Effects of environmental orientation, green marketing mix and social capital on the competitive advantage of real estate developers in Bali

I Gusti Ayu Ketut Giantari (Department of Management, University of Udayana, Denpasar, Indonesia)
I Putu Gede Sukaatmadja (Department of Management, University of Udayana, Denpasar, Indonesia)

Property Management

ISSN: 0263-7472

Article publication date: 19 January 2021

Issue publication date: 24 March 2021

1964

Abstract

Purpose

To test and explain about the implementation of the green marketing mix strategy, based on an environmental orientation and social capital in increasing the competitive advantage of the real estate developer or company in Bali.

Design/methodology/approach

Data collected in this study are primary data. Primary data collection is done by survey method using a research instrument in the form of a questionnaire. This research was conducted at real estate development companies in several cities in Bali. The sample unit is a real estate developer in Bali whose scope of operation project is at least 20 hectares, which means the scale of the property business is a middle-class and upper-class company. The unit of analysis is the company developer in Bali, while the respondent is General Manager, CEO or company owner. Data analysis employs inferential statistics of partial least square (PLS).

Findings

The findings in this study indicate that environmental orientation and competitive advantage do not have a significant direct relationship. However, it has an indirect effect through the adoption of a green marketing mix strategy. Thus, the application of the green marketing mix strategy has a positive and significant impact on increasing competitive advantage. Then, environmental orientation has a direct and significant influence on the application of the green marketing mix. Social capital has a positive and significant influence on competitive advantage.

Originality/value

The originality of this study is evident from the effort to deepen the analysis about the Competitive Advantage uses a green marketing mix strategy for real estate developers as a service company. Although there are many studies on EO, the results are still varied so that this becomes something interesting. Thus, in this study the concept of the effect of EO influence was developed on the implementation of the green marketing mix strategy by green property developers.

Keywords

Citation

Giantari, I.G.A.K. and Sukaatmadja, I.P.G. (2021), "Effects of environmental orientation, green marketing mix and social capital on the competitive advantage of real estate developers in Bali", Property Management, Vol. 39 No. 2, pp. 193-209. https://doi.org/10.1108/PM-01-2020-0005

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited


1. Introduction

Activities related to industries and transportation since the Industrial Revolution has resulted in emissions accumulated in the air over the years. The accumulation of pollutants in the atmosphere in the form of gases causing the 4P greenhouse gas (GHG) then leads to the global warming and extreme climate change. Industrial activities since the last half century have created serious ecological problems; environmental issues that arise include global warming, ozone depletion, loss of biodiversity, and scarcity of natural resources, air pollution, acid rain, toxic waste and industrial accidents.

The problem is expected to worsen over the next 50 years, as the world’s population will double to about 11 billion people. To provide facilities for that large population using current technology, the world's economic production needs to be increased by more than five times compared to today; it will only further worsen our environmental problems (Commoner, 1990; Shrivastava, 1995). Ecosystem damage is closely related to waste pollution, offshore oil pollution, nuclear radiation contamination and regional development activities (settlement development); all occur because of corporate greed for personal gain, causing environmental damage leading to a catastrophe for most ecosystems including human life by the emergence of natural disasters.

Large environmental challenges (such as global warming, increased amounts of waste or reduced fresh air) have made political forces and experts as well as professionals to reflect and take action on the issues. Since the real estate industry is one of the major producers of greenhouse gas (GHG) and wastes (from development), the industry is directly affected by those things. Thus, real estate developers must continue to adapt and design residential buildings more efficiently to meet the goals and expectations of sustainable development.

Green activities in the industry (environmentally friendly industry) are important to be developed and maintained. The green industry can be achieved by: (1) recycling materials, (2) using environmentally friendly technology, (3) changing raw materials and (4) improving internal management efforts. The economic crisis in 2005–2008, which had an impact on the real estate industry, also has encouraged construction experts to seek differentiate from others with reference to environmental practices to remain competitive in the market. From these trends, the terms “green building”, “green renovation” and “green property” first appeared on the market.

The company's environmental orientation (EO) requires the evolution of traditional marketing concepts. Orientation to the environment is a new advancement for marketing orientation because, in addition to considering customer satisfaction and achieving economic goals, a company must also take into account its social and environmental impact (Miles and Munilla, 1993).

Green marketing refers to strategies for lifting the value of products or services by using environmental claims about attributes or systems, company policies and their production or marketing processes. Companies can “green” themselves in three ways, i.e. the process of adding value (at the company level), the management systems (at the company level) and the production of environmentally friendly goods or services (at the product level) in order to reduce negative environmental and social impacts, which will also increase the availability of products or services not harmful to consumers.

