Showing papers in "Business Strategy and The Environment in 2021"

Modeling the dynamic linkage between financial development, energy innovation, and environmental quality: Does globalization matter?

Abstract: In the modern era of the wave of globalization, financial development is leading toward a higher rate of economic expansion and promoting energy innovation around the globe. Nevertheless, environmental impact of financial development has preoccupied government officials to circumvent adverse impact on environmental quality. Thus, this paper examines the nexus between financial development, economic growth, energy innovation, and environmental pollution for the period of 1990–2017 for the panel of Organization for Economic Cooperation and Development (OECD) countries. To obtain robust and unbiased results, this study utilizes Pooled Mean Group Autoregressive Distributed Lag (PMG/ARDL) estimator that counters the issue of heterogeneity and cross‐sectional dependence. Empirical evidence suggests that financial development promotes energy innovation and improves environmental quality. Globalization also has a long‐term relationship with energy innovation and reduces greenhouse gas (GHG) emissions. Moreover, findings validate the environmental Kuznets curve for OECD countries in the significance of financial development, globalization, and energy innovation.

Industry 4.0 and the circular economy: A literature review and recommendations for future research

Abstract: Research regarding the Fourth Industrial Revolution (Industry 4.0) and the circular economy has gained traction since 2014. Paralleling the growth in the internet of things (IoT), the circular economy poses both risks and opportunities to various stakeholders in its development. This literature review aims to identify Industry 4.0 stakeholders' interests and expectations regarding how the IoT can be part of circular economy management. Contributions include identifying various IoT tools for dealing with circular economy challenges while also addressing implementation best practices. The transition of the circular economy within Industry 4.0 requires a better understanding of government, suppliers, international organizational interests, and expectations regarding the IoT. This study enables future research on circular economy practices and their potential sustainability benefits for manufacturing firms. This study's findings allow practitioners and researchers to understand the literature and critical elements of the transition toward a more circular economy.

Enhancing green product and process innovation: Towards an integrative framework of knowledge acquisition and environmental investment

Abstract: Despite the increasing interest in green innovation literature, little is known on how and under what conditions firms' knowledge transfer activities affect green innovation. There is lack of research that on how particular organizational capabilities are seen more useful and how it influences on green innovation performance. To address this research gap, we examine a mediation model in which we explore whether a firm's knowledge acquisition capability and investment in environmental management mediate the impact of buyer‐driven knowledge transfer activities on green product innovation and green process innovation. On the basis of an analysis of a sample of 239 manufacturing firms, we find that buyer‐driven knowledge activities have a greater positive impact on green product innovation than green process innovation. Investment in environmental management fully mediates the relationship between buyer‐driven knowledge transfer activities and green process innovation, and knowledge acquisition capability partially mediates the relationship between buyer‐driven knowledge transfer activities and green product innovation. The current study provides evidence that internal competencies and the role of buyers in knowledge transfer are critical for explaining the green product innovation and green process innovation. Our results suggest that buyer involvement pushes firms to develop resource acquisition capability to enhance green product innovation. Our results also highlight the importance of investment in environmental management for overcoming the environmental challenges in the manufacturing firms.

The determinants of business contribution to the 2030 Agenda: Introducing the SDG Reporting Score

Abstract: Within the 2030 Agenda, the United Nations have explicitly required that the Member States introduce within their jurisdictions new forms of regulations about non‐financial reporting practices. The aim of this paper is to investigate the effects related to the transposition of Directive 2014/95/EU by analyzing firm‐level, governance‐level, and report‐level determinants of business reporting on the Sustainable Development Goals (SDGs). To conduct such an analysis, this study defines and introduces the SDG Reporting Score (SRS)—a qualitative proxy representing a firm orientation toward SDG reporting. The study sample includes the non‐financial reports of 153 Italian Public Interest Entities. The results show a positive relationship between a firm's SRS and various determinants, such as the presence of independent directors on the board, expertise with non‐financial reporting, and length of the report. Finally, the highest levels of SRS are achieved by firms operating in environmental sensitive sectors.

