AN EVALUATION OF THE KEY FACTORS THAT INFLUENCE A SOUTH AFRICAN-BASED FIRM TO IMPLEMENT ENVIRONMENTAL MANAGEMENT

International research indicates that the practice of environmental management may lead to profitability and competitive advantage for the firm. But this theory has not been tested in South Africa. This lack of empirical evidence led the researcher to the primary research question: does environmental management increase a firm’s profitability in South African-based firms? The secondary objective of the study is to determine which factors cause South African-based firms to implement environmental management strategies. Based on a comprehensive literature review, this study delineates the concepts environmental management and profitability and examines the causal relationship between the two factors. Data is collected from firms operating in ten sectors in South Africa using a cross-sectional online mail survey. A proposed research model and hypotheses are tested using confirmatory factor analysis and path analysis with latent variables. The SAS System is used for statistical analysis. The test of the structural model supports the proposed hypothesis that environmental management increases competitive advantage in South African-based firms. Environmental management, however, is limited to the minimization of natural resource consumption and competitive advantage is determined by the strength of the firm’s relationships with its stakeholders. In turn, top management positively influences the strength of these relationships. South African firms follow a strategy of pollution control as opposed pollution prevention. One of the main contributing factors to compliance with regulation in environmental management (as opposed to innovation) is the lack the technical skill and knowledge in both government and the manufacturing sector.