Several other studies (Armstrong and Kotler, 2009; Esty and Winston, 2009; Johansson, 2009; Keegan and Green, 2008; Kotler and Keller, 2006; Ogunmokun et al., 2012) suggest that currently any business operates in a world sensitive to its environment, so businesses must formulate competitive environmental strategies in their marketing practices. Many companies respond to global challenges through the implementation of green marketing strategies—by developing products or services safer to the environment and easier to recycle, by having environmentally friendly packaging, by having better pollution control and by practicing more efficient business activities related to the use of energy in an effort to achieve sales and profit targets by focusing on the environment and social life (Ogunmokun et al., 2012).

Bradley (2007) was the first to incorporate the green marketing concept into the marketing mix element in 1989. Bradley first used the term green marketing mix (GMM) and developed several studies to measure how “green” a company is, as well as explaining some rules for putting the GMM into a marketing strategy.

Implementation of the green marketing strategy requires a fundamental and holistic approach to all aspects of marketing functionality, including the overall marketing mix, i.e. targeting, pricing, design, positioning and promotion. The GMM strategy includes: (1) development of environmentally friendly products, (2) green logistics, (3) green promotion, (4) green pricing and (5) green consumption (Polonsky and Rosenberger, 2001).

The government also promotes the “green” orientation in the real estate sector by issuing the Law Number 26 of 2007 on Green Open Space, which states that the minimum green open space of an area is 30% of the area built. Good green real estate implementation in residential projects does not merely represent green areas, but also consider waste and waste management systems, control systems and water management that allow rainwater to be absorbed into the soil so as not to cause stagnant water or floods; it also employs green infrastructure, such as the use of safe and environmentally friendly materials for facilities in residential areas other than core buildings (houses).

Previous studies on environmental marketing have been widely conducted and focused on manufacturing companies due to greater exposure to environmental issues from the process of providing raw materials to finished goods. Thus, further investigation is needed to extend the environmental issue to the service sector, where the service is often described as the “silence” environmental destructive sector in Leonidou et al. (2013), which makes hotel services as the research objects.

Several previous studies have explored EO and tested its influence on various variables, such as First and Khetriwal (2010) examining the effect of EO on brand value as independent variable). Menguc and Ozanne (2005) examined the effect of EO on employee performance and attitudes (as the dependent variables). The role of EO is as a moderating effect that influences environmentally friendly marketing strategies for the competitive advantage and firm performance (Fraj et al., 2011). Several other researchers developed the corporate environmentalism (EO and ES) strategy model for achieving the competitive advantage (Kanarattanavong and Ruenrom, 2011; Menguc and Ozanne, 2005; Fraj-Andrés et al., 2009; Baker and Sinkula, 2005).

In addition, social capital is also needed to increase competitive advantage. Because social capital can be a factor that drives business excellence.

The originality of this study is evident from the effort to deepen the analysis about the Competitive Advantage uses a GMM strategy for real estate developers as a service company. Mapping of the previous research is done using variables related to current research. This study seeks to develop a model from some previous studies aimed at enriching the results of research for further development. EO, with indicators referring to internal and external dimensions using different measurements, is used to see the impact on the GMM strategy and increased the competitive advantage. To date, there has been no empirical study in Indonesia that assesses the implementation of the GMM strategy and increased the competitive advantage influenced by EO of the company. Thus, there is a gap to be filled by researchers by basing on the merging in accordance with the expectation of researchers to include all models. This study examines the implementation of the GMM strategy influenced by EO in increasing the competitive advantage in the real estate developers in Bali. This study aims to test and explains about the implementation of the GMM strategy, based on an EO in increasing the competitive advantage of the real estate developer or company in Indonesia.

2. Conceptual framework and hypothesis testing

The relationship between the variables based on theoretical studies and empirical studies is described as follows. First, it deals with the influence of EO on increasing the competitive advantage. Developers with central corporate values, integrated understanding, environmental conservation policies, environmental stewardship responsibilities, building an image as a developer having environmental concerns and stakeholder expectations as a good EO element will be able to improve their the competitive advantage in the present and future.

Second, EO has an effect on the implementation of the GMM strategy. Good EO from real estate developers is in the form of environmental conservation values that match the expectations of all parties. EO supported by good information and knowledge about the environment can facilitate the process of channeling these EOs into an eco-friendly marketing mix strategy implemented by the real estate developer.

Third, the GMM strategy has an effect on increasing the competitive advantage. An eco-friendly marketing strategy that is properly implemented can enhance a company's competitive advantage. With an overall eco-friendly marketing mix strategy, the company plays an important role through pollution prevention and product oversight while innovating with clean technology, and further creating opportunities for sustainable the competitive advantage.

Fourth, social capital has an impact on increasing competitive advantage. In increasing competitive advantage social capital is also needed. Because social capital can be a factor that drives business excellence (see Figure 1).

  1. Competitive advantage and EO have positive and significant relationships.

“Knowledge is the fundamental source of the competitive advantage” (Vargo and Lusch, 2004). A competitive advantage of the company is based on the internal and external environment of the company, i.e. the relationship within the organization and with its environment (Saloner et al., 2001). A competitive advantage based on values is characterized by a profit or quality that increases the interest of the targeted customers.

