Factors Influencing Firm’s Sustainable Competitive Advantage in a Developing Country: Exploring Perspectives of Green Dynamic Capabilities

2.1 Underpinning theory

In this study, the RBV theory is used as the underpinning theory to explain how internal factors within a company impact the establishment and reinforcement of its SCAD.

The RBV is widely adopted to explain an organization's competitiveness and success. RBV emphasizes the importance of nurturing and developing internal resources and capabilities to establish and strengthen a firm's CAD [30]. By effectively exploiting resources, a firm may achieve higher business performance than its competitors [21]. Each organization can utilize its resources and capabilities to maintain long-term CAD. Regardless of tangibility or intangibility, resources and capabilities that meet the VRIN can be nurtured to become an organization’s CAD [1]. The VRIN indicates four core competency requirements: value, rarity, inimitability, and non-substitutability. In other words, a resource or capability must be: (1) effectively exploitable by the organization (valuable), (2) possessed by very few or no other competitors (rare), and (3) either difficult or costly for competitors to replicate or find substitutes for (inimitable and non-substitutable). When an organization can continuously nurture and maintain such VRIN resources and capabilities over the long term, it will establish a sustained CAD [30].

2.2 GDC

The DCV, which is built upon the RBV by Barney [1] and Wernerfelt [31], focuses on developing key competencies to strengthen a firm’s advantages within a rapidly changing environment [2]. A DC is regarded as “a crucial competency for a firm” [7] that is very difficult for competitors to replicate [32], and enables a firm to acquire and apply new knowledge [33], assist in reconfiguring, renewing, and creating its resources and capabilities [4], and adapt to changes driven by both internal and external factors [2, 5, 34]. GDC evolves from the DCV by Teece et al. [2] to address companies' need to integrate green and environmentally friendly practices into their operations. Chen and Chang [13] define GDC as “the ability of a company to exploit its existing resources and knowledge to renew and develop its green organizational capabilities to react to the dynamic market.” GDC pertains to a company’s process of creating, developing, and implementing green practices in its internal operations to adjust to environmental changes. Qiu et al. [17], with research conducted in China, suggest that GDC is cultivated through a sustainable green orientation. Singh et al. [35], drawing from Barreto [36] and Helfat [37], view GDC as a firm’s capability to intentionally create resources to address dynamic challenges and enhance them to become environmentally friendly, thereby supporting sustainable development. GDC can be understood from multiple dimensions. It can be generated and nurtured through internal and external sources [16]. Internal factors focus on the effective exploitation and integration of knowledge, resources, and competencies within a firm’s departments to achieve sustainable development [38], while external factors involve the firm’s capacity to seek, learn, assimilate, exchange, and apply opportunities to enhance its internal resources [39]. Consequently, GDC enables a firm to develop experiences and knowledge gained from the external environment to integrate and reconfigure its resources and capabilities in an environmentally friendly way, helping it respond promptly to external fluctuations and reinforce competitiveness through sustainable development [17, 35]. Thus, GDC allows a firm to benefit from the DCV and facilitates sustainable development in line with environmentally friendly trends [17].

2.3 GMO and IMO

2.3.1 GMO

Marketing orientation is critical in improving firm performance [40] because it helps a firm transform its marketing activities into effective practices [41, 42]. There are various approaches to the definition of marketing orientation. Chiou and Chang [43] define marketing orientation as “the degree to which an organization obtains and uses information from customers, develops a strategy which will meet customer needs and implement that strategy by being responsive to customer needs and wants,” some researchers believe that marketing orientation is the internal driving force that influences marketing activities, employees as well as the relationship with customers [40]. Marketing orientation can be constituted by various factors, such as customer orientation, competitor orientation, product orientation, cross-functional combinations [44], or customer philosophy, integrated marketing organization, marketing information, strategic orientation, and operational efficiency [40].

Green marketing/environmental marketing has become a significant issue in developing strategies for an organization’s social growth. It allows a firm to enhance its image and competitiveness to improve business performance. Green marketing activities focus on recycling, constructing, and renovating the marketing mix elements. In other words, green marketing enables a firm to innovate its products, services, production processes, packaging, or advertising [40]. Green marketing activities aim to fulfill customer needs and adapt to environmentally friendly requirements [23, 45].

