Professional Documents
Culture Documents
By
Kashif Munir
211 MSBA/Lhr/F 14
Supervisor Name:
Mr. Saif Ullah
1. Introduction
Today all types of manufacturing firms rather they are small or large, polluting the
environment. It is need to work actively to environmental proactivity. Environmental
Proactivity is very important as it is considered as strategic position by
accepting the challenges of the new sustainability standards. However,
Porter and Linde (1995) said that adoption of environmental proactive approaches leads to be
beneficial for the companies while giving importance to green technology. Those benefits can
be ascertain from proper environmental management. Environmental proactivity mean
voluntary employment of practices and initiatives aimed at improving environmental
performance. This can become visible through different strategies and these strategies are
characterized by a series of environmental practices.The purpose of this study is to
investigate the impact of firm environmental proactivity on the firm
performance. Moderating effect of firm size will be checked between
environmental proactivity and firm performance.
In this era many manufacturing firms are working on the environmental management
practices. This enables organizations to contribute sustainable development in the
environmental management through redesigning the manufacturing procedures (Shrivastava,
1995). However Waddock, Bodwell, Graves (2003) said that increasing transparency required
from companies in matters of social responsibility forces them to inform not only about their
financial performance but also about their environmental and social impact. To compliance
with the environmental regulations of the government they take proactive measures. In the
whole world it is compulsory for manufacturing concerns to adopt proactive approaches to
the environment (Swain, 2006).
These practices are the main way through which some of them form an opinion about
the environmental performance of the company. Discharge of solid waste and wastewater of
manufacturing process have become the significant reason of degrading the environment
quality (Pizer, Morgenstern, Shih, 2011). This has become the reason of proactive role of
environment in running businesses. The worsening environmental conditions owing to
emission of greenhouse gases and other polluting substance during manufacturing processes.
There are different reasons leading to climate change. Energy inefficiency and inefficient
supply chain becomes the reason of more waste and it affects the perceived financial
performance of the manufacturing concerns. Organizations want to reduce cost, increase
revenue and reduce the risk associated with high energy costs.
The owners of firms are concerned whether environmental proactive approaches are
positively related with the perceived financial performance of the companies or not. This
study aims at finding the said relation. They can also be derived from improved operational
performance of the organizations like reduction in the production cost (Porter and Linde,
1995). Several factors can indicate a firm to adopt environmental management practices
(Berry and Rondinelli, 1998). According to Gonzlez (2006) stakeholder pressure is driving
companies toward more advanced environmental management. The more progressive
environmental management can also improve a companys perceived financial performance
(Molina, Azorin, Claver, Lopez, Tari, 2009). This results in an increase in the companys
manufacturing effectiveness, promoting reduction in cost, quality improvements and the
generation of new products and processes (Yang, Lin, Chan, Sheu, 2010).
It was stated in economic survey (2006-07) that industry grew by 8.4 percent during
2007 and 10 percent last year. In the manufacturing sector, large scale manufacturing plays a
vital role and accounts for approximately 70 percent of overall manufacturing (Government
of Pakistan, 2006-07). Economic Survey of Pakistan, (2012-2013) further classified
manufacturing sector into three sub groups i.e. Large Scale Manufacturing (LSM), Small
Scale Manufacturing. Manufacturing accounts 13.5 percent of Gross Domestic Product
(GDP) and 14.1 percent of total employed labor force.
Performance.
To investigate the relationship between Environmental Proactivity and Perceived Financial
performance.
To investigate the moderating role of Firm Size between Environmental Proactivity and
Firm Performance.
Firms will get benefit from this study. On the basis of this study firms will be able to improve
their performance by reorganizing their policies regarding the environment. The corporate
policy makers will get help from this study. They will be able to make better policies based
on this study.
2. Literature Review
2.1 Environmental Proactivity:
Environmental Proactivity is very important in the context of manufacturing firms.
Newton and Harte (1997) consider that the literature on environmental management adopts a
linguistic position which is based on questionable ideas. Aragon (1998) has given
environmental proactivity concept in the management literature. Environmental practices are
very important in relation to the environmental proactivity. Sharma and Vredenburg (1998)
said that a firm is environmentally proactive if there exist regular environmental practices in
overall production processes. In current competitive period environmental commitment of the
companies becomes very important. However one of the most cited predictors of the
implementation of green supply is the proactivity of the firms towards environmental
management (Bowen, Cousins, Lamming, Faruk, 2001). Following Simpson, Power, Samson
(2007) environmental commitment is measured through the firms policies, values and
employee awareness of environmental programs.
Reducing raw material and water consumption not only helps to prevent rapid
depletion of natural resources but also helped the manufacturing firms to work financially
better (Jayal, Badurdeen, Dillon Jr., Jawahir, 2010). Another means of increasing worth
occurs when firms announce their adoption of ISO 14001 environmental management
systems. This system tended to generate an increase in share value traded on stock exchanges
(Jacobs, Singhal, Subramanian, 2010). With the advancement of the populations
environmental awareness, companies that invest in environmental management may increase
in worth through green marketing initiatives (Woolverton and Dimitri, 2010). Environmental
proactivity often got reflected in the planning of manufacturers to get ISO 14001 certificates
(Jabbour, Govindan, Teixeira, Freitas, 2013). They also found that the manufacturing firm
performance is affected through environmental proactivity.
5
Bowen, Cousins, Lamming, Faruk, (2001) found a positive and direct impact of
environmental proactivity on greening the supply process, a construct that shares similarities
with our green supplier assessment approach. Etzion, (2007) said that larger firms were
associated with environmental proactiveness to a greater extent than smaller firms. In their
study Darnall, Henriques and Sadorsky, (2010) said that size moderates the relationship
between stakeholder pressures and the adoption of proactive environmental practices such
that the relationship is stronger for small firms.
