IDEAS home Printed from https://ideas.repec.org/p/ulp/sbbeta/2001-22.html
   My bibliography  Save this paper

Determinants of Environmental and Economic Performance of Firms: An Empirical Analysis of the European Paper Industry

Author

Listed:
  • Théophile AZOMAHOU
  • Phu NGUYEN VAN
  • Marcus WAGNER

Abstract

This paper examines the relationship between the environmental and economic performance of firms in the European paper manufacturing industry. Based on panel data, it first investigates the relationship separately, with the analysis based on four hypotheses formulated with regard to country influence, process influence and firm size influence on environmental and economic performance. Hypotheses are tested using pooled regression and a panel regression framework with random firm and temporal effects. The main results of this analysis based on separated regressions are that (i) only for a direct comparison between the UK and Germany, country effects are found to be consistent with the hypotheses, i.e. German firms have better environmental, but worse economic performance than UK firms, (ii) there is a significant sub-sector effect on environmental performance only, (iii) effectively no significant firm size effect can be detected. Subsequent to analysing the relationship separately, the paper estimates the determinants of the relationship between environmental and economic performance using three simultaneous equations systems. It was found that for the system with return on sales as economic performance variable, and an environmental performance index as environmental performance variable, a significant and positive regression coefficient was estimated for the asset-turnover ratio, as well as significant and negative coefficients for the dummy variables representing the industrial and mixed sub-sector. For the system with return on capital employed and the environmental index, significant and positive coefficients were found for the latter, both linear and squared. This last finding fits better with "traditionalist" reasoning about the relationship between environmental and economic performance, which predicts the relationship to be uniformly negative.

Suggested Citation

  • Théophile AZOMAHOU & Phu NGUYEN VAN & Marcus WAGNER, 2001. "Determinants of Environmental and Economic Performance of Firms: An Empirical Analysis of the European Paper Industry," Working Papers of BETA 2001-22, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2001-22
    as