Several studies have identified a positive relationship between environmental concerns and economic performance (Aragon-Correa and Rubio-López, 2007) because environmental efforts or concerns, mainly due to strict regulation, enable companies to gain the competitive advantage (Porter and Van der Linde, 1995). Hart (1995) states environmental resources have a central role for the successful development of environmental strategies.

One of the resources that contribute to creating superior business performance is EO (Banerjee, 2002). Today, companies need to consider the environment as a potential source of the competitive advantage, which can provide a win–win situation for the people, the business world and the ecosystem (Porter, 1991).

However, it is still important to provide other empirical evidence through different industries to consider these assumptions. From these considerations, the following hypothesis is proposed:

H1.

Competitive advantage and EO have positive and significant relationships.

  1. GMM strategy and EO have a positive and significant relationship

Companies are beginning to change their attitude toward the environment. The change earns the expected results because the company carries out business in accordance with environmental principles. It is important to adapt the business strategy with environmentally responsible behavior to increase consumer demand and create value for customers. Green marketing contains several important things, namely the organization or company through its marketing activities trying to satisfy the needs and desires of consumers, this marketing activity is carried out in a more efficient and effective way compared to competitors and this activity has a minimal impact on the destruction of the natural environment so as to improve welfare consumers and society (Setianingsih and Septi, 2019).

The existing environmental constraints force companies to build new and different (environmentally oriented) resources and abilities to respond to these environmental challenges into the realization of the environmental marketing strategy (Karagozoglu, 2001; Baker and Sinkula, 2005; Porter and Van der Linde, 1995; Fraj et al., 2011; Menon and Menon, 1997). The organization's success in green marketing lies in reorganization, restructuring and redesigning processes and systems within the organization.

Like total quality management, the success of green marketing requires employee involvement from all functional areas, including marketing, production, procurement, accounting and information systems (Polonsky and Mintu, 1997). Leaders of an organization are believed to play an important role in shaping the organization's values and orientation (Menon et al., 1999).

The strategic nature of environmentally based marketing programs (EBMPs) is that environmental concerns and responsibilities are embedded within the corporate culture and will be championed from the top to the bottom. Coddington (1993) argues that the corporate mindset is an important determinant of strategies related to the environment, company policies and practices.

At the tactical level, EBMPs are lined up from the introduction of environmentally friendly products or services that require little change in the operations and corporate management philosophy, leading to changes in packaging and labeling of those products or services reflecting higher environmental friendliness. Companies that adopt EBMPs have environmentally responsible product or service policies (Menon et al., 1999).

Conversely, companies that decide to use proactive strategies into practice without previously adopting a strong environmental culture (EO) environment do not get enough expertise to implement the strategy successfully (Christmann, 2000). Specifically, researchers expect that EO can act as an intangible asset that can affect the implementation of the GMM. From the explanation, the following hypothesis is proposed:

H2.

GMM strategy and EO have a positive and significant relationship.

  1. Competitive advantage and GMM have a positive and significant relationship

“Competition is at the core of the success or failure of firms” (Porter, 1985). This means that uncompetitive businesses will not survive or are unable to work properly. The competitive advantages emerging from action-oriented environments have been the subject of widespread discussion in academic literature (Hart, 1995; Porter and Van der Linde, 1995; Shrivastava, 1995; Russo and Fouts, 1997), who generally argue that environmental management by firms has positive implications for the competitive advantage. As a result, certain concepts such as eco-advantages (Esty and Winston, 2009) and environmental competitiveness (Wagner and Schaltegger, 2004) have emerged to refer to a new type of the competitive advantage, i.e. “the opportunity to cut costs, reduce risk, income, and increased intangible value [and] build deeper relationships with customers, employees, and other stakeholders in which managers have recognized it” (Esty and Winston, 2006).

The GMM strategy includes developing green-based products, green logistic, green promotion, green pricing and green consumption. The strategy includes adopting eco-marketing orientations as a business philosophy, government interventions, life cycle analyses and working together to gain business success (Polonsky and Mintu, 1997). The ability to target customers wanting green products can also increase the competitive advantage (Banerjee et al., 2003; Leonidou et al., 2013).

Other studies (Laroche et al., 2001; Royne et al., 2011 in Leonidou et al., 2013) have reported the willingness of consumers to pay higher prices for eco-friendly products or services. In addition, companies can improve the process and quality of their products or services today by making them more “green” (environmentally friendly). All these advantages offer more attractive, pleasing, rewarding and acceptable for customers than other competitors (Leonidou et al., 2013; Menon and Menon, 1997; Porter and Van der Linde, 1995).

To achieve the competitive advantage, the company must continue to look for opportunities to create the best value compared to competitors. A company's marketing strategy can be defined as the use of marketing mix or 4P (Product, Price, Place and Promotion) within a particular market to create value and the competitive advantage. In property service companies, the implementation of the green marketing strategy in all sectors of real estate development (green property) refers to the application of GMM (7Ps).

