Vol. 8 No. 3 (2020): Business & Management Studies: An International Journal
Articles

A RESEARCH ON THE RELATIONSHIP BETWEEN ENVIRONMENTAL MANAGEMENT APPLICATIONS AND ORGANIZATIONAL PERFORMANCE: THE EFFECT OF ENVIRONMENTAL PROACTIVITY

PDF (Türkçe)
  • Özlem AYAZ ARDA,
  • Tuğçe ASLAN
Özlem AYAZ ARDA
Asisst. Prof., Brunel Üniversity
Tuğçe ASLAN
Asisst. Prof., Bahçeşehir University
DOI: https://doi.org/10.15295/bmij.v8i3.1516

Published 2020-09-25

Keywords

  • Environmental Management Practices Organizational Performance Dynamic Capabilities View Environmental Proactivity
  • Çevre Yönetimi Uygulamaları, Örgütsel Performans, Dinamik Yetenekler Kuramı, Çevresel Proaktiflik

How to Cite

AYAZ ARDA, Özlem, & ASLAN, T. (2020). A RESEARCH ON THE RELATIONSHIP BETWEEN ENVIRONMENTAL MANAGEMENT APPLICATIONS AND ORGANIZATIONAL PERFORMANCE: THE EFFECT OF ENVIRONMENTAL PROACTIVITY. Business & Management Studies: An International Journal, 8(3), 3582–3614. https://doi.org/10.15295/bmij.v8i3.1516

Abstract

1. LITERATURE
Over the past two decades, environmental management (EM) systems have been increasingly implemented throughout the world, not only by large-scale firms but also by many small- and medium-sized enterprises (SMEs) (Lopez-Gamero et al., 2009; Tatoglu et al., 2015). Industrial developments have brought many innovations in production methods and processes while creating huge burdens. Water and air pollution, global warming, soil erosion, ozone depletion, and declines in forested and agricultural lands constitute some of the critical challenges widely faced as environmental issues. These challenges appear to necessitate modifications in the external settings of the structures of the industries. Pressure from controlling forces and environmental sensitivity on the part of the public, in particular, have the potential to affect business-related activities. Increasing environmental consciousness in society is one of the key reasons behind this growth. Increasing governmental regulations and requirements, pressure from nongovernmental organizations (NGOs) and other organized groups, and customers’ preference for firms that use environmentally friendly production methods tend to force both manufacturing and service firms to take action in this direction. When customers pay attention to selecting the products of firms that are sensitive to environmental issues (Ginsberg and Bloom 2004; Jabbour and Santos, 2006), firms tend to be careful about their decisions on supplier selection and place a great emphasis on their environmental management practices (EMP).
1.1. RESEARCH SUBJECT
This study examines whether the environmental management practices of companies operating in Turkey have a positive impact on company performance. Accordingly, the impact of environmental management practices on environmental proactivity as well as the mediating role of environmental proactivity in the relationship between environmental management practices and organizational performance was explored.
1.2. RESEARCH PURPOSE AND IMPORTANCE
Although the contributions of EMP in improving both firm performance and their differentiation based on competitive advantage have been well acknowledged in practice, there is an ongoing interest in the relation between EMP and organizational performance. Drawing on the arguments of the dynamic capabilities view, this study proposes a research model that examines the effects of the adoption of environmental management practices on environmental proactivity and the mediating role that environmental proactivity plays in the relationship between the adoption of environmental management practices and organizational performance.

