Environmental management practices and environmental performance. The roles of operations and marketing capabilities
| Date | 11 July 2016 |
| Pages | 1201-1222 |
| DOI | https://doi.org/10.1108/IMDS-09-2015-0380 |
| Published date | 11 July 2016 |
| Author | Wantao Yu,Ramakrishnan Ramanathan |
| Subject Matter | Information & knowledge management,Information systems,Data management systems |
Environmental management
practices and environmental
performance
The roles of operations and
marketing capabilities
Wantao Yu
Kent Business School, University of Kent, Chatham, UK, and
Ramakrishnan Ramanathan
Department of Business Systems,
University of Bedfordshire Business School, Luton, UK
Abstract
Purpose –The purpose of this paper is to provide an initial analysis of the roles of functional
capabilities in adopting environmental management practices (EMP) and improving environmental
performance from an organizational capability perspective.
Design/methodology/approach –By combing survey data and archival data from 121 UK-based
manufacturing firms, this study explores the relationships among functional capabilities (marketing
and operations), EMP and environmental performance.
Findings –The results show that marketing and operations capabilities significantly affect EMP,
which in turn leads to improved environmental performance. More specifically, this study finds that
EMP fully mediates the relationship between marketing capability and environmental performance.
Practical implications –The results of this study provide guidance for managers considering how
to develop environmental capability in order to improve environmental performance.
Originality/value –This study address es a demonstrable gap in the existing literature
that few empirical studies have explored the potential effects of functional capabilities on
implementing EMP.
Keywords UK, Data envelopment analysis, Marketing capability, Environmental performance,
Environmental management practices, Operations capability
Paper type Research paper
1. Introduction
It has been widely accepted that firms face pressures from various stakeholders
(e.g. customers,suppliers and competitors) on implementing environmental management
practices (EMP) (Delmas and Toffel, 2008). EMP refers to “the techniques, policies and
procedures a firm uses that are specifically aimed at monitoring and controlling the
impact of its operations on the natural environment”(Montabon et al., 2007). The
implementation of EMP can improve a firm’s environmental performance, which
measures efforts by a firm to reduce the level of environmental impact of its operations
(e.g. Tyteca, 1996; Ulubeyli, 2013). Implementing EMP relies on the deployment of
relevant organizational capabilities (Bowen et al., 2001). Thus, a major challenge for
organizations is to understand how improved environmental performance can be
created in their business processes using various functional capabilities. Managers
realize that they should avoid complex environmental initiatives if they do not have
relevant functional capabilities to implement them. However, they have “little guidance
Industrial Management & Data
Systems
Vol. 116 No. 6, 2016
pp. 1201-1222
©Emerald Group Publis hing Limited
0263-5577
DOI 10.1108/IMDS-09-2015-0380
Received 21 September 2015
Revised 6 January 2016
Accepted 25 January 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
1201
EMP and
environmental
performance
on how these capabilities can be developed”to support their EMP (Bowen et al., 2001)
and environmental performance. Clearly, there is a need for more research that
empirically explores the development of environmental management capability and
provides useful insights into which organizational capabilities (Grant, 2002) can be
used to create environmental management capability (Aragon-Correa and Sharma,
2003). To fulfil the important research gap, the present study develops a conceptua l
framework addressing the role of functional capabilities in implementing EMP, and
provides an initial empirical examination that can help managers build environmental
management capability for environmental performance improvement.
Previous studies using the resource-based view (RBV) of the firm have unpacked the
organizational resources and capabilities that link environmental strategy and firm
performance (e.g. Aragon-Correa and Sharma, 2003; Russo and Fouts, 1997). Furthermore,
the natural-resource-based view (NRBV) of the firm posits that competitive advantage is
rooted in capabilities that facilitate environmental sustainability (Hart, 1995). Grant (2002)
describes a hierarchy of organizational capabilities, where specialized capabilities are
integrated into broader functional capabilities such as marketing and operations.
Recently, there has been a great deal of research interest regarding whether or not EMP
can improve firm performance (e.g. Lai and Wong, 2012; Montabon et al., 2007; Yu and
Ramanathan, 2015), and regarding the effects of functional capabilities on firm
performance (e.g. Ahmed et al., 2014; Nath et al., 2010; Rungi, 2014; Yu et al., 2014).
However, to date there have been no empirical studies that have explored the potential
association between functional capabilities and EMP and their effects on envi ronmental
performance. Further, previous studies have paid little attention to mediation analysis
when examining the relationship between functional capabilities and performance,
especially in the EMP context. To fulfil the research gaps, by evaluating the mediating
effect of EMP, this study will help clarify the nature of the relationships between
functional capabilities, EMP and environmental performance. More specifically, in the
present study we will examine whether environmental management capability
(Aragon-Correa and Sharma, 2003) is developed from functional capabilities, such as
operations and marketing capabilities. We focus on these two capabilities, amongothers,
because previous studies have considered these two as key functions in a firm (Ahmed
et al., 2014; Tatikonda and Montoya-Weiss, 2001).
This study makes several compelling contributions to existing EMP research by
providing theoretical insights and empirical findings. First, drawing upon the RBV
and NRBV, this study seeks to extend our understanding of the effects of functional
capabilities on EMP and environmental performance. To the best of our knowledge,
this study is the first to explore the development of environmental management
capability in the EMP context. Clarifying such important relationships will offer
valuable insights into broader environmental management research (Bowen et al.,
2001). Second, while the impacts of functional capabilities on firm performance
have been extensively studied (e.g. Ahmed et al., 2014; Nath et al., 2010; Rungi, 2014;
Yu et al., 2014), studies on impacts on EMP and environmental performance are
absent, which we attempt in this study. Third, we delve deeper into the link between
organizational capabilities and environmental performance by studying the
mediating role of EMP on the link. To the best of our knowledge, the proposed
mediation has not been empirically tested. Finally, this study provides managerial
guidelines for managers to understand how environmental management capability
can be developed based on their functional capabilities in order to improve
environmental performance.
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