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When to increase firms’ sustainable operations for efficiency? A data envelopment analysis in the retailing industry

Author

Listed:
  • Yeming Gong

    (EM - EMLyon Business School)

  • Jiawen Liu
  • Joe Zhu

Abstract

Retailers increasingly incorporate sustainable operations to improve their efficiency, which raises questions: Is it always beneficial to increase firms' sustainable operations for operational efficiency? Under which conditions should a retailer increase its socially-responsible and environmentally-friendly operations to improve efficiency? Our research addresses inconsistent viewpoints in relation to sustainable activities and performance at an operational level, and fills in research gaps in measuring the efficiency of, and identifying the operational mechanisms active in, sustainable retail operations. By collecting data from 124 retailers, we integrate the DEA (data envelopment analysis) model with empirical methods. We first apply DEA models to evaluate the efficiency of retailers. Using efficiency values provided by DEA, we conduct hierarchical regression analysis to examine the influence of socially-responsible and environmentally-friendly operations, and understand the role of sustainable operations in the supply chain. Finally, we use nonlinear analysis to identify the conditions required to increase the efficiency of sustainable operations. Supply chain integration can improve efficiency with higher levels of socio-economic integration and environmental-economic integration. Firms in an internal operational environment with a higher level of financial flow integration and a lower level of physical flow integration are more likely to achieve high retail efficiency.We find two conditions for implementation with managerial insights. When these conditions, characterized by financial flow and physical flow integration, are satisfied, a retailer can increase sustainable operations to increase efficiency. We have a surprising but reasonable finding: The interaction of sustainable operations and physical flow integration is negatively correlated to efficiency.

Suggested Citation

  • Yeming Gong & Jiawen Liu & Joe Zhu, 2019. "When to increase firms’ sustainable operations for efficiency? A data envelopment analysis in the retailing industry," Post-Print hal-02312352, HAL.
    • Handle: RePEc:hal:journl:hal-02312352
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    Citations

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    Cited by:

    1. Nomita Pachar & Jyoti Dhingra Darbari & Kannan Govindan & P. C. Jha, 2022. "Sustainable performance measurement of Indian retail chain using two-stage network DEA," Annals of Operations Research, Springer, vol. 315(2), pages 1477-1515, August.
    2. Zhu, Liyun & Schneider, Kevin & Oude Lansink, Alfons, 2023. "Economic, environmental, and social inefficiency assessment of Dutch dairy farms based on the dynamic by-production model," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1134-1145.
    3. Bang, You-Young & Lee, Dae Sung & Lim, Seong-Rin, 2019. "Analysis of corporate CO2 and energy cost efficiency: The role of performance indicators and effective environmental reporting," Energy Policy, Elsevier, vol. 133(C).
    4. Wang, Xing-Xin & He, Ai-Zhong, 2022. "The impact of retailers’ sustainable development on consumer advocacy: A chain mediation model investigation," Journal of Retailing and Consumer Services, Elsevier, vol. 64(C).
    5. Gupta, Anshu & Pachar, Nomita & Jain, Akansha & Govindan, Kannan & Jha, P.C., 2023. "Resource reallocation strategies for sustainable efficiency improvement of retail chains," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    6. Tsionas, Mike G. & Patel, Pankaj C., 2023. "Tinkering or orchestrating? The value of country-level asset management capability and entrepreneurship outcomes," International Journal of Production Economics, Elsevier, vol. 255(C).
    7. Singpai, Bodin & Wu, Desheng Dash, 2021. "An integrative approach for evaluating the environmental economic efficiency," Energy, Elsevier, vol. 215(PB).
    8. Yong Tan & Mike G. Tsionas, 2022. "Modelling sustainability efficiency in banking," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3754-3772, July.
    9. Veiga, Gabriela Lobo & Pinheiro de Lima, Edson & Frega, José Roberto & Gouvea da Costa, Sérgio Eduardo, 2021. "A DEA-based approach to assess manufacturing performance through operations strategy lenses," International Journal of Production Economics, Elsevier, vol. 235(C).
    10. Zeng, Ximei & Zhou, Zhongbao & Gong, Yeming & Liu, Wenbin, 2022. "A data envelopment analysis model integrated with portfolio theory for energy mix adjustment: Evidence in the power industry," Socio-Economic Planning Sciences, Elsevier, vol. 83(C).

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