By applying the practices, strategies and marketing tactics that are green, the company can achieve its main goal to gain the competitive advantage in the form of differentiation compared to competitors, while also be able to instill a sense of environmental or social responsibility on all internal staff (people) of the company (Hart, 1995; Shrivastava, 1995). From the explanation, the following hypothesis is proposed:

H3.

The GMM has a positive effect on increasing the competitive advantage of a company.

  1. Competitive advantage and social capital have a positive and significant relationship.

Social capital is closely related to the relationship between individuals, norms and beliefs which facilitates mutual coordination and cooperation. The problem faced by entrepreneurs is that most of the entrepreneurial performance is not progressing. Factors that influence the lack of progress in entrepreneurial performance are lack of education and training, do not want to take risks, both in terms of making new products or expanding markets. Then, it can be said that social capital plays an important role in meeting organizational needs and contributing to the survival of the organization in the current era of global competition. This is a management tool in achieving organizational goals more effectively and at a low cost.

In increasing competitive advantage social capital is also needed. Because social capital can be a factor that drives business excellence.

H4.

The Social Capital has a positive effect on increasing the competitive advantage of a company.

3. Research method

This study was conducted at real estate developer companies in several cities in Bali, i.e. Denpasar, Gianyar, Buleleng, Singaraja, Tabanan of Bali Province, Indonesia, registered as a member of Real Estate Indonesia (REI). Bali was chosen, as it is a province with a very rapid growth of the property sector than other provinces in Indonesia.

The population is all property developer companies in Bali, which are officially registered in Bali REI. From Bali REI, we obtained data of all companies or real estate developers in Bali in 2015 as many as 396 developers. This study is census research. The sample unit is a real estate developer in Bali whose scope of operation project at least 20 hectares, which mean the scale of the property business is middle-class and upper-class companies. The unit of analysis was developer companies in Bali, while the respondents were the General Manager, CEO or owners of the company. The respondents were chosen so each question in the questionnaire could be filled correctly and accurately. The owner, CEO or General Manager (decision maker) is the key that understands the planning, the enforceable policy or any implementation strategies within the company.

Data collected in this study are primary data. Primary data collection is done by survey method using research instruments. The main instrument used in this study is a questionnaire which is a list of structured questions that are used to measure respondents' judgments about the variables studied and the facts relating to respondents. Questions are presented in a list of questions and scales to express response. To measure the respondents' rating, the Likert scale is used with the interval of assessment starting from number 1 (Very Bad/Very Inappropriate/Very Low), 2 (Bad/Inappropriate/Low), 3 (Neutral), 4 (Good/Appropriate/High) and 5 (Very Good/Very Suitable/Very High). The questionnaire as a data collection instrument, before it is used to collect field data, must first be tested for its validity and reliability.

At the stage of data analysis, measurements were made on each research variable in accordance with the operational variables. The variables used in this study are as follows. The first variable is (1) EO, with six indicators, i.e. central corporate value, integrated understanding effort, environmental awareness policy, environmental maintenance responsibility, image building, expectations of stakeholders adopted from Menon et al. (1999) and Banerjee (1999). Respondents were asked to respond to questions on environmental-related actions and behavior of the real estate developer to see the impact on improving the implementation capabilities of the GMM strategy. The second variable is (2) the GMM (GMM), measured using nine indicators, i.e. environmentally friendly materials, environmental considerations in pricing, efforts to communicate environmental care activities, eco-labeling in promotional activities, environment, environmentally friendly facilities, correct information on eco-friendly lifestyles, waste recycling facilities and eco-friendly cultural values adopted by staff and management. The third is (3) The competitive advantage (CA), measured using four indicators, i.e. minimizing operational costs, creation of uniqueness, competitive as a company with environmental insight and improvement of corporate green image. The fourth is (4) Social Capital (SC), measured using four indicators, i.e. friendship, formal learning, an explanation of formal education, suitable behavior in the process of trying to experience.

The data analysis employs inferential statistic of partial least square (PLS). PLS becomes a powerful method of a larger analysis on the measurement scale (e.g. measurements that require interval or ratio scale), sample size and distribution of residuals (Wold, 2013). Structural models describe the relationships between variables latent independent (exogenous) with latent dependent variables (endogenous). PLS has a weight relation that is the weight connecting the inner model and the outer model for forming estimates of exogenous latent variables and endogenous. PLS aims at predictive orientation; the strength of the analysis is based on the portion of the model having the greatest number of predictors; minimum recommended range is from 30 to 100 cases (Solimun, 2017). The reasons for using PLS are based on the following considerations: (1) the limited number of samples, only 72 developers, (2) the formative and reflective measurement of variables and (3) the recursive model analysis.

