Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India

Chishty, Syed Khusro; Sayari, Sonia Article Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Chishty, Syed Khusro; Sayari, Sonia (2024) : Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-17, https://doi.org/10.1080/23311975.2024.2363427 This Version is available at: https://hdl.handle.net/10419/326321 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India Syed Khusro Chishty & Sonia Sayari To cite this article: Syed Khusro Chishty & Sonia Sayari (2024) Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India, Cogent Business & Management, 11:1, 2363427, DOI: 10.1080/23311975.2024.2363427 To link to this article: https://doi.org/10.1080/23311975.2024.2363427 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group Published online: 04 Jul 2024. Submit your article to this journal Article views: 1228 View related articles View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 ManageMent | ReseaRch aRticle Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2363427 Does market oriented environmental sustainability determine the export performance? A study of leather products manufacturing SMEs in India syed Khusro chishty and sonia sayari Department of Business administration, College of administrative and Financial sciences, saudi electronic university, Jeddah, saudi arabia ABSTRACT Market-oriented environmental sustainability (Mes), which is part of an organization’s orientation towards the export market and its impact on the export resources and competencies of firms was analyzed in this study. Further, this research also examines the influence of export resources and competencies on export strategy of marketing and export performance of organizations. to accomplish this objective, structural equation modeling (seM) was used. Data was gathered from 194 manufacturing export enterprises. the results indicate that Mes positively impacts resources and competencies connected to green export. Furthermore, only resources indirectly affect eco-friendly export marketing strategy through capabilities, but green export-related competencies directly affect it. the findings also demonstrate how an eco-friendly export marketing approach improves a company’s export success. By analyzing business orientation and its impact on eco-friendly export marketing strategy and export performance, this research contributes the field of sustainability and exporting. this study has significant managerial implications, it explicitly opens up significant decision-making channels for indian sMes engaged in exporting to various markets. First, it advises businesses that their acquisition of resources and eventual development of skills will be influenced by their orientation, i.e. preference for green values, norms, and behaviors. the study’s findings also demonstrate that businesses must put effort into developing capabilities rather than just investing in resources alone. 1. Introduction humans are constantly pursuing their individual and collective goals, paying less attention to how their actions and behaviors affect nature and their surroundings. Frequent climate change, global warming, acid rain, and biodiversity are just a few consequences of irresponsible human behaviors (Bager & lambin, 2020). eco-literate and eco-conscious organizations urge the business community to make efforts to mitigate such consequences. in response, eco-friendly behaviors emerge among people and businesses, and sustainability issues come to the forefront of all business activities (chiarvesio et al., 2015; leonidou etal., 2013b). Managers consider environmental factors while designing, developing, and manufacturing products (de guimarães et al., 2018; Katsikeas et al., 2016). the indian leather industry boasts its existence to 3000 Bc which started establishing its dominion as an organized industrial sector much before the commencement of indian independence struggle. central leather Research institute, chennai was the first significant development post indian independence for this sector. the national strategy of restricting the manufacturing of leather products exclusively for the small and medium scale enterprises distinguishes it from other industry sectors. Being a priority export © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group CONTACT syed Khusro Chishty [email protected]; [email protected] Department of Business administration, College of administrative and Financial sciences, saudi electronic university, Jeddah 23442, saudi arabia. institutional email of syed Khusro Chishty: [email protected]; institutional email of sonia sayari: s[email protected] https://doi.org/10.1080/23311975.2024.2363427 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY Received 30 november 2023 Revised 14 May 2024 accepted 27 May 2024 KEYWORDS green exporting; Mes; export marketing orientations; export marketing strategy; exporting processes; export performance SUBJECTS environmental economics; Business; Management and accounting; environmental Management; environment & Business; environment & economics REVIEWING EDITOR Rocio gallego-loasada, Rey Juan carlos University, spain 2 s. K. chishtY anD s. saYaRi sector, it has consistently been a foreign exchange earner for india, besides being an apex jobs creator ((Bechtsis et al., 2018). having almost 1/3rd of global cattle population (cow, buffalo, sheep, and goat) and being fifth largest global exporter of leather products, india fetched $4.87 billion from export market during 2021–2022 (Ozkan et al., 2022). the availability of advanced technology, trained as well as blue-collar workers, auxiliary industries, and evolving government regulations, raised and differential environmental compliance expectations in domestic and international markets, and government promotional efforts have created a bundle of opportunities as well as accompanying challenges (Kumar & Joji, 2023). For instance, this industry is still a labor-intensive industry that helps the national economy in huge employment generation, which contributes to national prosperity. like many other industries and their products, the leather industry as well as its products produced using eco-friendly means also contribute to a favorable brand image in the market, which ultimately yields socioeconomic benefits in the long run (Karuppiah et al., 2020; Paul et al., 2023) thus, leather-manufacturing sMes are increasingly adopting green practices (Dwivedi et al., 2019; Kanagaraj etal., 2015). the idea is to ensure the eco-friendliness of all processes that add value to the finished product being delivered for consumption in the domestic and/or international market and resumption for recovery and proper disposal. exporting firms, particularly small and medium enterprises (sMes) dealing with leather products, find it more challenging to address environmental concerns and implement green marketing plans (garg, 2015). the acquisition, movement, and processing including tanning, storage, and usage bring sorts of pollutants to the environment; air, water, and soil pollution are the key. even if these practices offer a competitive edge, a method to stand out from the competition, and a way to control costs, their worldwide application increases in complexity for various reasons (Fakheri et al., 2022). leather quality or price sensitivity of masses, size and design specifications, distribution channel preferences, mode of payments, and terms of sales, such as warranty, returns, and refund, are just a few to mention. an extensive review of the extant literature reveals that most research on green business strategy focuses on large companies in the domestic context, ignoring the global scenario (hasan etal., 2019). in sMes and international contexts, specifically in export settings (for exceptions, see (leonidou et al., 2013b; leonidou etal., 2015), there is little research on the causes and outcomes of sustainable marketing strategies (Dwivedi et al., 2019; Karuppiah et al., 2020; Paul et al., 2023), particularly in the context of leather product manufacturing companies (garg, 2015). Researchers who have examined the individual dimensions of sustainability have focused more on the economic or social pillars of sustainability, exploring environmental dimensions insufficiently. however, sustainable environmental strategies and practices have proved to be sources of firms’ sustainable competitive advantage and export performance (crittenden et al., 2011; hult, 2011). the existing literature also indicates a gap in understanding the relationship between market-oriented environmental sustainability and export performance, particularly among small and medium enterprises (sMes) in the leather industry (Dwivedi et al., 2019; Karuppiah et al., 2020; Podsakoff et al., 2003). additionally, there is a dearth of research on how sMes implement sustainable marketing strategies and their impact on export performance (leonidou et al., 2015; 2017; Verhoef et al., 2003), especially in an international context. existing studies on green business strategies often focus on large companies, overlooking the specific challenges and opportunities faced by sMes (Bıçakcıoğlu, 2018; Bıçakcıoğlu et al., 2019; chen et al., 2023; Martín-tapia et al., 2010; Morgan et al., 2004; Quintás et al., 2018; santra et al., 2021; silva et al., 2023; Zamir & Mujahid, 2022). While prior research mentions the potential benefits of sustainable practices, it does not thoroughly examine how these practices translate to export performance for sMes in the leather product sector (Bıçakcıoğlu, 2018). the research proposes a novel approach by investigating the influence of market-oriented environmental sustainability (Mes) on the development of resources and capabilities for green exporting practices among sMes in the leather industry. it aims to explore how these green export capabilities affect the development and implementation of eco-friendly export marketing strategies by sMes. Focusing on sMes in the leather product industry, the research offers a specific and under-researched perspective on green marketing and export performance. Utilizing