IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v267y2024ics0925527323002980.html
   My bibliography  Save this article

How does the stakeholder exposure of vertical integration influence environmental performance?

Author

Listed:
  • Kraude, Richard
  • Narasimhan, Ram

Abstract

In this study, we examine the relationship between Vertical Integration (VI) and Environmental Performance (EP) to understand the impact of Stakeholder exposure on organizational behavior. We collected data on emissions, environmental initiatives, and financial information in the consumer-packaged goods (CPG) industry from two independent secondary sources between 2002 and 2012. We utilized a financial measure for VI and operationalized EP both with objective measures (carbon emissions and waste) and semi-objective measures (the number of environmental initiatives implemented). We show that highly integrated firms produce less waste and show greater alignment in “saying” (stating objectives publicly) versus “doing” (reducing carbon footprint and waste). Yet, firms also engage in fewer environmental initiatives and do not emit less CO2. Taken together, this provides a more nuanced understanding of the relationship between VI and EP and how organizational pressures influence strategic action.

Suggested Citation

  • Kraude, Richard & Narasimhan, Ram, 2024. "How does the stakeholder exposure of vertical integration influence environmental performance?," International Journal of Production Economics, Elsevier, vol. 267(C).
    • Handle: RePEc:eee:proeco:v:267:y:2024:i:c:s0925527323002980
    DOI: 10.1016/j.ijpe.2023.109066
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527323002980
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2023.109066?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Srinivasan Balakrishnan & Birger Wernerfelt, 1986. "Technical change, competition and vertical integration," Strategic Management Journal, Wiley Blackwell, vol. 7(4), pages 347-359, July.
    2. Sharon Novak & Steven D. Eppinger, 2001. "Sourcing By Design: Product Complexity and the Supply Chain," Management Science, INFORMS, vol. 47(1), pages 189-204, January.
    3. Christopher Marquis & Michael W. Toffel & Yanhua Zhou, 2016. "Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing," Organization Science, INFORMS, vol. 27(2), pages 483-504, April.
    4. Fei Gao & Gilvan C. Souza, 2022. "Carbon Offsetting with Eco-Conscious Consumers," Management Science, INFORMS, vol. 68(11), pages 7879-7897, November.
    5. Chialin Chen, 2001. "Design for the Environment: A Quality-Based Model for Green Product Development," Management Science, INFORMS, vol. 47(2), pages 250-263, February.
    6. Marvin B. Lieberman & Rajeev Dhawan, 2005. "Assessing the Resource Base of Japanese and U.S. Auto Producers: A Stochastic Frontier Production Function Approach," Management Science, INFORMS, vol. 51(7), pages 1060-1075, July.
    7. Karunakaran, Arvind & Orlikowski, Wanda J. & Scott, Susan V., 2022. "Crowd-based accountability: examining how social media commentary reconfigures organizational accountability," LSE Research Online Documents on Economics 114401, London School of Economics and Political Science, LSE Library.
    8. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    9. Brian W. Jacobs & Richard Kraude & Sriram Narayanan, 2016. "Operational Productivity, Corporate Social Performance, Financial Performance, and Risk in Manufacturing Firms," Production and Operations Management, Production and Operations Management Society, vol. 25(12), pages 2065-2085, December.
    10. Stuart L. Hart & Gautam Ahuja, 1996. "Does It Pay To Be Green? An Empirical Examination Of The Relationship Between Emission Reduction And Firm Performance," Business Strategy and the Environment, Wiley Blackwell, vol. 5(1), pages 30-37, March.
    11. Normann, Hans-Theo, 2009. "Vertical integration, raising rivals' costs and upstream collusion," European Economic Review, Elsevier, vol. 53(4), pages 461-480, May.
    12. Henri Servaes & Ane Tamayo, 2013. "The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness," Management Science, INFORMS, vol. 59(5), pages 1045-1061, May.
    13. Aaron K. Chatterji & David I. Levine & Michael W. Toffel, 2009. "How Well Do Social Ratings Actually Measure Corporate Social Responsibility?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 125-169, March.
    14. Andrew King & Michael Lenox, 2002. "Exploring the Locus of Profitable Pollution Reduction," Management Science, INFORMS, vol. 48(2), pages 289-299, February.
    15. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    16. Herremans, Irene M. & Akathaporn, Parporn & McInnes, Morris, 1993. "An investigation of corporate social responsibility reputation and economic performance," Accounting, Organizations and Society, Elsevier, vol. 18(7-8), pages 587-604.
