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Article

The Impact of Green Organizational Capabilities on Competitive Advantage of Construction Enterprises in Vietnam: The Mediating Role of Green Innovation

by
Xuan Hung Nguyen
*,
Khanh Linh Nguyen
,
Thi Van Ha Nguyen
,
Thi Thanh Huyen Nguyen
and
Van Loi Ta
*
School of Trade and International Economics, National Economics University, 207 Giai Phong, Hai Ba Trung, Hanoi 100000, Vietnam
*
Authors to whom correspondence should be addressed.
Sustainability 2023, 15(16), 12371; https://doi.org/10.3390/su151612371
Submission received: 12 June 2023 / Revised: 6 August 2023 / Accepted: 9 August 2023 / Published: 14 August 2023
(This article belongs to the Section Hazards and Sustainability)
Browse Figures
Review Reports Versions Notes

Abstract

:
The escalating environmental pollution primarily caused by construction enterprises has raised concerns about the urgent need for sustainable practices. This study aims to establish a novel framework of Green Organizational Capabilities (GOC) for construction enterprises in Vietnam. Additionally, it addresses the research gap regarding the relationship between GOC and Competitive Advantage (CA) while also exploring the mediating effect of Green Innovation (GI). Employing Structural Equation Modeling (SEM), we simultaneously model and estimate the intricate relationships among GOC, GI, and CA, which are often unobservable and measured indirectly by the Likert scale point. Through SEM, we account for measurement errors in observed variables and test hypotheses from a sample of 278 valid respondents. The findings reveal that (1) Organizational capabilities are being transformed into GOC, encompassing three key capabilities: Operational Capabilities (OC), Green Dynamic Capabilities (GDC), and Green Creativity (GC); (2) Only GDC and GC have a positive impact on CA; and (3) There is a mediating role of GI on the relation between GC, GDC, and CA. These results highlight the significance of focusing on developing GDC and GC to bolster green innovation practices and achieve a competitive edge. Construction companies can leverage these insights to enhance their sustainability efforts and seize opportunities for growth in the green economy.

1. Introduction

In the pursuit of gaining a competitive edge, organizational capabilities play a pivotal role as valuable resources for enterprises [1]. These capabilities encompass the proficiency to excel in routine operations as well as the agility and creativity required to adapt to dynamic environments. In today’s business landscape, environmental concerns have emerged as a global priority, underscoring the significance of exploring the concept of green organizational capabilities—the amalgamation of organizational capabilities with environmental objectives. To achieve this objective, the concept of “green innovation” has emerged, serving to enhance and sustain environmental practices within enterprises [2,3]. Firms now recognize that innovation extends beyond resource optimization and must be intertwined with environmental considerations. In light of these developments, a comprehensive investigation into the concept of green organizational capabilities becomes imperative.
Despite existing research exploring the value of green innovation and organizational capabilities in delivering competitive advantage to businesses, particularly in relation to enterprises [4,5,6,7], there remains a significant knowledge gap concerning the emerging concept of green organizational capabilities and its influence on competitive advantage through green innovation. To address this void, we present a theoretical framework centered around Green Organizational Capabilities (GOC), introducing three innovative constructs: green organizational capabilities, green innovation, and competitive advantage. As firms increasingly seek to gain a competitive edge in an ever-changing environment, this research framework serves to provide valuable insights into how enterprises can enhance their competitive advantage by leveraging the pivotal elements of green organizational capabilities and green innovation. By doing so, this study aims to offer valuable guidance to enterprises on improving their competitive standing in the modern business landscape.
In Vietnam, the construction industry plays a pivotal role in fostering the country’s socioeconomic infrastructure, with an average annual growth rate ranging from 8.5% to 8.7% [8]. However, the various construction activities, including transportation, material production, and waste generation, exert significant pressure on the environment [9]. Concurrently, the recent implementation of the European Union–Vietnam Free Trade Agreement (EVFTA) has opened vast opportunities for the Vietnamese construction sector to collaborate with leading European tech giants, which possess cutting-edge technologies in construction and manufacturing [10]. To meet the demands of this partnership, European corporations are emphasizing the development of robust organizational capabilities, especially in the realm of green competitive advantage strategies, to counteract the detrimental impact of construction on the environment [11]. As the construction sector rebounds from the aftermath of the COVID-19 pandemic and Vietnam’s market becomes more accessible to European enterprises, it presents a strategic moment for Vietnamese construction firms to fortify their resources and cultivate high-level green organizational capabilities.
Therefore, the primary focus of this study is to conduct a comprehensive analysis and evaluation of the influence of GOC on the competitive advantage of construction enterprises in Vietnam while also examining the mediating role of green innovation in this relationship. By doing so, the research aims to present effective solutions that can bolster competitive advantages through the implementation of GOC and green innovation, ultimately contributing to the sustainable development of these enterprises.
The remainder of this research is structured as follows: Section 2 introduces the literature review of related issues; Section 3 presents the theoretical framework and research hypothesis through logical argument; Section 4 introduces the research methodology used, including the data collection, variables measurement, and analytical techniques; Section 5 reports the empirical results; Section 6 describes the study’s conclusions, and Section 7 presents the study’s contributions and limitations.

