Under the Tip of the Iceberg: Absorptive Capacity, Environmental Strategy, and Competitive Advantage

Abstract

Although existing research evaluates how the adoption of proactive environmental strategies affects corporate performance, there is little understanding of the organizational mechanisms that link such strategies to competitive advantage. It is, therefore, unclear how environmental strategies relate to other management strategies that could lead to a competitive advantage. In this article, we analyze the organizational capabilities that underlie a firm’s ability to generate competitive advantage from the adoption of proactive environmental strategies. We develop and test a model where absorptive capacity facilitates the development of proactive environmental strategies that result in competitive advantage. Results from a survey of 157 German chemical firms strongly support the model.