Does corporate environmental responsibility engagement affect firm value? The mediating role of corporate innovation

This paper aims to construct a comprehensive corporate environmental responsibility (CER) engagement measurement to examine the relationship between CER engagement and firm value as well as explore the mediating effect of corporate innovation on this relationship based on a sample of 496 China's A‐share listed companies from 2008 to 2016. The results show that when firms start to adopt environmental regulations, CER would have a negative effect on firm value; however, at a specific level, CER would start to enhance firm value positively. In addition to this, corporate innovation plays a mediating role in the relationship between CER and firm value. Corporate innovation promotes firm value of firms with CER more than firms without CER. Overall, the findings of this paper are extremely relevant for the government, investors, and firm's managers and can be utilized for policy and investment decision making. Also, the findings encourage firms to enhance their sense of environmental responsibility in order to enhance their competitive advantages, enhance corporate innovation capabilities, and thus enhance firm value.     

Gender Diversity on Boards and Firms’ Environmental Policy

This paper tests the relationship between gender diversity on boards and firms’ environmental policy. Based on prior research, we predict that gender diversity on boards of directors should have a positive relationship with firms’ environmental policy. Moreover, firm character in terms of pollution creation likelihood moderates the relationship between gender diversity on boards and firms’ environmental policy. Analyzing data from 865 publicly listed firms in the United States, we found direct and significant empirical evidence for our predictions. According to the findings, we highlight the importance of gender diversity for the development of good firm environmental policy as well as for the improvement of corporate governance. Moreover, the more likely firms in a given industry are to cause environmental pollution, the more salient will be the beneficial effect of gender diversity on boards on firms’ environmental policy in the industry. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

Effect of green innovation strategy on firm‐idiosyncratic risk: A competitive action perspective

Despite increasing concern for corporate environmental responsibility in numerous industries, the relationship between green innovation strategy (GIS) and idiosyncratic risk is a rarely scrutinised topic, particularly in the automotive domain. In this study, we empirically explore the association between GIS and idiosyncratic risk and analyse the moderating role played by the firm's competitive action. We rely on the secondary information sourced for 132 top automotive firms, in the period ranging from 2011 to 2017 by applying the system generalised methods of moments estimator to the dynamic panel data model. Our findings indicate that GIS significantly reduces the idiosyncratic risk of all firms, and this relationship strengthens with the increase in the competitive action of the firms. Our evidence supports “it pays to be green” firm heterogeneity argument. This study highlights the academic and managerial implications and focuses on the environmental issues published in environmental management literature.     

Enhancing effects of manufacturing flexibility through operational absorptive capacity and operational ambidexterity

A large body of research investigates how manufacturing flexibility in uncertain environments leads to firm performance, with mixed results. The mixed findings could be due to differences across firms in terms of the capabilities to acquire, assimilate, and transform knowledge and to simultaneously pursue both the exploitation of existing operational capabilities and the exploration for new operational capabilities. Building on the literature that suggests that manufacturing flexibility mediates the relationship between environmental uncertainty and firm performance, we explore the applicability of two organizational learning contingencies to the operations environment: operational absorptive capability and operational ambidexterity. Absorptive capacity enables the recognition and assimilation of new knowledge. Ambidexterity determines whether this knowledge will be applied for both exploration and exploitation. Using a sample of 852 manufacturing firms, we find that environmental uncertainty affects firm performance directly and indirectly through manufacturing flexibility. Furthermore, both operational absorptive capacity and operational ambidexterity moderate the relationship between environmental uncertainty and manufacturing flexibility and the relationship between manufacturing flexibility and firm performance. Theoretical and practical implications are discussed.     

