Differences in the Environmental Management and Ethical Management Practices—Corporate Performance Relationship Due to Customization and Process Innovation Level

Abstract

Our first research question sought to confirm whether there is a positive relationship between environmental and ethical management practices and corporate performance. We tested whether the two constructs were a fit for the sample of Korean companies and assessed their reliability and validity in an exploratory context. Further, we formulated the companies' action variables using the degree of implementation of customization and process innovation strategy and checked if those two variables had some effects on the relationship. We divided the sample into two groups—high and low—based on the two variables and compared the regression results. The results suggest that both environmental and ethical management practices have a positive effect on corporate performance. Further analyses revealed that the statistical results representing fitness between the two practices and corporate performance favored the group that showed a lower degree of customization strategy. Thus, we inferred that companies that adopt a customization rather than a standardization approach experience a more positive relationship between environmental and ethical practices and corporate performance. Finally, the results comparing the relationship between the two practices and corporate performance showed a better fit for the group that did more to implement process innovation than for the group with lower implementation, indicating that companies implementing process innovation can anticipate a more positive relationship between environmental and ethical practices and corporate performance.