This study examines the significance of the adoption of proactive environmental strategy (APES) as a source of competitive advantage for the organization. The relationship between adoption of environmental proactivity and their environmental performance (ENVP) and economic performance (ECP) were studied, and then the prevailing organizational culture (OC) was introduced to explore whether it plays a moderating role in the relationship between APES and performance. A research model is developed and tested using a sample of 314 managers from star graded hotels in Sri Lanka. Data were collected through survey questionnaire and self- reported measures on APES, ENVP, ECP and OC were used. Data were analyzed using SPSS and structural equation modeling with AMOS. The findings of the study suggest that hotels with a higher degree of environmental proactivity obtain better environmental and economic performance and show significant positive impact of environmental performance on firm’s economic performance. In particular, the study found that flexible organizational culture seemed to be the more suitable cultural type that enhances organizational performance through environmental proactivity.
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