Resource Configuration in Family Firms: Linking Resources, Strategic Planning and Technological Opportunities to Performance

abstract    We apply the resource-based view of the firm to the study of family firms by investigating how a family specific resource (reciprocal altruism) and a firm specific resource (innovative capacity) contribute to family firm performance. We then examine how the impact of these resources is moderated by strategic planning and technological opportunities. Our findings suggest that family firms can benefit from emphasizing the positive aspects of kinship and from developing innovative capacities. As such, we demonstrate that not only do firm specific resources contribute to family firm performance, but also that family relationships can be a source of competitive advantage for a family firm. In addition, we found a heightened importance of reciprocal altruism in environments rich in technological opportunities, and that strategic planning is more important for those family firms that lack innovative capacities.     

城市可持续发展和企业的环境行为——对昆明市企业环境行为的分析

本文考察了昆明市环保局重点监控的污染企业的环境行为,发现昆明市国有企业比其他企业在环境保护方面的投资更多,而外资企业和私营企业在环境保护行为与其属性没有显著关系.另外,总体上,企业经营时间与其环境保护行为也不存在显著关系.但是,对化学原料及化学制品制造业企业的研究表明,企业经营时间越长,其环境保护的投入水平更高.最后,尽管滇池流域的治理受到广泛关注,但是企业是否处于流域之内与企业本身对环境保护的投入方面并没有显著的关系.最后,本文提出了一些加强对企业环境监管的政策建议.     

Can environmentally oriented CEOs and environmentally friendly suppliers boost the growth of small firms?

The core question addressed in the natural resource‐based view (NRBV) of the firm is how to develop and exploit resources beneficial for both the natural environment and firm performance. Due to the resource constraints and increased competition facing small manufacturing firms, achieving this is a challenge for such companies. Building on the NRBV and resource orchestration literatures, we examine the relationship between green purchasing capabilities (GPCs), CEO's environmental orientation (EO), and firm growth. Results from 304 Swedish small manufacturing firms indicate a significant relationship between GPC and growth, and this relationship is positively moderated by the EO of the CEO.     

Navigating through firm–environmental groups' relationships: The impact of societal trust on corporate environmental strategy

This study examines the impact of societal trust on corporate environmental strategy with particular reference to the firm–environmental groups' relationship, which has received very little attention in trust literature. Using data on 2332 firms from 16 countries, we find that societal trust exerts a negative effect on the likelihood of ISO 14001 certification. The negative relationship between societal trust and the likelihood of ISO 14001 is more pronounced for firms having intense collaboration with environmental groups. However, this effect appears to be weak in higher market uncertainty. These findings, besides significantly adding to the literature, have practical and managerial implications.     

Understanding variation in the relationship between environmental management practices and firm performance across studies: A meta‐analytic review

The relationship between environmental management practices and firm performance has continuously received much attention in academic research. As existing literature on the link of the two constructs is characterized by heterogeneous research characteristics and mixed empirical evidence, one interesting question arises: Do research characteristics affect the magnitude and direction of the relationship between environmental management practices and firm performance? Amassing a database of 92 studies, 199 effect sizes, and 72,258 firms, we examine this question by conducting a meta‐analysis. The characteristics investigated in this study include item number of performance measures, year of data collection, industry type, economic development, and Hofstede's five cultural dimensions. A meta‐regression reveals that environmental management practices are positively associated with firm performance and that the degree of this association depends on these contexts. Specifically, the environmental management practices–performance relationship increases with year of data collection, is stronger with multiple item measures, and is higher for firms in developed countries and in cultures characterized by high power distance, low individualism, low uncertainty avoidance, and low long‐term orientation.     

CEO compensation: does it pay to be green?

The relationship between chief executive officer (CEO) compensation and various organizational variables (i.e., size, length of tenure of the CEO, board composition and firm performance) has been explored in academic research. However, the relationship between CEO compensation and the firm's reputation based on the firm's commitment to the community and the environment has been relatively unexamined in the academic research. This study's purpose is to empirically examine this relationship using the Fortune Reputation Index as revised by Brown and Perry (1995) . Using a sample of 186 firms in 1990 and 188 firms in 1991, the relationships between CEO compensation and organization size, financial performance and environmental reputation are examined. The results of the study demonstrate that there is a strong relationship between CEO compensation and firm environmental reputation, firm size and firm financial performance. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment     

Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.     

