Determinants of Corporate Environmental Performance

Date of Submission

2007

Document Type

Dissertation

Degree Name

Doctor of Science in Management Systems (Sc.D.)

Department

Management

Advisor

William Pan

Committee Member

Roman Zajac

Committee Member

Ben Judd

LC Subject Headings

Industrial management--Environmental aspects, Production management--Environmental aspects

Call No. at the Univ. of New Haven Library

AS 36 N290 Mgmt. Syst. 2007 no. 7

Abstract

This study addresses the main question: “What are the determinants of corporate environmental performance?” Based on this research question, I then formulate the study objectives such as: (1) To explore the relationship between the level of corporate environmental performance and the R&D concentration, (2) To explore the relationships between the level of corporate environmental performance and the employee productivity, (3) To explore the relationship between the level of corporate environmental performance and the growth rate, (4) To explore the relationship between the level of corporate environmental performance and the capital intensity, (5) To explore the relationship between the level of corporate environmental performance and the industry’s stringency of environmental regulation, and (6) To explore the relationship between the level of corporate environmental performance and firm size.

Previous studies predicted that innovative environmental strategies could lead to the development of corporate specific capabilities. These organizational capabilities, in turn, within organizations are seen to influence competitive strategies and organizational outcomes. This study indicates that there is a link between green business strategy as measured by corporate environmental performance and organizational capabilities as measured by R&D intensity, employee productivity, firm growth, capital intensity, the stringency of industry regulation, and firm size.

Firm size, because of insignificant result, was dropped for regression analysis. The results of the multiple regression analysis suggest the R- Square is 90.20%. It means that 90.20% of the observed variability in environmental performance are explained by the five independent variables. The analysis of variance suggests that the observed significance level is less than 0.05, the alternative hypothesis is accepted that at least one of the population regression coefficients is not 0, and therefore, it can be concluded that there is linear relationship between corporate environmental performance and the five independent variables.

The main implication of this study is that the ability to make a prediction of corporate environmental performance is based on the following formula:

Predicted Y = -0.505 + 9.64 x RDSales + 0.0067 x EMProd + 2.28 x CAPisity + 0.42 ENVReg + 0.052 FGrowth.

Where Y is the predicted level of corporate environmental performance. In this multiple regression equation, the regression coefficient for the variable indicates how much the value of the dependent variable changes when the values of that independent variable increases by 1 and the values of the other independent variables do not change.

The findings of path analysis suggest that there is a direct effect on such variables as the level of corporate environmental performance, the firm growth, the R&D intensity, the employee productivity, and the capital intensity. The regulation stringency plays as a background variable. Focusing on the paths to the level of corporate environmental performance, it can be seen that employee productivity and R&D intensity each had strong effect on the level of corporate environmental performance.

This study, therefore, recommends the need to enhance employee productivity (variable EmProd) and R&D intensity (variable RDSales) to increase the level of corporate environmental performance.

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