4. Results and discussion

The hypothesis proposed in this study is then tested based on the t-statistic test. It appears in Table 1 that the (2), (3) and (4) values are significant, whereas the (1) value is not significant. The result of inner model estimation for direct influence of EO toward the competitive advantage shows a t-statistic value of 0.536 and a p-value of 0.594 with error rate α of 5%. This shows that the direct effect of EO on the competitive advantage is insignificant.

The resulting effect is positive, which means the higher EO, the higher the competitive advantage will be, and the vice versa. EO does not directly affect the competitive advantage. Nevertheless, there is an indirect effect of EO on the competitive advantage through the implementation of the GMM strategy.

4.1 Competitive advantage and environmental orientation have positive and significant relationships

The competitive challenge in the property industry today is to outperform competitors internally and externally and to always meet the evolving wants and needs of consumers. In line with today's environmental changes, where any type of business is required to become more environmentally conscious, an EO becomes a necessary construct (Miles and Munilla, 1993). As Saloner et al. (2001) underline the competitive advantage is based on the internal and external environment of the organization, both on the organization and on the organization's relationship to its environment.

The EO has the same basic outlook as the market orientation (Stone et al., 2004), both of which depend heavily on internal and external factors of the organization that may affect its implementation. However, while market orientation focuses on key stakeholders such as customers and competitors, EO gives equal attention to all stakeholders both primary and secondary.

EO refers to managerial perceptions on the importance of environmental issues the company faces (Banerjee et al., 2003). The study of Banerjee (2002) further identifies two types of EO, internally and externally. Internal EO (IEO) refers to the company's internal values and ethical standards on the level of commitment to environmental protection. The External Environmental Orientation (EEO) refers to managers' perceptions on the need to respond to the environmental demands of stakeholders from external organizations.

The result of EO analysis toward the competitive advantage shows no significant effect. This means that the eco-friendly orientation in real estate developer companies in Bali, reflected on the basis of central corporate value, integrated understanding effort, environmental awareness policy, environmental conservation responsibility, image building and stakeholder expectation, has been proven to not able to increase the competitive advantage of these developers.

The insignificant influence can occur due to various factors, one of which is the internal factors of the organization. As previously mentioned, Banerjee (2002) mentions EO is about the manager's cognitive response. Top management is an important instrument in advocating pro-environment programs according to the expectations of stakeholders, in this regard including employees or staff of the company.

It seems that the insignificant result is also caused by the lack of widespread environmental proactive attitudes among employees and/or company staff. In the questionnaires in the form open-ended items, it turns out that most managers do not answers to the question, “How do the company try to provide an understanding on the importance of environmental protection in the daily life of employees?”

This shows that training about environmental conservation to the employees is limited to be implemented in daily work activities; this means that most employees practice environmentally friendly activities in accordance with existing policies within the organization, but they have not applied those in daily life outside of their work.

The results of this study broaden the results of studies conducted by Fraj-Andres et al. (2009) that there is no positive relationship between EO and company competitive advantage. This means that internal acceptance with a compromise attitude toward environmental protection for the purpose of achieving better competitive advantage (market performance) is still not enough: where it must be accompanied by effective and visible strategies at the communication and operational level. Likewise, Chang's (2011) research study was also expanded with the results of this study. Chang proves that EO does not have a positive direct effect on the increase in CA, but after being mediated by green innovation (both product innovation and process innovation) there is an indirect effect of EO on increasing CA in manufacturing companies in Taiwan.

Thus, the influence of EO on competitive advantage can be realized after the developer translates the EO into strategic environmental practices for real estate development or development. Or in other words, an EO does not have a real influence to be able to increase the competitive advantage of green property developers if the EO is not realized into a real environmental marketing strategy implementation.

4.2 Green marketing mix strategy and environmental orientation have a positive and significant relationship

EO reflects the company's mission to generate and disseminate ecological intelligence throughout the organization, resulting in acceptability and responsiveness through adaptation of internally developed programs that create and foster organizational and public perceptions of ecological concerns. The housing developers have an EO that shows significant influence on the implementation of the GMM strategy.

Resource-based view (RBV) asserts that each company has different returns because each has a heterogeneous resource over others as stated by Barney (1991). The rationale for RBV is that companies are essentially different because each company has a certain number of resources, both tangible and intangible, that are unique.

Similarly, Hart (1995) argues that the emerging environmental constraints forced the company to build new and more differentiated resources and capabilities. This capability allows real estate developers to respond more efficiently to existing environmental pressures through the design of new and flexible strategies for environmental goals, which can be the competitive advantage for the company.

Due to the abundance of resources that cannot be obtained instantaneously, the choice of corporate strategy is limited by the amount of resources available at the time and by the company's speed to acquire new resources. Differences in resources and capabilities are at the core of the strategy and are critical to the continuity of the competitive advantage.

In particular, the results of this study indicate that a strong environmental culture (EO) can help companies to implement more efficient environmental marketing strategies. The reason for this argument lies in better information gathering capabilities that environmentally oriented companies have good chances and can help themselves to identify opportunities beneficial from environmental pressures.

