Role of lean manufacturing and environmental management practices in eliciting environmental and financial performance: the contingent effect of institutional pressures

Abstract

This study aims to examine the impact of firm lean manufacturing (LM) and environmental management (EM) practices on firm performance (i.e., environmental and financial performance). Drawing upon institutional theory, we also examine the moderating effect of institutional pressures in adopting EM practices and their subsequent effects on firm performance. The data were collected from 178 textile manufacturing firms operating in Pakistan. Covariance-based structural equation modeling was used to test the hypothesized relationships. Findings support the positive direct effect of LM practices on EM practices and the indirect effect on environmental performance which ultimately increases financial performance. Institutional pressures moderate the direct effect of EM practices on environmental performance. Firms are advised to implement LM accompanied by EM practices to ensure the protection of the natural environment as well as to enhance profit-making capability, in the long run. Further, firms can also enhance environmental performance capabilities through strict synchronization of EM practices with institutional pressures. This research fills the literature gap by investigating the effects of firm's EM practices on environmental and financial performance under the contingent effect of institutional pressures. The study also provides important implications for firms and practitioners.

Appendix

Questionnaire

Disclaimer

The aim of this data collection is to assess hypothesized relationships among lean manufacturing, environmental management practices, environmental and financial performance, and institutional pressures. All respondents are assured of confidentiality of their individual responses. The data will be presented only in generalized form as a whole.

Organization’s name: __________________________.

Firm size (no. of employees): ________________________.

Lean manufacturing
Indicate degree of the following action programs undertaken over the last 3 years 1: Not at all 2: To a small extent 3: To some extent 4: To a moderate extent 5: To a large extent.
JIT1	Restructuring manufacturing processes and layout to obtain process focus and streamlining (e.g., reorganize plant within-a-plant; cellular layout, etc.)	1	2	3	4	5
JIT2	Undertaking actions to implement pull production (e.g., reducing batches, setup time, using Kanban systems, etc.)	1	2	3	4	5
TQM1	Undertaking programs for quality improvement and control (e.g., TQM programs, 6 s projects, quality circles, etc.)	1	2	3	4	5
TQM2	Undertaking programs for the improvement of your equipment productivity (e.g., total productive maintenance programs)	1	2	3	4	5
EI1	Implementing actions to increase the level of delegation and knowledge of your workforce (e.g., empowerment, training, autonomous teams, etc.)	1	2	3	4	5
EI2	Implementing the lean organization model by, e.g., reducing the number of levels and broadening the span of control.	1	2	3	4	5
Environmental management practices
Undertaking programs to improve environmental performance of processes and products (e.g., environmental management system, life-cycle analysis, design for environment, environmental certification)
EMP1	How has your operational performance changed over the last 3 years? How does your current performance compare with main competitor(s)?	1	2	3	4	5
Environmental performance
Compared to 3 years ago, indicator has: 1—deteriorated more than 10%, 2—stayed about the same, 3—improved 10–30%, 4—improved 30–50% and 5—improved more than 50%.
EP1	Relative to our main competitor(s), our performance is: 1—much worse to 5—much better.	1	2	3	4	5
EP2	How do you perform relative to three years ago and to main competitor(s)?	1	2	3	4	5
Financial performance
Compared to 3 years ago indicator has: 1—deteriorated more than 10%, 2—stayed about the same, 3—improved 10–30%, 4—improved 30–50% and 5—improved more than 50%.
FP1	Return on sales (ROS)	1	2	3	4	5
FP2	Return on investment (ROI)	1	2	3	4	5
Relative to our main competitor(s), our performance is 1—much worse to 5—much better.
FP3	Return on sales (ROS)	1	2	3	4	5
FP4	Return on investment (ROI)	1	2	3	4	5
Institutional pressures
Please rate your perception towards the institutional pressures
IP1	Regional pollution control board pressurizes the firm to adopt green practices.	1	2	3	4	5
IP2	Government regulations provide clear guidelines in controlling pollution level.	1	2	3	4	5
IP3	Pollution control board strictly monitors the pollution level of firm on a periodic basis.	1	2	3	4	5
IP4	Green practices decrease incidence of penalty fee charged by pollution control board.	1	2	3	4	5
IP5	Maximum sales of company are export oriented.	1	2	3	4	5
IP6	Foreign customers are more sensitive towards green practices	1	2	3	4	5