1.3. CONTRIBUTION of the ARTICLE to the LITERATURE
The fundamental theoretical contribution of the research is the incorporation of EMP, and eventually EP, as firm capabilities as a way to gain competitive advantage, in line with the arguments of the dynamic capabilities view. Insights derived from this study contribute to connecting the gap between theory and practice, specifically concerning strategic management and the adoption of environmental management practices.
2. DESIGN AND METHOD
2.1. RESEARCH TYPE
The quantitative research design was adopted in this study. Accordingly, a survey is designed to understand the implementation level of EMP and its effect on organizational performance, drawing on a sample of Turkish firms.
2.2. RESEARCH PROBLEMS
In this study, the authors tried to find answers for two research problems: (1) Is there any positive relation between environmental management practices organizational performance? ; (2) Does environmental proactivity mediates the relation between environmental management practices and organizational performance?
2.3. DATA COLLECTION METHOD
Cross-sectional mail survey is used to collect the data. The initial form of the survey was in English, and it was translated into Turkish. The Turkish version was back-translated until a board of experts including scholars and industry professionals, approved that the two forms were equivalent. The website of ICI (Istanbul Chamber of Industry, http://www.iso.org.tr) constituted the sampling frame for Turkish firms. ICI provides an industrial database that contains nearly 18,000 firms functioning in a wide variety of manufacturing industries. Through a random sampling technique, 1,000 firms were selected and established the sampling frame for the survey. A survey and a cover letter were mailed to the CEO of each member company, requesting completion by the CEO or a senior manager with knowledge of environmental issues and organizational performance. After two reminders, a total of 208 usable surveys were received and this represents an effective response rate of 20.8 per cent, which was seemingly adequate, given the confidentiality of the questionnaire.
3. FINDINGS AND DISCUSSIONS
The findings demonstrate that although the link between the adoption of environmental management practices and organizational performance is insignificant within direct links, in the presence of higher environmental proactivity, the effect of the adoption of environmental management practices on organizational performance becomes significant and positive. This finding resolves the controversies about the relationship between environmental management practices and organizational performance by merely noting that applying or adopting environmental management practices is not a sufficient condition to achieve higher organizational performance. Instead, firms need to realize their actions and pursue environmental proactivity indicators in order to attain higher organizational performance.
4. CONCLUSION, RECOMMENDATION AND LIMITATIONS
4.1. RESULTS of the ARTICLE
The results show that when there is a high level of environmental proactivity, the impact of adopting environmental management practices on organizational performance is significant and positive. This indicates that the adoption of environmental management practices is not a sufficient condition for achieving higher organizational performance. As a result, the findings of this study suggest evaluating discussions about the relationship between environmental management practices and organizational performance in this context.
4.2. SUGGESTIONS BASED on RESULTS
The knowledge gained from this study may contribute to bridging the gap between theory and practice, especially regarding the adoption of Strategic Management and environmental management practices. At the same time, research can be designed that covers the extent to which the sub-dimensions of environmental management practices are effective in achieving organizational performance. It will be useful for these studies to reveal reviews based on sectors and geographies. Another area of study may be on the impact of environmental management practices on multinational companies’ investment decisions. All of these are important issues to highlight the fact that environmental management practices have become a capability in the core strategies of companies.
4.3. LIMITATIONS of the ARTICLE
Despite its merits, this study is subject to some limitations. These limitations are primarily those associated with the research methods adopted and the single-country context selected. Initially, the selection of Turkey as the context for the study had some advantages and disadvantages. Because the study involves a single-country context, understanding the nature of a market in depth makes a more specific contribution.

PDF (Türkçe)

Downloads

Download data is not yet available.

