Green strategy and firm performance: The mediating role of competitive advantage in emerging economy SMEs

Type of the article: Research ArticleAbstractSustainability transitions are a strategic imperative for SMEs in emerging economies, where institutional and resource constraints limit the direct translation of environmental strategies into performance outcomes. This study explores how green marketing and eco-innovation are associated with business performance through competitive advantage. Data were collected through a quantitative cross-sectional survey, yielding 474 valid questionnaires from owners, managers, and specialists of Vietnamese SMEs in the consumer goods sector. Environmental regulation strengthens the green marketing–competitive advantage relationship, and customer green awareness and market dynamics positively moderate the competitive advantage–performance relationship. The findings showed positive associations of eco-innovation (β = .597, p < .001) and green marketing (β = .230, p < .001) with competitive advantage, which was positively associated with business performance (β = .461, p < .001). The corresponding indirect effects through competitive advantage were significant (β = .275 and .106, respectively; both p < .001), while environmental regulation (β = .164), customer green awareness (β = .083), and market dynamics (β = .091) showed positive moderating effects. The cross-sectional design, non-probability sampling, and industry-specific focus may limit this study’s scope and generalizability in broader contexts. This study advances the sustainability and strategic management literature by providing a mechanism-based account of how environmental strategy, when extended from the Natural Resource-Based View and translated into competitive positioning, generates economic gains for SMEs in resource-constrained emerging economies.AcknowledgmentsThis article was developed from a university-level scientific research project conducted in 2026 at Ho Chi Minh City University of Law.