    17. M. Bensaou & N. Venkatraman, 1995. "Configurations of Interorganizational Relationships: A Comparison Between U.S. and Japanese Automakers," Management Science, INFORMS, vol. 41(9), pages 1471-1492, September.
    18. Sharon Novak & Scott Stern, 2009. "Complementarity Among Vertical Integration Decisions: Evidence from Automobile Product Development," Management Science, INFORMS, vol. 55(2), pages 311-332, February.
    19. Zhou, Qin & Meng, Chao & Sheu, Jiuh-Biing & Yuen, Kum Fai, 2023. "Remanufacturing mode and strategic decision: A game-theoretic approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    20. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    21. Kathryn Rudie Harrigan, 1986. "Matching vertical integration strategies to competitive conditions," Strategic Management Journal, Wiley Blackwell, vol. 7(6), pages 535-555, November.
    22. Sandra A. Waddock & Samuel B. Graves, 1997. "The Corporate Social Performance–Financial Performance Link," Strategic Management Journal, Wiley Blackwell, vol. 18(4), pages 303-319, April.
    23. Ranjay Gulati & Paul R. Lawrence & Phanish Puranam, 2005. "Adaptation in vertical relationships: beyond incentive conflict," Strategic Management Journal, Wiley Blackwell, vol. 26(5), pages 415-440, May.
    24. Andrea Liesen & Andreas G. Hoepner & Dennis M. Patten & Frank Figge, 2015. "Does stakeholder pressure influence corporate GHG emissions reporting? Empirical evidence from Europe," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 28(7), pages 1047-1074, September.
    25. Chien-Ming Chen, 2017. "Supply Chain Strategies and Carbon Intensity: The Roles of Process Leanness, Diversification Strategy, and Outsourcing," Journal of Business Ethics, Springer, vol. 143(3), pages 603-620, July.
    26. Justine S. Hastings & Richard J. Gilbert, 2005. "Market Power, Vertical Integration And The Wholesale Price Of Gasoline," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 469-492, December.
    27. James Richardson, 1996. "Vertical Integration and Rapid Response in Fashion Apparel," Organization Science, INFORMS, vol. 7(4), pages 400-412, August.
    28. Subhani, Muhammad Imtiaz & Hasan, Syed Akif & Osman, Ms. Amber, 2012. "Bye to Vertical Integration and Welcome to the Horizontal Integration in the Textile Business," MPRA Paper 45140, University Library of Munich, Germany.
    29. Sime Curkovic & Robert Sroufe & Robert Landeros, 2008. "Measuring TQEM returns from the application of quality frameworks," Business Strategy and the Environment, Wiley Blackwell, vol. 17(2), pages 93-106, February.
    30. Abagail McWilliams & Donald Siegel, 2000. "Corporate social responsibility and financial performance: correlation or misspecification?," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 603-609, May.
    31. Tucker, Irvin B & Wilder, Ronald P, 1977. "Trends in Vertical Integration in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 26(1), pages 81-94, September.
    32. Adem Orsdemir & Bin Hu & Vinayak Deshpande, 2019. "Ensuring Corporate Social and Environmental Responsibility Through Vertical Integration and Horizontal Sourcing," Manufacturing & Service Operations Management, INFORMS, vol. 21(2), pages 417-434, April.
    33. Thomas P. Lyon & John W. Maxwell, 2011. "Greenwash: Corporate Environmental Disclosure under Threat of Audit," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(1), pages 3-41, March.
    34. Richard G. Harris & Elmer G. Wiens, 1980. "Government Enterprise: An Instrument for the Internal Regulation of Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 125-132, February.
    35. Khanna, Madhu & Damon, Lisa A., 1999. "EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 1-25, January.
    36. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.
    37. Arya, Anil & Mittendorf, Brian & Sappington, David E.M., 2008. "Outsourcing, vertical integration, and price vs. quantity competition," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 1-16, January.
    38. Charles J. Corbett & Robert D. Klassen, 2006. "Extending the Horizons: Environmental Excellence as Key to Improving Operations," Manufacturing & Service Operations Management, INFORMS, vol. 8(1), pages 5-22, March.
    39. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    40. Jordi Surroca & Josep A. Tribó & Sandra Waddock, 2010. "Corporate responsibility and financial performance: the role of intangible resources," Strategic Management Journal, Wiley Blackwell, vol. 31(5), pages 463-490, May.
    41. Robert J. David & Shin‐Kap Han, 2004. "A systematic assessment of the empirical support for transaction cost economics," Strategic Management Journal, Wiley Blackwell, vol. 25(1), pages 39-58, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chien-Ming Chen, 2017. "Supply Chain Strategies and Carbon Intensity: The Roles of Process Leanness, Diversification Strategy, and Outsourcing," Journal of Business Ethics, Springer, vol. 143(3), pages 603-620, July.