In the context of green practices, GMO relates to a firm’s activities in marketing decisions to maintain its CAD in addressing environmental issues [24]. Leonidou et al. [46] suppose that GMO focuses on the marketing mix and minimizes its negative ecological impact. GMO has been found as a crucial aspect in the marketing fields of firms in Yemen to strengthen the relationship with its customers and bring environmental benefits to the whole market [47]. Based on extant studies to present, Chahal et al. [40] have indicated that GMO can be reflected in green innovation (green product/service development), greening the process (internal greening), and green alliances (coordination for green activities). Through the lens of strategy, GMO focuses on a firm’s long-term actions and policies implemented by top managers focusing on environmental concerns to gain its CAD [48], help a firm fulfill the expectations of stakeholders [24], and increase its sales and profitability [49].

2.3.2 IMO

To ensure that an organization can adapt and be flexible in a continually changing marketplace, Awwad and Agti [50] suggest that internal marketing, organizational commitment, and organizational citizenship behaviors serve as antecedents of market orientation. De Bruin et al. [25] described internal marketing as a crucial component of a market orientation that necessitates the application of marketing strategies inside an organization to generate value for the enterprise. This is crucial to a company’s ability to gain a competitive edge.

According to Papadas and Avlonitis [51], GMO in a green context entails spreading environmental ideals throughout the company to establish a more extensive corporate green culture. To achieve customer satisfaction through the process of developing motivated and customer-oriented employees, Rafiq et al. [52] defined internal marketing as a planned effort using a marketing-like approach to overcome organizational change resistance, align, motivate, inter-functionally coordinate, and integrate employees to implement corporate and functional strategies effectively. Internal marketing serves as a thorough management procedure that unifies different business divisions in two ways: First, internal marketing is understood by all staff members at all levels of the organization as a type of strategic management philosophy that guarantees the recruitment, growth, inspiration, and retention of valuable staff members by establishing a top-notch workplace that satisfies their needs. Second, internal marketing causes all staff members to get excited about providing excellent customer service [25]. Also, Qureshi and Mehraj [28], in their empirical study in India, suggest that internal green marketing behavior is another unique element of the strategy. To present a research framework, this study first merges the concepts of internal marketing and green issues. The research revealed that IMO in green practices is a multifaceted concept encompassing green internal communication, green skill development, and green rewards. IMO, in the green context, it entails spreading environmental ideals throughout the company to establish a more extensive corporate green culture [51]. This method, which a business might use to improve external customer satisfaction, can also be considered human resource management [25]. Employees are encouraged to develop the skills and abilities necessary to implement successful environmental initiatives by spreading knowledge and fostering an ecological culture throughout the firm [53]. Therefore, IMO suggests that businesses should match the conduct of their employees, who are in charge of their marketing initiatives, with their green marketing strategy. Stated differently, it is an internal green marketing approach tied to the environmental culture that ought to permeate the entire company [24].

To summarize, the authors approach IMO from an employee perspective. IMO has an employee-centric goal: improving employee satisfaction at work, motivating them to work better, and helping to improve the quality of products and services, ultimately raising productivity and customer satisfaction and increasing revenue and profits for businesses.

2.4 SCAD

CAD plays a significant role in an organization’s success [1]. Suppose a company can sustain, nurture, and leverage its CAD over the long term to achieve its strategic goals and directions and enhance its competitiveness in response to the changing environment. In that case, it can create a SCAD [54]. Reinforcing a SCAD is crucial in improving organizational performance [9, 55-57]. Based on the RBV, a SCAD depends on the company’s ability to possess, nurture, and exploit its internal resources and capabilities [1]. When these resources and capabilities exhibit the VRIN [1, 58], they become a source of SCAD.

Regarding the characteristics of CAD, Porter [59, 60] identified two sources: cost leadership and differentiation. Cost leadership involves minimizing production and operational costs to offer products/services at lower prices than competitors. The second type of CAD, differentiation, consists of creating unique aspects of a product/service (such as superior quality, special features, distinctive attributes, excellent customer service, or outstanding distribution systems). These differentiating features allow a firm to meet customer needs better, thus enabling it to charge higher prices than competitors while still being well-received by customers. In an unpredictable market, strengthening a SCAD allows a company to achieve superior performance, which is crucial for sustaining competitive success.