References

  1. Anderson, J.C., Gerbing, D.W. (1988). Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103, 411-423.
  2. Aragón-Correa, J. A., & Rubio-Lopez, E. A. (2007). Proactive corporate environmental strategies: myths and misunderstandings. Long Range Planning, 40(3), 357-381.
  3. Aragón-Correa, J. A., & Sharma, S. (2003). A contingent resource-based view of proactive corporate environmental strategy. Academy of Management Review, 28(1), 71-88.
  4. Arda, O. A., Bayraktar, E., & Tatoglu, E. (2019). How do integrated quality and environmental management practices affect firm performance? Mediating roles of quality performance and environmental proactivity. Business Strategy and the Environment, 28(1), 64-78.
  5. Bagozzi, R.P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16, 74-94.
  6. Banerjee, A. (1998). Environment, population, and human settlements of Sundarban Delta. Concept Publishing Company.
  7. Banerjee, S.B. (2001). Managerial perceptions of corporate environmentalism: Interpretations from industry and strategic implications for organizations. Journal of Management Studies, 38(4), 489-513.
  8. Banerjee, S. B., Iyer, E. S., &Kashyap, R. K. (2003). Corporate environmentalism: Antecedents and influence of industry type. Journal of Marketing, 67(2), 106-122.
  9. Baron, D. P. (2001). Private politics, corporate social responsibility, and integrated strategy. Journal of Economics & Management Strategy, 10,1, 7-45.
  10. Baron, R.M., & Kenny, D.A. (1986). The moderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173-1182.
  11. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management. 17 (1), 99–120.
  12. Berchicci, L., Dowell, G., & King, A. A. (2012). Environmental capabilities and corporate strategy: Exploring acquisitions among US manufacturing firms. Strategic Management Journal, 33(9), 1053-1071.
  13. Boyd, B.K. (1991). Strategic planning and financial performance: A meta‐analytic review. Journal of Management Studies, 28(4), 353-374.
  14. Buckley, M.R., Cote, J.A., & Comstock, S.M. (1990). Measurement errors in behavioral sciences: The case of personality/attitude research. Educational and Psychological Measurement, 50(3), 447-474.
  15. Cairncross, F. (1992). How Europe’s companies reposition to recycle. Harvard Business Review, 70(2), 34-42.
  16. Christmann, P. (2000). Effects of “best practices” of environmental management on cost advantage: The role of complementary assets. Academy of Management journal, 43(4), 663-680.
  17. Claver, E., Lopez, M. D., Molina, J. F., &Tarí, J. J. (2007). Environmental management and firm performance: A case study. Journal of environmental Management, 84(4), 606-619.
  18. Cordeiro, J. J., and Sarkis, J. (1997). Environmental proactivism and firm performance: evidence from security analyst earnings forecasts. Business Strategy and the Environment. 6(2) 104-114.
  19. Curkovic, S., Melynk, S.A., Handfield, R.B., &Calantone, R.J. (2000). Investigating the linkage between total quality management and environmentally responsible manufacturing. IEEE Transactions on Engineering Management, 47(4), 444-446.
  20. Dess, G.G., & Robinson, R.B. (1984). Measuring organizational performance in the absence of objective measures: The case of the privately‐held firm and conglomerate business unit. Strategic Management Journal, 5(3), 265-273.
  21. Dowell, G., Hart, S., & Yeung, B. (2000). Do corporate global environmental standards create or destroy market value? Management Science, 46(8), 1059-1074.
  22. Ervin, D., Wu, J.J., Khanna, M., Jones, C., &Wirkkala, T. (2013). Motivations and barriers to corporate environmental management. Business Strategy and the Environment, 22, 390-409.
  23. Fernández, E., Junquera, B., &Ordiz, M. (2003). Organizational culture and human resources in the environmental issue: a review of the literature. International Journal of Human Resource Management, 14(4), 634-656.
  24. Fornell, C., &Larcker, D.F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
  25. Ganster, D.C., Hennessey, H.W., &Luthans, F. (1983). Social desirability response effects: Three alternative models. Academy of Management Journal, 26(2), 321-331.
