Law IJEM

This research investigates the relationship between proactive environmental management and financial performance from strategic management aspect. Despite popularity of the business case for environmental sustainability (BCES) among business leaders and scholars, however, the role of strategic initiatives in enabling a BCES remains unclear. Underpinned by dynamic capabilities theories, core strategic outcomes in terms of environmental strategic focus and environmental shared vision were postulated as sources of firms’ dynamic capabilities. These environmental capabilities enable firms to effectively exploit their environmental resources for building environmental performance which eventually contribute to their financial performance. The research model was validated via survey data collected in year 2017 from 124 Malaysian manufacturers certified with ISO 14001. Findings from data analysis via SEM-PLS structural model analysis indicated environmental strategic focus has a significant effect on environmental performance. Likewise, environmental performance illustrated a significant positive effect on financial performance. However, contrary to prediction, environmental shared vision has no effect on environmental performance. This study recognises some limitations and suggested directions for future research.