The results of answers to open questions from some housing developers show that the EO adopted by the developer is good. On the question of forms of activity or corporate responsibility toward the preservation of the environment, the majority of developers provide written and positive answers.

The realization of environmental sustainability responsibilities is also explained by developers, among others, that their companies are contributing to the preservation of flora and fauna currently classified as a rare species. Some animal plants and habitats are deliberately left to remain in a residential neighborhood, as the developers in Gianyar did. Birds and forests that have existed since before the housing area was built were deliberately not moved, thus making the atmosphere to the housing complex even more beautiful and natural.

Efforts to preserve the flora and fauna are also done by one of the developers in Denpasar. The company provides a 5-hectare urban forest that includes a recreational park and a 1-hectare green link surrounding the residential area. The green space will gradually be planted with 10,000 trees from 1,000 species of plants. Until now, according to the developer, there are 6,000 trees planted.

Stakeholders are important to the company. Developers need to maintain good relationships with stakeholders in the short and long term. The majority of developer companies in Bali have made efforts to preserve the environment according to the expectations of stakeholders. Some developers also provide added values for public facilities in their neighborhoods.

The added value, among others, is the provision of public facilities that cover almost 50% of the project area, providing natural reflexology in the park (using special stones or pebbles arranged in such a way that it serves as a foot massage). Trees and flowers in the park are given a notepad inscribing the Latin names, which aims for knowledge for all visitors. Developers specifically provide paths for bikers separated from the pedestrian area so that each party feels the comfort and security to enjoy the public facilities in the housing complex.

The developer company has strived to preserve the environment according to the expectations of the stakeholders. However, the effort certainly needs support from the residents and other stakeholders to act according to the environmentally friendly manner.

Eco-friendly culture is socialized from the homes of each resident to the housing environment through various programs and activities involving residents and the surrounding community. Common programs and activities undertaken by developers with resident residents include drawing or coloring contest or poster creation on environmental preservation, and environmental campaign activities by developers regularly for all residents and communities of all ages.

The developer's capabilities and resources (EO) can be said to be the core of an eco-friendly marketing mix strategy. The GMM strategy by housing developers is understood as a strategy that includes proactive actions against the environment aimed at responding to environmental problems occurring in general settlements, such as pollution, floods and landslides, energy wastage, the use of hazardous materials for occupants as well as for the environment, the waste accumulation and so forth.

The implementation of environmental values by developers reflected in integrated EO throughout the company's operational activities affects the implementation of the GMM strategy by real estate developers. Based on the observations, it appears that the developers are concerned with the implementation of the pricing policy strategy by considering the environmental aspects.

The interesting thing is that the provision of public facilities that are environmentally friendly should be the most important factor in the implementation of the GMM strategy. However, according to respondents' appraisal, the green pricing strategy for real estate they offer is the most important indicator in increasing the competitive advantage of developers in the real estate market.

Green products are generally presented to the market at a premium price in order to reflect the high cost of production as well as to profit from the strong green demand from the market. Green pricing strategies by the developers emphasize that the price of their company's property products is based on consumers' perceptions of the “added value” of the product than the cost of production or cost of sales.

The reality shows that real estate developers are well aware that pricing is the only element in the marketing mix as revenue for the company. Green developers will consider carefully about pricing policies by offering environmentally standardized real estate products as customers get smarter about choosing products that match their value.

EO by building the image as a “green” developer is also evident in the selection of appropriate or strategic housing locations and meets environmentally friendly elements. A “green” location is an easy to reach or close to activity centers, safe and flood-free due to proper processing and arrangement by the developer.

Artificial rivers or lakes are built for the purpose of collecting rainwater from environmental channels in the housing complex as well as collecting processed household wastewater. Spatial planning is also a consideration of the developers supported by residential facilities, education (schools, courses, training), offices, health (clinics and/or hospitals), places of worship (mosques, churches), sports (golf courses, pools, tennis courts and/or futsal fields), markets or shopping centers, green lines on roads, rivers, lakes, as well as parks or entertainment venues (family playgrounds).

Spatial arrangement in accordance with the law requires the proportion of green open space of at least 30% and the rest is built space, as with the spatial arrangement in the real estate area managed by the developer company. The level of biodiversity (flora and fauna), and various green space functions, both ecological, economic, aesthetic, educative, energy and evacuation functions are sufficient, but must be improved to give high values to green open space.

The result of analysis of EO variable shows a direct and significant influence on the implementation of GMM; this shows that real estate developers have a high enough (proactive) initiative in protecting and preserving the environment. The initiative is the EO embodied in the implementation of a green marketing strategy in each of the elements of a green housing.

