Financial constraints, investments, and environmental strategies: An empirical analysis of judicial barriers

Abstract

This work analyzes the relation between the judicial system and financial constraints, investigating whether inefficiency in enforcing credit rights can amplify companies' difficulties in collecting resources on the capital market, limiting their access to the funds needed to support investments and environmental sustainability. Considering the Italian manufacturing industry and according to the selected insolvency procedures, our results suggest that, if the time necessary to settle cases decreases by 20%, we can expect an increase in the financial debt ratio between 0.92% and 5.08% and a decrease in the trade credit ratio between 0.81% and 2.71%, as well as an increase in investments between 0.46% and 3.22%. These results are robust under a variety of tests and support the hypothesis that judicial inefficiency represents a barrier to environmental sustainability, preventing investments in key technologies able to support green strategies, as well as the key role of trade dynamics as alternative funding strategy for their business. The economic implications of our evidence could be far-reaching for the whole economy, not only reducing the competitiveness and financial stability of the national system but also triggering a cascade effect on the market and undermining environmental strategies.

Mechanism of knowledge management process towards minimizing manufacturing risk under green technology implementation: an empirical assessment

“…In the green environment, manufacturing firms are responsible for internal and external institutional environmental processes to update employees on related matters with KMMR. The study supports the past literature by Falavigna and Ippoliti (2022); they studied that internal and external environments are vital influences on the green process. Additionally, a green environment consolidates different resources to alleviate the green environment influence, allowing them to recognize and capitalize on KMMR possibilities (Zhou et al 2018).…”

“…The study focuses on green environmental KM drivers to increase employee knowledge efficiency and minimize manufacturing risk. The past literature suggests that green corporate environmental attention in manufacturing firms is based on external and internal factors; its established institutional environment and financial resources influence green environmental responsibility and process (Falavigna and Ippoliti 2022;Huang and Lei 2021). The study by Tucker (2007) highlighted that process improvement is redesigning work schedules with the systematic participation of frontline employees.…”

Booster or Killer? Research on Undertaking Transferred Industries and Residents’ Well-Being Improvements

“…The undertaking of transfer industries has improved the regional industrial structure, which not only increases the vitality of the market but also promotes the high-quality development of the economy. At the same time, the industrial structure and people’s well-being show a strong coupling effect under the influence of financial constraints [ 26 ]. Gresik T.A.…”

Corporate environmental investment and supply chain financing: The moderating role of environmental innovation

“…The stronger the performance and the lower the financial risk, the easier it is for firms to obtain more and cheaper trade credit (Giannetti et al, 2011; Petersen & Rajan, 1997). Hence, we expected that by cooperating with firms with high levels of environmental investment, supply chain firms would face lower default risks of repayment and would be willing to lower trade credit thresholds (Falavigna & Ippoliti, 2022), allowing such firms to experience positive trends in the direction and size of the change in supply chain financing.…”

“…In repeated game partnerships in supply chains, gaining trust is an effective way for all parties to maximize long‐term benefits; that is, whether trade credit is extended depends on trust between suppliers and customers (Guiso et al, 2004; Kreps & Wilson, 1982). Based on the theory of transaction costs, due to the existence of bounded rationality and opportunistic behavior, supply chain firms face higher repayment risks due to information asymmetry (Falavigna & Ippoliti, 2022). However, firms' CSR activities can build stakeholder trust and cooperation (Lins et al, 2017), and this increase in social trust can reduce the moral hazards of information asymmetry, in turn helping firms offer and use more trade credit (Wu et al, 2014).…”