2.5 Research model and hypotheses

2.5.1 Research model

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Figure 1. The research model

As mentioned above, the underpinning theory in this study is the RBV. Accordingly, it can establish and enhance its SCAD when an organization nurtures and develops its resources and capabilities – such as GDC, GMO, and IMO. Additionally, previous research indicates a reciprocal relationship among GDC, GMO, and IMO [24, 41, 61, 62]. Therefore, examining the mechanisms of influence among these capabilities and their impact on an organization’s SCAD is necessary. Based on these arguments, the research model for the relationships between GDC, GMO, IMO, and SCAD is established in Figure 1.

2.5.2 Research hypotheses

• The direct impact of GDC on GMO

Regarding the relationship between GDC and GMO, Hunt and Madhavaram [21] suppose the positive influence of DC on dynamic marketing capabilities. Accordingly, acting as a key to marketing capabilities, marketing orientation is significantly impacted by DC [24, 63, 64]]; it is expected that a direct relationship between DC and marketing orientation.

Several studies [65] have succeeded in identifying the relationship between GMO and green innovation capabilities based on institutional theory. However, these studies stop considering the combined effects of GMO and innovation capabilities. Research by Negi et al. [66] and D’Attoma and Ieva [61] confirm the individual and combined (direct and indirect) effects of GMO and green innovation capabilities performance. Research results confirm a positive relationship between GMO and green innovation capabilities [61, 66]. In addition, empirical research by Nuryakin and Maryati [67] has successfully established a positive and significant relationship between GMO and green innovation capabilities (product and process) based on resource theory (RBV). On the other hand, green innovation capabilities are similar to green DC in a specific business [66]. That could lead to a positive relationship between green DC and marketing orientation. From the above arguments, the authors propose the following research hypothesis:

H1: GDC has a positive effect on GMO.

• The direct impact of GDC on IMO

Researchers have also shown that employee participation in green knowledge-sharing initiatives, such as training, has a good impact on green dynamic capacities, which fosters more creative work practices inside the company. Actions aimed at resource integration, acquisition, and reconfiguration may be included in DC [62].

Also, the empirical study conducted in India [62] indicated that green creativity would be linked to green training. The current study considers green training while examining the importance of training from an ecological standpoint. The incremental approach to creativity/innovation is used in Joshi’s study to prove the impact of green training on green creativity. Green training helps to promote green values in employees, which has a good effect on their green cognition [68]. It also raises employees’ knowledge, abilities, and awareness of environmental actions [69]. This study validates that controlling the firm's internal resources might achieve more extraordinary sustainability performance. According to this argument, businesses that consider internal quality relations have unique, valuable, and uncommon qualities like employee involvement. As a result, companies are better positioned to comprehend the shifting environment, adjust to it, and enhance their sustainability performance [70]. The study’s findings demonstrate that internal quality linkages directly impact social, environmental, and economic sustainability outcomes.

Overall, IMO focuses on employees. As such, DC impacts employee participation, green training influences green creativity, and dynamic impacts IMO through internal relations. These can encourage employees' environmental awareness and increase their cultural commitment. Therefore, GDC influences IMO (through internal relations). Our new contribution is finding the relationship between GDC and IMO. Consequently, we propose the hypothesis that:

H2: GDC has a positive effect on IMO.

• The direct impact of IMO on GMO

While both IMO and GMO are vital components of marketing capabilities, Papadas et al. [41] suppose that IMO is independent of GMO and IMO can facilitate the effective implementation of GMO within an organization. Acting as an orientation of internal motivation, IMO allows a firm to spread knowledge and foster a friendly environmental culture throughout the entire firm, which leads to the success of ecological initiative implementation [53]. GMO can be executed successfully if a firm can communicate effectively between its individuals and departments [41]. It can be seen that IMO enables a firm to create a green culture and, therefore, enhance GMO to improve its product quality and gain cost reduction. Consequently, we propose the hypothesis that:

H3: IMO has a positive effect on GMO.

