View Item 

Show simple item record

The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry
dc.contributor.authorFu, Wayne
dc.contributor.authorSu, Che‐ping (jack)
dc.date.accessioned2021-08-03T18:15:32Z
dc.date.available2022-08-03 14:15:30en
dc.date.available2021-08-03T18:15:32Z
dc.date.issued2021-07
dc.identifier.citationFu, Wayne; Su, Che‐ping (jack) (2021). "The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry." Business Strategy and the Environment 30(5): 2489-2504.
dc.identifier.issn0964-4733
dc.identifier.issn1099-0836
dc.identifier.urihttps://hdl.handle.net/2027.42/168479
dc.description.abstractFirms often invest in sustainable development projects to improve their environmental and societal performance. Given the broad spectrum of these projects and limited resources, managers face challenges in determining where to improve (e.g., improving water consumption and reducing carbon footprint). The study examines the connection between environmental performance and firm performance from a new angle to help managers make informed decisions. The study examines firms in the consumer product industry regarding their efficiency in the operational aspect, the resource- related environmental aspect, and the climate- related environmental aspect. It then employs panel data models to investigate the implications of efficiency differences across these aspects on firms’ financial performance and business risk. The results indicate that the effects of these differences are adverse in general. Additionally, the relationship between the operational and environmental efficiency difference and financial performance is in an inverted- U shape. The study contributes to the literature by offering theoretical support and empirical evidence for the balanced portfolio approach in managing multiple environmental concerns. The study findings also provide managerial guidelines for decision- making. To gain a greater benefit, managers should aim to minimize the performance differences across multiple environmental aspects and manage a subtle balance between operational performance and environmental performance.
dc.publisherThe Boston Consulting Group
dc.publisherWiley Periodicals, Inc.
dc.subject.otherenvironmental efficiency
dc.subject.othersustainable development
dc.subject.otherpanel data
dc.subject.otherconsumer product
dc.titleThe implications of efficiency differences in sustainable development: An empirical study in the consumer product industry
dc.typeArticle
dc.rights.robotsIndexNoFollow
dc.subject.hlbsecondlevelBusiness (General)
dc.subject.hlbtoplevelBusiness and Economics
dc.description.peerreviewedPeer Reviewed
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/168479/1/bse2759.pdf
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/168479/2/bse2759_am.pdf
dc.identifier.doi10.1002/bse.2759
dc.identifier.sourceBusiness Strategy and the Environment
dc.identifier.citedreferenceZhang, N., & Choi, Y. ( 2014 ). A note on the evolution of directional distance function and its development in energy and environmental studies 1997- 2013. Renewable and Sustainable Energy Reviews, 33, 50 - 59. https://doi.org/10.1016/j.rser.2014.01.064
dc.identifier.citedreferenceKing, A. A., & Lenox, M. J. ( 2002 ). Exploring the locus of profitable pollution reduction. Management Science, 48 ( 2 ), 289 - 299. https://doi.org/10.1287/mnsc.48.2.289.258
dc.identifier.citedreferenceKleindorfer, P. R., & Saad, G. H. ( 2005 ). Managing disruption risks in supply chains. Production and Operations Management, 14 ( 1 ), 53 - 68.
dc.identifier.citedreferenceShrivastava, P. ( 1995 ). Environmental technologies and competitive advantage. Strategic Management Journal, 16 ( S1 ), 183 - 200. https://doi.org/10.1002/smj.4250160923
dc.identifier.citedreferenceSkinner, W. ( 1969 ). Manufacturing- missing link in corporate strategy. Harvard Business Review, 47 ( 3 ), 136 - 145.
dc.identifier.citedreferenceSpence, T. ( 2013 ). Trade- offs: What’s good for the climate may not be good for the air. Euractiv.com. 3- 4. Retrieved from https://www.euractiv.com/section/sustainable-dev/news/trade-offs-what-s-good-for-the-climate-may-not-be-good-for-the-air/
dc.identifier.citedreferenceSroufe, R. ( 2003 ). Effects of environmental management systems on environmental management practices and operations. Production and Operations Management, 12 ( 3 ), 416 - 431.