2. Literature Review

In recent decades, research on organizational capabilities has garnered increasing interest and witnessed substantial development. Scholars from around the world have approached the concept of organizational capacity and its components from various perspectives. Gold et al. [12] emphasized knowledge management capability as a key aspect of organizational capabilities in the transition to a knowledge-based economy. Similarly, Spanos & Prastacos [13] viewed organizational capabilities as a meta-capability derived from the collective knowledge and application of knowledge within the enterprise. On the other hand, Jacobides [14] highlighted the effective division of labor as a means to harness the full potential of human resources as a demonstration of organizational capabilities.
Among the different views, Collis’s perspective [1] on organizational capabilities has gained widespread acceptance and application. According to Collis, organizational capabilities can be categorized into basic functional activities and innovation-oriented activities, which govern the efficiency of converting inputs into outputs, leading to a firm’s unique market position. Building on Collis’s framework, various studies have explored the elements of organizational capabilities and their relationships with green innovation, financial performance, and competitive advantage in specific countries and industries.
Some typical elements of organizational capabilities include operational capabilities, which play a crucial role in gaining a competitive advantage through efficient material flow and resource utilization [15,16,17]. Dynamic capabilities, on the other hand, are associated with the process of innovation towards sustainable development [18,19,20,21], while creativity enables businesses to explore and exploit market opportunities for innovation [22,23,24].
Although certain elements of organizational capabilities, such as green dynamic capacity and green creativity, have been examined in the context of environmental pollution’s impact on business activities, a comprehensive review of the components of green organizational capabilities has not been thoroughly undertaken. This research gap serves as the primary motivation for conducting this study, which aims to address this significant gap and shed light on the crucial relationship between green organizational capabilities, green innovation, and business performance.

3. Theoretical Framework and Hypothesis Development

3.1. Green Organizational Capabilities

Numerous scholarly publications have contributed to the field of organizational capabilities and firm capabilities. Capabilities are essentially intangible resources [1,25] that businesses utilize to address key challenges in a distinctive manner. These resources transform into capabilities when they are combined in a more structured manner based on human consciousness, enabling the enterprise to tackle specific problems effectively. Drawing from Collis’s original theoretical framework [1], in the context of the modern business environment and the global trend towards sustainability, organizational capabilities are now evolving in connection with sustainability, particularly in the construction industry, which faces significant environmental pressures. This development can be attributed to three precise factors: Firstly, the impact of climate change is profound for construction enterprises in Vietnam, especially concerning the design and construction of projects. Secondly, new government policies and regulations are being adopted to minimize the construction industry’s environmental footprint. Thirdly, the scarcity of natural resources is prompting Vietnamese construction businesses to reconsider their structure and sources of construction materials. Under these pressures, coupled with the growing popularity of green buildings and green materials, enterprises’ organizational capabilities must inevitably transform into green organizational capabilities. This shift is imperative to address the challenges posed by environmental concerns and adapt to the changing landscape of sustainable practices within the industry.
In response to the aforementioned pressures, the authors introduce the concept of “Green Organizational Capabilities” as the collective abilities of enterprises strategically aligning their independent resources to achieve environmental protection objectives. Building upon Collis’ theoretical framework and informed by in-depth interviews with experts, the authors identify three pivotal components that distinctly express Green Organizational Capabilities within Vietnamese construction enterprises: Operational Capabilities, Green Dynamic Capabilities, and Green Creativity. These components collectively enable enterprises to proactively address environmental challenges and foster sustainable practices in their operations.
Drawing from the resource-based view, operational capabilities are defined as the aptitude of a company to proficiently conduct functional activities by judiciously selecting and leveraging resources. This encompasses the adept use of inputs, such as materials, labor, and technology, as well as streamlining critical technologies, resources, and processes. As affirmed by Protogerou et al. [26], operational capabilities contribute positively to the economic value of businesses by enhancing cost-effectiveness, quality, and efficiency in converting inputs into desired outputs [27]. Building upon the insights provided by previous research and the work of Koufteros et al. [28], we propose that operational capabilities entail the cultivated skills, processes, and habits ingrained in the operational management system over time, empowering the company to perform functional activities with effectiveness and efficiency.
Drawing insights from dynamic capabilities theory, particularly Teece [29] and Chen & Chang [30], green dynamic capabilities are perceived as the organizational abilities enabling a company to analyze and harness existing resources and knowledge to innovate and cultivate green competencies, thereby adapting to the ever-evolving market dynamics. Qiu et al. [21] have identified three key components of green dynamic capabilities: resource integration, resource reconfiguration, and environmental literacy. Resource integration capabilities encompass the simultaneous consolidation of resources from both internal and external sources. The second component, resource reconfiguration, involves optimizing, reallocating, or acquiring new resources, while also eliminating redundant ones. Lastly, environmental literacy pertains to an organization’s proficiency in gathering and leveraging environmental information to identify opportunities or threats, reflecting the business’s responsiveness to environmental changes. Guided by the definitions proposed by Qiu et al. [21], this study defines green dynamic capabilities as the enterprise’s proficiency in combining, constructing, and restructuring both internal and external resources concerning environmental preservation.
Referring to the model of organizational innovation [31], creativity is recognized as a valuable form of competence, and its assessment is best focused on its output—ideas. These ideas may pertain to new products, services, processes, or other innovative activities. Innovative ideas need not be entirely novel; their value lies in their alignment with the company’s objectives. Given the increasingly stringent environmental regulations and growing consumer concerns, businesses are compelled to explore and generate green ideas to address environmental challenges. In light of this, Chen & Chang [30] introduced the concept of green creativity: the generation of fresh ideas concerning green products, green services, green processes, or green practices, which are deemed unique, novel, and purposeful. In congruence with this study, the authors adopt the above definition of green creativity.