the Resource-Based View (RBV) framework, the research examines how sMes can develop green export-related resources and capabilities, providing valuable insights into how these businesses can establish a competitive edge in the global market. cOgent BUsiness & ManageMent 3 thus, based on the resource-based view (RBV) of firms (Kraaijenbrink et al., 2010), this study assumes that an organization’s orientation and resources are sources of sustainable competitive advantage. in fact, it is a pool of resources and capabilities that aids an organization in securing superior performance. as per RBV, organizations possessing the valuable, rare, inimitable, and non-substitutable resource-capability mix may exploit it to gain competitive edge in distinctive aspects (newbert, 2008) Of late, scholars and researchers have used ‘organization’ instead of ‘non-substitutability’. By ‘organization,’ they mean how the firm organizes itself to exploit its valuable, rare, and inimitable resource-capabilities mix. the RBV seeks to explore how various resources relate to each other and how they may be combined to gain and maintain a sustainable competitive advantage (Barney, 2001). the resources required to attain a sustainable competitive advantage depend on how well a firm is positioned in relation to the environment and society. specifically, this study examines how Mes has impacted exporting firms’ green export-related resources and capabilities. Furthermore, it investigates whether these resources and competencies affect eco-friendly export-marketing strategies and firms’ export performance. the remainder of this paper is organized as follows. the first section briefly introduces the main research idea, followed by the background of the research, concept and hypothesis development, materials and methods, and empirical findings in the subsequent sections. the final section presents the study’s contributions, implications, and limitations. 2. Literature review and hypotheses development 2.1. RBV theory RBV emphasizes the firm’s internal resources and capabilities as the foundation for achieving a sustainable competitive advantage (Barney, 1991). this aligns well with research on export performance, where specific resources and capabilities are crucial for success in international markets (Morgan et al., 2004). RBV highlights the importance of resources that are valuable, rare, inimitable, and non-substitutable (VRin) for creating a competitive advantage (Barney, 1991). this perspective is relevant when examining green marketing strategies as effective strategies can be a source of VRin resources, leading to improved export performance (Verhoef et al., 2003). RBV suggests that firms develop specific capabilities to utilize their resources effectively [Barney, 1991]. in the context of green marketing, these capabilities could involve expertise in eco-design, sustainable supply chain management, or green communication strategies. these capabilities can then be leveraged to implement effective green marketing strategies, potentially leading to superior export performance (Morgan et al., 2004). Building on the VRin concept, RBV suggests that firms with resources that are valuable, rare, inimitable, and non-substitutable can achieve a sustainable competitive advantage (Barney, 1991). effective green marketing strategies, if they meet the VRin criteria, can be a source of competitive advantage, leading to improved export performance metrics like increased market share or profitability (Morgan et al., 2004). the theory also examines how this tactic affects exports, as shown in Figure 1. 2.2. Market oriented environmental sustainability (MES) in the context of exporting firms, their environmental orientation becomes more vital as it drives exporting resources, competencies, export marketing strategies, and export performance of organizations (Barney, 1991; Bıçakcıoğlu et al., 2019; crittenden et al., 2011). according to (crittenden et al., 2011), the definition of market-oriented environmental sustainability (Mes) orientation is similar to “the organizational philosophy and culture that supports common values, norms, and behaviors that support environmental activities." (hult, 2011) extended this definition of market orientation by considering a firm’s potential to strategically align its interests with those of various stakeholders to gain a distinct and competitive market position. although the extant literature emphasizes the relevance of Mes, very few studies have probed its impact on green business strategies and export performance (Bıçakcıoğlu et al., 2019). although sustainability is generally regarded as a vital aspect of business organizations, it is categorically more important for organizations working across the globe with limited resources (chiarvesio etal., 2015). 