The escalating environmental pollution primarily caused by construction enterprises has raised concerns about the urgent need for sustainable practices. This study aims to establish a novel framework of Green Organizational Capabilities (GOC) for construction enterprises in Vietnam. Additionally, it addresses the research gap regarding the relationship between GOC and Competitive Advantage (CA) while also exploring the mediating effect of Green Innovation (GI). Employing Structural Equation Modeling (SEM), we simultaneously model and estimate the intricate relationships among GOC, GI, and CA, which are often unobservable and measured indirectly by the Likert scale point. Through SEM, we account for measurement errors in observed variables and test hypotheses from a sample of 278 valid respondents. The findings reveal that (1) Organizational capabilities are being transformed into GOC, encompassing three key capabilities: Operational Capabilities (OC), Green Dynamic Capabilities (GDC), and Green Creativity (GC); (2) Only GDC and GC have a positive impact on CA; and (3) There is a mediating role of GI on the relation between GC, GDC, and CA. These results highlight the significance of focusing on developing GDC and GC to bolster green innovation practices and achieve a competitive edge. Construction companies can leverage these insights to enhance their sustainability efforts and seize opportunities for growth in the green economy.

Purpose: The aim of this study is to examine the influences of different factors on green innovation in Vietnamese construction enterprises. Theoretical framework: The theoretical framework is built upon the resource-based view, the model of organizational innovation, and stakeholder theory. Design/methodology/approach: The research carries out a literature survey related to construction enterprises, then empirical analysis is conducted among 450 employees and managers at all level working in this field with the results analyzed using Cronbach’s Alpha analysis, exploratory factor analysis, pearson correlation analysis, linear regression analysis and One - way ANOVA analysis. Findings: The results demonstrate that using renewable energy is well represented for green innovation in the Vietnamese construction industry and quantitative results also show positive impacts of all factors studied on green innovation: Green dynamic capabilities, Green creativity, Green knowledge sharing, Corporate environmental ethics, Pressure from industry competitors and regulators. In addition, the result affirmed there are statistically significant differences in the level of green innovation between construction enterprises of size and age, but not types of firm. Research, Practical & Social implications: The study proposes solutions for both enterprises and regulators – one of the external stakeholders to develop green innovation in the construction sector.