3.2. Green Innovation

The Organization for Economic Cooperation and Development (OECD) has presented a classic definition of innovation at the micro level, stating that innovation involves the enhancement or introduction of a new product (good/service) or a novel process, marketing approach, or organizational method within or outside a business setting. Building upon the definitions proposed by Chen et al. [32] and Rennings [33], green innovations are characterized as advancements in the hardware or software of green products or green processes, encompassing technological innovations aimed at energy conservation, pollution prevention, waste recycling, green product design, and corporate environmental governance. These definitions have garnered widespread acceptance among various scholars, including Chang [4], Huang & Li [34], and Song & Yu [35]. Thus, in line with the established concepts of green innovation, this study adopts the definition put forth by Chen et al. [32].
Based on the provided definition, green innovation at the firm level can be categorized into green product and green process innovation. Green product innovation involves enhancing products to achieve energy efficiency, pollution prevention, waste recycling, environmentally-friendly design, and sustainable business management [4]. From a design perspective, green innovation encompasses modifying existing product designs to minimize environmental impact across all stages of the product’s life cycle [5]. Additionally, Lai et al. [36] highlight that green product innovation includes the elimination of harmful substances and the development of new green products. On the other hand, green process innovation refers to any adaptations made in the production process to reduce adverse effects on the environment during the procurement, manufacturing, and transportation of raw materials and finished products [5]. Emphasizing green technology, this form of innovation involves converting conventional energy use to alternative, more sustainable energy sources to reduce overall energy consumption and limit greenhouse gas emissions [37].

3.3. Competitive Advantage

According to Porter [38], competitive advantage arises from the value a company delivers to its customers by offering either lower prices or superior benefits compared to competitors. Additionally, Barney [39] defines a company as obtaining a competitive advantage when it employs a value-creation strategy that is not replicated by any current or potential competitors. Another perspective considers a company to have a competitive advantage when it generates more economic value (measured as the difference between perceived resource benefits and economic exploitation costs) than its rivals [40] or achieves greater success than competitors [41]. Schilke further investigates and evaluates competitive advantage as a two-dimensional structure comprising strategic performance (qualitative dimension) and financial performance (quantitative dimension). Consequently, in this study, we define competitive advantage as a company adopting a unique, uncopiable strategy that creates superior economic value compared to its competitors.
To achieve and sustain a competitive advantage, businesses commonly employ three general strategies: overall cost leadership, differentiation, and focus [38]. The first strategy, overall cost leadership, entails becoming the lowest-cost producer of a product or service, enabling the company to earn above-average profits while maintaining prices in line with industry averages. The second strategy, differentiation, focuses on creating a perception among customers that the products or services offered by one company are superior to those of its competitors. This differentiation can be achieved through design, brand image, technology, unique features, or exceptional customer service. By offering distinct products, the risk of substitution is reduced, brand loyalty increases, and the price elasticity of demand decreases [42]. The third strategy, known as the focus strategy, involves catering to the specific needs of a particular customer group. Businesses adopting this approach target niche markets that are less susceptible to substitution or have weak competition, allowing them to attain above-average returns.