Nudging toward diversity in the boardroom: A systematic literature review of board diversity of financial institutions

Abstract: Going beyond the mere gender diversity in the boardroom, this systematic review comprehensively covers the research on board diversity of financial institutions. More specifically, we cover gender diversity, as well as other characteristics of diversity, such as nationality, age, tenure, experience, education, ethnicity, and religion. A systematic literature review was employed using Scopus and Web of Science databases, covering all publications until May 2020, which resulted in 91 studies from 66 top-ranked journals in accounting, finance, and economic fields. We analyze them based on the journal, methodology, research construct questions, and theoretical perspectives. Our results highlight the substantial knowledge gaps and the inconsistent findings of prior studies on several aspects of the field, suggesting avenues for further studies in terms of research designs, settings, scope, and theories. We argue that there is a need to explore other board diversity attributes rather than focusing on the gender diversity of the boards of financial institutions to achieve sustainable development. Also, more work is outlined on topics related to board diversity of financial firms that receive limited attention from scholars, such as (but not limited to) environmental performance, capital structure, intellectual capital, innovation and earnings quality of financial institutions, as well as the indirect effect of policy settings.

Environmental performance, sustainability, governance and financial performance: Evidence from heavily polluting industries in China

Abstract: This study seeks to contribute to the existing business strategy and the environment literature by examining the effect of governance structures on Chinese firms' environmental performance, and consequently ascertain the extent to which the financial performance–environmental performance nexus is moderated by governance mechanisms. Using a sample of Chinese companies from heavily polluting industries over a 5‐year period, our baseline findings suggest that, on average, board size and governing board meetings are positively associated with Chinese firms' environmental performance, whilst board independence and gender diversity have positive, but insignificant association with firms' environmental performance. Our evidence suggests further that the examined internal governance mechanisms have a mixed moderating effect on the link between financial performance and environmental performance. Our findings have important implications for company executives, environmental activists, policy‐makers, and regulators. Our results support insights drawn from agency, resource dependence, stakeholder, and legitimacy theories.

Integrating sustainability and resilience in the supply chain: A systematic literature review and a research agenda

Abstract: Sustainability has emerged as an important industrial strategic outlook expanding beyond organizational boundaries to include the supply chain. Simultaneously, the industry has also been faced with supply chain resilience concerns. Research on the intersection of supply chain sustainability and resilience is nascent and is a consequence of their observed mutual influences. However, confusion about concepts, implementation methods, and measurements of sustainable and resilient supply chains remains. This study completes a systematic literature review that critically examines several major observations and directions. We find the concept of sustainable supply chains is more established, and general agreement on its theoretical foundations exists. Supply chain resilience is relatively less mature. The nexus and relationships between the two topics are often incoherent: there is confusion on sustainable and resilient supply chains establishment; there is no clarity on what practices could jointly advance both areas. A major conflict exists since sustainability generally focuses on efficiency, while resilience seeks effectiveness. We recommend studies to analyze implementation relationships and impact. We also observe that performance measurement systems should be developed to assess supply chain sustainability and resilience performance taking with explicit consideration time horizons considered in these measures.

Industry 4.0 and circular economy: An exploratory analysis of academic and practitioners' perspectives

Abstract: The union between Industry 4.0 and the circular economy (CE) appears relatively recent. In this sense, new trading zones for sharing a common scenario among academics and practitioners are needed. The paper aims to investigate the link between Industry 4.0 and the CE by understanding how Industry 4.0 can foster the impact of the CE on companies. The study proposes a broader perspective that includes thematic and content analysis gathering data on professional documents based on business cases, newspaper articles, press releases and specialised blogs, as well as scientific papers. The joint academic‐practitioners view highlights how Industry 4.0 has the potential to impact on the CE through countless actions: increasing waste disposal; promoting remanufacturing; enhancing the efficiency of critical resources such as water, energy, gas and CO2; and improving business models and the mission of companies. However, barriers still exist in its adoption, stressing the need for holistic and integrated design and a proactive environment of collaboration among stakeholders. Results lead to practical as well as research implications.

