Environmental Innovation, Environmental Performance and Financial Performance: Evidence from Malaysian Environmental Proactive Firms

Abstract

：This study is aimed to investigate the relationship between environmental performance, environmental innovation, and financial performance of firms. A total of 124 responses were collected from managers of manufacturers certified by ISO 14001 EMS in Malaysia, and the data was subjected to a structural equation analysis using the Smart PLS version 3.2.7 software. The results have endorsed environmental competitive capabilities i.e. environmental innovation and environmental performance as the key enablers for the creation of economic values for environmental proactive manufacturing firms. Moreover, environmental innovation is also found to be the mediator that transforms the benefits of environmental performance into financial performance.

The influence of responsible leadership on environmental innovation and environmental performance: The moderating role of managerial discretion

“…Nevertheless, radical environmental innovation is the most effective approach to innovation (Chen et al, 2014) as it can generate new products, knowledge, technology, and designs to fundamentally reduce the environmental costs of business activities and promote the firm's sustainable development. Successful R&D in radical environmental innovation can effectively reduce environmental pollution such as toxic emissions (Maletič, Maletič, & Gomišček, 2016;Ong, Lee, Teh, & Magsi, 2019). Hence, the following hypothesis is proposed:…”

Beyond Gathering the ‘Low-Hanging Fruit’ of Green Technology for Improved Environmental Performance: an Empirical Examination of the Moderating Effects of Proactive Environmental Management and Business Strategies

“…In this context, a new paradigm of management for sustainable development has emerged, entailing major changes in current production systems and the use of natural resources [36]. A number of studies have attempted to identify which resources and capabilities enable an organisation to adapt, change and innovate to meet new environmental challenges, under the framework of the natural resource-based view (e.g., [3,[37][38][39]).…”

“…Molina-Azorín et al [2] and Testa et al [52] provide a valuable overall review of existing empirical studies on environmental management practices and firm environmental performance. They report that most such studies demonstrate a positive relationship between these two variables, through cost savings [44,67] and technical and organisational innovation [30,37,52,67], contributing to the development higher quality processes and less polluting products [41].…”

“…This variable was measured with a seven-point Likert-type scale reflecting managers' perceptions of the firm's level of achievement of environmental objectives (1 = "very low", 2 = "low", 3 = "quite low", 4 = "average", 5 = "quite high", 6 = "high", and 7 = "very high") as compared to competitors in their specific subsector. Specifically, it includes five items adapted from previous studies [96] also validated in recent literature (e.g., [37,71,73]), i.e., 'Reduction in the consumption of materials for service provision', 'Reduction in the energy consumption for service provision', 'Reduction in the time required for service provision', 'Reduction in the environmental impact', and 'Improvement of equipment efficiency'.…”

Environmental Performance, Customer Satisfaction, and Profitability: A Study among Large U.S. Companies

“…While this study is concerned with the effect of companies' environmental performance on their financial performance, it can be expected that companies that are more profitable could be more likely to improve their environmental performance. In avoidance of an endogeneity problem, control variables were included in the model; as the introduction of control variables is helpful in correcting endogeneity problems in structural equation modeling [66]. Control variables were selected on the basis of their ability to affect the financial performance of companies.…”