Corporate Environmental Management: Eco-Efficiency and Economics Benefits among Manufacturers Certified with EMS14001 in Malaysia
Lee Ah Suat1, Ong Tze San2
1Lee Ah Suat, Faculty of Economics and Management, Universiti Putra Malaysia, Serdang, Malaysia and Faculty of Business and Finance, Universiti Tunku Abdul Rahman, Kampar, Malaysia.
2Ong Tze San, Faculty of Economics and Management, Universiti Putra Malaysia, Serdang, Malaysia.
Manuscript received on 07 May 2019 | Revised Manuscript received on 19 May 2019 | Manuscript Published on 23 May 2019 | PP: 873-886 | Volume-7 Issue-6S5 April 2019 | Retrieval Number: F11520476S519/2019©BEIESP
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: The concept of eco-efficiency suggests that firms could gain economic benefits when their environmental protection adds values to stakeholders, and results in enhanced shareholder value. This is a state which scholars denote as the optimum level of environmental protection. In contrary, any environmental protection above the optimum level is unlikely to result in economic benefits. This paper articulates eco-efficiency using two major variables of corporate environmental management. Environmental innovation reflects high level of eco-efficiency; as it measures a firm’s focus on market and product development within its environmental management, which brings economic benefits. Environmental performance reflects low level of eco-efficiency; as it measures solely on a firm’s achievements in reducing adverse environmental impact. This paper hypothesised environmental innovation and environmental performance as antecedents of firms’ economic performance. Economic performance was represented by two variables: competitive advantage and financial performance. Simultaneous equation modelling analysis via Smart PLS 3 was performed on survey data collected from managers of 85 manufacturers certified with EMS 14001 in Malaysia. Findings indicate conflicting effects of environmental innovation and environmental performance on firms’ economic performance, when being analysed simultaneously. Environmental innovation was found to be positively associated with both competitive advantage and financial performance. On the other hand, environmental performance was found to have no relation with competitive advantage and financial performance. This paper provides empirical evidences in supports of eco-efficiency concept. The findings indicate that potential for economic benefits are realised when firms’ environmental protection actions are targeted at creating value for its stakeholders. These findings contribute to a better understanding of the need for strategic approach to corporate environmental management Implications are drawn from the study findings and directions for future research are provided.
Keywords: Eco-efficiency, Environmental Innovation, Environmental Performance, Competitive Advantage, Financial Performance.
Scope of the Article: Environmental Engineering