Circular economy and the policy: A framework for improving the corporate environmental management in supply chains

Abstract: The transition to the circular economy (CE) creates value through the closed‐loop systems, reverse logistics, product life cycle management, and clean production in terms of corporate environmental management. During this transition process, the organization faces many barriers such as financial, organizational, technology‐based, social, policy‐related, market‐based, and logistics‐based barriers. The objectives of this study are to propose a framework highlighting policy‐related barriers for a supply chain in the transition to CE and finally discuss potential implications on enhancing corporate environmental performance of a business. Further, this study evaluates the causal relationships between the policy‐related barriers using fuzzy Decision‐Making Trial and Evaluation Laboratory (DEMATEL) method. The application was conducted in an apparel firm in Turkey. From findings, lack of legislation for efficient CE (C4), lack of mandatory requirements and responsibilities for manufacturers/suppliers for the CE (C17), and lack of government support for environmentally friendly policies (C2) are revealed as the most important barriers, respectively. It is found that lack of attitude and awareness about CE in government institutions (C19) is the most influencing factor, whereas lack of effective recycling policies to achieve quality in waste management (C8) is the most influenced factor. The recommendations were developed for enhancing the corporate environmental performance of businesses through incentives and unique rewards, improving communication among stakeholders, the government's perception of CE and current linear economy, cooperation with nongovernmental organization (NGOs) and civil actions, the vision of government towards circular principles, the circular public procurement, the local governments in circular policymaking, and awareness of bureaucracy and government officials.

Factors affecting corporate environmental disclosure in emerging markets: The role of corporate governance structures

Abstract: This study seeks to examine whether internal corporate governance (CG) mechanisms affect corporate environmental disclosure (CED) in emerging economies. Using a sample of 500 firm‐year observations, this study distinctively applies a linear panel quantile regression (PQR) model to examine the CG–CED nexus in Jordan. This technique is supplemented with conducting a two‐step dynamic generalised method of moment (GMM) model to overcome any potential occurrence of endogeneity problems. This study reports an increasing trend in CED practice among the sampled companies over the period of analysis, yet it is still at an early stage as compared with their developed counterparts. Furthermore, this study suggests that board size, board independence, CEO duality and foreign ownership have positive associations with CED. In contrast, managerial ownership, institutional ownership and ownership concentration are negatively associated with the disclosed amount of environmental information in the Jordanian context. Theoretically, board structures appeared to be more efficient than ownership structures in reducing agency conflicts by addressing the asymmetric gap of information and promoting the disclosure of environmental information. These findings add to the debate about whether ownership structures detrimental to CED in developing economies. Specifically, when it comes to spending money on CED, owners seemed to be more concerned about any reductions in their share of the pie and may, therefore, be less motivated to disclose their companies' environmental information. This paper provides managers, owners and policymakers with a set of context‐specific recommendations related to the crucial need for a more concerted effort to integrate governance and environmental regulations in order to ensure sustainability in emerging markets.

Green growth versus economic growth: Do sustainable technology transfer and innovations lead to an imperfect choice?

Abstract: A concern with the mitigation of climate change cuts a transversal line across economic agents, epitomized by two contradictory viewpoints. Some defend that green growth can be achieved without harming economic growth; others argue that it is not possible to respect sustainability if intensive consumption of goods continues to foster economic growth. Our research aims to analyze the role that sustainable technology transfer and sustainable innovations play in green growth and ascertain the impact of green growth on economic growth. We use aggregated country‐level data provided by the OECD, including national accounts, population, and environment statistics (including patents) between 1990 and 2013 for 32 countries, corresponding to an unbalanced panel of 591 observations. We estimate econometric models based on dynamic panel methodologies to capture differences that exist over time. The results show that sustainable technology transfer and sustainable innovation promote green growth, which in turn positively impacts economic growth. We contribute new insight to the green growth versus economic growth debate and provide several political and management implications.

Exploring the effect of buyer engagement on green product innovation: Empirical evidence from manufacturers

Abstract: In this study, we are interested in how export firms organize knowledge management and increase product innovation performance. Prior studies have concluded that knowledge transfer from external actors leads to operational performance outcomes; others have questioned the positive influence of buyer‐driven knowledge transfer activities on innovation performance. Drawing on absorptive capacity, we aim to offer a better understanding, how export firms as recipients of knowledge resources, organize their internal capabilities in order to realize firm‐level product innovation. This empirical study examines the interplay of buyer‐driven knowledge activities, resource acquisition and combining, and product innovation outcomes in the context of Pakistani export firms. Drawing on survey data from 239 export‐manufacturing firms, we test hypotheses using structural equation modeling. Our findings show that buyer‐driven knowledge transfer activities play a crucial role in enhancing export firms in absorbing and combining resources that lead to product innovation. The pragmatic suggestion of the research suggests that managers look closely at developing a culture of involvement with their buyers that promotes the development of knowledge resources. The results of this study have research, policy, and managerial implications.