Improving the quality of life of the community should be a reference and the main foundation in developing a housing complex. Development of real estate based on sustainable development will consider the ecological balance (open area and green open space, improved environmental quality), employment creation, community empowerment (improving the welfare of local people), law enforcement (according to spatial planning), ethics, justice and equality of rights, as well as the comfort of the community and the enhancement of the beauty of the area.

The green property aims to develop an environmentally friendly and fun residential area through good and sustainable business practices. Based on interviews with several developers and with the DPD REI as an organization that supervises the real estate developers, the concept of “green” and environmentally friendly housing complexes are increasingly prevalent, and have become a new trend of the century, and will lead to sustainable development.

Public awareness of environmental sustainability (green consumer awareness) has opened up insights on the importance of maintaining the environment and choosing an adaptive design to the environment and minimizing the impact of the pollutant. Green property developers also take part to contribute to the environment through the design of the area and the building. With the concept of environmentally friendly design and layout, then a building not only appears attractive but also able to adapt to the climate, and at the same time contribute to minimize the impact on the environment.

The results of this study broaden the results of the study of Petts et al. (1999) that to address environmental issues and behaviors that occur, it is necessary to support the majority of corporate commitments, starting with the existence of environmental commitments from top executives who have strong support for marketing strategies based on the environment (EO). The results of the study by Gupta and Aggarwal (2012) were also expanded by the results of this study that the responsibility for the environment and ecological orientation must be the basis for the overall business strategy of the company and implemented according to the company's main principles in overcoming environmental problems.

4.3 The green marketing mix has a positive effect on increasing the competitive advantage of a company

Competition is at the core of a success or failure of a business. The competitive advantage can be achieved because companies adopt activities that are responsive to their environment.

The results of data analyses indicate that the implementation of the GMM strategy has a positive and significant impact to increase the competitive advantage. That is, the implementation of the GMM in an integrated way directly affects the real increase in the competitive advantage of real estate developers.

Competitive-driven companies believe that their ecological responses can be a sustainable the competitive advantage, and thus increase their long-term profitability. The competitive advantage in this study is reflected through minimal operational costs, creation of uniqueness, competitive as an environmentally friendly company and improvement of corporate green image.

Environmental responsiveness will help build a company's reputation, excel in competition and create added value, which will ultimately set them apart among their competitors. Environmental responsiveness is realized with the implementation of an environmentally friendly marketing strategy, which is a driver of innovation, increasing market share, productivity and organizational profitability.

The results of this study extend the results of the study by Miles and Covin (2000) that an environmentally friendly marketing strategy significantly affects the reputation and performance of a company as a whole. In addition, this study also expands the findings of Ginsberg and Bloom (2004) that the marketing strategy by the residential housing developer has shown a positive impact on all aspects ranging from public relations, brand reputation and employee motivation to the attitudes and intentions of consumers to consume green product or services.

Based on the observations, it appears that developers are concerned with the competitive advantage that is competitive as a developer with environmental insight (green) and at the same time able to minimize operational cost. This means real estate developers believe that high awareness of environmental sustainability is the right advantage to compete in a construction or real estate business.

The majority of green real estate developers have high competitiveness compared to traditional-concept housing developers. The competitiveness of an environmentally friendly real estate developer can be achieved because environmentally oriented values have been applied from the beginning by “greening” the company employees (internal) and socializing them to the public in the form of eco-friendly property products.

Competitive developers with an insight into the environment can be interpreted as a developer who has a positive attitude to the environment and social life. Developers who adhere to environmental regulations can also be said to have competitiveness as an environmentally friendly company.

The competitive advantage as an environmentally friendly company is a dominating advantage as the majority of housing developers play an active role in environmental management, acting proactively in seeking pollution control to produce safe and eco-friendly real estate products. This environmentally friendly competitiveness greatly helps developers in expanding into a proven global marketplace with the start of expatriate customers who are occupants in some of the green real estate they manage.

The competitive advantage as an environmentally friendly developer is also reflected by the company's ability to meet the green consumers' demand for green products and infrastructure. More experienced real estate developers mention some of the benefits of green infrastructure or green building such as increasing property values, saving energy, reducing infrastructure costs, reducing flood mitigation costs, reducing water bills, as well as improving mental health and productivity of workers and house owners.

The results of this study show meaningful information to real estate green developers about the importance of implementing the GMM to enhance the company's competitive advantage. This is not surprising given that the respondents of this study are the strategic decision-makers in the company that is the owner and/or the General Manager of the company.

4.4 The social capital has a positive effect on increasing the competitive advantage of a company

Social capital is a matter related to one individual with another, norms and beliefs that facilitate mutual coordination and cooperation. This can be seen through the process of friendship with others, the process of formal learning such as education, seminars and suitable behavior in the process of trying to experience.

Based on the results, the analysis shows that social capital has a positive and significant effect on increasing competitive advantage. So, it can be said that an increase in social capital, will make competitive advantage increase as well. If social capital can increase it is expected to encourage business excellence. So, based on this it can be seen if social capital is very important for increasing competitive advantage.

