Assessing the impact of green supply chain practices on firm performance in the Korean manufacturing industry

As a growing number of customers tend to view corporate social responsibility (CSR) as a key purchase decision criterion, demands for CSR including environmental sustainability have accelerated in today's business world. To meet such demands, many firms consider embracing environment-friendly business practices. However, many firms are still hesitant to implement those practices due to sceptical views about their real managerial benefits. Although the previous literature confirms the positive link between a firm's commitment to environmental sustainability and its performance, the varying degree of impact of different kinds of environment-friendly supply chain practices on the firm's operational performance is still unknown. To fill the void left by prior research, this paper aims to classify various types of green supply chain management (GSCM) practices and then assess the impact of each of these distinct types on the firm's operational performances (especially manufacturing and marketing performance). Also, this paper examines how the firm's organisational profiles such as firm size affect the particular firm's choice of GSCM practices. Our experimental results reveal that the chosen type of GSCM practices influences the firm's performance differently.     

Financial benefits and risks of dependency in triadic supply chain relationships

The economic consequences of interdependent relationships with suppliers and customers have long been of interest to supply chain managers and academics alike. Whereas previous studies have focused on the benefits or risks of embedded relationships that accrue to buying firms, this study simultaneously investigates the effects of a supplier's and a customer's embeddedness, arising from resource dependency, on a focal firm's financial performance in triadic supply chain relationships. Using 1,144 unique focal firm-years for U.S. firms from Compustat, we find that a supplier's and a customer's dependency both increase the focal firm's performance in terms of return on assets (ROA) and return on sales (ROS) by increasing asset turnover (ATO). As levels of supplier and customer dependency on the focal firm increase, however, the economic benefits of customer dependency diminish beyond a certain point, while those of supplier dependency continue to increase above that threshold. Thus, our findings show the paradoxically differing risks of the supplier's versus the customer's dependency, while establishing the unequivocal economic benefits of supplier and customer relations for focal firms in the middle of concentrated triadic relationships.     

Sustainability Management within Supply Chains – A Resource Dependence View

Proceeding from three basic concepts of resource dependence theory – organizational effectiveness, interdependence and external control – we conducted a multiple‐case study to investigate factors that facilitate and hinder sustainability management within supply chains. Our empirical observations highlight that focal firms do not necessarily transfer their own corporate sustainability agendas into control mechanisms for managing the sustainability of their suppliers. Based on this insight, we develop a new theory that explains how intra‐ and interorganizational sustainability management is affected by a firm's business case for promoting sustainability, control mechanisms, trade‐offs, trust and market liberalization. The theory offers new insights into drivers and barriers for effective interorganizational sustainability management, whereas previous theories could not fully explain the reasons for diverging sustainability management practices in supply chains. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Boards and Sustainability: the Contingent Influence of Director Interlocks on Corporate Environmental Performance

This paper highlights the importance of a firm's board with respect to sustainability issues by analysing the relationship between director interlocks, i.e. directors who simultaneously belong to the boards of directors of several companies, and a firm's environmental performance. The previous literature has focused on the influence of firm‐level resources on corporate environmental performance. This study utilizes insights from a resource‐based view and research on social capital to demonstrate that the environmental performance of a firm is also influenced by the difficult‐to‐imitate capabilities that are embedded in the network relationships of its directors. Our results support a contingency perspective of the social capital theory that finds that director interlocks are positively connected with the environmental performance of a firm in two specific situations: (1) when the firm is linked to a larger parent company and (2) in cases of low and high levels of interlock diversity. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Sustainability in multi-tier supply chains: Understanding the double agency role of the first-tier supplier

In light of the growing complexity of globally dispersed, multi-tier supply chains, the involvement of first-tier suppliers has become instrumental in the quest for achieving sustainability compliance along the supply chain. We describe this new responsibility as the double agency role. We employ agency and institutional theory arguments to explore the conditions under which first-tier suppliers will act as agents who fulfill the lead firm's sustainability requirements (i.e., the primary agency role) and implement these requirements in their suppliers' operations (i.e., the secondary agency role). The findings from three in-depth case studies embedded in different institutional contexts highlight the importance for lead firms to incentivize each agency role separately and to reduce information asymmetries, particularly at the second-tier level. In addition, our inductive analysis reveals several contingency factors that influence the coupling of the secondary agency role of the first-tier supplier. These factors include resource availability at the first-tier supplier's firm, the lead firm's focus on the triple-bottom-line dimension (i.e., environmental or social), the lead firm's use of power, and the lead firm's internal alignment of the sustainability and purchasing function. We integrate our findings in a conceptual framework that advances the research agenda on multi-tier sustainable supply chains, and we subsequently outline the practical implications of assigning the double agency role to first tier suppliers.     

