Is Strategic Proactivity a Driver of an Environmental Strategy? Effects of Innovation and Internationalization Leadership

This study analyses strategic proactivity as a driving factor in the implementation of an advanced environmental strategy in a firm. Strategic proactivity is defined as a firm’s tendency to initiate voluntary changes instead of reacting to events in the environment and according to previous literature, can be interpreted as a combination of internal factors that characterise a firm’s business strategy as that of a prospector firm. In this study, we measured this through innovation, with two variables related to the firm’s entire production cycle: R&D expenditure and patents. However, we also considered two more strategic proactivity indicators: innovation proactivity and internationalisation proactivity. These two proactivity variables take into account the innovative and international actions of the firms, going beyond the actions usually taken by firms in the same sector. Using panel data methodology, we obtained results that show that firms who invest in R&D and patent their innovations achieve more advanced positions in their environmental strategies. Empirical evidence also shows that firms with a greater innovation effort throughout the production cycle (product, process, organisation and marketing) than their competitors also attain more advanced positions (proactivity) in environmental matters. In other words, innovation proactivity is a driver of environmental strategy. In relation to internationalization, the results also showed that firms that operate in a larger geographical area than their competitors adapt to the most demanding environmental legislation, placing them in a position of environmental leadership in their respective sectors. The inclusion of internationalization as an indicator of strategic proactivity, the measurement of proactivity variables and the correction of firms’ specific unobserved aspects are some of this paper’s contributions.