  26. Ginsberg, J.M., Bloom P.N., (2004). Choosing the right green marketing strategy. MIT Sloan Management Review. 48(1) 79-85
  27. Gonzalez-Benito, J., & Gonzalez-Benito, O. (2005). Environmental proactivity and business performance: An empirical analysis. Omega, 33, 1-15.
  28. Gökşen, N. S., &Üsdiken, B. (2001). Uniformity and diversity in Turkish business groups: Effects of scale and time of founding. British Journal of Management, 12(4), 325-340.
  29. Greene, C.N., & Organ, D.W. (1973). An evaluation of causal models linking the received role with job satisfaction. Administrative Science Quarterly, 18, 95-103.
  30. Groenewegen, P., &Vergragt, P. (1991). Environmental issues as threats and opportunities for technological innovation. Technology Analysis & Strategic Management, 3(1), 43-55.
  31. Gunduz, L., &Tatoglu, E. (2003). A comparison of the financial characteristics of group affiliated and independent firms in Turkey. European Business Review, 15(1), 48-54.
  32. Hanna, M. D., & Rocky Newman, W. (1995). Operations and environment: an expanded focus for TQM. International Journal of Quality & Reliability Management, 12(5), 38-53.
  33. Hair, J.F., Black, W.C., Babin, B.J., & Anderson, R.E. (2010). Multivariate Data Analysis – A Global Perspective, 7th ed. Pearson Prentice Hall, New Jersey.
  34. Hamilton, J. T. (1995). Pollution as news: Media and stock market reactions to the toxics release inventory data. Journal of environmental economics and management, 28(1), 98-113.
  35. Harrison, D.A., McLaughlin, M.E., & Coalter, T.M. (1996). Context, cognition, and common method variance: Psychometric and verbal protocol evidence. Organizational Behavior and Human Decision Processes, 68(3), 246-261.
  36. Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986-1014.
  37. Hart, 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.
  38. Hart, S. L., & Dowell, G. (2011). Invited editorial: A natural-resource-based view of the firm: Fifteen years after. Journal of management, 37(5), 1464-1479.
  39. Hayes, A. F., & Preacher, K. J. (2014). Statistical mediation analysis with a multicategorical independent variable. British Journal of Mathematical and Statistical Psychology. 67(3), 451-470.
  40. Helfat, C.E., Finkelstein, S., Mitchell, W., Peteraf, M., Singh, H., Teece, D., et al. (2009). Dynamic Capabilities: Understanding Strategic Change in Organizations. John Wiley & Sons.
  41. Henriques, I., &Sadorsky, P. (1999). The relationship between environmental commitment and managerial perceptions of stakeholder importance. Academy of management Journal, 42(1), 87-99.
  42. Hofer, C., D. E. Cantor, and J. Dai. 2012. The Competitive Determinants of a Firm’s Environmental Management Activities: Evidence from US Manufacturing Industries. Journal of Operations Management 30: 69–84.
  43. Hufnagel, E. M., & Conca, C. (1994). User response data: The potential for errors and biases.
  44. Glaister, K. W., Dincer, O., Tatoglu, E., &Demirbag, M. (2009). A comparison of strategic planning practices in companies from the UK and Turkey. Journal of Management Development, 28(4), 361-379. Information Systems Research, 5(1), 48-73.
  45. Janssens, W., Wijnen, K., De Pelsmacker, P., & Van Kenhove, P. (2008). Marketing Research with SPSS. Pearson Education Limited, England.
  46. Jennings, P. D., &Zandbergen, P. A. (1995). Ecologically sustainable organizations: An institutional approach. Academy of management review, 20(4), 1015-1052.
  47. Kamande, M. W., &Lokina, R. B. (2013). Clean production and profitability: An eco-efficiency analysis of kenyan manufacturing firms. The Journal of Environment & Development, 22(2), 169-185.
  48. Kemp, R. (1993). An economic analysis of cleaner technologies: theory and evidence. In: Fischer, K., Schot, J. (Eds.), Environmental Strategies for Industry. Island Press, Washington, pp. 79–113.
  49. Khanna, M., & Kumar, S. (2011). Corporate environmental management and environmental efficiency. Environmental and Resource Economics, 50(2), 227-242.