Firm Size
Firm Performance
Environmenta
l Proactivity
a) Operational
Performance
b) Perceived
Financial
2.2 Hypotheses
H-1 Environmental Proactivity has an impact on firm performance.
H-1a Environmental Proactivity has relationship with operational performance.
H-1b Environmental Proactivity has impact on perceived financial performance.
H-2 Firm size moderate the relationship between environmental proactivity and firm
performance.
H-2a Firm size moderate the relationship between environmental proactivity and operational
performance.
H-2b Firm size moderate the relationship between environmental proactivity and perceived
financial performance.
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3.3 Sampling
Questionnaires will be got filled from 150 companies. There will be two
questionnaires filled from each company. The companies will be selected on basis of
convenient sampling (Alvi, Adil, Ahmed, Veinhardt, 2014). The sample size will be 300
(Silk and Urban, 1977).
3.5 Measures
The participants will have to answer the questions on five point Likert scale where the
degrees of 1,2,3,4,5 will be used to represent not at all, to little extent, to some extent, to
a moderate extent and to large extent respectively.
3.6 Model
To study relationships following model will be used.
Yi = 1 + 1i +
Based on above equation, three equations will be developed for each dependent variable.
Firm Performance =
+ 1 EP +
Firm Performance =
+ 1 EP + 2 FS + 3 (FS)(EP) +
Operational Performance =
+ 1 EP + 2 FS + 3 (FS)(EP) +
+ 1 EP + 2 FS + 3 (FS)(EP) +
Where
FS=
Firm Size
3.7 Measurements
Selection of variables is strongly influenced by the previous studies on subject under
discussion. The mentioned variables will be used to test the hypotheses of the study. There
are independent variables, dependent variable and a moderating variable.
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Firm Size: Firm size will be used as dummy variable. And the size of firms will be based on
number of employees working in the organization (Russo and Fouts, 1997; Christmann P.
2000).
11
4. References
lvarez Gil MJ, Burgos Jimnez J, Cspedes Lorente JJ. (2001). An analysis of environmental
management, organizational context and performance of Spanish hotels. Omega, Vol
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Alvi, H. A., Hanif, M., Adil, M. S., Ahmed, R. R., & Vveinhardt, J. (2014). Impact of
Organizational Culture on Organizational Commitment and Job Satisfaction.
European Journal of Business and Management , 6 (27).
Arago n-Correa, J.A. (1998), Strategic proactivity and firm approach to the natural
environment, Academy of Management Journal, Vol. 41 No. 5, pp. 556-67.
Arora, S., Cason, T.N. (1996). Why do firms volunteer to exceed environmental regulations?
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Avolio, B. J., Gardner, W. L., Walumbwa, F. O., Luthans, F., & May, D. R. (2004). Unlocking
the mask: A look at the process by which authentic leaders impact follower attitudes
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Berry, M.A., Rondinelli, D.A. (1998). Proactive environmental management: a new
industrial revolution. The Academy of Management Executive, Vol 12 (2), pp.38-50.
Bowen, F., Cousins, P., Lamming, R., Faruk, A. (2001). The role of supply management
capabilities in green supply. Production and Operations Management, Vol 10(2),pp
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Christmann P. (2000). Effects of best practices of environmental management on cost
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Dean, T. J., Brown, R. L. and Stango, V. (2000). Environmental regulation as a barrier to the
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Government of Pakistan.
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Porter, M., Linde, C. (1995). Towards a new conception of the environmental competitiveness
relationship. Journal of Economical Perspective. Vol 9 (4), pp.97-118.
Russo MV, Fouts PA.(1997). A resource-based perspective on corporate environmental
performance and profitability. Academy of Management Journal,Vol 40(3),pp-53459.
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Sambasivan, M., Saiku, M., Bah, S.M., Ho, Jo-Ann H. (2013). Making the case for operating
Green: impact of environmental proactivity on multiple performance outcomes of
Malaysian firms. Journal of Cleaner Production, Vol 42, pp.69-82.
Silk, A. J., & Urban, G. L. (1977). Pre-test market evaluation of new packaged goods:a
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Silva, D.A.L., Reno, G.W.S., Sevegnani, G., Sevegnani, T.B., Truzzi, O.M.S. (2013).
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Appendix
SURVEY QUESTIONNAIRE
Dear Sir/Madam!
This survey is being conducted to understand Role of Environmental Proactivity in
Performance of Manufacturing Firms. Your responses are voluntary and will be confidential.
Responses will not be identified by individual. All responses will be compiled together. The
results will be used for research purposes only. Thank you for your valuable input and
cooperation.
1. Personal Information
a) Name:
b) Gender:
f) Designation:
2.7
2.8
2.09
2.10
16
Extent To Large
2.6
Extent To Moderate
2.5
Extent To Some
2.4
Extent To Little
2.3
Not at all
2.2
( )F
2.1
( )M
1
1
2
2
3
3
4
4
5
5
3.6
3.7
17
To Large
Extent
To Moderate
Extent
To Some
Extent
To Little
Extent
5
To Large Extent
3.5
Extent To Moderate
3.4
To Some Extent
3.3
To Little Extent
3.2
wing
state
ments
My company is focused on reduction of emission to
air.
My company is focused on reduction of energy
consumption.
My company is focused on reduction of raw
material consumption.
My company is focused on reduction of water
consumption.
My company is focused on reduction of wastes by
recycling.
My company achieved overall cleaner
manufacturing system.
Due to environmental proactivity there is sale of
scraps in my company.
Not at all
3.1
Not at all
2. Follo
No of Employees