Leveraging organizational culture to create competitive value from environmental practices

Abstract

There has been a long-standing debate in the management literature as to the performance implications of environmental practices. Drawing upon the contingent resource-based view, we hypothesize that organizational culture moderates the relationship between environmental practices and firm performance. We use the competing value framework to explore the effects of developmental, group, rational, and hierarchical culture types on three key capabilities (i.e., stakeholder integration, higher-order learning, and continuous innovation) that stem from implementing environmental practices. We test our hypotheses using data from the fourth round of the High Performance Manufacturing survey. We find that the developmental, group, and rational culture types positively moderate the relationship between external proactive environmental practices and firm performance. By contrast, hierarchical culture negatively moderates the relationship between internal proactive environmental practices and firm performance, but positively moderates the relationship between external reactive environmental practices and firm performance. As such, our study contributes to the literature by unpacking the influence of organizational culture on the capabilities through which environmental practices affect firm performance. Our results can guide operations management executives in choosing the most suitable environmental practices that will align with their organizational culture.