3.4. Hypothesis Development

3.4.1. The Impact of Green Organizational Capabilities on Competitive Advantage

Operational capabilities play a crucial role in helping businesses effectively select and utilize resources within their operational management system. As these capabilities directly influence the fundamental functions of the organization, achieving operational efficiencies [43] and maintaining a competitive advantage [44] become essential goals. The strength of operational capabilities positively contributes to overall performance and efficiency maintenance [45]. Notably, operational capabilities have various positive impacts, such as increasing revenue [46], reducing costs associated with product development [47], and enhancing the quality of existing processes and products [48]. In the dynamic and transformative business landscape of today, successful implementation of new operational processes enables companies to quickly adapt to stakeholders’ trends and requirements. This ability to differentiate itself in delivering value to customers becomes a key factor in gaining a competitive advantage [49].
As the business environment evolves, varying market demands give rise to different product lines. In such dynamic conditions, traditional rigid strategies may no longer suffice, becoming potential barriers to development. Companies must adapt, modify, eliminate, or redesign their business models as necessary, drawing insights from both internal and external sources [50]. Dynamic capabilities, therefore, emerge as a critical factor in maintaining a company’s competitive advantage [51]. Companies equipped with green dynamic capabilities possess the ability to integrate knowledge from diverse sectors and channel it into innovation, effectively converting potential opportunities into business advantages. By being attuned to environmental changes, businesses can collect and utilize market information, promptly identifying opportunities and threats. In the digital age, speed has become a vital source of competitive advantage for companies [52]. The quicker the decision-making process, the more likely a business is to seize opportunities and avoid threats, ultimately gaining a competitive edge. Numerous prior studies have demonstrated that green dynamic capabilities positively influence the competitive advantage of enterprises [5,7,47].
According to organizational capabilities theory, creativity represents a unique, incomparable, and indispensable capability that forms the basis for businesses to attain a competitive advantage. This stems from the fact that the products, services, processes, or activities derived from creativity are not only useful and valuable but also novel, intriguing, and unexpected, enabling businesses to offer exceptional value to customers [53]. By leveraging creativity, businesses can adopt a differentiation strategy to enhance their competitive advantage. In the current context where corporate social responsibilities are gaining increasing attention, green creativity becomes a driving force behind the generation of beneficial new ideas for creating environmentally friendly products and processes, enabling companies to stay ahead of competitors and enjoy the benefits of being pioneers [54]. Green creativity involves proposing initiatives that minimize negative environmental impacts, bolster brand image, and enhance competitive advantage [54]. Past research has yielded similar findings, revealing the positive influence of green creativity on businesses’ competitive advantage [55].
Based on the results of previous related studies, the authors propose the following hypotheses:
H1a: 
Operational capabilities have a positive impact on the competitive advantage of Vietnamese construction enterprises.
H1b: 
Green dynamic capabilities have a positive impact on the competitive advantage of Vietnamese construction enterprises.
H1c: 
Green creativity has a positive impact on the competitive advantage of Vietnamese construction enterprises.

3.4.2. The Mediating Role of Green Innovation on the Relationship between Green Organizational Capabilities and Competitive Advantage

The primary driving force behind the high demand for innovation in firms is its potential to enhance productivity and generate greater output and value with the same input [56]. This orientation influences all activities within the organization, leading to efforts to adopt green practices. Regardless of their objectives, both successful innovation practices and green innovation require the ability to efficiently and effectively run the organization. This encompasses the support of functional activities throughout the entire production process to create green products and services. Numerous prior studies have consistently demonstrated that operational capabilities have a positive influence on innovation [57].
In this ever-changing environment, businesses must not only adapt quickly but also respond with high levels of innovation and creativity [51]. Therefore, enterprises need to possess green dynamic capabilities, a subset of dynamic capabilities that are associated with green resources [19], to drive innovation, especially green innovation, which involves enhancing all aspects of a product or process to achieve sustainability [32]. The development of green innovation in enterprises greatly depends on how swiftly businesses can adapt to mandatory changes related to environmental governance [58]. Several previous studies have demonstrated similar results, showing that green dynamic capabilities have a positive impact on green innovation in enterprises [59,60].
If creativity focuses on the generation of ideas, then innovation emphasizes the actual implementation of those ideas [61]. When considering the relationship between creativity and the level of innovation within an enterprise, creativity serves as the “raw material” for innovation [62]. The newer ideas produced through creative thinking are then put into action during the actual process, increasing the likelihood of successful innovation. Studies conducted by Song & Yu [35] affirm that when a company implements unique and valuable green ideas, it stimulates a process that enhances green innovation. Similarly, Chen & Chang [30] and Chen et al. [22] assert that green creativity has a positive impact on green product development performance. Moreover, Malik et al. [24] argue that when a business acquires innovative green ideas to improve processes and practices, it leads to an increase in green innovation.
Green innovation encompasses both green product and process innovation, establishing protective barriers based on unique competencies that enable businesses to continuously enhance their advantages for long-term development [25,39,63]. Firstly, green product innovation contributes to a differentiation strategy, enabling businesses to lead in the market and gain a competitive advantage [4]. By improving the quality and features of products, the company’s image and reputation are enhanced, building trust and loyalty among customers and positioning the products as superior to those of competitors. Secondly, green process innovation reduces resource costs and overall costs by minimizing waste, preventing environmental harm [64,65], and enhancing resource efficiency through material savings and waste recycling [2,38,66]. The successful implementation of green process innovation creates a cost advantage [2], improving the company’s competitive advantage [32]. Numerous previous studies have demonstrated similar results, indicating that green innovation has a positive impact on the competitive advantage of enterprises [4,19,32]. Therefore, the authors propose the following hypotheses:
H2a: 
There is mediating role of green innovation in the relationship between operational capabilities and the competitive advantage of Vietnamese construction enterprises.
H2b: 
There is mediating role of green innovation on the relation between green dynamic capabilities and the competitive advantage of Vietnamese construction enterprises.
H2c: 
There is mediating role of green innovation on the relationship between green creativity and the competitive advantage of Vietnamese construction enterprises.
Based on the above theories and analysis, we propose a research model (Figure 1):