• The direct impact of GDC on SCAD

DC are one of the keys to finding a CAD in strategic management [8, 55, 71]. It is understood as the ability to integrate, build, and reconfigure internal and external capabilities to adapt to rapid changes in the business environment [72]. Prior studies have provided evidence to confirm the significant relationship between DC and SCAD [55, 57, 73-75].

For example, studies by Teece and Pisano [72] and Schilke [73] show a positive contingent relationship between DC and CAD in dynamic environments. However, this relationship is likely weaker in highly dynamic environments [73]. suggest that examining the impact of DC should result in long-term performance, or in other words, create a sustainable advantage. However, achieving and maintaining a CAD in an ever-changing environment is quite difficult. In the context of research in China, Li and Liu [55], from a strategic process perspective, discovered a positive relationship between DC and CAD of businesses and the role of the environmental dynamic. When looking at suppliers, Vanpoucke et al. [57] found that supplier integration capability (SIC) can be understood as a component of DC (which includes the processes to achieve efficient flows of information and products between buyers and suppliers, as well as the ability to adapt these processes to changing environments) and argues that SIC can help businesses build SCAD. Based on the notion that the relationship between DC and CAD is shaped by a complex interaction between external and internal factors, Ferreira et al. [75] and Fainshmidt et al. [74] enrich the theory of DC and CAD by further considering the impact of a firm's strategic orientation.

Based on evolutionary theory and evidence, the theory of resources, the authors Fainshmidt et al. [76] have shown that overall, there is a positive relationship between DC and a company's performance. Eikelenboom and de Jong [15] confirm the positive impact of DC on sustainable competitiveness through empirical research with small and medium-sized enterprises in the Netherlands. The results show that integrated DC and internal DC both have a positive influence on the sustainable competitiveness of SMEs [15]. At a higher level of approach, green DC are considered one of the critical factors determining the development prospects of manufacturing enterprises [17]. Green DC, which are high-level capabilities for businesses to achieve green development [77], allow them to take advantage of available resources and knowledge to update and exploit the capacity of green organizations to respond well to changes in the business environment [16]. By structuring green DC into resource integration capabilities, resource reconfiguration capabilities, and environmental understanding capabilities, Qiu et al. [17] discovered a generally positive relationship between the specific integration of green DC and the sustainable competitiveness of manufacturing enterprises in China.

H4: GDC has a positive effect on SCAD.

• The direct impact of GMO on SCAD

CAD is a long-term strategic goal that helps businesses achieve high profits [41, 78, 79]. In particular, SCAD refers to creating market-oriented value based on the pursuit of innovation [80]. According to Barney [1], CAD can be formed from a business’s resources and skills. Businesses can only maintain a SCAD when competitors cannot imitate the source of the advantage. In the context of increasingly fierce global competition, to achieve SCAD, businesses must integrate environmental thinking into all aspects of marketing. Therefore, GMO is essential in creating SCAD for firms [23, 80].

Several research works [25, 79, 81] have conducted an overview of previous studies to confirm that GMO includes a strategic proactive environment, enabling rare, unique, and complex capabilities that help businesses make a difference. Thereby maintaining a CAD for firms in the market [81]. In addition to differentiation, the above capabilities refer to cost advantages [24, 82]. Cost reduction can be related to energy and water savings while using recycling processes or gaining the advantage of scaling up the production of green products [24]. Therefore, studies have concluded that GMO positively impacts a business's CAD through cost reduction and innovative practices [4, 79, 81]. In addition, Papadas et al. [24] study attempts to evaluate the impact of GMO’s structural factors on businesses’ CADs. Specifically, SGMO positively affects CAD under the strong regulation of IGMO [24].

Looking at different research fields, the authors Shaukat and Ming [80] based on resource theory (RBV) to examine the impact of GMO on business performance (BP) by determining the role of the intermediate variable - SCAD in the pharmaceutical industry in Pakistan. The results show that GMO has a significant direct and indirect impact on business performance through the intermediate variable of SCAD [80]. In another field, Chung [78] conducted a customer survey to evaluate the role of GMO in sustainable development in the hotel business. Specifically, GMO positively impacts green hotel image and customer loyalty, which are essential factors that help hotels achieve SCAD [78]. In the automotive industry, Moravcikova et al. [23] also identified a significant relationship between GMO and the SCAD of businesses in the market. From the above arguments, the authors propose the following research hypothesis:

H5: GMO has a positive effect on SCAD.