Creating social and environmental value through integrated thinking: International evidence

Integrated thinking (IT) is a managerial mindset increasingly discussed in the context of value creation. Through the lens of systems theory, this study examines how the degree to which IT is embedded in a firm's strategy and day-to-day business processes is associated with the firm's social and environmental value creation. Using a broad international dataset, we find strong evidence that our measure of IT is positively related to a firm's sustainability performance (SP), which we use to operationalize social and environmental value creation (or erosion). Our results also reveal that the increase in a firm's SP might come at the cost of a short-term decrease in financial performance (FP). We find no indication, however, that IT induces a trade-off between SP and long-term FP. Integrated thinking appears to stipulate long-term financial value creation instead. We further explore moderating factors within the organizational and institutional context of our sample firms and highlight implications for society, corporate practice, and policymaking.     

Customer Satisfaction,Competition, and Firm Performance: An Empirical Investigation

We conduct two empirical studies to test two hypotheses: (1) rivals' customer satisfaction increases a firm's own customer satisfaction; and (2) rivals' customer satisfaction reduces a firm's sales. Study One uses a panel dataset of annual store‐level customer satisfaction data from a supermarket chain for the periods 1998–2001. Study Two considers a range of industries by using a panel dataset of brand‐level customer satisfaction ratings from the American Customer Satisfaction Index spanning the periods 1994–2003. Results from both studies provide support for our hypotheses. Copyright © 2013 John Wiley & Sons, Ltd.     

Retailers’ incentives for green investment in differentiated competition channels

With increasing public environmental awareness, green activities in retail and distribution processes have become crucial tools for retailers to boost demand and enhance competitiveness. This study develops an analytical model to study the green investment choices of two differentiated retailers dealing with a common green manufacturer. It also explores the impacts of these investment choices on the manufacturer's operational decisions, channel efficiency, consumer welfare, and the environment. We derive three main results. First, the powerful retailer always favors green investments, whereas the less powerful (inferior) retailer may either prefer or avoid green investments. The fiercer the inter-retailer competition, the lower the willingness of the inferior retailer to introduce green investments. Second, although all supply chain parties may disagree on their preferences for retailers' green investments, a bilateral green investment (i.e., both retailers make green investments) can reach an incentive alignment for all firms if the differentiation between retailers is low enough and the competition between them is not substantially fierce. Moreover, a bilateral green investment improves consumer welfare and channel efficiency because of the great demand expansion and double marginalization reduction. Third, the retailers' green investments can motivate the manufacturer to produce greener products, but they do not necessarily benefit the environment. We show that the supply chain's economic sustainability aligns with its environmental sustainability only if the environmental improvement efficiency of green investments is substantially high. We further examine the impact of retailers with differentiated green investment abilities and the manufacturer's green investment efficiency to verify the robustness of the main results.     

Improving Firm Environmental Performance and Reputation: The Role of Employee Green Teams

This paper examines the link between a firm's organization environmental management capability, represented by the development of green teams made up of employees, and its performance. In particular, two categories of firm performance will be analysed: environmental performance and environmental reputation. This link has been investigated in a sample made of the largest publicly traded US companies. Data about green teams have been collected through the content analysis of firm environmental/sustainability/corporate social responsibility reports and/or their websites, whereas data about environmental performance and reputation are those reported in the US 500 Newsweek's 2010 Green Ranking. Regression analysis results show that the creation of employee green teams positively affects both environmental performance and environmental reputation. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Do Board's Corporate Social Responsibility Strategy and Orientation Influence Environmental Sustainability Disclosure? UK Evidence

The environmental implications of corporate economic activities have led to growing demands for firms and their boards to adopt sustainable strategies and to disseminate more useful information about their activities and impacts on environment. This paper investigates the impact of board's corporate social responsibility (CSR) strategy and orientation on the quantity and quality of environmental sustainability disclosure in UK listed firms. We find that effective board CSR strategy and CSR‐oriented directors have a positive and significant impact on the quality of environmental sustainability disclosure, but not on the quantity. Our findings also suggest that the existence of a CSR committee and issuance of a stand‐alone CSR report are positively and significantly related to environmental sustainability disclosure. When we distinguish between firms with high and low environmental risk, we find that the board CSR/sustainability practices that affect the quantity (quality) of environmental sustainability disclosure appear to be driven more by highly (lowly) environmentally sensitive firms. These results suggest that the board CSR/sustainability practices play an important role in ensuring a firm's legitimacy and accountability towards stakeholders. Our findings shed new light on this under‐researched area and could be of interest to companies, policy‐makers and other stakeholders. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Corporate sustainability and financial performance: Collective reputation as moderator of the relationship between environmental performance and firm market value

Markets value superior corporate sustainability performance in part because investors use a firm's environmental performance as a signal of desirable but difficult-to-observe attributes, such as the firm's integrity capacity. Yet a signaling conflict can arise when a firm belongs to an organizational form that has a collective reputation for being unethical. In such circumstances, the firm's environmental performance may no longer credibly signal its underlying integrity capacity, leading markets to adjust downward the value they would otherwise place on the firm's environmental performance. Using longitudinal data on South Korean firms, we find that improvements in firm environmental performance lead to smaller increases in market values for firms belonging to a poorly reputed organizational form. However, firms can partially recover lost value by adopting firm features that reduce the signaling conflict, thereby restoring the notion of corporate sustainability performance driving firm market values.     