4 s. K. chishtY anD s. saYaRi 2.3. Eco friendly export resources and capabilities (ERR and ERC) eco-friendly export resources support green export marketing strategies (li etal., 2017). still, in order to fully reap the benefits of resources—more especially, material, monetary, and experiential resources—in export strategy and green practises, they have to be used to build capacity (Barney, 2001). according to the RBV school of thinking, having appropriate resources may be a necessary but inadequate need for value delivery. the company’s resources, how it uses them, and the capabilities it develops all have an impact on its strategy (leonidou et al., 2013a). capabilities and skills are thought to become crucial for businesses operating in global marketplaces (hult, 2011). Just as having the right resources is important, having the right competencies also helps organisations implement their marketing strategies (leiblein & Reuer, 2004; leonidou et al., 2011). 2.4. Eco-friendly export marketing strategies (EMS) according to (Morgan etal., 2004), green marketing includes a company’s activities that advertise, package, and retrieve products with consideration for the environment. the term "green marketing" has many connotations, and terms like "environmental marketing," "ecological marketing," and "sustainable marketing" are used interchangeably for green marketing [31, 25, 03]. according to these definitions, "green marketing" refers to all marketing activities with special consideration of environmental consciousness to generate revenue and produce results. in this sense, implementing a green marketing strategy requires modifying the marketing mix elements, such as product, price, place, and promotion (leonidou et al., 2015). green marketing mix components can improve performance (li et al., 2017). examples of green product strategies include making judgments about products and focusing on efforts to minimize waste and pollution (leonidou et al., 2013b). companies may use environmentally convenient product and distribution methods, which have been shown to have a favorable impact on market and product performance (Katsikeas et al., 2016). Businesses need specialized resources and competencies to achieve a lasting competitive advantage and design and implement solid marketing strategies (Dangelico & Vocalelli, 2017; hart, 1995). Knowledge of population and environmental issues, biodiversity loss, and climate change causes exporting organizations to focus on sustainability issues in export marketing (Fraj et al., 2011). the frequent exposure of exporting enterprises to environmental issues leads to eco-consciousness (li et al., 2017). consumers’ growing environmental concerns further provoke firms’ eco-consciousness to develop and embrace eco-friendly export marketing techniques to attain their export market objectives (galeazzo & Figure 1. Conceptual framework. cOgent BUsiness & ManageMent 5 Klassen, 2015; li et al., 2017). discovered that businesses operating abroad typically perform better when using a sustainable approach to marketing tactics. this improved performance may be attributed to the increased profitability achieved via cost reduction and improved market performance (hart, 1995), improved socio-ecological standing [03,25], or the creation of competitive advantage (leonidou et al., 2015). Furthermore, according to (chan, 2010), sustainability concerns and actions of exporting firms are influenced by a variety of external factors, including macro-environmental factors such as regulations, technology, cultural/social norms, the economy, and micro-environmental factors (leonidou et al., 2015). adopting green marketing tactics may influence all enterprises and exporting businesses operate in a more complicated environment. exporting businesses face difficulty in implementing sustainable strategies and breaking into international markets because of the differences in the external environments of the home and host countries (taherdangkoo et al., 2017). 2.5. Firm export performance (EFP) although there is no commonly accepted definition of export performance, this notion has been examined extensively (hultman et al., 2009). this is also known as the outcome of an organization’s export activities (aaby & slater, 1989). the performance of export firms can be measured comprehensively in terms of products offered, market entry, customer satisfaction, or gross economic gains and is typically studied as effectiveness, efficiency, or adaptability (Diamantopoulos & Kakkos, 2007; Katsikeas etal., 2000). Research indicates that several variables affect export success, including management traits, organizational variables, environmental influences, and export marketing strategies (Diamantopoulos & Kakkos, 2007). in particular, some marketing strategies appear to play a crucial role in achieving outstanding performance in international markets (Morgan etal., 2004). additionally, export businesses have a good relationship with sustainability-related challenges such as eco-innovation (leonidou et al., 2002). it is being observed that companies adhere to sustainable concerns typically do better in the export market [03, 25]. however, recent research (leonidou et al., 2002) highlights the importance of sharing environmental knowledge. 