• The direct impact of IMO on SCAD

Something that sets a business apart from its rivals is called a CAD. For solid market positioning, one or more CADs provide value to a company or its products and services, making it more attractive than its competitors. The objective is to grow market share and draw in new clients. However, a company’s competitive edge may not last forever. Therefore, it must ensure that everything differentiating it from rival businesses is sustainable [26].

Even though it may be little or nonexistent in small enterprises, marketing is now acknowledged as essential to preserving competitiveness. It is debatable if a firm of any size should develop a marketing plan because even the smallest ones cannot afford to overlook this marketing idea. A CAD is significant in strategic management because it is the most efficient means for a business to outperform its rivals and draw in clients by raising the perceived value and degree of happiness they receive [26].

Internal green marketing modifies the links between strategic and CAD, which makes it a crucial component of gaining an advantage in the cutthroat market [24].

Only via the leader's guidance, who builds a relationship with internal customers in an organization and sets goals and direction, can internal marketing be accomplished. In addition, a leader's coaching improves the capacity of the business by providing transparent performance compensation and other beneficial coaching abilities [27]. When creating an internal marketing plan, corporate executives have a message to convey: create an environment where employees value and support the internal marketing strategy. Employees should be moved by this message and motivated to support the organization in realizing its particular goals [26].

Also, through CAD, IMO has a favorable impact on financial performance, such as income and profitability goals [26]. Additionally, the target audience for internal marketing is employees. The results demonstrated that IMO impacted customer satisfaction, service quality, and personnel satisfaction [29]. It is argued that employees given greater power and authority are more likely to acquire pleasure, even though happier workers provide better services [83].

Internal marketing programs include activities that improve customer consciousness among employees and enhance internal communication effectiveness. These activities make employees feel they are pioneers in the organization and contribute to their higher motivation and job satisfaction, encouraging their positive response toward the firm’s customers [29].

Furthermore, employees will be encouraged to develop the skills and abilities necessary to implement successful internal marketing strategies by spreading knowledge and creating a positive work environment throughout the firm [53]. Therefore, many studies have shown that IMO enhances employee job satisfaction [83], motivating them to contribute more to the company. As a result, this improves product and service quality [25], enhances customer satisfaction, and ultimately creates a CAD for businesses. Consequently, we established the following hypothesis in light of earlier research:

H6: IMO has a positive effect on SCAD.

4.1 The measurement model

According to Hair et al. [85], the measurement assessment includes (1) examination of the construct reliability by both Cronbach’s Alpha (≥ 0.7) and the Composite reliability (CR) (≥ 0.7) of all latent variables. (2) investigation of the convergent validity by the Outer loading (≥ 0.7) and the Total variance extracted (AVE) (≥ 0.5). (3) assessment of the discriminant validity by the HTMT (≤ 0.900). Table 2 indicates the results of construct reliability and convergent validity examinations. It can be seen that all items meet the requirements of the Outer loading (much greater than 0.7), and all four latent variables are qualified for the requirements of Cronbach’s Alpha, CR, and AVE.

Table 2. Examination of the construct reliability and convergent validity

Moving to the discriminant validity assessment, the HTMT results indicate that all constructs are qualified (Table 3).

Table 3. The assessment of the discriminant validity

4.2 The measurement model

Firstly, examine the multicollinearity by VIF scores which should be less than 5 [85]. The VIF scores in this study ranging [1.000; 4.398] indicate no multicollinearity (Table 4).

Table 4. The inner VIF

Now, investigate the relationship between GDC, GMO, IMO, and SCAD. The one-tailed method was applied because this study focuses on examining the direct effects. According to Hair et al. [85], it is required to examine Path coefficients, p-value, t-value, and confidence intervals bias corrected. The results of the structural model assessment are presented in Table 5 and Figure 2.

