Environmental Innovation : Advancing the Resource-Advantage Theory of Competition

The Resource-Advantage Theory of Competition states that a comparative advantage in resources leads to a competitive advantage in the marketplace. This research aims to expand this theory by including the role of innovation, particularly environmental innovation, as a moderating variable in the relationship between resources and competitive advantages. Empirical evidence of this moderating effect is obtained through factor and regression analyses with survey data collected from 130 small agricultural businesses located in Oaxaca, Mexico. This is a traditional sector in an emerging economy. Theoretical implications include the importance of environmental issues in competition as well as the applicability of this framework to the agricultural sector. Practical implications for small agricultural businesses are related to the effectiveness of environmental innovation in the enhancement of competitiveness through both cost reduction and value added