Negative Incentives and Regulatory Capture: Noncompliance with Price Ceilings on Essential Medicines in India

Nonmarket scholars have paid limited attention to noncompliance as an alternative strategy to capture regulators; yet noncompliance is particularly consequential given its potentially significant negative externalities. We exploit rich data on price ceilings introduced in India in 2013 on 255 essential medicines to test whether noncompliance by other firms drives the focal firm's noncompliance decision. Our results indicate that noncompliance by other firms, particularly those with larger products in the market, is positively associated with a focal firm's noncompliance. The focal firm's scope and sales positively moderate this relationship. Overall, our study indicates that firms are more likely conclude that the potential benefits of regulatory capture using negative incentives outweigh the potential financial and social costs in the presence of a greater number of firms that are already noncompliant. As such, our study draws attention to negative incentives as an important yet largely overlooked nonmarket strategy.     

Routine Rigidity and Environmental Sustainability: Why Rational Innovations are Regularly Ignored

Rigidities describe the sluggishness of an organization's response in the face of discontinuous external change, and routine rigidity is the failure to change the organization's processes. This article aims to provide empirical evidence that substantiates the relevance of routine rigidity in the discussion on environmental sustainability. A qualitative approach employs a logic model to analyse two sequences of events and tracks the implementation of innovations that had been overlooked for some time. The evidence shows that the selected organizational innovations were previously inhibited by a failure to change the organization's formal processes and informal cultural norms. This is especially true of innovations that altered the daily routines of the focal firm's employees and of innovations that potentially alienated customers. The characteristics of the innovations (high impact and low barrier to implementation) indicate that firms are now less able to justify inaction through the traditional barriers of environmentally focused innovation. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Balancing on a tightrope: Managing the boundaries of a firm-sponsored OSS community and its impact on innovation and absorptive capacity

Realizing the innovation potential of OSS communities, firms now create or sponsor their own open source software (OSS) communities, generally as part of an open innovation strategy. However, maximizing the innovation capability of a sponsored OSS community is a challenging task since firms cannot rely on traditional hierarchical authority to control community members. Furthermore, a firm's efforts to manage its sponsored community may also impact the firm's absorptive capacity, or its ability to effectively absorb and leverage the valuable knowledge created by the community. Thus, the purpose of this article is to investigate two research questions: 1) How does the boundary management of a firm-sponsored OSS community impact the community's innovation capacity? and 2) How does the boundary management of a firm-sponsored OSS community impact the firm's absorptive capacity? Using the results from our qualitative analysis of eZ Systems and its successfully sponsored OSS community – eZ Publish – we develop a theoretical model depicting how the boundary management of a firm-sponsored OSS community influences both the community's innovation capacity and the absorptive capacity of the firm. In addition, the results of our study highlight the central importance of an integrative IT platform in boundary management activities.     

LRN 2016 SPECIAL – the antecedents and consequences of reduction within a supply chain collaboration orientation of CO2 emissions: evidence from China

ABSTRACT

This paper explores the impact of a predisposition towards supply chain collaboration (SCC) on the reduction of CO₂ emissions, along with its consequences, within the context of a growing recognition of green collaboration. The study draws upon three theoretical lenses, i.e. natural-resource-based view (NRBV), resource dependence theory (RDT) and institutional theory. It conceptualises a research framework in which the underlying constructs are defined and the hypotheses postulated. The empirical investigation was undertaken in China, resulting in data pertaining to 167 companies compiled from a questionnaire survey and subsequently analysed using structural equation modelling. The research findings reveal a causal relationship between two orientations, i.e. SCC orientation and a firm's CO₂ emission reduction orientation, and SCC-led CO₂ emission reduction and its impact on a firm's performance. The study suggests that, in a ‘low-carbon’ business environment, firms can guarantee the engagement of an SCC-led CO₂ emission reduction initiative towards broad environmental sustainability.     

