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The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth

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  • Cainelli, Giulio
  • Mazzanti, Massimiliano
  • Zoboli, Roberto

Abstract

This paper investigates the empirical link between emission intensity and economic growth, using a very large data set of 61,219 Italian manufacturing firms over the period 2000-2004. As a measure of lagged environmental performance (efficiency) at firm level we exploit NAMEA sector for CO2, NOx, SOx data over 1990-1999. The paper tests the extent to which (past) environmental efficiency/intensity, which is driven by structural features and firm strategic actions, including responses to policies, influences firms growth. Our results show, first, a typical trade off generally appearing for the three core environmental emissions we analyse: lower environmentally efficiency in the recent past allows higher degrees of freedom to firms and relax the constraints for growth, at least in this short/medium term scenario. Nevertheless, the size of the estimated coefficients is not large. Trade off are significant for two emission indicators out of two, but quite negligible in terms of impacts, besides the case of CO2. For example, growth is reduced by far less than 0.1% in association to a 1% increase of environmental efficiency. Environmental efficiency does not seem a primary cost factor and constraint to growth if compared to other factors affecting firm targets and firm competitiveness. In addition, non-linearity seems to characterise the economic growth-environmental performance relationship. Signals of inverted U shape appears: this may be a signal that both firm strategies and recent policy efforts are affecting the dynamic relationship between environmental efficiency and economic productivity, turning it from an usual trade off to a possible joint complementary/co-dynamics, where bad environmental performances hamper firm growth and investments in greener technologies may be associated to positive economic performances of firms and sectors.

Suggested Citation

  • Cainelli, Giulio & Mazzanti, Massimiliano & Zoboli, Roberto, 2008. "The Relationship Between Environmental Efficiency and Manufacturing Firm’s Growth," Coalition Theory Network Working Papers 46656, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemct:46656
    DOI: 10.22004/ag.econ.46656
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    Cited by:

    1. Davide Antonioli & Massimiliano Mazzanti, 2009. "Techno-organisational strategies, environmental innovations and economic performances. Micro-evidence from an SME-based industrial district," Journal of Innovation Economics, De Boeck Université, vol. 0(1), pages 145-168.
    2. Eugenio Zubeltzu‐Jaka & Artitzar Erauskin‐Tolosa & Iñaki Heras‐Saizarbitoria, 2018. "Shedding light on the determinants of eco‐innovation: A meta‐analytic study," Business Strategy and the Environment, Wiley Blackwell, vol. 27(7), pages 1093-1103, November.
    3. Erauskin Tolosa, Artitzar & Zubeltzu Jaka, Eugenio, 2016. "Eko-berrikuntza sustatzen duten faktore eragile batzuen azterketa meta-analisiaren bidez," Revista de Dirección y Administración de Empresas, Universidad del País Vasco - Escuela Universitaria de Estudios Empresariales de San Sebastián.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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