  50. King, A. A., & Lenox, M. J. (2001). Does it really pay to be green? An empirical study of firm environmental and financial performance: An empirical study of firm environmental and financial performance. Journal of Industrial Ecology, 5(1), 105-116.
  51. Konar, S., & Cohen, M. A. (2001). Does the market value environmental performance?.The review of economics and statistics, 83(2), 281-289.
  52. Klassen, R. D. (2001). Plant‐level environmental management orientation: the influence of management views and plant characteristics. Production and Operations Management, 10(3), 257-275.
  53. Klassen, R. D., & McLaughlin, C. P. (1996). The impact of environmental management on firm performance. Management science, 42(8), 1199-1214.
  54. Lewin, A. Y., & Minton, J. W. (1986). Determining organizational effectiveness: Another look, and an agenda for research. Management science, 32(5), 514-538.
  55. Li, Y.H., Huang, J.W., & Tsai, M.T. (2009). Entrepreneurial orientation and firm performance: The role of knowledge creation process. Industrial Marketing Management, 38(4), 440-449.
  56. López-Gamero, M. D., Molina-Azorín, J. F., &Claver-Cortes, E. (2009). The whole relationship between environmental variables and firm performance: Competitive advantage and firm resources as mediator variables. Journal of Environmental Management, 90(10), 3110-3121.
  57. López-Gamero, M.D, Molina-Azorín, J.F., &Claver-Cortes, E. (2011). The relationship between managers’ environmental perceptions, environmental management and firm performance in Spanish hotels: A whole framework. International Journal of Tourism Research, 13, 141-163.
  58. Malhotra, N.K., Kim S.S., &Patil A. (2006). Common method variance in IS research: A comparison of alternative approaches and a reanalysis of past research. Management Science, 52(12), 1865-1883.
  59. Malhotra, N.K., & Dash, S. (2011). Marketing Research: An Applied Orientation. 6th Edition, Pearson, New York.
  60. Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: Rethinking social initiatives by business. Administrative science quarterly, 48(2), 268-305.
  61. McGee, E.C., &Bhushan, A.K. (1993). Applying the Baldrige quality criteria to environmental performance: Lessons from leading organizations. Total Quality Environmental Management, 3(1), 1-18.
  62. Melynk, S.A., Sroufe, R., &Calantone, R. (2003). Assessing the impact of environmental management systems on corporate and environmental performance. Journal of Operations Management, 21, 329-351
  63. Molina-Azorin, J.F., Tari, J.J., Claver-Cortes, E., & Lopez-Gamero, M.D. (2009). Quality management, environmental management and firm performance: A review of empirical studies and issues of integration, International Journal of Management Reviews, 11(2), 197-222.
  64. Montabon, F., Sroufe, R., &Narasimhan, R. (2007). An examination of corporate reporting, environmental management practices and firm performance. Journal of Operations Management, 25, 998-1014.
  65. Nash, M. (1983). Managing organizational performance. San Francisco: Jossey-Bass.
  66. Nehrt, C. (1996). Timing and intensity effects of environmental investments. Strategic Management Journal, 17(7), 535-547.
  67. Nishitani, K., Kaneko, S., Fujii, H., & Komatsu, S. (2011). Effects of the reduction of pollution emissions on the economic performance of firms: an empirical analysis focusing on demand and productivity. Journal of Cleaner Production, 19(17), 1956-1964.
  68. Nunnally, J.C. (1978). Psychometric Theory, 2nd ed., McGraw-Hill, New York, NY.
  69. Organ, D.W., & Greene, C.N. (1981). The effects of formalization on professional involvement: A compensatory process approach. Administrative Science Quarterly, 26, 237-252.
  70. Orlitzky, M., Schmidt, F. L., &Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.
  71. Pearce, J.A., Freeman, E.B., & Robinson, R.B. (1987). The tenuous link between formal strategic planning and financial performance. Academy of Management Review, 12(4), 658-675.
  72. Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y., &Podsakoff, N.P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. Applied Psychology, 88(5), 879-903.
  73. Porter, M. E. (1991). Towards a dynamic theory of strategy. Strategic Management Journal. 12 (2), 95-117.
