Development of a Model Linking Physical Asset Management to Sustainability Performance: An Empirical Research

Abstract

This article is aimed at exploring the relationship between physical asset management (PAM) practices and sustainability performance. A framework of interrelated constructs was developed based on the existing literature and consequently tested through empirical study. Survey data were collected from organizations operating in six European countries (i.e., Greece, Poland, Slovakia, Slovenia, Sweden, and Turkey) and analyzed using Partial Least Squares Path Modeling (PLS-PM). The results offer support for the proposed hypotheses, showing that PAM practices positively influence the sustainability performance outcomes, namely economic, environmental, and employee-related social performance. Overall, this study demonstrates that a PAM framework can be conceptualized by four sub-constructs, namely physical asset risk management, physical asset performance assessment, physical asset lifecycle management, and physical asset policy and strategy. Finally, this study brings to light some theoretical and managerial implications as well as directions for future research. The findings of the study underscore PAM areas in which managers should focus on in order to optimize costs, performance, and risk exposures concerning the physical assets, and therefore enhance sustainability performance.

Strategic Aspects of Asset Management: An Overview of Current Research

“…Authors highlight the rising importance of sustainability, safety, social responsibility issues, and increasing environmental pressures that should be embedded in long-term strategic planning of the asset portfolio (e.g., [13,70]).…”

“…Developing resources and capabilities (corresponding to ideas of the resource-based view of the firm [75][76][77]) in strategic asset management seems to be highly important in the process of gaining competitive advantage. Companies have to determine key capabilities and core competence in order to meet the expectations for business and financial performance, focusing on customers and accountability for results (e.g., [10,13,28,32,35]).…”

“…Asset managers are responsible for direct governance of the asset portfolio through establishing specific asset management systems, processes, and practices. Their decisions are focused on purchase, replacement, and rehabilitation of the asset portfolio to balance performance, risk, and costs (e.g., [1,13,40,62]). A strategic asset management system puts an emphasis on key performance indicators aimed at creating value from assets, commitment to continuous improvement, and asset management maturity.…”

“…Introducing a strategic approach to asset management seems to be a source of strong competitive advantage and should be considered within a broader organizational context. Recent research provides evidence that there is a link between introducing a holistic approach to asset management and improving organizational performance [10,13]. Considering a broader context implies that asset management goals should be consistent with the organizational goals across all levels of strategic decision-making [1,14].…”

The Role of Enterprise Risk Management in Sustainable Decision-Making: A Cross-Cultural Comparison

“…Risk management has been viewed as an important practice for improving sustainable decision-making [3][4][5][6][7][8]. Unsustainable behaviors can generate potential business risks to an organization's reputation and ultimately result in the collapse of an organization [9].…”