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Sustainability and company performance: Evidence from the manufacturing industry
Linköping University, Department of Management and Engineering, Production Economics. Linköping University, Faculty of Science & Engineering.
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation approaches the question of sustainability and its influence on company performance, with special focus on the manufacturing industry. In the contemporary production environment, manufacturing operations must take into account not only profit, but also environmental and social performance, in order to ensure the long-term development of the company. Companies have to decide whether they should allocate resources to environmental and social practices in order to improve their competitive advantage. Consequently, in decision-making processes concerning operations, it is important for companies to understand how to coordinate profit, people, and planet.

The objective of this dissertation was to investigate the current situation regarding manufacturers’ sustainable initiatives, and to explore the relationship between these sustainable practices and companies’ performance, including financial performance, operational performance, innovation performance, environmental performance, and social performance. First of all, a structured literature review was conducted to identify sustainable factors considered to be important in the decision making of manufacturing operations. The findings were synthesized into a conceptual model, which was then adopted as the basis for designing the survey instrument used in this dissertation. Drawing on Global Reporting Initiative (GRI) reports, empirical research was performed to explore the relationship between environmental management practices and company performance. Interestingly, the findings showed that many environmental management practices had a strong positive impact on innovation performance. Sustainability disclosures and financial performance were further analyzed using extended data from the GRI reports. The results also showed that several sustainability performance indicators, such as product responsibility, human rights, and society, displayed a significant and positive correlation with return on equity in the sample companies.

In order to further explore the research area and to verify these findings, a triangulation approach was adopted and new data were collected via a survey conducted among middle and large sample companies in the Swedish manufacturing industry. The results indicated that the sustainable improvement practices had a positive impact on company performance. Some environmental and social improvement practices had a direct and positive correlation with product and process innovation. Furthermore, findings suggested that better cooperation with suppliers on environmental work could help to strengthen the organizational green capabilities of the focal companies.

When considering the company’s general approach to implementing sustainable practices, some interesting findings emerged. There were limited significant differences in sustainable practices when comparing different manufacturing sectors, and different countries and regions. However, the results showed that Swedish manufacturing companies often place higher priority on implementing economic and environmental sustainability practices than on social ones.

This dissertation contributes to the literature on manufacturing sustainability. The study expands the understanding of how environmental, social, or economic perspectives as a triple bottom line can influence company performance and to a certain extent the supply chain. Identifying and understanding such relationships gives companies the opportunity to integrate sustainability into their manufacturing operations strategy in order to sustain their manufacturing operations over the long term.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2015. , 67 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1698
Keyword [en]
Empirical research, sustainable practices, company performance
National Category
Economics and Business Social Sciences Interdisciplinary
Identifiers
URN: urn:nbn:se:liu:diva-121052DOI: 10.3384/diss.diva-121052ISBN: 978-91-7685-967-4 (print)OAI: oai:DiVA.org:liu-121052DiVA: diva2:851142
Public defence
2015-09-22, ACAS, Hus A, Campus Valla, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2015-09-03 Created: 2015-09-03 Last updated: 2015-09-03Bibliographically approved
List of papers
1. Manufacturing facility location and sustainability: A literature review and research agenda
Open this publication in new window or tab >>Manufacturing facility location and sustainability: A literature review and research agenda
2014 (English)In: International Journal of Production Economics, ISSN 0925-5273, E-ISSN 1873-7579, Vol. 149, 154-163 p.Article in journal (Refereed) Published
Abstract [en]

The perspectives on the manufacturing footprint of global firms are widening from the economic aspects to also include the environmental and social aspects. Thus, sustainability is becoming an important issue for the location of manufacturing facilities. It is therefore timely to review the relevant aspects and dimensions in the extant literature to investigate the relationship between sustainability and facility location. In this paper, we aim to understand how sustainability aspects are included in decision-making concerning manufacturing facility locations and the role of location in evaluating manufacturing sustainability. We examine the literature streams on sustainability and facility location. A comprehensive search includes peer-reviewed literature from 1990 to 2011. We propose a literature classification scheme with respect to focal area and research methodology. The content analysis identifies the environmental, social and economic perspectives and factors affecting location decisions. We synthesize the findings into a framework for taking sustainability aspects into account in manufacturing facility location decision-making. We also propose a research agenda for further research on sustainable locations.

