Linking Corporate Environmental Performance to Financial Performance of Pakistani Firms: The Roles of Technological capability and Public awareness

Abstract

This research investigates the corporate environmental performance (CEP) literature toward its financial performance of the firm. CEP is defined as the exercise and practices of companies to choose sensible measures to save and develop environment-friendly green activities. The influence of CEP on the financial performance of the firm via technological capability was examined. Furthermore, public awareness was hypothesized to moderate the impact of CEP on technological capability indicating moderation mediation. When public awareness was high, the relationship between the CEP and technological capability should be stronger. Content analysis was used for data collection. The model was tested using a sample of 1491 observations from the manufacturing companies of Pakistan. The data were collected between the period 2008 and 2017 from the annual reports of the companies, State Bank of Pakistan, and Pakistan Stock exchange. A hierarchical regression analysis was used for data analysis. Using bootstrap analysis, we used model 8 in Stata to examine conditional direct and indirect effects. Results supported the indirect effect of CEP on financial performance through strengthening technological capability. Both direct and indirect effects were significant. Consistent with theoretical assumptions, the indirect effect becomes stronger with high public awareness and diminished with low public awareness. Both theoretical and practical contributions are discussed based on the outcomes.

Internal green integration and environmental performance: The predictive power of proactive environmental strategy, greening the supplier, and environmental collaboration with the supplier

“…Second, researchers have tested the effect of relationship capabilities on entrepreneurial performance through GTS and ECS (Li, Qiao, Cui, & Wang, 2020). In the manufacturing firms of Pakistan, Wu, Ullah, and Shah (2020) found an indirect effect of corporate EP on financial performance, that is, the effect of strengthening technological capability; however, there is no empirical evidence that supports the direct association between PES and firm performance rather than through the significant mediating role of technological eco‐innovation (Ryszko, 2016). Third, contextually, these links have not been assessed in the context of Pakistan (Aslam, Rashid, Wahla, & Tahira, 2019; Chen, Daugherty, & Landry, 2009; Li, Qiao, Cui, & Wang, 2020; Spillan, McGinnis, Kara, & Yi, 2013; Zahid, 2016).…”

Is there any difference between the theory and practice for the association between environmental sustainability and firm performance in Pakistan?

“…Few studies investigated the impact of ES and FFP and found mixed findings (Rehman et al, 2020). A case in point, some studies found the ES has a positive impact on FFP by assisting firms in achieving a competitive advantage, environmental innovation, improving operational efficiency, minimizing cost, achieving legitimacy, and license to operate (Gupta & Gupta, 2020; Wu & Ullah, 2020). However, in contrast, few studies noted that ES has no or negative impact on FFP as eco and environment‐friendly manufacturing processes require the latest and cleaner technologies, which has a cost with no immediate return on the profitability of the firm (Grewatsch & Kleindienst, 2017; Hang et al, 2018; Saleh et al, 2011).…”

“…In the past few decades, academia and industry have substantially shifted their attention to climate change, carbon emission, and other environment‐related issues (Gupta & Gupta, 2020; Wu & Ullah, 2020). Consequently, the question of what pushes firms to disclose information related to climate and sustainability issues has emerged as an enticing topic for both researchers and practitioners (Galpin et al, 2015; Linnenluecke & Griffiths, 2013; Soytas et al, 2019).…”

Developing environmental performance through sustainable practices, environmental CSR and behavioural intentions: an online approach during the COVID-19 pandemic

“…This study’s findings do not support the indirect effect of employee voice between high-performance work systems and organizational performance. By using a 1,491 sample of observations, Wu et al ’s (2020) findings show that through reinforcing technological capability through content analysis, EP indirectly affects financial performance. Bhatti et al ’s (2021) findings demonstrate, in the context of Pakistan, the significant and predictive role of learning style and training content towards EP.…”