  74. Porter, M. E., and Van der Linde, C. (1995a). “Green and competitive”. Harvard Business Review, 73 (5), pp. 120-134.
  75. Porter, M. E., and Van der Linde, C. (1995b). Toward a new conception of the environment-competitiveness relationship. The journal of economic perspectives. 9 (4), 97-118.
  76. Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods. 40(3), 879-891.
  77. Rao, M.P. (2006). A performance measurement system using a profit-linked multi-factor measurement model. Industrial Management & Data Systems, 106(3), 362-379.
  78. Richardson, H.A., Simmering, M.J., &Sturman, M.C. (2009). A tale of three perspectives examining post hoc statistical techniques for detection and correction of common method variance. Organizational Research Methods. 12(4), 762-800.
  79. Russo, M.V., &Fouts, P.A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal. 40(3), 534-559.
  80. Sarkis, J. (1998). Evaluating environmentally conscious business practices. European Journal of Operational Research, 107, 159-174.
  81. Sharma, S., &Vredenburg, H. 1998. Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, 19: 729-753.
  82. Schriesheim, C.A. (1979). The similarity of individual-directed and group directed leader behavior descriptions. Academy of Management Journal, 22, 345-355.
  83. Shrivastava, P. (1995). Environmental technologies and competitive advantage. Strategic Management Journal, 16(S1), 183-200.
  84. SME User Guide (2016). User Guide to the SME Definition. European Commission, Brussels: Enterprise and Industry Publications.
  85. Soo Wee, Y., &Quazi, H. A. (2005). Development and validation of critical factors of environmental management. Industrial Management & Data Systems, 105(1), 96-114.
  86. Steger, U. (Ed.). 2004. The business of sustainability. Basingstoke: Palgrave Macmillan.
  87. Teece, D. J. (2014). A dynamic capabilities-based entrepreneurial theory of the multinational enterprise. Journal of International Business Studies. 45(1), 8-37.
  88. Thornton, D., Kagan, R. A., &Gunningham, N. (2003). Sources of corporate environmental performance. California Management Review, 46(1), 127-141.
  89. Trung D.N., Kumar S. (2005). Resource use and waste management in Vietman hotel industry. Journal of Cleaner Production. 13, 109–16.
  90. Venkatraman, N. (1989). The concept of fit in strategy research: toward verbal and statistical correspondence. Academy of Management Review, 14, 423-444.
  91. Venkatraman, N., &Ramanujam, V. (1986). Measurement of business performance in strategy research: A comparison of approaches. Academy of Management Review, 11(4), 801-814.
  92. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic management journal, 303-319.
  93. Wever, H., &Vorhauer, G.F. (1993). Kodak’s framework and assessment tool for implementing TQEM. Total Quality Environmental Management, 3(1), 19-30.
  94. Williams, L.J., Edwards, J.R., & Vandenberg, R.J. (2003). Recent advances in causal modeling methods for organizational and management research. Journal of Management, 29, 903-936.
  95. Williams, H. E., Medhurst, J., and Drew, K. (1993). Corporate strategies for a sustainable future in Environmental Strategies for Industry: International Perspectives on Research Needs and Policy Implications (K. Fischer and J. Schot, Eds.).
  96. Yamak, S., &Üsdiken, B. (2006). Economic liberalization and the antecedents of top management teams: evidence from Turkish ‘big’business. British Journal of Management, 17(3), 177-194.
  97. Yu, W., &Ramanathan, R. (2015). An empirical examination of stakeholder pressures, green operations practices and environmental performance. International Journal of Production Research, 53(21), 6390-6407.
  98. Yu, W., &Ramanathan, R. (2016). Environmental management practices and environmental performance: The roles of operations and marketing capabilities. Industrial Management & Data Systems, 116(6), 1201-1222.
  99. Zhang, H., & Yang, F. (2016). On the drivers and performance outcomes of green practices adoption: an empirical study in China. Industrial Management & Data Systems, 116(9), 2011-2034.