Is market learning the missing link between family involvement – firm performance relationship? A resource-based perspective

Drawing on previous literature on proposing that there exists a positive relationship between family involvement and firm performance, this study refines the explanatory role of market learning in explaining the relationship between family involvement and firm performance to be conditional to firm age and environmental turbulence. The data from 344 small-medium enterprises show that family involvement is positively related to market exploitation while family involvement is negatively related to market exploration as family firms age. Also, we provide empirical evidence that family involvement is positively related to firm performance in turbulent environments through market exploration irrespective of the firm’s age. Conversely, family involvement is positively related to firm performance through market exploitation in less turbulent environments irrespective of firm age. This study provides empirical evidence of the market exploration and exploitation capabilities may be the capabilities that glue family involvement to firm performance.     

Boosting environmental management: The mediating role of Industry 4.0 between environmental assets and economic and social firm performance

The adoption of new innovative ecosystems linked to Industry 4.0 (I4.0) in industrial firms has created new opportunities for performance. In this study, we investigate whether I4.0 can reinforce environmental asset management in achieving firm economic and social performance. We intend to contrast the existence of I4.0-based reward mechanisms for being green. Using a panel of 1028 Spanish industrial firms in 2009–2016 period and a partial least squares structural equation modelling econometric methodology, the research has obtained two main results. First, the management of environmental assets generates positive effects on the economic and social performance of the industrial firm. Second, research findings confirm the mediating role of I4.0, which ends up reinforcing the relationship between environmental assets and the economic and social firm performance. The results obtained highlight the importance of complementary relationships between digital and environmental transformation to promote firm performance. Implications for firm strategy and business models are also discussed.     

Environmental sustainability orientation and performance of family and nonfamily firms

Despite the growing research evidence on the effect of environmental sustainability orientation (ESO) on firm outcomes, contingent factors that may influence the strength of this relationship have received little scholarly attention. In this study, we use insights from the literature on ESO and family business to introduce family status and firm age as moderators in the ESO‐performance linkage. Using time‐lagged data from 253 small and medium‐sized enterprises in Ghana, we found the impact of ESO on firm performance is amplified for nonfamily firms but not significant for family firms. Our evidence suggests it is stronger among older firms than younger ones. Implications and directions for future research are discussed.     

Green management,firm innovations,and environmental turbulence

The multifaceted nature of firm innovation has prevented researchers from fully explaining the relationship between firm innovation and green management. This study, building on the Schumpeterian theory of innovation, explores this relationship by examining three major types of firm innovation—strategic innovation, managerial innovation, and product innovation—and their respective relationships with green management, considering several dimensions of environmental turbulence as distinctive boundary conditions. We propose that both strategic innovation and managerial innovation facilitate green management, which in turn mediates these effects on new product performance. The results of a survey of 303 Chinese firms provide strong support for this mediating logic. Moreover, we find that market turbulence weakens the effect of strategic innovation on green management whereas technological turbulence strengthens such effect but the effect of managerial innovation on green management is not influenced by environmental turbulence. Our research contributes to the innovation as well as green management and sustainability literatures by offering a framework in which to analyze firm innovation and green management and by showing how firms pursue sustainability and prosperity under specific environmental conditions.     

Greenwash: Corporate Environmental Disclosure under Threat of Audit

We develop an economic model of “greenwash,” in which a firm strategically discloses environmental information and an activist may audit and penalize the firm for disclosing positive but not negative aspects of its environmental profile. We fully characterize the model's equilibria, and derive a variety of predictions about disclosure behavior. We rationalize conflicting results in the empirical literature, finding a nonmonotonic relationship between a firm's expected environmental performance and its environmental disclosures. Greater activist pressure deters greenwash, but induces some firms to disclose less about their environmental performance. Environmental management systems discourage firms with poor expected environmental performance from greenwashing, which may justify public policies encouraging firms to adopt them.     

