Abstract
This study investigates how different types of corporate environmental practices affect environmental performance. This paper is theoretically anchored in the natural resource-based view and, methodologically, it applies the recently recommended disaggregated approach in a new effort to deepen our understanding of how environmental performance is associated with different types of corporate environmental practices. The results partially affirm the argument of the natural resource-based view that proactive corporate environmental practice leads to better environmental performance, whereas reactive corporate environmental practice is associated with worse environmental performance. However, the relationship between corporate environmental practices and environmental performance should be carefully interpreted, because the findings differ depending on how Kinder Lydenberg Domini (KLD) strength and concern rating scores are measured. The results further demonstrate that the disaggregate KLD environmental rating scores can be better alternative measures for corporate environmental practices than the commonly used composite and aggregate KLD rating scores, given that disaggregate KLD concern and strength scores represent independent rather than similar constructs. The findings are expected to help both theorists and practitioners achieve a more nuanced understanding of the measurement of environmental practices.
Highlights
The 2011 Gesellschaft für Konsumforschung (GfK) [1] Roper Consulting Green Gauge survey indicates that while the concerns of investors and consumers regarding environmental issues have increased in the U.S over the 20 years between 1991 and 2010, firms have been acting as both pollution preventers and pollution generators
This study reveals that the relationship between corporate environmental practices and environmental performance sounds more convincing when the environmental practices are measured at the disaggregate level, given the results of the correlation analysis that total concerns and total strengths are orthogonal and that disaggregate concern and strength scores are not consistently associated
This study set out to assess a theoretical link between corporate environmental practice and environmental performance
Summary
The 2011 Gesellschaft für Konsumforschung (GfK) [1] Roper Consulting Green Gauge survey indicates that while the concerns of investors and consumers regarding environmental issues have increased in the U.S over the 20 years between 1991 and 2010, firms have been acting as both pollution preventers and pollution generators. Over the past 20 observation years, corporations have attempted to incorporate the effect of corporate environmental practices on environmental performance into their main strategies in pursuit of sustainable growth [4]. Investors have increasingly paid more attention to corporate environmental practices and environmental performance, as corporate responses to the natural environment necessarily affect corporate economic performance [5]. Establishing a link between corporate environmental practices and environmental performance has been a primary concern in the environmental sustainability literature Because of both weak theory [11] and the limits to the measurement of environmental practices presently in use [13], few studies have investigated how distinct proactive and reactive environmental practices influence the corporate environmental performance in different ways, the literature agrees that environmental practices are the precursor of environmental performance
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