4. Methodology

4.1. Data Collection

The research sample is enterprises in the Vietnamese construction industry. We conducted online surveys and face-to-face interviews with business leadership members such as directors, deputy directors, and employees who fully grasped construction enterprise information of the environment to gather primary data.
After a two-month data collection period, we obtained a total of 328 questionnaires. However, after careful data entry and the elimination of ineligible questionnaires, we retained 278 valid questionnaires, representing 85.76% of the initial responses, for further analysis. Subsequently, we compiled a list of 53 construction sector enterprises in Vietnam and gathered their financial statements from reputable statistical websites such as CafeF and Vietstock to measure financial performance indicators.
In terms of enterprise age, the surveyed firms are distributed as follows: 31.65% are in the 16–20 years age group, followed by 29.15% in the 1–15 years group, 19.78% in the 21–30 years group, and the remaining 19.42% are over 30 years old (Figure 2). Concerning enterprise scale, the largest proportion consists of companies with 301–1000 employees, accounting for 56.47% of the total. Additionally, the surveyed enterprises operate in various sectors, including contractors, construction consultants, technological equipment and construction materials producers, and enterprises involved in construction investment, among others.

4.2. Variables Measurement

We conducted the following to build the research scale:
The 5-point Likert scale, from level 1 (completely disagree) to level 5 (completely agree), is used to measure: Operational capabilities (OC), green dynamic capabilities (GDC), green creativity (GC), green innovation (GI), and strategic performance (SP).
The 5-point Likert scale, from level 1 (much lower) to level 5 (much higher than the industry average) for the 3-year period of 2019–2021, is used to measure financial performance (FP).
The detailed research scale is fully expressed in Table 1.

4.3. Analytical Techniques

This study used a structure equation model, a method used commonly in research on issues related to competitive advantage. We used SPSS 26.0 software for descriptive statistics and used AMOS 24 software to evaluate the scale and determine the importance of factors as well as test hypotheses.
We conducted the following verification steps: (i) Scale reliability by Cronbach’s Alpha coefficients. The scale is reliable to conduct the next test when Cronbach’s Alpha ≥ 0.6 and the total variable correlation > 0.3; (ii) The authors used exploratory factor analysis (EFA) to consider and eliminate factors that are inconsistent with the model. In this test, we guaranteed that KMO value > 0.5; Sig Bartlett’s was <0.05, eigenvalue value > 1, and Factor Loading ≥ 0.5; (iii) Used confirmatory factor analysis (CFA) to test how well the model fits the data and confirm the univariate multivariate, convergent and discriminant validity of the scale, some typically tracked metrics are χ2/df, GFI (goodness of fit index), CFI (comparative fit index), TLI (Tucker Lewis Index), RMSEA (root mean square error of approximation); and (iv) Concluding hypotheses through analyzing structural equation modeling (SEM), which is a robust multivariate data analysis method employed to examine intricate relationships among constructs and their corresponding indicators [67]. It serves as a potent statistical technique capable of integrating quantitative data, incorporating cause-effect assumptions into the model, and analyzing multiple regression models simultaneously. Moreover, SEM enables the modeling of multidimensional relationships between variables within a comprehensive framework. Given the complexity of the model, sample size, and the exploratory nature of the data, SEM was deemed well-suited for the purposes of this study.

5. Empirical Results

5.1. Testing the Reliability of the Scale

Cronbach’s Alpha test removes two items—OC (3) and GI (6)—because the total correlation coefficient is less than 0.3. After removing that item, all constructs have Cronbach’s Alpha coefficients > 0.7, and the remaining items all have total correlation coefficients greater than 0.3, which are suitable for the next analyzing step (Table 2).

5.2. Exploratory Factor Analysis (EFA)

5.2.1. First Factor Analysis Results

The test removed item GDC (3) because this item has a loading coefficient of less than 0.5. The remaining items meet the requirements of separation and convergence between groups; also, all items have factor loading coefficients greater than 0.5, showing that these observed variables are statistically significant for inclusion in the next analysis steps.

