Firm performance and the role of environmental management

Firm performance and the role of environmental management This paper analyzes the interactions between three dimensions of firm performance – productivity, energy efficiency, and environmental performance – and especially sheds light on the role of environmental management. In this context, environmental management is investments to reduce environmental impact, which may also affect firm competitiveness, in terms of change in productivity, and spur more (or less) efficient use of energy. We apply data envelopment analysis (DEA) technique to calculate the Malmquist firm performance indexes, and a panel vector auto-regression (VAR) methodology is utilized to investigate the dynamic and causal relationship between the three dimensions of firm performance and environmental investment. Main results show that energy efficiency and environmental performance are integrated, and energy efficiency and productivity positively reinforce each other, signifying the cost saving property of more efficient use of energy. Hence, increasing energy efficiency, as advocated in many of today's energy policies, could capture multiple benefits. The results also show that improved environmental performance and environmental investments constrain next period productivity, a result that would be in contrast with the Porter hypothesis and strategic corporate social responsibility; both concepts conveying the notion that pro-environmental management can boost productivity and competitiveness. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Environmental Management Elsevier

Firm performance and the role of environmental management

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Publisher
Elsevier
Copyright
Copyright © 2017 Elsevier Ltd
ISSN
0301-4797
D.O.I.
10.1016/j.jenvman.2017.07.053
Publisher site
See Article on Publisher Site

Abstract

This paper analyzes the interactions between three dimensions of firm performance – productivity, energy efficiency, and environmental performance – and especially sheds light on the role of environmental management. In this context, environmental management is investments to reduce environmental impact, which may also affect firm competitiveness, in terms of change in productivity, and spur more (or less) efficient use of energy. We apply data envelopment analysis (DEA) technique to calculate the Malmquist firm performance indexes, and a panel vector auto-regression (VAR) methodology is utilized to investigate the dynamic and causal relationship between the three dimensions of firm performance and environmental investment. Main results show that energy efficiency and environmental performance are integrated, and energy efficiency and productivity positively reinforce each other, signifying the cost saving property of more efficient use of energy. Hence, increasing energy efficiency, as advocated in many of today's energy policies, could capture multiple benefits. The results also show that improved environmental performance and environmental investments constrain next period productivity, a result that would be in contrast with the Porter hypothesis and strategic corporate social responsibility; both concepts conveying the notion that pro-environmental management can boost productivity and competitiveness.

Journal

Journal of Environmental ManagementElsevier

Published: Dec 1, 2017

References

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