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Figure 2. The structural model assessment

Table 5. The results of the structural model examination

Hypotheses	Original Sample (O)	Sample Mean (M)	Standard Deviation (STDEV)	T Statistics (|O/STDEV|)	P- Values	f2	CI		Results
							5.00%	95.00%
H1: GDC and GMO	0.213	0.217	0.068	3.132	0.001	0.086	0.108	0.33	Supported
H2: GDC and IMO	0.747	0.748	0.042	17.638	0.000	1.261	0.663	0.806	Supported
H3: IMO and GMO	0.705	0.701	0.064	11.017	0.000	0.684	0.589	0.801	Supported
H4: GDC and SCAD	0.506	0.5	0.094	5.36	0.000	0.243	0.343	0.651	Supported
H5: GMO and SCAD	0.32	0.325	0.107	2.989	0.001	0.055	0.144	0.494	Supported
H6: IMO and SCAD	-0.021	-0.02	0.093	0.226	0.411	0.000	-0.168	0.136	Not Supported

Moving to the details, the research results show that GDC plays an essential role in supporting both GMO and IMO of a firm (H1: Beta = 0.213, P-value = 0.001, T-value = 3.132, f2 = 0.086; H2: Beta = 0.747, P-value = 0.000, T-value = 17.638, f2 = 1.261). The findings indicate that IMO and GMO can be significantly improved if a firm pays attention to nurturing and developing its GDC. Besides, IMO also shows its importance in creating and promoting a firm’s GMO (H3: Beta = 0.705, P-value = 0.000, T-value = 11.017, f2 = 0.684). For SCAD, the findings illustrate that a firm can attain and develop its SCAD when it focuses on exploiting its DC and marketing in the context of green practices (H4: Beta = 0.506, P-value = 0.000, T-value = 5.360, f2 = 0.243; H5: Beta = 0.320, P-value = 0.001, T-value = 2.989, f2 = 0.055). However, the research results have not found the significance of IMO on a firm’s SCAD (H6: Beta = -0.021, P-value = 0.411 > 0.05, T-value = 0.226 < 1.65).

This study aims to explore the link between GDC, GMO, IMO, and SCAD in an organization. Based on the underpinning theories, the researchers argued the importance of nurturing core competencies and resources to help organizations create and strengthen their SCAD. Our study has made significant contributions both theoretically and practically. By conducting an empirical study in an emerging country like Vietnam, the research results provide reliable and convincing evidence about the role and importance of GDC in developing other capabilities in organizations, such as GMO and IMO. By examining IMO through the lens of employee motivation, our research has demonstrated the strong influence of GDC on IMO, which has not been extensively investigated or validated in previous studies. The research findings imply that when organizations possess flexibility and proactive innovation to absorb and adapt to new conditions, it can positively impact employees' perception and willingness to engage in environmentally friendly activities. Furthermore, our research also reveals the direct and positive impact mechanism of IMO on GMO, which has been overlooked in prior studies. Regarding SCAD, our research has proven the crucial role of GDC and GMO in strengthening a firm's CAD over the long term. The results suggest that in the trend of green and sustainable development, nurturing DC, including the ability to identify trends and changes in the environment, learning and absorbing knowledge to innovate and adapt to new conditions (GDC), is a crucial factor allowing firms to establish superior and sustainable advantages compared to competitors. In addition, the research highlights the vital role of nurturing GMO, including applying modern technologies and methods to create environmentally friendly products, services, and processes, which helps firms reduce costs, enhance quality, and innovate green and sustainable products and services, thereby further strengthening the firm's SCAD. For practical contributions, this study was conducted on various types of firms with different scales, ages, and business models in a typical emerging country like Vietnam. Therefore, the research results provide valuable insights for managers in Vietnam, particularly in similar emerging countries, when applying green practices in their production and business activities, thus finding effective methods to innovate, maintain, and enhance long-term CADs. However, some limitations are considered directions for our further research. They are as follows: (1) As an important competency, GDC is expected to not only have an effect on marketing fields but also impact other capabilities of an organization that have not been integrated in this study. Hence, future research should explore the influence of GDC on other fields and capabilities of a firm. (2) While some previous studies confirmed the direct role of different components of IMO in nurturing a firm’s SCAD, our study has not supported this relationship between IMO with integrated approach and SCAD. Further research should re-examine this relationship in other contexts to clarify its connection. (3) Because the empirical context involves focusing on a specific country – Vietnam, the research findings need to be supported by further studies in other context be difficult to transfer to other contexts. Different findings might surface with a broader sample of enterprises with more significant variation in the country.