    Download full text from publisher

    File URL: http://beta.u-strasbg.fr/WP/2001/2001-22.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wansbeek, Tom & Kapteyn, Arie, 1983. "A note on spectral decomposition and maximum likelihood estimation in models with balanced data," Statistics & Probability Letters, Elsevier, vol. 1(4), pages 213-215, June.
    2. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    3. Peattie, Ken & Ringer, Anja, 1994. "Management and the environment in the UK and Germany: A comparison," European Management Journal, Elsevier, vol. 12(2), pages 216-225, June.
    4. 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.
    5. Daniel C. Esty & Michael E. Porter, 1998. "Industrial Ecology and Competitiveness: Strategic Implications for the Firm," Journal of Industrial Ecology, Yale University, vol. 2(1), pages 35-43, January.
    6. Amemiya, Takeshi, 1971. "The Estimation of the Variances in a Variance-Components Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(1), pages 1-13, February.
    7. Henriques, Irene & Sadorsky, Perry, 1996. "The Determinants of an Environmentally Responsive Firm: An Empirical Approach," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 381-395, May.
    8. R. Schmalensee & R. Willig (ed.), 1989. "Handbook of Industrial Organization," Handbook of Industrial Organization, Elsevier, edition 1, volume 1, number 1.
    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. Christian Schwens & Marcus Wagner, 2019. "The role of firm-internal corporate environmental standards for organizational performance," Journal of Business Economics, Springer, vol. 89(7), pages 823-843, September.
    2. Badi Baltagi & Dong Li, 2006. "Prediction in the Panel Data Model with Spatial Correlation: the Case of Liquor," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(2), pages 175-185.
    3. Van Meensel, Jef & Lauwers, Ludwig H. & Van Huylenbroeck, Guido & Van Passel, Steven, 2009. "Exploring production-theoretical insights for analyzing trade-offs between economic performance and environmental pressure at firm level," 2009 Conference, August 16-22, 2009, Beijing, China 51725, International Association of Agricultural Economists.
    4. 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.
    5. A. Mahabbati & A. Izady & M. Mousavi Baygi & K. Davary & S. M. Hasheminia, 2017. "Daily soil temperature modeling using ‘panel-data’ concept," Journal of Applied Statistics, Taylor & Francis Journals, vol. 44(8), pages 1385-1401, June.
    6. Myoungjin Oh & Jungwoo Shin & Pil‐Ju Park & Sunmee Kim, 2020. "Does eco‐innovation drive sales and technology investment? Focusing on eco‐label in Korea," Business Strategy and the Environment, Wiley Blackwell, vol. 29(8), pages 3174-3186, December.
    7. Marcus Wagner, 2004. "The Porter Hypothesis Revisited: A Literature Review of Theoretical Models and Empirical Tests," Public Economics 0407014, University Library of Munich, Germany.
    8. James J. Cordeiro & Giorgia Profumo & Ilaria Tutore, 2021. "Family ownership and stockholder reactions to environmental performance disclosure: A test of secondary agency relationships," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 2091-2107, May.
    9. Hidemichi Fujii & Kimbara Tatsuo, 2012. "Environmental Management Mechanisms in U.S. and Japanese Manufacturing Firms," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 3(6), pages 13-24, November.
    10. Joern H. Block & Marcus Wagner, 2014. "The Effect of Family Ownership on Different Dimensions of Corporate Social Responsibility: Evidence from Large US Firms," Business Strategy and the Environment, Wiley Blackwell, vol. 23(7), pages 475-492, November.
    11. Serdal Ozusaglam & Stéphane Robin & Chee Yew Wong, 2018. "Early and late adopters of ISO 14001-type standards: revisiting the role of firm characteristics and capabilities," The Journal of Technology Transfer, Springer, vol. 43(5), pages 1318-1345, October.
    12. Surender Kumar & Pritika Dua, 2022. "Environmental management practices and financial performance: evidence from large listed Indian enterprises," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 65(1), pages 37-61, January.
    13. Baltagi, Badi H. & Song, Seuck Heun & Koh, Won, 2003. "Testing panel data regression models with spatial error correlation," Journal of Econometrics, Elsevier, vol. 117(1), pages 123-150, November.
    14. repec:jss:jstsof:27:i02 is not listed on IDEAS
    15. Symeou, Pavlos C. & Zyglidopoulos, Stelios & Gardberg, Naomi A., 2019. "Corporate environmental performance: Revisiting the role of organizational slack," Journal of Business Research, Elsevier, vol. 96(C), pages 169-182.
    16. Qi Guoyou & Zeng Saixing & Tam Chiming & Yin Haitao & Zou Hailiang, 2013. "Stakeholders' Influences on Corporate Green Innovation Strategy: A Case Study of Manufacturing Firms in China," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 20(1), pages 1-14, January.
    17. Marcus Wagner & Nguyen Van Phu & Théophile Azomahou & Walter Wehrmeyer, 2002. "The relationship between the environmental and economic performance of firms: an empirical analysis of the European paper industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 9(3), pages 133-146, September.
    18. Danquah Jeff Boakye & Ishmael TIngbani & Gabriel Ahinful & Isaac Damoah & Venancio Tauringana, 2020. "Sustainable environmental practices and financial performance: Evidence from listed small and medium‐sized enterprise in the United Kingdom," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2583-2602, September.
    19. Joaquín Cañón-de-Francia & Concepión Garcés-Ayerbe, 2019. "Factors and Contingencies for the “It Pays to Be Green Hypothesis”. The European Union’s Emissions Trading System (EU ETS) and Financial Crisis as Contexts," IJERPH, MDPI, vol. 16(16), pages 1-15, August.
    20. Badi H. Baltagi, 1987. "On Estimating from a More General Time-Series Cum Cross-Section Data Structure," The American Economist, Sage Publications, vol. 31(2), pages 69-71, October.
    21. Ritu Pareek & Krishna Dayal Pandey & Tarak Nath Sahu, 2019. "Corporate Governance, Firms’ Characteristics and Environmental Performance Disclosure Practices of Indian Companies," Indian Journal of Corporate Governance, , vol. 12(2), pages 142-155, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

    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:ulp:sbbeta:2001-22. 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: the person in charge The email address of this maintainer does not seem to be valid anymore. Please ask the person in charge to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/bestrfr.html .

    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.