IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v272y2024ics0925527324001014.html
   My bibliography  Save this article

Market reaction to responsible production practices adoption: The role of firm size and financial slack

Author

Listed:
  • Liu, Fuzhen
  • He, Chaocheng
  • Lai, Kee-hung

Abstract

The tension between the costs and benefits of adopting responsible production practices has engendered firms' hesitation about embracing legitimate actions in their business operations. Drawing upon the legitimacy theory and resource-based view, this study delves into the market responses to responsible production practices adoption and the boundary conditions of firm size and financial slack influencing the performance link. Using a dataset comprising 392 manufacturers that adopted responsible production practices between 2016 and 2023; this study employs a short-term event study approach to unveil the positive market value of responsible production practices adoption. Through cross-sectional regression analysis, we discern that firm size and financial slack can strengthen the market value of adopting responsible production practices, especially during the COVID-19 pandemic. The findings offer managerial insights for assisting firms in navigating their journey toward responsible production while safeguarding their firm value.

Suggested Citation

  • Liu, Fuzhen & He, Chaocheng & Lai, Kee-hung, 2024. "Market reaction to responsible production practices adoption: The role of firm size and financial slack," International Journal of Production Economics, Elsevier, vol. 272(C).
    • Handle: RePEc:eee:proeco:v:272:y:2024:i:c:s0925527324001014
    DOI: 10.1016/j.ijpe.2024.109244
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527324001014
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2024.109244?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.

    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:272:y:2024:i:c:s0925527324001014. 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.

    We have no bibliographic references for this item. You can help adding them by using 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.