The relationship between environmental information disclosure and firm valuation: the role of corporate governance

Hopwood argued that accounting has become associated with environmental concerns, and that environmental concerns will be further integrated into accounting practices in the near future. The McKinsey Company discovered that environmental information affects a firm’s value, and that investors in firms with good corporate governance in Asian countries are willing to pay a price premium of 20 % or greater. The increasing need for environmental protection and responsibility to the community on the part of firms have led to environmental protection becoming a critical focal concern of governments, public welfare associations, and the public. Effective implementation of corporate governance has been reported to enhance operating performance and increase firm value. This study applies the Ohlson valuation model to examine the value relevance of environmental information disclosure and corporate governance, and investigate their on firms in Taiwan. The results indicate relationships between total disclosure of environmental information, mandatory disclosure of environmental information, and voluntary disclosure of environmental information and firm value. Corporate governance is positively correlated with the valuation of total disclosure of environmental information and mandatory disclosure of environmental information.     

High‐commitment HR practices,employee effort,and firm performance: Investigating the effects of HR practices across employee groups within professional services firms

In this study, the authors examine the relationship between high‐commitment HR practices and firm performance in professional services firms through the mediator of employee effort. In addition, they contribute to the debate in the field of strategic HRM on whether high‐commitment HR practices should be used across all employee groups within a firm. Their study's results show that high‐commitment HR practices positively relate to firm performance through employee effort for two employee groups within professional services firms. Further, they found that the relationship between effort and performance is contingent on the value of the employee group to firm competitive advantage, suggesting that companies may only want to expend the effort and resources on building a high‐commitment HR system for employee groups that are clearly tied to creating firm competitive advantage. © 2011 Wiley Periodicals, Inc.     

New evidence on the origins of corporate crime

The intuition that poorly performing corporations are more likely to engage in crime is found throughout the contemporary literature on the economics and law and economics of corporate misconduct. Yet little evidence of such a relationship exists. This paper presents new evidence on the relationship between prior performance and corporate crime, using panel data on public corporations, 1975–92. When prior performance is measured in terms of earnings, only very weak evidence of a relationship is found. However, we find that a low rate of sales or employment growth by the firm tends to be a good predictor of environmental crime, and that environmental crime tends to occur in industries that have had relatively high rates of growth, as measured by employment or sales. This suggests that it is the performance of the firm rather than or relative to that of the industry that matters. Support for this finding is robust. The data provide weaker support for the notion that prior performance affects the occurrence of other types of corporate crime, particularly fraud. This may reflect the presence of mechanisms through which potential fraud victims, unlike potential environmental crime victims, can and do respond to events that would increase their chances of becoming crime victims by taking steps to prevent it. Finally, larger firms are found significantly more likely to have engaged in crime than smaller firms, in contrast to recent suggestions in the literature.     

Exploration and exploitation and firm performance variability<Emphasis>:</Emphasis> a study of ambidexterity in entrepreneurial firms

A challenge young entrepreneurial firms usually face is reducing variability in firm performance in order to mitigate survival difficulties. This paper suggests ventures should have a clear preference for either exploration or exploitation, because such an approach to ambidexterity reduces variability in firm performance. We specifically concentrate on the moderation effects of firm size and environmental dynamism in a sample of young entrepreneurial firms. We found evidence for the effects of lower performance variability in dynamic environments. This is an important insight, because environmental dynamism is a contingency where performance variance is considered problematic for entrepreneurial firms. Our research has implications for the establishment phase of entrepreneurial firms as it suggests they should carefully consider how much they explore to be as different as possible and how much they exploit to be as effective as possible. This is particularly important when they are younger and exposed to dynamic environments.