followed by social sustainability strategies and then environmental sustainability strategies. The findings show that organizations can gain competitive advantage by implementing social, environmental and economic sustainability actions. The result also supports the resource-based view, which posits that rare, valuable, difficult to imitate, and non-substitutable resources possess benefits that a firm can appropriate to achieve superior performance.

The results support the resource-based perspective that business strategies for climate change explain sustainable competitive advantage, especially during environmental uncertainties. In this regard, many studies also found that climate change sustainability strategies lead to competitive benefit. Therefore, companies can achieve financial benefits by introducing new products or adopting new production processes and innovative actions.  This in line with the notion that monetary benefits can be achieved by a firm when it invests in environmentally friendly products and in know-how and innovation in growing markets regarding climate change.Thus, business social and environmental sustainability strategies are a useful strategy to improve organizational performance. Previous studies found that sustainability strategies lead to improved performance through business sales, investment and financial assistance, talent, workforce diversity and productivity, company visibility, and goodwill.

The results should be interpreted with caution because of the several limitations on approach, design, and methods. Firstly, the study focused on only the manufacturing firms in Nigeria, comprising of majorly of five sub-sectors; consumer goods, industrial goods, diversified, pharmaceutical, and agriculture. Though this sector is among the vibrant sectors of the Nigerian economy and represents various sectors, the generalizability of the findings may be limited to only this industry. The results from other industries, such as construction may be different from the outcomes of this paper. Therefore, future studies should consider studying other sectors, especially those whose impacts on climate change are much visible, including the oil and gas industry.

5. BIBLIOGRAPHY AND WEB RESOURCES

Barney, J. B. Firm resources and sustained competitive advantage. Journal of    Management, 1991, 17, 99-120.

Baumgartner, R.J., Ebner, D. Corporate Sustainability Strategies: Sustainability Profiles and             Maturity Levels. Sustainable Development, 2011, 18, 2, 76-89.

Benitez-Amado, A. & Walczuch, R. Information technology, the organizational capability of             proactive corporate environmental strategy and firm performance: a resource-based            analysis. European Journal of Information Systems, 2012, 21, 664–679

Bhupendra, K.V. & Sangle, S. What drives successful implementation of pollution         prevention and cleaner technology strategy? The role of innovative capability.            Journal Environmental Management, 2015, 155, 184 -192.

Bui, B. & Villiers, C. Business strategies and management accounting in response to    climate change risk exposure and regulatory uncertainty. The British Accounting Review, 2017, 4 – 24, 1-23

Cantele, S. & Zardini, A. Is sustainability a competitive advantage for small         businesses? An empirical analysis of possible mediators in the sustainability –         financial performance relationship. Journal of Cleaner Production, 2018, 182          2018, 166 – 176.

Chapin, F.S., Carpenter, S. R., Kofinas, G.P. &Folke, C. Ecosystem Stewardship:         Sustainability Strategies for a Rapidly Changing Planet. Trends in Ecology &        Evolution, 2010, 25, 4, 241-249.

Christmann, P. Effects of ‘best practices’ of environmental management on cost            advantage: the role of complementary assets. Academy of Management Journal,        2000, 43, 4, 663-680.

Creswell, J. W. Research Design. New Delhi: Sage Publications Inc.

Danso, A., Adomako, S. Amankwah-Amoah, J. & Owusu-Agyei, S. &Konadu, R.             Environmental sustainability orientation, competitive strategy and financial             performance. Business Strategy & Environment, 2019, 1-11.

Dawes, J. Do data characteristics change according to the number of scale points used? An             experiment using 5 point, 7 point and 10 point scales. International Journal of Market             Research, 2008, 50, 1, 61–18.

Hair Jr, J. F., Black, J. W., Babin, B. J., & Anderson, E. R. Multivariate data analysis: A            global perspectives (Seventh Ed.) 2010, New Jersey: Pearson Education Limited.

Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management             Review, 1995, 20, 986-1014.

Hart S. L. & Milstein, M.B. Creating sustainable value. The Academy of Management   Executive, 2003, 17, 56–69.

Henderson, B., Cacho, O.J., Thornton, P.K., Van Wijk, M.T. & Herrero, M.. The economic             potential of residue management and fertilizer use to address climate change     impacts on mixed smallholder farmers in Burkina Faso. Agricultural. Systems, 2018, 167, 195–205. 

Hopwood, B., Mellor, M. & O´Brian, G. Sustainable Development: Mapping different     approaches. Sustainable Development, 2005, 13, 1, 38-52.

Hockerts K. A. cognitive perspective on the business case for corporate sustainability. Business Strategy and the Environment, 2015, 24, 2, 102–122.

Kurapatskie, B., & Darnall, N. Which corporate sustainability activities are associated with             greater financial payoffs? Business Strategy and the Environment, Published online     in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/bse.1735

Nyberg, D. & Wright, C. Justifying business responses to climate change: discursive     strategies of similarity and difference. Environment and Planning A, 2012, 44,    1819-1835.

Porter, M.E., Kramer, M.R. Strategy and society: the link between competitive advantages      and corporate social responsibility. Harvard Business Review, 2006, 84 (12), 78-92.

Pratano, A. H., Darmasetiawan, N. K., Yudiarso, A. &Jeong, B.G. Achieving sustainable             competitive advantage through green entrepreneurial orientation and market      orientation: The role of inter-organizational learning. The Bottom Line, 2019.    https://doi.org/10.1108/BL-10-2018-0045. 

Schalteggar, S., Horisch, J. & Freeman, R. E. Business cases for sustainability: a          stakeholder theory perspective. Organization & Environment, 2017, 1–22.

Sekaran, U. (2003). Research methods for business: A skill building approach. PhD     Proposal (4th ed., Vol. 1). New York: John Wiley & Sons Ltd.

Sullivan, K., Thomas, S. &Rosano, M. Using industrial ecology and strategic       management concepts to pursue the Sustainable Development Goals. Journal of           Cleaner Production, 2018, 174, 237- 246. 

Walsh, P.R. &Dodds, R. Measuring the choice of environmental sustainability strategies in             creating a competitive advantage. Business Strategy and the Environment, 2017             Published online in Wiley Online Library (wileyonlinelibrary.com) DOI:       10.1002/bse.1949.

Wijethilake, C. Proactive sustainability strategy and corporate sustainability performance:        the mediating effect of sustainability control systems.Journal of environmental           management, 2017, 196, 569-582

Yegbemey, R.N., Yegbemey, E.O. &Yabi, J.A. Sustainability analysis of observed climate             change adaptation strategies in maize farming in Benin, West Africa. Outlook on             Agriculture, 2017, 46.

6. LIST OF ABBREVIATIONS

ACCRONYM

MEANING

CBN

Central Bank of Nigeria

CMA

Competitive Advantage

ECO. SUST.

Economic Sustainability

ENV. SUST.

Environmental Sustainability

GDP

Gross Domestic Product

MAN

Manufacturers’ Association of Nigeria

RBV

Resource-Based View

SEM

Structural Equation Model

SOC. SUST.

Social Sustainability

SYC

System Capabilities

UK

United Kingdom

UN

United Nations

UNDP

United Nations Development Programme

US

United States

 

Author : Comfort Asokoro-Ogaji  a student at LIGS University, under the supervision of lecturer Minh Nguyen.

Přihlásit se do studenstské sekce