dc.identifier.citedreferenceSustainability Accounting Standards Board. ( 2018 ). Materiality map. Accessed: September 20, 2019. https://materiality.sasb.org/
dc.identifier.citedreferenceThe Coca- Cola Company. ( 2017 ). 2017 Sustainability Report: Priority issue analysis. Accessed: June 12, 2018, https://www.coca-colacompany.com/stories/priority-issue-analysis
dc.identifier.citedreferenceThomson Reuters. ( 2018 ). ESG carbon data & estimate models. Retrieved: May 5, 2018, from https://www.refinitiv.com/content/dam/marketing/en_us/documents/fact-sheets/esg-carbon-data-estimate-models-fact-sheet.pdf
dc.identifier.citedreferenceVan Reenen, J. ( 2011 ). Does competition raise productivity through improving management quality? International Journal of Industrial Organization, 29 ( 3 ), 306 - 316. https://doi.org/10.1016/j.ijindorg.2011.02.001
dc.identifier.citedreferenceVastag, G. ( 2000 ). The theory of performance frontiers. Journal of Operations Management, 18 ( 3 ), 353 - 360. https://doi.org/10.1016/S0272-6963(99)00024-8
dc.identifier.citedreferenceWaddock, S. A., & Graves, S. B. ( 1997 ). The corporate social performance- Financial performance link. Strategic Management Journal, 18 ( 4 ), 303 - 319. https://doi.org/10.1002/(SICI)1097-0266(199704)18:4<303::AID-SMJ869>3.0.CO;2-G
dc.identifier.citedreferenceWagner, M. ( 2005 ). How to reconcile environmental and economic performance to improve corporate sustainability: Corporate environmental strategies in the European paper industry. Journal of Environmental Management, 76 ( 2 ), 105 - 118. https://doi.org/10.1016/j.jenvman.2004.11.021
dc.identifier.citedreferenceWalley, N., & Whitehead, B. ( 1994 ). It’s not easy being green. Harvard Business Review, 72 ( 3 ), 46 - 51.
dc.identifier.citedreferenceWeber, O., Fenchel, M., & Scholz, R. W. ( 2008 ). Empirical analysis of the integration of environmental risks into the credit risk management process of European banks. Business Strategy and the Environment, 17 ( 3 ), 149 - 159. https://doi.org/10.1002/bse.507
dc.identifier.citedreferenceWeinhofer, G., & Busch, T. ( 2013 ). Corporate strategies for managing climate risks. Business Strategy and the Environment, 22 ( 2 ), 121 - 144. https://doi.org/10.1002/bse.1744
dc.identifier.citedreferenceWhitehead, J. ( 2017 ). Prioritizing sustainability indicators: Using materiality analysis to guide sustainability assessment and strategy. Business Strategy and the Environment, 26 ( 3 ), 399 - 412. https://doi.org/10.1002/bse.1928
dc.identifier.citedreferenceWooldridge, J. M. ( 2010 ). Econometric analysis of cross section and panel data. Cambridge and London: MIT Press.