Board gender diversity and carbon emissions: European evidence on curvilinear relationships and critical mass

Abstract: The role of European businesses in addressing environmental issues and climate change has taken center stage with the European Green Deal. With increasing attention to the effect of board gender diversity (BGD) on firms' environmental performance, the question arises whether BGD has any influence on carbon emissions. Based on legitimacy and critical mass theory, this study empirically investigates the impact of BGD on firms' carbon performance (CP), based on total carbon emissions intensity. The paper relies on two‐stage least squares (2SLS) regressions with instrumental variable (IV) and a two‐step generalized method of moments (GMM) system approach to analyze a cross‐country sample of 3123 observations from non‐financial firms in the European STOXX600 index over the 2009–2018 period. Our findings add to the growing empirical evidence twofold: (1) there is a robust linear and positive relationship between BGD and CP, whereas some indication of a U‐shaped relationship is found; and (2) we find that a critical mass of at least two women directors needs to be reached to increase CP. Our research results contribute to the current discussion on sustainable corporate governance, especially in the European capital market, and have implications for researchers, business practice, and regulatory issues alike.

Do audit committee attributes influence integrated reporting quality? An agency theory viewpoint

Abstract: The limits of financial disclosure in meeting the investors' needs have led to the request for reporting frameworks capable of incorporating information of different nature. Integrated reporting (IR), which is the latest novelty in organisational reporting practice, promises to bring together material financial and non‐financial information. IR has received considerable academic attention in recent years. However, little attention has been paid to the role of the audit committee in IR processes, despite the influence that this body has on disclosure, thanks to its supervisory and monitoring functions. This study bridges this gap by analysing the effect of the audit committee attributes on integrated reporting quality (IRQ) from an agency theory perspective. The regression analysis, conducted on a sample of 125 international firms, demonstrated a positive effect of size, independence and meeting frequency of the audit committee on IRQ and a non‐significant effect of financial expertise.

Achieving environmental sustainability through green transformational leadership policy: Can green team resilience help?

Abstract: The race to gain competitive advantage through the formulation of a sustainable business strategy is key for the survival in the global business sphere. Even more importantly is the quest to deploy an effective green strategy to combat the numerous negative impact industrialization has on the environment. Researches pointed out the role of leaders and stakeholder's engagement in bringing about reform. This research focuses on how to build a robust psychological capital within an organization through the leader's transformative ability in combating environmental issues. This is necessary because research related to green transformational leadership and the effect on green team resilience has not been considered in literature. Drawing from the combination of three theories; broaden‐and‐build theory, job demand–resource theory, and conservation of resource theory, this study contributes to the extant literature by testing the effect of green transformational leadership via the mediating role of green work engagement to green team resilience. Using Amos 20 version to analyze 351 questionnaires that were collected from employees in four and five star hotels in Turkey, the result reviews that green transformational leadership has a positive effect on green work engagement and green team resilience, and green work engagement fully mediates the relationship between the variables. The theoretical and practical implications are discussed.

CEO hometown identity and firm green innovation

Abstract: Drawn on the upper echelons theory, this study investigates how chief executive officer (CEO) hometown identity drives firm green innovation. We propose that CEO hometown identity has a positive impact on a firm's green innovation performance. Furthermore, we explore the moderating role of managerial discretion determined by organizational and environmental factors (i.e., institutional ownership and market complexity). We propose that institutional ownership negatively moderates the positive relationship between CEO hometown identity and green innovation, but market complexity plays a positive moderating role. Using Chinese publicly listed firms from 2002 to 2016 in heavily polluting industries, our findings support these hypotheses. Our research contributes to the upper echelons theory and corporate social responsibility literature and has substantial practical implications.

The transition from linear economy to circular economy for sustainability among SMEs: A study on prospects, impediments, and prerequisites