Place, publisher, year, edition, pages
Elsevier, 2014
Keyword
Corporate social responsibility (CSR); Environment; Facility location; Manufacturing; Sustainability
National Category
Other Natural Sciences Other Engineering and Technologies not elsewhere specified
Identifiers
urn:nbn:se:liu:diva-102696 (URN)10.1016/j.ijpe.2013.05.013 (DOI)000332439600015 ()
Funder
VINNOVA
Available from: 2013-12-19 Created: 2013-12-19 Last updated: 2017-12-06Bibliographically approved
2. Applying GRI reports for the investigation of environmental management practices and company performance in Sweden, China and India
Open this publication in new window or tab >>Applying GRI reports for the investigation of environmental management practices and company performance in Sweden, China and India
2015 (English)In: Journal of Cleaner Production, ISSN 0959-6526, E-ISSN 1879-1786, Vol. 98, 36-46 p.Article in journal (Refereed) Published
Abstract [en]

The relationship between environmental management practices (EMPs) and company performance hasrecently been debated in literature and is of interest for both industrial managers and political decisionmakers.This paper investigates the relationship between EMPs and firm performance in manufacturingcompanies in Sweden, China and India. With the content analysis of Global Reporting Initiative (GRI)reports and financial reports of sample companies, the levels of EMPs and the companies’ financialperformances were coded. Further statistical assessment was conducted in order to identify patterns andcorrelations. The results indicate that only selected EMPs have been employed differently in threedifferent countries. Most EMPs clearly do not have a positive correlation with the financial performance;i.e. employing EMPs does not necessarily improve the economic consequence of companies. Nevertheless,a number of EMPs do have a strong correlation with improving innovation performance in variouscompanies. It is also interesting to note that a negative correlation exists between the Environmentalstandard for suppliers and Sales growth. This is possibly due to increasing operational costs and a delay inmarket acceptance. This research illustrates the possibility of using standard environmental data fromGRI reports as a resource for future studies of EMPs. In order to improve long-term financial performance,this study also suggests that innovation should gain a substantial amount of attention when EMPsare employed.

Place, publisher, year, edition, pages
Elsevier, 2015
Keyword
Environmental management practices; Company performance; Global reporting initiative ; Manufacturing industry; Empirical research
National Category
Environmental Management Economics and Business
Identifiers
urn:nbn:se:liu:diva-113755 (URN)10.1016/j.jclepro.2014.02.001 (DOI)000356194300005 ()
Funder
VINNOVA
Available from: 2015-01-29 Created: 2015-01-29 Last updated: 2017-12-05Bibliographically approved
3. The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry
Open this publication in new window or tab >>The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry
2015 (English)In: International Journal of Production Economics, ISSN 0925-5273, E-ISSN 1873-7579, Vol. 170, 445-456 p.Article in journal (Refereed) Published
Abstract [en]

Whether the corporate social performance affects the financial performance is still unclear in many manufacturing companies. We commonly expect, on one side, that profitable corporations have stronger incentives to reveal information on social performance in order to improve their publicity; on the other hand, companies may face the fear of rising costs due to Corporate Social Responsibility (CSR) activities. With increasing concerns of CSR, it is timely to investigate the relationship between the disclosure of corporate social performance and financial performance. In this paper with the above study objective, we use Global Reporting Initiative (GRI) reports of 75 sample companies, collect evidences by applying the method of structured content analysis of the cases and attempt to identify this relationship. The corporate social performance is measured by the indicators according to the GRI guidelines, i.e. within the categories of Labor practices and decent work, Human Rights, Society as well as Product responsibility. Financial performance is measured by return on equity, sales growth and cash flow/sales ratio. Using statistical evaluation methods, our results indicate that the categories of Human Rights, Society as well as Product responsibility display a significant and positive correlation with the return on equity. Same conclusion also holds for many CSR indicators. Nevertheless, when examining the CSR practices across different manufacturing sectors, we have not observed significant differences. The study results are important for understanding the development and implementation of CSR practices in the manufacturing industry.