Mindfulness,socioemotional wealth,and environmental strategy of family businesses

The study advances knowledge in the field of business strategy and the environment by incorporating mindfulness theory into the research on socioemotional wealth (SEW) and its environmental consequences in family businesses. Using an integrative model, the paper investigates the relationship between mindfulness SEW dimensions and family firms' environmental strategies, specifically in developing sustainable products and processes. This study also proposes the firm's capabilities as a mediator in this relationship, while market turbulence is a moderator in the relationship between the firm's capabilities and sustainable products and processes. The empirical results show that in protecting SEW, specifically in the identification of family members with the firm and binding social ties, mindfulness provides a rich endowment that develops appropriate capabilities to produce sustainable products and processes. While the moderating role of market turbulence is insignificant, we can infer that irrespective of how turbulent (or not) the market is, the firm's capabilities are a key determinant of sustainable products and processes. Our findings offer theoretical and managerial implications for sustainable practices in the family business context.     

The product‐market performance benefits of environmental policy: Why customer awareness and firm innovativeness matter

Researchers have widely studied the nexus between corporate environmental (“green”) policy and its green performance and firm financial performance, but with mixed findings. A potential explanation for these mixed findings is the focus of extant studies on the direct and immediate impact of environmental performance on financial performance to the exclusion of firm‐specific boundary conditions. Furthermore, all prior research study the effect of environmental performance on either stock market‐based performance measures (i.e., stock return) or accounting‐based performance measures (i.e., return on assets). A missing third dimension of firm performance, product–market‐based performance (i.e., market share), has so far remained unexplored despite representing a crucial objective when innovating. Using Newsweek's annual green ranking as a novel measure of environmental performance for a panel of U.S. firms from 2010 to 2015, this paper attempts to fill these voids in the literature. The results show a positive relationship between firms' environmental performance and market share as a measure of product–market‐based performance. The findings further demonstrate that this relationship is positively moderated by the level of customer awareness and innovativeness of the firm: The higher the level of awareness of a firm's environmental credentials and innovativeness, the stronger the effects of environmental performance on market share. Our results are robust against endogeneity concerns and alternative measures of firm financial and environmental performance.     

Environmental transparency and investors' risk perception: Cross-country evidence on multinational corporations' sustainability practices and cost of equity

We explore whether a greater amount of environmental disclosure can reduce a firm's ex ante cost of equity. This could occur because the quantity of environmental information changes investors' risk perception of the company, thereby influencing its ex ante cost of equity. Our study is a cross-country analysis of 1481 multinational corporations (MNCs) across 43 countries and territories from 2013 to 2019. Firstly, we measure investors' risk perception as a firm's ex ante cost of equity by employing five different valuation models, all based on equity analysts' forecasted data. We then investigate whether large quantities of environmental information disclosed by an MNC affect its ex ante cost of equity. We find evidence that investors price the amount of environmental disclosure. More environmental disclosure decreases a firm's ex ante cost of equity because it lessens investors' information asymmetry. However, this relationship is non-linear. Once the amount of environmental disclosure data exceeds a certain threshold level, a firm's ex ante cost of equity will rise again. Our empirical results also suggest that non-financial factors at the country level play a role in shaping how investors perceive a firm's riskiness. Locating the firm in a country with better environmental performance and a higher score of the human development index can reduce investors' risk perception and result in a lower ex ante cost of equity. A policy implication of our findings is that a global standardised and effective corporate sustainability reporting is needed to provide investors a more holistic view for evaluating the riskiness of their investments.     

Forest Certification and ISO 14001: Current State and Motivation in Forest Companies

In this study, we explore the current state of specific corporate responsibility practices in the global forest sector. We compare the motivations for the leading forest industry companies to invest in certification from the Forest Stewardship Council (FSC) and the Programme for the Endorsement of Forest Certification (PEFC), and in the ISO 14001 environmental management system. For the empirical investigation, we use quantitative survey data collected from 60 of the world's leading forestry companies. This study's empirical results indicate that incentives for adopting forest certification are more often external rather than internal, and more market driven than regulation driven, which would suggest the dominance of extrinsic motivation. The results also indicate that the adoption of ISO 14001 certification represents a reactive strategic approach, emphasizing customer satisfaction as a key motivation. Motivations differ depending on the firm's business sector and the geographical location of its headquarters. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

Knowledge sharing in supply chain networks: Effects of collaborative innovation activities and capability on innovation performance

Building on knowledge management and innovation capability theories, this paper aims to reveal the mechanisms of collaborative innovation processes by investigating the complex relationships among critical factors influencing firm's innovation performance in supply chain networks. Using hierarchical Multiple Regression (MR) and Moderated Multiple Regression (MMR) methods, results from a survey of 236 firms in China indicated that there are significant positive relationships between collaborative innovation activities, knowledge sharing, collaborative innovation capability, and firm's innovation performance. Moreover, it is expected that knowledge sharing plays a partial mediating role in the relationships between collaborative innovation activities and firm's innovation performance. Collaborative innovation capability exhibited a moderating effect on collaborative innovation activities - innovation performance relationship. These results contribute to collaborative innovation process management by offering a nuanced conceptualization of the collaborative innovation - performance relationship in supply chain networks.