dc.identifier.citedreferenceWu, Z., & Pagell, M. ( 2011 ). Balancing priorities: Decision- making in sustainable supply chain management. Journal of Operations Management, 29 ( 6 ), 577 - 590. https://doi.org/10.1016/j.jom.2010.10.001
dc.identifier.citedreferenceXie, J., Nozawa, W., Yagi, M., Fujii, H., & Managi, S. ( 2019 ). Do environmental, social, and governance activities improve corporate financial performance? Business Strategy and the Environment, 28 ( 2 ), 286 - 300. https://doi.org/10.1002/bse.2224
dc.identifier.citedreferenceXue, B., Zhang, Z., & Li, P. ( 2019 ). Corporate environmental performance, environmental management and firm risk. Business Strategy and the Environment, 29 ( 3 ), 1074 - 1096. https://doi.org/10.1002/bse.2418
dc.identifier.citedreferenceZeng, H., Zhang, T., Zhou, Z., Zhao, Y., & Chen, X. ( 2019 ). Water disclosure and firm risk: Empirical evidence from highly water- sensitive Industries in China. Business Strategy and the Environment, 29 ( 1 ), 17 - 38. https://doi.org/10.1002/bse.2347
dc.identifier.citedreferenceAltman, E. I. ( 1973 ). Predicting railroad bankruptcies in America. The Bell Journal of Economics and Management Science, 4, 184 - 211. https://doi.org/10.2307/3003144
dc.identifier.citedreferenceAngell, L. C., & Klassen, R. D. ( 1999 ). Integrating environmental issues into the mainstream: An agenda for research in operations management. Journal of Operations Management, 17 ( 5 ), 575 - 598. https://doi.org/10.1016/S0272-6963(99)00006-6
dc.identifier.citedreferenceBaily, M. N., Gersbach, H., Scherer, F. M., & Lichtenberg, F. R. ( 1995 ). Efficiency in manufacturing and the need for global competition. Brookings Papers on Economic Activity. Microeconomics, 1995, 307 - 358. https://doi.org/10.2307/2534776
dc.identifier.citedreferenceBerns, M., Townend, A., Khayat, Z., Balagopal, B., Reeves, M., Hopkins, M. S., & Kruschwitz, N. ( 2009 ). The business of sustainability: Imperatives, advantages and actions (Vol. 36 ). Boston, MA, USA: The Boston Consulting Group.
dc.identifier.citedreferenceBonini, S., & Gorner, S. ( 2012 ). The business of sustainability (pp. 96 - 105 ). New York, NY, USA: McKinsey & Company. McKinsey Insights.
dc.identifier.citedreferenceBonn, I., & Fisher, J. ( 2011 ). Sustainability: The missing ingredient in strategy. Journal of Business Strategy, 32 ( 1 ), 5 - 14. https://doi.org/10.1108/02756661111100274
dc.identifier.citedreferenceCapece, G., Di Pillo, F., Gastaldi, M., Levialdi, N., & Miliacca, M. ( 2017 ). Examining the effect of managing GHG emissions on business performance. Business Strategy and the Environment, 26 ( 8 ), 1041 - 1060. https://doi.org/10.1002/bse.1956
dc.identifier.citedreferenceChen, C.- M. ( 2017 ). Supply chain strategies and carbon intensity: The roles of process leanness, diversification strategy, and outsourcing. Journal of Business Ethics, 143 ( 3 ), 603 - 620. https://doi.org/10.1007/s10551-015-2809-8
dc.identifier.citedreferenceClark, P. ( 2014 ). Nestle warns water scarcity - more urgent- than climate change. Financial Times, July 14, 2014.