2.6. Hypothesis development a company’s business orientation reflects its business philosophy and relationship with the environment and stakeholders (galbreath et al., 2021) and it serves as a point of difference (leonidou et al., 2002). this represents the methodologies, preferred practices, and decision-making processes that guide a firm’s operations. according to (hult, 2011), the Mes is a market orientation that captures businesses’ preferences for sustainable market green practices. Market-focused sustainability may influence an organization’s strategy. according to (Murray et al., 2011), a robust Mes may promote learning and the creation of novel and sustainable practices. consumers have grown increasingly aware of and interested in environmental goods and services as green consciousness and sustainability challenges have grown over time [03,25]. Market-oriented businesses create value by knowing their customers’ present and latent demands (galbreath et al., 2021; Menguc et al., 2010). these businesses are aligned with market needs. likewise, exporting firms adopt green export marketing practices and create eco-friendly products and services that customers would appreciate (Dibrell et al., 2011; galeazzo & Klassen, 2015). Firms may support environmental causes by using eco-friendly resources and showing their commitment towards the sustainable usage of these resources (crittenden etal., 2011). as a result, businesses prioritize resources and competencies that are environmentally sustainable (Dangelico & Vocalelli, 2017; leonidou et al., 2015). thus, we postulate the following hypothesis: h1. Mes has a favorable relationship with resources for green exports (eRR). h2. Mes has a favorable relationship with export-related green capabilities (eRc). identification of the skills and resources that influence a firm’s capacity to pursue success concurrently in the business and environmental spheres has advanced noticeably (chan et al., 2012). green export 6 s. K. chishtY anD s. saYaRi marketing practices are aided by eco-friendly export resources (li et al., 2017). however, to fully realize the value of resources—specifically, physical, financial, and experience resources—in green practices and export strategy, they must be used in the creation of capacities (Barney, 2001). according to the RBV school of thought, having the requisite resources may be necessary but insufficient for value delivery. the firm’s strategy is influenced not only by its resources but also by how it uses them and the competencies it develops (leonidou et al., 2013a). capabilities and competencies are believed to be essential for firms in international markets (Ray et al., 2004). similar to having the necessary resources, having the appropriate capabilities aids businesses in implementing their marketing plans (leiblein & Reuer, 2004; leonidou et al., 2011). For example, market responsiveness was found to be crucial for enhancing the performance of exports in enterprises serving emerging international markets (Berchicci & King, 2007). the orientation of the market and how quickly the firm responds to changing conditions are among the qualities that have been shown to be helpful in implementing green export marketing strategies (li et al., 2017). Furthermore, environmental knowledge and learning obtained from global marketplaces may aid export firms in creating export marketing strategies (Khan & Khan, 2021). Based on the above literature, the following hypothesis is proposed: h3. green export-related resources (eRR) influence an eco-friendly export marketing strategy (eMs). h4. an eco-friendly export marketing strategy (eMs) is influenced by green export-related capabilities (eRc). 2.7. Environmentally sustainable export marketing strategy and export performance Previous studies (aguilera-caracuel et al., 2012; Boone & Kurtz, 2001) suggest that environmental sustainability problems may be incorporated into firms’ marketing strategies. companies may alter current goods and manufacturing systems to address the environmental concerns of various stakeholders, thus minimizing ecological effects and enhancing environmentally oriented performance (chabowski et al., 2011). Promoting innovation, creating possibilities, and competitive advantages define significant aspects of a strategy (cronin et al., 2011). Owing to better resource management, decreased waste, and enhanced efficiency, eco-friendly decisions and practices may result in cheaper costs and higher profits or market share via sustainable positioning (Varadarajan, 2014). as a result, incorporating environmental concerns into the strategic forefront helps enterprises perform well and gain a competitive advantage (hart, 1995; leonidou et al., 2017). Previous research (cronin et al., 2011) has demonstrated that implementing sustainability practices results in higher performance. according to (li et al., 2017), an eco-friendly marketing strategy influences export performance. as a result, the following assertion was made: h5. a company’s eco-friendly export marketing strategy (eMs) directly impacts export performance (eFP). 