Place, publisher, year, edition, pages
Elsevier, 2015
Keyword
corporate social responsibility, disclosures of social performance, financial performance, Global Reporting Initiative, empirical research
National Category
Other Earth and Related Environmental Sciences
Identifiers
urn:nbn:se:liu:diva-117443 (URN)10.1016/j.ijpe.2015.04.004 (DOI)000367486100009 ()
Available from: 2015-04-27 Created: 2015-04-27 Last updated: 2017-12-04
4. An empirical evaluation of sustainable operations practices and performance in the Swedish manufacturing industry
Open this publication in new window or tab >>An empirical evaluation of sustainable operations practices and performance in the Swedish manufacturing industry
2015 (English)Manuscript (preprint) (Other academic)
Abstract [en]

This study explored whether there are patterns linking sustainability practices and performance in the Swedish manufacturing industry. Meanwhile, the relationships between sustainability improvement practices and companies’ triple bottom line performance were investigated using survey data from Swedish manufacturing companies. Treating each sustainability practice and performance indicator as an individual item, factor analysis and cluster analysis were conducted to explore the potential patterns and relationships. The results indicated that the triple bottom line provides a valid outline for representing companies’ sustainability practices in the Swedish manufacturing industry. In terms of sustainability performance, the results showed that economic performance was often treated as a separate category in practice, whereas environmental sustainability and social sustainability were often combined. Process and product technology level was positively correlated with environmental performance and innovation performance. Economic, social, and environmental practices had positive correlations with performance in the respective area. Even though not all social and environmental practices directly improved companies’ economic performance, some social and environmental practices, such as education, individual development, and environmental health improvement, had an indirect effect and, thus, are deserving of specific attention. These selected practices often had a positive impact on product and process innovation, which could further improve companies’ economic performance.

Keyword
Sustainability, operations strategies, operations performance, survey
National Category
Other Earth and Related Environmental Sciences
Identifiers
urn:nbn:se:liu:diva-121050 (URN)
Available from: 2015-09-03 Created: 2015-09-03 Last updated: 2015-09-03Bibliographically approved
5. Does supplier involvement affect Swedish manufacturers’ sustainability?
Open this publication in new window or tab >>Does supplier involvement affect Swedish manufacturers’ sustainability?
2015 (English)Manuscript (preprint) (Other academic)
Abstract [en]

This study examines the moderating role of supplier involvement in the focal company’s sustainable initiatives. Survey methodology was used to collect data from 349 Swedish manufacturers. Partial least squares structural equation modeling was then applied to analyze the causal relationships and moderating effects. The results showed that there was a significant positive relationship between sustainable drivers and sustainable improvement practices within the focal company itself. The focal company’s sustainable improvement practices significantly contributed to its sustainable performance. Moreover, the high levels of supplier involvement in environment-related work significantly strengthened the relationship between the focal company’s sustainable practices and performance. This study contributes to the literature in the field of green supply chain management. The results indicate not only that a “win-win” opportunity exists for members of the Swedish manufacturing industry who implement sustainable practices, but also that organizational green capabilities can be strengthened by cooperating with suppliers through organizational learning.

Keyword
Corporate social responsibility, Corporate sustainability, Empirical research, Organizational sustainability cooperation, Structural equation model, Supplier involvement, Sweden
National Category
Other Earth and Related Environmental Sciences
Identifiers
urn:nbn:se:liu:diva-121051 (URN)
Available from: 2015-09-03 Created: 2015-09-03 Last updated: 2015-09-03Bibliographically approved

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