Effects of strategic flexibility and organizational slack on the relationship between green operational practices adoption and firm performance

Abstract

AbstractThis study aims to explain why some firms improve their performance through the adoption of green operational practices (GOPs) while others do not. Researchers attribute this phenomenon to that some resources are necessary to capture the benefits of GOPs. Drawing upon relevant literature and the resource‐based view, this study identifies strategic flexibility and organizational slack as two potential resources that enable firms to improve their performance through GOPs adoption. In other words, this study examines the moderating effects of strategic flexibility and organizational slack on the relationship between GOPs adoption and firm performance (including environmental and financial performance). Based on the data from 213 Chinese manufacturing firms, hierarchical regression analysis is used to test the hypotheses. The results show that GOPs adoption positively influences environmental and financial performance. Moreover, we find that strategic flexibility strengthens the relationship between GOPs adoption and environmental performance, but weakens the relationship between GOPs adoption and financial performance. Conversely, organizational slack strengthens the relationship between GOPs adoption and financial performance, but weakens the relationship between GOPs adoption and environmental performance. This study contributes to related literature and its findings provide new insights for managers and the government to manage the relationship between GOPs adoption and firm performance.