dc.identifier.citedreferenceConsumer Brands Association ( 2019 ). Economic Contribution of the US Consumer Packaged Goods Industry. 82. Retrieved from https://consumerbrandsassociation.org/wp-content/uploads/2020/03/Economic-Impact-Report.pdf
dc.identifier.citedreferenceDelmas, M. A., Etzion, D., & Nairn- Birch, N. ( 2013 ). Triangulating environmental performance: What do corporate social responsibility ratings really capture? Academy of Management Perspectives, 27 ( 3 ), 255 - 267. https://doi.org/10.5465/amp.2012.0123
dc.identifier.citedreferenceDhaliwal, D. S., Li, O. Z., Tsang, A., & Yang, Y. G. ( 2011 ). Voluntary nonfinancial disclosure and the cost of equity capital: The initiation of corporate social responsibility reporting. The Accounting Review, 86 ( 1 ), 59 - 100. https://doi.org/10.2308/accr.00000005
dc.identifier.citedreferenceDowell, G., Hart, S., & Yeung, B. ( 2000 ). Do corporate global environmental standards create or destroy market value? Management Science, 46 ( 8 ), 1059 - 1074. https://doi.org/10.1287/mnsc.46.8.1059.12030
dc.identifier.citedreferenceEccles, R. G., Ioannou, I., & Serafeim, G. ( 2014 ). The impact of corporate sustainability on organizational processes and performance. Management Science, 60 ( 11 ), 2835 - 2857. https://doi.org/10.1287/mnsc.2014.1984
dc.identifier.citedreferenceFeather, T. D., Harrington, K. W., & Capan, D. T. ( 1995 ). Trade- off analysis for environmental projects: An annotated bibliography. 199. U.S. Army Corps of Engineers Water Resources Support Center, Institute for Water Resources, Alexandria, VA. Retrieved from https://www.iwr.usace.army.mil/portals/70/docs/iwrreports/95-r-8.pdf
dc.identifier.citedreferenceFujii, H., Iwata, K., Kaneko, S., & Managi, S. ( 2013 ). Corporate environmental and economic performance of Japanese manufacturing firms: Empirical study for sustainable development. Business Strategy and the Environment, 22 ( 3 ), 187 - 201. https://doi.org/10.1002/bse.1747
dc.identifier.citedreferenceFujii, H., Managi, S., & Kawahara, H. ( 2011 ). The pollution release and transfer register system in the U.S. and Japan: An analysis of productivity. Journal of Cleaner Production, 19 ( 12 ), 1330 - 1338. https://doi.org/10.1016/j.jclepro.2011.01.010
dc.identifier.citedreferenceGormley, T. A., & Matsa, D. A. ( 2011 ). Growing out of trouble? Corporate responses to liability risk. Review of Financial Studies, 24 ( 8 ), 2781 - 2821. https://doi.org/10.1093/rfs/hhr011
dc.identifier.citedreferenceHart, S. L. ( 1995 ). A natural- resource- based view of the firm. Academy of Management Review, 20 ( 4 ), 986 - 1014. https://doi.org/10.5465/amr.1995.9512280033
dc.identifier.citedreferenceHart, S. L., & Ahuja, G. ( 1996 ). Does it pay to be green? An empirical examination of the relationship between emission reduction and firm performance. Business Strategy and the Environment, 5 ( 1 ), 30 - 37. https://doi.org/10.1002/(SICI)1099-0836(199603)5:1<30::AID-BSE38>3.0.CO;2-Q
dc.identifier.citedreferenceÄ°mrohoroÄ lu, A., & Tüzel, Å . ( 2014 ). Firm- level productivity, risk, and return. Management Science, 60 ( 8 ), 2073 - 2090. https://doi.org/10.1287/mnsc.2013.1852
dc.identifier.citedreferenceIshinabe, N., Fujii, H., & Managi, S. ( 2013 ). The true cost of greenhouse gas emissions: Analysis of 1,000 global companies. PLoS One, 8 ( 11 ), e78703 - e78703. https://doi.org/10.1371/journal.pone.0078703
dc.identifier.citedreferenceJacobs, B. W., Kraude, R., & Narayanan, S. ( 2016 ). Operational productivity, corporate social performance, financial performance, and risk in manufacturing firms. Production and Operations Management, 25 ( 12 ), 2065 - 2085. https://doi.org/10.1111/poms.12596