5. Conclusion, research limitations and recommendations

  • Based on the explanation and results of the study, the following conclusions are given.

  • (1)The result of EO analysis toward the competitive advantage shows no significant effect. The insignificant influence can occur due to various factors, one of which is the internal factors of the organization. The insignificant result is also caused by the lack of widespread environmental proactive attitudes among employees and/or company staff.

  • (2)The result of analysis of EO variable shows a direct and significant influence on the implementation of GMM. Improving the quality of life of the community should be a reference and the main foundation in developing a housing complex.

  • (3)The results of data analyses indicate that the implementation of the GMM strategy has a positive and significant impact to increase the competitive advantage.

  • (4)The results of data analyses indicate that the social capital has a positive and significant impact to increase the competitive advantage.

This study cannot be separated from limitations that can open up opportunities for further research. The limitations of this research are as follows.

  1. Measurement of the EO variable, the GMM strategy and the competitive advantage in this study is based on subjective perception of the owners, GM and Operational Managers, and does not involve members of other organizations such as employees or field workers. Further studies are needed to find out whether it is better to use more than one type of respondent. Green property is intended for all elements of society, so consumers or customers should also be taken as a respondent. Further studies should also include additional objective measures such as social and environmental performance, which will reinforce subjective perceptions and add more validity to the findings.

  2. This study has not yet explored perceptions from the perspective of stakeholders such as consumers and the public about green products or green services, which is always identified with high prices. It is important for further research to try to use the perceptions of primary stakeholders such as shareholders or investors, employees, customers, suppliers and residents about the “expensive” perception of green property products or services.

Based on the explanation and results of the study, the following recommendations are given.

  1. The EO needs to be improved by the housing developers, since the implementation of the GMM strategy by the developers will be useless if not supported by the adoption of organizational values or culture that cares about the environment, or conscious attitude on the importance of environmental conservation that is integrated for all internal and external corporate policies. A strong environmental sustainability strategy should include a thorough understanding that the company can affect people and the planet on which it operates, and with a heightened awareness of implementing real environmental sustainability practices in every element of its business.

  2. Further studies are suggested to conduct empirical and theoretical studies related to EO as a valuable intangible asset owned by the company. Apart from EO internally and externally, further studies also need to incorporate elements of environmentally friendly technology and entrepreneurial base. The addition of research variables or indicators can also be enriched in terms of building materials and green work processes, green architecture, balanced land use and other related matters.

  3. The GMM strategy in this study uses elements of the service marketing mix (internal green 7P). Further studies are suggested to enrich the research by adding the indicator of the GMM strategy variables based on the GMM, which includes External Green 7P, Internal Green 7P and 4S for Success according to Peattie (2001).

  4. Further development in the field of green property should also include elements for research sampling criteria, i.e. broader real estate developers other than residential developers (can cover property developers such as office buildings, apartments, resorts, star hotels and so forth).

  5. Further studies may include population criteria for empirical analysis, i.e. property developers who also have green certification standards or awards from authorized certification agencies, such as the Green Building Council Indonesia (GBCI).

6. Implication

The theoretical implications in this paper are expected to provide benefits or contributions to theoretical development, which are as follows: (1) The results of this study can add and expand the study of strategic marketing management, (2) Examine more deeply, especially understanding and knowledge of the importance of implementing a GMM strategy and its impact on increasing competitive advantage in property service companies.

Then, the practical implications of this paper are expected to be used as a reference for various parties, including: (1) For practitioners, the results of this study can be input and study material for further research on the interrelationship of the implementation of the GMM strategy based on an EO for increasing the competitive advantage of companies/real estate developers. (2) For marketers and industry players, the application of a GMM strategy in their company will be a unique competitive advantage and will be able to create superior “green” products/services and consumers and organizations can become pioneers of “green business” which outperformed its competitors.

Figures

Conceptual framework

Figure 1

Conceptual framework

Analysis result

RelationshipCoefficientt-statisticp-valueRemark
Environmental orientation (EO) → competitive advantage (CA) (1)0.0940.5360.594Not Significant*
Environmental orientation (EO) → green marketing mix strategy (GMM) (2)0.69913.0160.000Significant
Green marketing mix strategy (GMM) → competitive advantage (CA) (3)0.5293.5410.000Significant
Social capital (SC) → Competitive advantage (CA) (4)0.4563.4120.001Significant

Note(s): *p-value < 0.05 = significant

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Further reading

Muslikah, N.A., Haryono, A.T. and Harini, C. (2018), “The influence of entrepreneurial competence, entrepreneurship strategy and social capital on sustainable competitive advantage with business performance (entrepreneur) as an intervening variable (Case study on furniture SMEs in Kembang Village, Jepara Regency)”, Journal of Management, Vol. 4 No. 4, pp. 1-10.

Corresponding author

I Putu Gede Sukaatmadja can be contacted at: sukaatmadja.unud.jp@gmail.com

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