The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry

Abstract

Firms often invest in sustainable development projects to improve their environmental and societal performance. Given the broad spectrum of these projects and limited resources, managers face challenges in determining where to improve (e.g., improving water consumption and reducing carbon footprint). The study examines the connection between environmental performance and firm performance from a new angle to help managers make informed decisions. The study examines firms in the consumer product industry regarding their efficiency in the operational aspect, the resource-related environmental aspect, and the climate-related environmental aspect. It then employs panel data models to investigate the implications of efficiency differences across these aspects on firms' financial performance and business risk.The results indicate that the effects of these differences are adverse in general.Additionally, the relationship between the operational and environmental efficiency difference and financial performance is in an inverted-U shape. The study contributes to the literature by offering theoretical support and empirical evidence for the balanced portfolio approach in managing multiple environmental concerns. The study findings also provide managerial guidelines for decision-making. To gain a greater benefit, managers should aim to minimize the performance differences across multiple environmental aspects and manage a subtle balance between operational performance and environmental performance.

Does increased water efficiency improve financial performance? The important role of operational efficiency

“…Florida, 1996;King and Lenox, 2001b). Our findings are consistent with Fu and Su (2021) that a balance between OE and environmental efficiency is important for financial performance; if firms have low OE, they do not benefit as much from greater environmental efficiency. They recommend that managers focus more on OE to obtain optimal effects of sustainable development.…”

“…Although Fu and Su (2021) examine whether differences between firm-level OE and environmental efficiency impact risk, we could find no empirical studies of the moderating effect of OE on the water-risk relationship. By considering OE as a moderator in the waterrisk relationship, our study aims to address this gap.…”

“…Although other sustainable operations, researchers have considered both profit and risk (e.g. Jacobs et al, 2016;Fu and Su, 2021), much of the extant literature focuses strictly on the potential returns from CSP (e.g. see the meta-analysis by Albertini, 2013).…”

Sustainability frontiers of strategic risk management and firm survival: The Altman score effectiveness. A bibliometric analysis

“…However, the Altman score model's practicality and common use after so many years seem extraordinary, given the fact that business and economic research now has many new and innovative methodologies. Confirming the uniqueness of the Altman score appear in several studies (Fu & Su, 2021; Wedari et al, 2022; Zhang et al, 2021). A large number of them broaden the application of the altman score by combining it with innovative statistical analysis techniques.…”

“…Confirming the uniqueness of the Altman score appear in several studies (Fu & Su, 2021;Wedari et al, 2022;Zhang et al, 2021). A large number of them broaden the application of the altman score by combining it with innovative statistical analysis techniques.…”