Assessment of the effect of location and financial variables on environmental management performance for industrial goods supply chains

Abstract

The paper uses data on environmental (management) performance (EP) of industrial goods companies in 14 countries to assess the impact of 3 variables on EP: companies' headquarters location, global spread (GS) & financial performance (FP). No prior study has addressed these questions for the industrial goods sector, a crucial sector in most economies. Hierarchical regression and other methods are used to test pertinent hypotheses. Among other things, the paper finds that EP differ based on regional location of the companies' headquarters. Consistent with prior research for some industries, FP and GS show no impact on EP. An auxiliary finding is that manufacturing firms outperform service firms environmentally. These results have several practical implications. For example, industrial goods companies headquartered outside Europe can learn environmental best practices in Europe, and endeavor to implement them throughout their global operations. Also, firms need not excel financially to excel environmentally. Such firms may focus on environmental excellence, knowing that investments in environmental programs would ultimately pay off. This work bridges the International Management and Sustainability Literatures, provides some guidance to managers about EP improvement and adds to our understanding of EP. It will stimulate related research in the Production and Operations Management and Environmental Management fields.