dc.identifier.citedreferenceJones, T. M. ( 1995 ). Instrumental stakeholder theory: A synthesis of ethics and economics. The Academy of Management Review, 20 ( 2 ), 404 - 437. https://doi.org/10.5465/amr.1995.9507312924
dc.identifier.citedreferenceKlingebiel, R., & Rammer, C. ( 2014 ). Resource allocation strategy for innovation portfolio management. Strategic Management Journal, 35 ( 2 ), 246 - 268. https://doi.org/10.1002/smj.2107
dc.identifier.citedreferenceKonar, S., & Cohen, M. A. ( 2001 ). Does the market value environmental performance? The Review of Economics and Statistics, 83 ( 2 ), 281 - 289. https://doi.org/10.1162/00346530151143815
dc.identifier.citedreferenceKrasnikov, A., & Jayachandran, S. ( 2008 ). The relative impact of marketing, research- and- development, and operations capabilities on firm performance. Journal of Marketing, 72 ( 4 ), 1 - 11. https://doi.org/10.1509/jmkg.72.4.001
dc.identifier.citedreferenceLee, K.- H., Cin, B. C., & Lee, E. Y. ( 2016 ). Environmental responsibility and firm performance: The application of an environmental, social and governance model. Business Strategy and the Environment, 25 ( 1 ), 40 - 53. https://doi.org/10.1002/bse.1855
dc.identifier.citedreferenceMacKie- Mason, J. K. ( 1990 ). Do taxes affect corporate financing decisions? The Journal of Finance, 45 ( 5 ), 1471 - 1493. https://doi.org/10.1111/j.1540-6261.1990.tb03724.x
dc.identifier.citedreferenceMcWilliams, A., Parhankangas, A., Coupet, J., Welch, E., & Barnum, D. T. ( 2016 ). Strategic decision making for the triple bottom line. Business Strategy and the Environment, 25 ( 3 ), 193 - 204. https://doi.org/10.1002/bse.1867
dc.identifier.citedreferenceMcWilliams, A., & Siegel, D. ( 2001 ). Corporate social responsibility: A theory of the firm perspective. Academy of Management Review, 26 ( 1 ), 117 - 127. https://doi.org/10.5465/amr.2001.4011987
dc.identifier.citedreferenceMcWilliams, A., & Siegel, D. S. ( 2011 ). Creating and capturing value: Strategic corporate social responsibility, resource- based theory, and sustainable competitive advantage. Journal of Management, 37 ( 5 ), 1480 - 1495. https://doi.org/10.1177/0149206310385696
dc.identifier.citedreferenceMinutolo, M. C., Kristjanpoller, W. D., & Stakeley, J. ( 2019 ). Exploring environmental, social, and governance disclosure effects on the S&P 500 financial performance. Business Strategy and the Environment, 28 ( 6 ), 1083 - 1095.
dc.identifier.citedreferenceMouzas, S. ( 2006 ). Efficiency versus effectiveness in business networks. Journal of Business Research, 59 ( 10- 11 ), 1124 - 1132. https://doi.org/10.1016/j.jbusres.2006.09.018
dc.identifier.citedreferenceNeuhäusler, P., Schubert, T., Frietsch, R., & Blind, K. ( 2016 ). Managing portfolio risk in strategic technology management: Evidence from a panel data- set of the world’s largest R&D performers. Economics of Innovation and New Technology, 25 ( 7 ), 651 - 667. https://doi.org/10.1080/10438599.2015.1109780
dc.identifier.citedreferenceNidumolu, R., Prahalad, C. K., & Rangaswami, M. R. ( 2009 ). Why sustainability is now the key driver of innovation. Boston, Harvard Business Review., 87, 56 - 64.
dc.identifier.citedreferenceOrlitzky, M., & Benjamin, J. D. ( 2001 ). Corporate social performance and firm risk: A meta- analytic review. Business & Society, 40 ( 4 ), 369 - 396. https://doi.org/10.1177/000765030104000402
dc.identifier.citedreferenceOrlitzky, M., Schmidt, F. L., & Rynes, S. L. ( 2003 ). Corporate social and financial performance: A meta- analysis. Organization Studies, 24 ( 3 ), 403 - 441. https://doi.org/10.1177/0170840603024003910
dc.identifier.citedreferencePatterson, S. ( 2019 ). Lowville had lots of water. Then string cheese came. Wall Street Journal, A1 ( June 06, 2019 ).