5.2.2. Second Factor Analysis Results

The second EFA analysis result remains 28 items of 6 variables. The KMO coefficient of Barlett’s test is 0.920 > 0.5 with significance level sig = 0.000 < 0.05, so the data used for factor analysis is appropriate. Eigenvalues of 6 constructs > 1, so only six groups of constructs are created, completely consistent with the original model of six factor groups. The total variance extracted was 0.63954, which means that 6 variables were extracted 63.954% from 28 observed variables. The model after EFA analysis is evaluated.

5.3. Chartered Financial Analysis (CFA)

Second-Order Variable Evaluation

All effects from the second-order variable on its component first-order variables have p-values less than 0.05. Thus, the first-order variables are suitable and explain well for the second-order variable. In conclusion, the second-order variable CA (competitive advantage) consists of two components of the first-order variable, SP (strategic performance) and FP (financial performance). Therefore, the measurement of the competitive advantage variable is appropriate (Table 3).
CFA result shows that the standardized regression weight of all variables is greater than 0.5, showing the model reaches a convergent validity. The results indicate that CMIN/DF = 1.298 < 3; GFI = 0.9; CFI = 0.971 > 0.9; TLI = 0.968 > 0.9; RMSEA = 0.033 < 0.06; PCLOSE = 1.000 > 0.05, showing that the model’s compatibility with data is very good. All observed variables in the model are statistical significance because the p-value is less than 0.05.

5.4. Structural Equation Model (SEM) Analysis

The goodness-of-fit indices of the structural model are shown in Figure 3. It can be concluded that the structural model demonstrated a good fit to the sample data, with χ2/df = 1.298; GFI = 0.900; CFI = 0.971; TLI = 0.968, RMSEA = 0.033 and PCLOSE = 1.00. The result shows that the R2 value of green innovation is 0.671, meaning 67.1% of the change in green innovation is explained by three independent variables. Meanwhile, the R2 value of competitive advantage is 0.606, proving that 60.6% of the change in competitive advantage is affected by four independent variables in the model.
Based on the analytical results of the linear structural model, we test the study hypotheses. The results, shown in Table 4, support most of our hypothesized effects.
Surprisingly, operational capabilities did not show a significant relationship with competitive advantage (β = −0.087, p > 0.05); thus, Hypothesis 1a is not supported. This result can be explained by the features of the construction industry, which has a complicated structure and links many stakeholders through the supply chain model. That is why most construction companies must have operational capabilities to survive and cannot gain a competitive advantage with this kind of capability.
The analysis revealed a positive impact of green dynamic capabilities on competitive advantage (β = 0.318, p < 0.05), thus supporting Hypothesis 1b. These findings are consistent with the results of previous studies by Qiu et al. [21] and Reuter et al. [68]. Companies in the construction sector with robust green dynamic capabilities possess the ability to gather, recognize, and anticipate changes in green technologies, green demands, and environmental protection policies for sustainable development. By systematically and efficiently addressing challenges through resource integration, construction, and reconfiguration, these companies are adept at making prompt and accurate decisions to cater to customer needs and address the demands of the emerging “green” market. Consequently, they gain a significant market share and obtain the coveted first-mover advantage.
The analysis indicates a significant positive relationship between green creativity and competitive advantage (β = 0.226, p < 0.05), confirming Hypothesis 1c. This finding aligns with the research conducted by Zameer et al. [54] and Nasifoglu et al. [69]. Enterprises that exhibit a high level of green innovation actively engage in research and development activities focused on environmental aspects, leading to a regular stream of new and enhanced products. This constant innovation contributes to the improvement of their competitive advantages. Particularly, in the era of the Internet of Things, where smart houses are extensively integrated into the construction industry, companies effectively leveraging Green creativity are poised to gain a competitive edge over their competitors in the market.
We prove that green innovation positively affects competitive advantage at the 95% confidence level with β = 0.290. In addition, operation capability is negatively related to green innovation (β = −0.283, p < 0.05), so Hypothesis 2a is rejected. Additionally, the result shows that the impact of green dynamic capabilities and green creativity on green innovation is positive, with β = 0.386 and β = 0.368, respectively. Therefore, green innovation has a mediating role in the relationship between green dynamic capabilities, green creativity, and competitive advantage.