3. Research methodology the Resource-Based View (RBV) is a theoretical framework that proposes a firm’s competitive advantage stems from its unique bundle of resources and capabilities. in the context of green leather exports from indian sMes, RBV offers a valuable lens to examine how these firms can achieve success. 3.1. Market-oriented environmental sustainability (MES) Mes reflects a firm’s strategic use of resources to integrate environmental considerations throughout its market-facing activities. this aligns with RBV’s emphasis on resource deployment for competitive advantage. 3.2. Export-related resources (ERR) eRR represent the tangible and intangible assets a firm possesses for export activities. these resources are essential for firms to implement Mes strategies, such as eco-friendly materials for sustainable leather production or financial resources for marketing green products in international markets. cOgent BUsiness & ManageMent 7 3.3. Export-related capabilities (ERC) eRc represent the skills and processes a firm develop to utilize its export-related resources effectively. Developing these capabilities allows firms to leverage their eRR for successful green exports. examples include marketing capabilities for crafting compelling green marketing messages or operational capabilities for efficient export logistics with minimal environmental impact. 3.4. EMS the Resource-Based View (RBV) and export marketing strategy are fundamentally intertwined for firms aiming to achieve a competitive advantage in international markets. RBV proposes that a firm’s unique bundle of resources and capabilities is the key to sustainable competitive advantage. these resources can be tangible (machinery, technology) or intangible (knowledge, skills), and capabilities represent the "know-how" to leverage these resources effectively. an effective export marketing strategy builds upon the foundation of RBV by focusing on: analyzing the firm’s resources and capabilities to identify those that are Valuable (contribute to competitive advantage), Rare (not easily replicated by competitors), inimitable (difficult for competitors to imitate), and non-substitutable (no readily available substitutes). 3.5. Export performance (EFP) RBV emphasizes that a firm’s unique bundle of resources and capabilities is the key to achieving sustainable competitive advantage. these resources can be tangible (machinery, technology) or intangible (knowledge, skills), and capabilities represent the "know-how" to leverage these resources effectively. RBV suggests that firms with superior resources and capabilities can achieve better eFP by Utilizing valuable R&D capabilities and knowledge of international markets to create products that meet the specific needs of foreign customers, leveraging relationship management capabilities to establish trust and collaboration with distributors, suppliers, and government agencies in export markets, and by utilizing marketing capabilities to create compelling messaging, target the right audience in international markets, and utilize appropriate marketing channels. this can increase brand awareness, attract new customers, and ultimately lead to higher export sales. 3.6. The marketing mix (4Ps) the four key elements a firm can adjust to influence customer decisions: Product: the good or service offered, including its features, benefits, and quality. in the context of green leather exports, this would encompass the sustainability attributes of the leather products. Price: the monetary value assigned to the product. green marketing strategies may allow sMes to command premium prices for eco-friendly leather goods. Place: the channels through which the product reaches the customer. this could involve online marketplaces, international trade shows, or partnerships with distributors in target markets. Promotion: the communication activities used to inform and persuade potential customers. green marketing strategies would focus on highlighting the environmental benefits of the leather products. By effectively utilizing the marketing mix (4Ps) alongside a strong foundation in RBV principles (Mes, eRR, eRc), indian leather sMes can achieve a competitive advantage in green leather exports. 3.7. Procurement of data and management this study concentrates on small- and medium-sized indian enterprises (sMes) that export manufactured goods. sMes actively attempt to establish strategies that integrate the global environment in earlier growth phases (Dibrell etal., 2011). additionally, sMes expand abroad more quickly than their domestic rivals (McDougall & Oviatt, 2000). the Business standard1 (2023) provides the sampling frame, chosen for 14 s. K. chishtY anD s. saYaRi ORCID syed Khusro chishty http://orcid.org/0000-0002-2541-933X Data availability statement Data is available on request by author syed Khusro chishty. References aaby, n. e., & slater, s. F. (1989). Management influences on export performance: a review of the empirical literature 1978-88. 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