Abstract
Theoretical evidence shows that a considerable amount of attention has been given to environmental issues in academic researches in the past years and the link between sustainable environmental practices and firm performance remains inconclusive. One of the reasons for this inconsistent relationship is due to the increasing regulatory requirements of the environmental sustainable practices which have become increasingly stringent on yearly basis. This study investigates the moderating effect of environmental regulation on the relationship between sustainable environmental manufacturing practices and firm performance. Data was collected by using a mail survey questionnaire from the manufacturing companies in Malaysia and analyzed with PLS-SEM. The result of the empirical investigation found that environmental regulation only moderates the relationship between SEMP and environmental performance. The relationships between SEMP; and financial and operational performance were not significantly moderated by stringent environmental regulation. The study recommends that environmental policy makers should revisit the blueprint about environmental regulation on environmental practices to provide supportive environmental policies that will enhance a better financial and operational performance in manufacturing industry.
Highlights
Association exists between manufacturing firms and the undesirable environmental impacts (Frosch & Gallopoulos, 1989; Despeisse, Ball, & Evans, 2012)
The result of the empirical investigation found that environmental regulation only moderates the relationship between sustainable environmental manufacturing practices (SEMP) and environmental performance
The demographic representation of the respondents of this study shows that electrical, electronics and computing machinery sector (50.5%) of manufacturing is the largest proportion of the respondents’ companies, many of which occupy the environmental, health & safety managers (50.5%) position from the multinational companies (45.6%) with their companies having more than 251 full-time employees
Summary
Association exists between manufacturing firms and the undesirable environmental impacts (Frosch & Gallopoulos, 1989; Despeisse, Ball, & Evans, 2012). The report of the International Environmental Agency (2007) revealed that manufacturing industries are significantly responsible for the consumption of a huge amount of resources and waste generation throughout the world. This is evidenced in the obvious increase of 61% in the consumption of energy by manufacturing industries between 1972 and 2004, they are responsible for about a third of the world’s global usage of energy and emission of 36% of carbon dioxide (C02) in the world (Organization for Economic Corporation Development, 2009). This is witnessed in the increasing volume of generated waste of stationary source from industries(Department of Environment, 2012; Environmental Statistics Time Series, 2012)
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