    2. Bongani Munkuli & Renee Horne, 2018. "Financial Markets Value Reputation for Corporate Social Responsibility (CSR) – A Study of the South African Mining Sector," Africagrowth Agenda, Africagrowth Institute, vol. 15(2), pages 17-22.
    3. Wayne Fu & Che‐Ping (Jack) Su, 2021. "The implications of efficiency differences in sustainable development: An empirical study in the consumer product industry," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2489-2504, July.
    4. Jun Li & Di (Andrew) Wu, 2020. "Do Corporate Social Responsibility Engagements Lead to Real Environmental, Social, and Governance Impact?," Management Science, INFORMS, vol. 66(6), pages 2564-2588, June.
    5. Magdalena Kapelko & Alfons Oude Lansink & Encarna Guillamon‐Saorin, 2021. "Corporate social responsibility and dynamic productivity change in the US food and beverage manufacturing industry," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 286-305, April.
    6. Franck Brulhart & Sandrine Gherra & Bertrand V. Quelin, 2019. "Do Stakeholder Orientation and Environmental Proactivity Impact Firm Profitability?," Journal of Business Ethics, Springer, vol. 158(1), pages 25-46, August.
    7. Aseem Kaul & Jiao Luo, 2018. "An economic case for CSR: The comparative efficiency of for‐profit firms in meeting consumer demand for social goods," Strategic Management Journal, Wiley Blackwell, vol. 39(6), pages 1650-1677, June.
    8. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.
    9. Mauri, Alfredo J. & Neiva de Figueiredo, João, 2012. "Strategic Patterns of Internationalization and Performance Variability: Effects of US-Based MNC Cross-Border Dispersion, Integration, and Outsourcing," Journal of International Management, Elsevier, vol. 18(1), pages 38-51.
    10. Truong, Yann & Berrone, Pascual, 2022. "Can environmental innovation be a conventional source of higher market valuation?," Journal of Business Research, Elsevier, vol. 142(C), pages 113-121.
    11. Emmanuel Lawal & Gökan May & Bojan Stahl, 2017. "The Significance of Corporate Social Disclosure for High‐Tech Manufacturing Companies: Focus on Employee and Community Aspects of Sustainable Development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(4), pages 295-311, July.
    12. Lin, Woon Leong & Law, Siong Hook & Ho, Jo Ann & Sambasivan, Murali, 2019. "The causality direction of the corporate social responsibility – Corporate financial performance Nexus: Application of Panel Vector Autoregression approach," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 401-418.
    13. Antonio D'Amato & Camilla Falivena, 2020. "Corporate social responsibility and firm value: Do firm size and age matter? Empirical evidence from European listed companies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 909-924, March.
    14. Hans B. Christensen & Luzi Hail & Christian Leuz, 2021. "Mandatory CSR and sustainability reporting: economic analysis and literature review," Review of Accounting Studies, Springer, vol. 26(3), pages 1176-1248, September.
    15. Nazim Hussain & Ugo Rigoni & Elisa Cavezzali, 2018. "Does it pay to be sustainable? Looking inside the black box of the relationship between sustainability performance and financial performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1198-1211, November.
    16. Rakesh Basant & Pulak Mishra, 2019. "Impact of Vertical Integration on Market Power in Indian Manufacturing Sector During the Post-Reform Period," Journal of Industry, Competition and Trade, Springer, vol. 19(4), pages 561-581, December.
    17. Woon Leong Lin & Chin Lee & Siong Hook Law, 2021. "Asymmetric effects of corporate sustainability strategy on value creation among global automotive firms: A dynamic panel quantile regression approach," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 931-954, February.
    18. Sanja Pekovic & Sebastian Vogt, 2021. "The fit between corporate social responsibility and corporate governance: the impact on a firm’s financial performance," Review of Managerial Science, Springer, vol. 15(4), pages 1095-1125, May.
    19. Florian Kaiser & Robert Obermaier, 2020. "Vertical (Dis‑)Integration and Firm Performance: A Management Paradigm Revisited," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(1), pages 1-37, February.
    20. Weiwei Wu & Rizwan Ullah & Syed Jamal Shah, 2020. "Linking Corporate Environmental Performance to Financial Performance of Pakistani Firms: The Roles of Technological capability and Public awareness," Sustainability, MDPI, vol. 12(4), pages 1-18, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:267:y:2024:i:c:s0925527323002980. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.