The Effects of Managerial Competency and Local Religiosity on Corporate Environmental Responsibility

Chuluunbat Tsendsuren,Prayag Lal Yadav,Sangsoo Kim,Seunghun Han

doi:10.3390/su13115857

Abstract

This study investigates the influence of local religious beliefs to evaluate managerial motives towards corporate environmental engagement, considering the growing attention of the role of external factors in shaping corporate behavior. Using Newsweek’s green rankings of the largest publicly traded US firms by market capitalization from 2014–2016, we find that competent managers show a higher strategic preference for corporate environmental practices in firms located in low-Protestant or high-Catholic areas exhibiting higher risk and uncertainty, which tend to mitigate the negative effects of risky environments. We find that corporate environmental practices positively influence the sales of firms in high risk-taking states. This study provides significant contributions to the literature documenting the consequences of local religious risk-taking behavior and elaborates on the perceptions of competent managers on environmental management. The results provide valuable insights for practitioners and policymakers looking to incorporate environmental practices.

Highlights

US firms by market capitalization from 2014 to 2016, we examine the effects of the statelevel Catholic to Protestant ratio (CPratio), that is, the proportion of Catholic to Protestant adherents in a particular state, on the firm’s corporate environmental responsibility (CER) performance measured by its green score, which is further examined in relation to managerial competency
Our findings suggest that competent managers strategically promote value-enhancing CER practices, which results in an improvement in corporate financial performance (CFP)
All the multivariate regressions show the variance inflation factor (VIF) statistics In Figure 1, geographical variations show that firms headquartered in Catholicwithin the rule-of-thumb value of ten (VIF < 2.48), suggesting no multicollinearity condominant states tend to be more environment-friendly and engage in more CER practices

Summary

Introduction

The debate over the antecedents and the consequences of corporate environmental responsibility (CER) has drawn considerable interest among scholars and practitioners, suggesting profound changes in the way firms execute environmental practices. Numerous studies on the determinants and economic consequences of CER have not resulted in conclusive outcomes, resulting in a lag in the broader goal of incorporating corporate social and environmental considerations into corporate behavior [1,2]. The majority of the extant research exhibits some awareness regarding the motivations for CER practices through ethical practices and environmental sustainability. Few studies have paid attention to the role of external factors in shaping corporate behaviors. Tsendsuren et al [3] highlight the fact that the product market competition setting is a perfect stage for managers to strategically incorporate CER practices to gain advantage in the competitive market

Objectives

Results

Conclusion