dc.identifier.citedreferencePlümper, T., & Troeger, V. E. ( 2007 ). Efficient estimation of time- invariant and rarely changing variables in finite sample panel analyses with unit fixed effects. Political Analysis, 15 ( 2 ), 124 - 139. https://doi.org/10.1093/pan/mpm002
dc.identifier.citedreferencePorter, M. E., & Kramer, M. R. ( 2006 ). Strategy & society: The link between competitive advantage and corporate social responsibility (Vol. 84 ) (pp. 78 - 85 ). Boston: Harvard Business Review. 88+
dc.identifier.citedreferencePorter, M. E., & van der Linde, C. ( 1995 ). Green and competitive: Ending the stalemate. Harvard Business Review, 73 ( 5 ), 120 - 134.
dc.identifier.citedreferenceReinhardt, F. ( 1999 ). Market failure and the environmental policies of firms: Economic rationales for - beyond compliance- behavior. Journal of Industrial Ecology, 3 ( 1 ), 9 - 21. https://doi.org/10.1162/108819899569368
dc.identifier.citedreferenceRosenzweig, E. D., & Easton, G. S. ( 2010 ). Trade- offs in manufacturing? A meta- analysis and critique of the literature. Production and Operations Management, 19 ( 2 ), 127 - 141. https://doi.org/10.1111/j.1937-5956.2009.01072.x
dc.identifier.citedreferenceRothenberg, S., Pil, F. K., & Maxwell, J. ( 2001 ). Lean, green, and the quest for superior environmental performance. Production and Operations Management, 10 ( 3 ), 228 - 243.
dc.identifier.citedreferenceRusso, M. V., & Fouts, P. A. ( 1997 ). A resource- based perspective on corporate environmental performance and profitability. The Academy of Management Journal, 40 ( 3 ), 534 - 559.
dc.identifier.citedreferenceSartal, A., Rodríguez, M., & Vázquez, X. H. ( 2020 ). From efficiency- driven to low- carbon operations management: Implications for labor productivity. Journal of Operations Management, 66 ( 3 ), 310 - 325. https://doi.org/10.1002/joom.1060
dc.identifier.citedreferenceSchaltegger, S., & Synnestvedt, T. ( 2002 ). The link between - green- and economic success: Environmental management as the crucial trigger between environmental and economic performance. Journal of Environmental Management, 65 ( 4 ), 339 - 346.
dc.identifier.citedreferenceSchmenner, R. W., & Swink, M. L. ( 1998 ). On theory in operations management. Journal of Operations Management, 17 ( 1 ), 97 - 113. https://doi.org/10.1016/S0272-6963(98)00028-X
dc.identifier.citedreferenceSchneider, S. C. ( 1989 ). Strategy formulation: The impact of national culture. Organization Studies, 10 ( 2 ), 149 - 168. https://doi.org/10.1177/017084068901000202
dc.identifier.citedreferenceSharfman, M. P., & Fernando, C. S. ( 2008 ). Environmental risk management and the cost of capital. Strategic Management Journal, 29 ( 6 ), 569 - 592. https://doi.org/10.1002/smj.678
dc.identifier.citedreferenceSharpe, W. F. ( 1964 ). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19 ( 3 ), 425 - 442.
dc.identifier.citedreferenceSheffi, Y. ( 2018 ). Balancing green: When to embrace sustainability in a business (and when not to). Cambridge, MA, USA: MIT Press. https://doi.org/10.7551/mitpress/11596.001.0001
dc.working.doiNOen
dc.owningcollnameInterdisciplinary and Peer-Reviewed


Files in this item

Name:
bse2759.pdf
Size:
2.403MB
Format:
PDF
View/Open
Name:
bse2759_am.pdf
Size:
771.1KB
Format:
PDF
View/Open

Show simple item record

Remediation of Harmful Language

The University of Michigan Library aims to describe library materials in a way that respects the people and communities who create, use, and are represented in our collections. Report harmful or offensive language in catalog records, finding aids, or elsewhere in our collections anonymously through our metadata feedback form. More information at Remediation of Harmful Language.

Accessibility

If you are unable to use this file in its current format, please select the Contact Us link and we can modify it to make it more accessible to you.