Abstract: The circular economy (CE) is a more holistic approach that advocates towards extracting the value from the waste and reaching sustainability goals. The objective of the present study is to highlight the prospects, impediments, and prerequisites while transiting from the linear economy (LE) to CE of SMEs. The study gathers information on prospects, impediments, and prerequisites for the transition of LE to a CE from recent studies. A semi‐structured interview questionnaire was prepared, and a survey was conducted on representatives of six SMEs. Further, six caselets were developed to understand the prospects, impediments, and prerequisites based on the findings of the interview and previous information gained from existing literature. The major prospects favoring transition from LE to CE found in the study are significance of 3R (reduce and reuse and recycling) approach, CE leads to competitive advantage, recycling attracts consumers in few cases, CE helps in achieving sustainability goals and reuse of materials are significant in resource conservation. There are certain impediments found such as issues associated with awareness, recyclability issues, financial challenges, and weak management vision of SMEs towards CE implementation. Other resource‐based impediments were found related to trained employees, lack of experience. Whereas, consumer acceptability is also a major concern towards implementing CE. The findings of the study suggest major prerequisites towards CE implementations such as strong “management will,” innovation, technology up‐gradation, training to employees, motivation, and appropriate guidelines. Government pressure to implement CE cannot be an effective step towards the transition of LE to CE.

Enabling the Circular Economy transition: a sustainable lean manufacturing recipe for Industry 4.0

Abstract: Over the past 10 years, the concepts and objectives of circular economy have been increasingly detailed and become strategic issues of international, European, and national policies. However, the transition towards circular production models continues to be affected by several barriers and critical factors that make the transition difficult to achieve. The paper tries to design a relationship between sustainable production and lean production, highlighting the opportunity to invest in reverse‐logistics and how Industry 4.0 system represents a breeding ground for circular economy targets application. The aim of the current study is to examine the relationships among sustainable production, lean production, and Industry 4.0 in order to evidence the need to adopt a lean methodology and Industry 4.0 technologies in a sustainable development perspective for companies. Following a holistic vision, the authors summarize the production principles and formulas, which, although in parallel, lead to similar results and therefore represent the pillars of a competitive and sustainable business. In conclusion, exploring the circular economy principles and production chain model, challenges, opportunities, and future outlooks are formulated.

Does the interaction between the knowledge management process and sustainable development practices boost corporate green innovation

Abstract: Green innovations are being deployed in manufacturing industries to promote organisational sustainability by embracing sustainable development practices (SDPs). However, little is known about how corporate green innovation (CGI) is influenced by the knowledge management process (KMP). To fill this gap, we have developed a multidimensional framework based on the resource-based view (RBV) theory that provides a foundation for sculpturing the process by which KMP was observed to capture and sustain CGI through SDPs. Data were collected from 393 respondents of large- and medium-sized manufacturing corporations in Pakistan and analysed using partial least squares structural equation modelling (SEM) and fuzzy set qualitative comparative analysis (fsQCA). This study provides several key findings. First, KMP dimensions (acquisition, dissemination and application) significantly improve the SDPs' dimensions (environment, economic and social). Second, SDP dimensions play a significant role in achieving CGI. Third, the implementation of SDPs partially mediates the relationship between the KMP and CGI. Furthermore, the fsQCA results signify the robustness of all integrated constructs. Our results demonstrate that investing in and adopting the latest technologies and sustainable practices are not only valuable for long-term success but the soft concerns such as managing organisational knowledge are also vital in the current knowledge-based economy. Finally, in light of our findings, theoretical and managerial implications, with propositions for future studies, have been provided at the end of the paper.

Sustainable Supplier Selection in Megaprojects: Grey Ordinal Priority Approach

Abstract: Due to mounting environmental and social challenges, supplier selection has become one of the most critical tasks of project‐oriented organizations. Because supplier selection can affect the long‐term success and profitability of the organizations and their projects, directly, embracing sustainability can add value in the equation. Considering sustainability measures can positively guide project managers in making better decisions for the projects in the long term. Therefore, the current study attempts to provide a conceptual model for selecting the best supplier based on a sustainability framework in megaprojects. Meanwhile, decision‐making methods can be employed as a proper tool to find the best supplier. Ordinal priority approach (OPA) is a recent development in multiple criteria decision making (MCDM), while it has many benefits compared with other methods like analytic hierarchy process (AHP) and technique for order of preference by similarity to ideal solution (TOPSIS). However, this method cannot consider multiple ranks during the decision‐making process, and using an uncertainty approach feels strongly. Grey systems theory (GST) can consider uncertainties with no need for large sample or proposing membership function. Hence, the current study employed the GST to consider multiple ranks for criteria and alternatives in the OPA method. This is the first time that a sustainable supplier selection framework has been presented for megaprojects with the aid of the Grey OPA (OPA‐G) method. Finally, a case study has been examined to evaluate the performance of the proposed approach. The results show that the proposed approach can be used in real‐world situations and it has acceptable performance under uncertainty conditions.