Selective Mediation Pathways: Sustainable Practices and Competitive Advantage in Malaysia’s LNG Industry

Abstract

Sustainable practices are widely assumed to strengthen competitive advantage through the three Triple Bottom Line (TBL) dimensions of economic, environmental, and social performance, which are typically treated as parallel, interchangeable mediators. This study tests that assumption, asking whether the three dimensions mediate uniformly or selectively in a capital-intensive, commodity-export setting. Using partial least squares structural equation modelling (PLS-SEM) on survey data from 252 middle managers in Malaysia's liquefied natural gas (LNG) industry, it tests 15 direct hypotheses and 12 specific indirect (mediation) pathways linking four types of sustainable practices (organisational, technological, supply chain, and business strategy) to competitive advantage. The results, which speak to SDG 9.4 and Malaysia's National Energy Transition Roadmap, show a selective rather than uniform mediation pattern. Environmental performance is the primary mediating channel; social performance mediates only the technological-practices pathway; and economic performance mediates none, with its direct path to competitive advantage non-significant. These associations indicate that, in capital-intensive commodity-export settings, sustainability investments convert into competitive returns mainly through environmental and social channels rather than through economic performance. For practice, LNG operators can concentrate sustainability investment on the channels most likely to yield strategic returns, particularly organisational, technological, and supply chain practices that work through environmental performance. Because the three TBL dimensions are not interchangeable as mediators, disaggregated mediation analysis is warranted in commodity-export contexts.