6. Conclusions

In conclusion, the research findings highlight the significance of applying and enhancing Green Creativity and Green Dynamic Capabilities within construction enterprises to elevate both Green Innovation and Competitive Advantage [19,20,24,34,35]. With the growing influence of the Internet of Things (IoT) in the construction sector, there is a pressing need for creative products and services tailored for smart accommodations and smart cities to lead this evolving market. The IoT is a vital component of Industry 4.0, bridging the gap between the physical and cyber-world industries, and its transformative potential is vast [70]. Companies equipped with high levels of green creativity possess abundant sources of ideas, fostering rapid R&D and product innovation and positioning them at the forefront of this dynamic field. Furthermore, in response to the evolving environmental landscape, global crises, and the surging demand for green buildings, every construction enterprise in Vietnam must adopt Green dynamic capabilities. These capabilities enable construction firms to mitigate their environmental impact, foster public trust, and enhance competitiveness, leading to improved profit margins. Additionally, Green dynamic capabilities bolster a company’s reputation, increasing opportunities for contracts with both public and private entities. In summary, Green Creativity serves as a wellspring of ideas, essential for innovation and the establishment of core competencies, while Green dynamic capabilities excel at seizing opportunities and swiftly adapting to environmental changes, ensuring effective implementation of innovative ideas. Embracing these green organizational capabilities will empower construction enterprises in Vietnam to thrive in the ever-evolving business landscape, achieve sustainable growth, and excel in the race for a greener, more innovative future.
Construction enterprises must prioritize and increase their investment in Green Innovation implementation, as the research results demonstrate its dual positive impact on Competitive Advantage and its ability to strengthen the relationship between Organizational capabilities and Competitive advantage. Green innovation acts as a catalyst for the future, akin to a currency that must be strategically invested to yield optimal value and contribute to a firm’s Competitive advantage. Diverse aspects of Green Innovation, including green building materials, renewable energy utilization, green technology, and eco-friendly construction processes, all play a pivotal role in long-term cost reduction, waste, and emission reduction. Moreover, Green Innovation enhances a firm’s reputation through its green image [2], making it more attractive in the eyes of environmentally-conscious consumers and stakeholders. Additionally, embracing Green Innovation enables companies to access new markets more effortlessly, leveraging support from governments and initiatives such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Furthermore, Green Innovation serves as a vital conduit for enterprises to harness their organizational capabilities and bring potential ideas to fruition, culminating in the establishment of a true core competency. By actively fostering a culture of Green Innovation, construction firms can stay ahead of the competition, demonstrate industry leadership, and secure a sustainable future. Embracing Green Innovation and effectively utilizing organizational capabilities is a potent formula for construction enterprises to excel, thrive, and make a positive impact on both the environment and their long-term success.

7. Contributions and Limitations

This study aimed to assess the influence of organizational capabilities on the competitive advantage of construction enterprises, with a focus on the mediating role of green innovation. The research makes notable contributions in several aspects. Firstly, it adopts a comprehensive framework derived from contemporary business concepts to define three integral components of organizational capabilities: OC, GDC, and GC. This framework presents a novel perspective on organizational capabilities in the modern era. Secondly, the study advocates the transformation of traditional organizational capabilities into green organizational capabilities within the context of Vietnamese construction enterprises, thereby proposing and validating the GOC framework. Lastly, the empirical findings highlight the positive impact of GDC and GC on competitive advantage while also demonstrating the crucial mediating role played by green innovation in shaping these relationships. Through these contributions, the research sheds light on the vital significance of green innovation as a facilitator of competitive advantage in the construction industry.
Despite the valuable contributions made in this research, certain limitations should be acknowledged. Firstly, the study was conducted by a limited number of key researchers, lacking over-institutional-level collaboration, which may have influenced the depth and breadth of the analysis. Secondly, while the study explored Green Creativity, Green Dynamic Capabilities, and Operational Capabilities, there remain other aspects of organizational capabilities that warrant further investigation, especially within the context of modern business activities. Thirdly, the empirical analysis did not specifically address the relationship between Operational Capability and competitive advantage. Additionally, the research period of only three years, starting from 2019, might not fully capture the comprehensive impact of capabilities and innovation, given that these variables are relevant to long-term sustainable goals. To address these limitations, future research could explore and incorporate other organizational capabilities, extend the data collection period to gain a more comprehensive understanding and consider alternative statistical and analytical models alongside SEM analysis to reevaluate the impact of organizational capabilities on firms’ competitive advantage. Emphasizing these recommendations could enhance the overall robustness and scope of research findings in this domain.

Author Contributions

Conceptualization, T.V.H.N. and T.T.H.N.; methodology, V.L.T., X.H.N. and K.L.N.; software, K.L.N.; validation, V.L.T. and T.T.H.N.; formal analysis, X.H.N., K.L.N. and T.V.H.N.; resources, K.L.N. and T.V.H.N.; data curation, T.V.H.N. and T.T.H.N.; writing—original draft, X.H.N., K.L.N. and T.T.H.N.; writing—review & editing, V.L.T. and X.H.N.; visualization, T.V.H.N.; supervision, X.H.N.; project administration, X.H.N. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Not applicable.

Conflicts of Interest

The authors declare no conflict of interest.

