Environmental strategic performance of SMEs in developing countries: perspectives of environmental strategic capabilities, environmental strategic assessment, and stakeholder engagement

The purpose of this study is to empirically evaluate the model that explains the methods involved in the transformation of environmental strategic capabilities (ESC) into environmental strategic performance (ESP) of manufacturing SMEs in developing economies such as Pakistan. This study also analyzes the role of environmental strategic assessment (ESA) as a mediator as well as the contingent impacts of stakeholder engagement (SE). To evaluate the conceptual model, a cross-sectional design was employed in this study. Data from 489 owners, production managers, finance managers, and CEOs of 133 production units dealing in agriculture equipment (31 units), auto parts (18 units), electrical equipment (25 units), gas appliances (23 units), pharmaceutical instruments (15 units), and plastic products manufacturing (21 units) was gathered to validate the moderated mediation framework. The outcomes of the study support the notion that ESC and ESP are positively correlated. Furthermore, results also support the mediation role of ESA in the association between ESC and ESP. Additionally, the moderation of SE is validated, and this construct is portrayed as a catalyst in interaction of ESC and ESP. The current study contributes to strategic management literature by concentrating on intangible assets such as ESC and its key aspects. As a result, it introduces a new framework as well as a roadmap that will support the accomplishment of ESP. Through focusing on the mediating mechanism in which ESC may well be transformed to ESP of manufacturing SMEs by ESA, the study findings significantly contributed to the understanding of environmental dynamism in contemporary management era. The findings of the study also assist in clarifying the moderating impact of SE and how its interactions with ESC and ESP strengthen the influence that enterprises have on ESA.