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Figure 1. Proposed research model. Source: Synthesized by authors.
Figure 1. Proposed research model. Source: Synthesized by authors.
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Figure 2. Statistical description of enterprises. Source: Synthesized by authors.
Figure 2. Statistical description of enterprises. Source: Synthesized by authors.
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Figure 3. Results of testing the models (SEM). Source: Authors’ calculation.
Figure 3. Results of testing the models (SEM). Source: Authors’ calculation.
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Table 1. Measurement scales.
Table 1. Measurement scales.
Green Organizational Capabilities
Operational Capability (referred from Wu et al. (2010) [47] with adjustments)
OC1Has an information system facilitating cooperation across functions.
OC2Has formal procedures facilitating teamwork across functions.
OC3Continuously standardizes production and working processes.
OC4Controls the inputs and outputs of products easily and quickly.
OC5Continuously reduces waste and variance.
OC6Always ensures to hand over the work to partners in accordance with agreements.
Green Dynamic Capability (referred from Qiu et al. (2020) [21] with adjustments)
GDC1Will incorporate the knowledge and competence of suppliers into regulating impacts on the environment.
GDC2Will receive consultation from environmental experts in evaluating and designing green products.
GDC3Will engage in restructuring to concentrate on environmental sustainability.
GDC4Will realign its relationships with suppliers to mitigate the environmental pollution caused by its products.
GDC5Can timely understand and master the support policies related to green development.
GDC6Can timely keep abreast of and respond to industry green technology changes.
GDC7Can timely keep abreast of customers’ green needs to adapt to market changes.
Green Creativity (referred from Chen & Chang (2013) [30] with adjustments)
GC1Company employees suggest new ways to achieve environmental goals.
GC2Company employees propose new green ideas to improve environmental performance.
GC3Company employees promote and champion new green ideas to colleagues.
GC4Company employees implement green ideas into a comprehensive plan.
GC5Company employees would find creative solutions to environmental problems.
Green Innovation (referred from Chen et al. (2006) [32] with adjustments)
GI1Chooses the materials to produce the least amount of pollution for conducting the product development or design.
GI2Uses the fewest amounts of materials to comprise the product for conducting the product development or design.
GI3Deliberate whether the product is easy to recycle, reuse, and decompose for conducting the product development or design.
GI4Has a manufacturing process that effectively reduces the emission of hazardous substances or waste.
GI5Has an operating process that reduces the consumption of water, electricity, coal, etc.
GI6Has an operating process that reduces the use of raw materials.
GI7Has an operating process that uses renewable energy.
Competitive Advantage (Schilke, 2014) [41]
Strategic Performance
SP1Has a cost advantage over its competitors.
SP2Provide a better quality of products or services.
SP3Has a large market share.
Financial Performance
FP1ROI
FP2ROS
FP3EBIT
Source: Synthesized by authors.
Table 2. Summary of Cronbach’s Alpha results of the scales.
Table 2. Summary of Cronbach’s Alpha results of the scales.
FactorsNumber of ItemsCronbach’s AlphaThe Smallest Corrected Item-Total Correlation
BeforeAfter
OC650.8340.509
GDC770.8740.580
GC550.8370.597
GI760.8650.596
SP330.8330.687
FP330.7980.621
Source: Authors’ calculation.
Table 3. Regression Weight of second-order variable.
Table 3. Regression Weight of second-order variable.
EstimateS.E.C.R.p
SP←CA1.000
FP←CA1.0160.1387.3480.000
Source: Authors’ calculation.
Table 4. Structural Equation Modeling.
Table 4. Structural Equation Modeling.
HypothesisRelationshipEstimateS.E.pResults
H1aCA ← OC−0.0870.0620.276Rejected
H1bCA ← GDC0.3180.0950.003Accepted
H1cCA ← GC0.2260.0840.030Accepted
H2aGI ← OC−0.2830.0390.000Rejected
CA ← GI0.2900.1480.031
H2bGI ← GDC0.3860.0600.000Accepted
CA ← GI0.2900.1480.031
H2cGI ← GC0.3680.0530.000Accepted
CA ← GI0.2900.1480.031
Source: Authors’ calculation.
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Nguyen, X.H.; Nguyen, K.L.; Nguyen, T.V.H.; Nguyen, T.T.H.; Ta, V.L. The Impact of Green Organizational Capabilities on Competitive Advantage of Construction Enterprises in Vietnam: The Mediating Role of Green Innovation. Sustainability 2023, 15, 12371. https://doi.org/10.3390/su151612371

AMA Style

Nguyen XH, Nguyen KL, Nguyen TVH, Nguyen TTH, Ta VL. The Impact of Green Organizational Capabilities on Competitive Advantage of Construction Enterprises in Vietnam: The Mediating Role of Green Innovation. Sustainability. 2023; 15(16):12371. https://doi.org/10.3390/su151612371

Chicago/Turabian Style

Nguyen, Xuan Hung, Khanh Linh Nguyen, Thi Van Ha Nguyen, Thi Thanh Huyen Nguyen, and Van Loi Ta. 2023. "The Impact of Green Organizational Capabilities on Competitive Advantage of Construction Enterprises in Vietnam: The Mediating Role of Green Innovation" Sustainability 15, no. 16: 12371. https://doi.org/10.3390/su151612371

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