2014-30
Expanding the Horizon:
An Empirical Study of Sustainable Supply Chain
Management and Firm Performance
Xichen SUN Michiyuki YAGI
Katsuhiko KOKUBU

Expanding the Horizon:
An Empirical Study of Sustainable Supply Chain
Management and Firm Performance
Xichen SUN1, Michiyuki YAGI2 and Katsuhiko KOKUBU3
1

Master Student, Graduate School of Business Administration, Kobe University(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
Email: clark-hunt@hotmail.com
2
Associate Professor, Interfaculty Initiative in the Social Science, Kobe University(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
Email: yagi@ruby.kobe-u.ac.jp (corresponding author)
3
Professor, Graduate School of Business Administration, Kobe University(2-1, Rokkodai-cho, Nada-ku, Kobe-city, 657-8501, Japan)
Email: kokubu@kobe-u.ac.jp

As global competition is getting more and more intense, there is an increasing trend manifesting theincreasing interest in sustainable supply chain management. This study introduces four sustainable supply
chain indicators from the upstream (supplier), middle stream (focal firm) and downstream (customer) of a
supply chain to empirically examine the relationship between sustainable supply chain performance andfirm performance (ROA), as well as the relationship between environmental efficiency and other three
indicators. It focuses on the Energy and Utilities industries. In this study we use global firm dataset from
Bloomberg professional service, and the number of observation is 86 during 2005 to 2013. We find an
inversely U-shaped curve relationship between environmental efficiency in supply chain and firm’s profitability (ROA); and a U-shaped relationship between investments in operational sustainability and firm’s
profitability. Also a negative relationship is found between having a new product and ROA. We provide
implications obtained from our analysis of regression results for managers. We contribute to the literatureby responding to the call for more empirical research in this filed, providing the evidence that sustainablesupply chain performance can bring actual benefits for the firm, as long as firms identify their own position accurately and take the right action.

Key Words : sustainable supply chain, environmental efficiency, new product, firm performance1

1.

INTRODUCTION(1) Purpose of this study
Academic and corporate interest in sustainable supply chain management has risen considerably in recent years1). Globally dispersed suppliers and customers have called for improved
management strategies in order to match the production and reputation of the focal firm. Risingawareness of sustainability has led to actions by firms to manage their suppliers and products interms of sustainability. However, a comprehensive understanding of what sustainability is andhow to create a business case for it is still missing, creating barriers that inhibit managers frompursuing sustainability in the supply chain.
The energy and utilities industry is vital to the normal function of a society. It is also a controversial industry for generating greenhouse gases (GHGs) through power generation and distribution. Many organizations in this industry have started pursuing sustainable activities proactively, and sustainable supply chain management is definitely an important topics of considerations. Tate et al.’s (2009) study compared and contrasted the influential words in the Corporate
Social Responsibility (CSR) reports of firms from a range of industries and found that the utilities industry emphasizes the energy conservation the most in CSR reports compared to otherindustries2). Zhu and Sarkis (2005) identified drivers and pressures for adoption of green supply
chain management practices in their inter-sector study in China, including the thermal power
plants industry3).
Despite the importance of this topic, to the best of our knowledge little research has been
done to examine what roles the sustainable supply chain management plays in the area of financial performance and environmental efficiency in the energy and utilities industry. Therefore, inthis study, the authors introduced four indicators to investigate the relationship between sustainable supply chain performance and firm performance in the context of the energy and utilities industry.

2(2) Backgrounds and Research Questions
According to Walley and Whitehead (1994), responding to environmental challenges has
sometimes been a costly and complicated proposition for managers, and win-win situations arevery rare4). Colby (1995) agreed by arguing that: “easy problems have mostly been fixed – theremaining obstinate challenges are becoming increasingly expensive to resolve”5). Carter andRogers (2008) identified several challengers to implementing sustainability6). They argued that
there are always environmental and social activities that harm or at least do not help the economic bottom line. The key is to learn from all these failures and to develop workarounds forthe most common failures.
On the contrary, according to Lankoski (2000), an inversely U-shaped curve is often cited as
the “best” possible relationship between environmental and economic performance7). In his theory, marginal environmental profit is a decreasing curve because of the decreasing marginal
benefits and increasing marginal costs, resulting in a non-linear relationship where both the firstand second order derivatives are negative. Researchers have disputed this while little empiricalresearch has tested this relationship so far8). Wagner and Schaltegger (2004) investigated thisissue by examining whether a non-linear effect of corporate environmental performance oncompetitiveness and economic performance can be shown and what effect strategy choice hason this. They found that for firms with an Environmental Shareholder Value-oriented corporate
environmental strategy, the environmental activities had a significant and positive influence on
environmental competitiveness. Following their step, we develop this model to test if there is aninversely U-shaped relationship between environmental performance and firm’s profitability inthe context of the supply chain.
Following on the previous research, we try to fill some gaps and further investigate this relationship. We found a lack of global samples to test the relationship between sustainable supply
chain performance and a firm’s financial performance. Also, most of the studies were conducted3

a single supply chain dimension, focusing on either the upstream (more) or the downstream(less). In addition, we found almost no studies were conducted in the context of the energy andutilities industry.
To fill these gaps, we pose the following question in our study: Are sustainable supply chain
management practices related to firm performance? We selected four indicators, representing
the sustainable performance of the upstream, middle stream and downstream supply chain, toexamine their relationships with firm performance.

a) Environmental Efficiency in the Supply Chain
Firms are required to employ sustainable supply chain practices because of pressures fromtheir stakeholders such as customers, regulators and NGOs9). In the context of sustainability,
green purchasing, sustainable supplier management and relevant topics have attracted more attention from managers. Not only should they focus on internal operations, but they must also
extend their green practices to other parts of supply chain. Regarding the role of the supply
chain management in the literature, Green et al.’s (1998) study10) suggests environmental pressures are “leading to a much more significant, and central, role for purchasing and supply management than the function has experienced before”. Reuter et al. (2010)11) introduced case studies and proposed that profound sustainable global supplier management (SGSM) capabilities area source of competitive advantage. Regarding supplier management and green purchase issues,
another set of literature examines the downstream side of the supply chain, focusing on logistics,
reverse supply chain, and the use impact of products12),13),14),15). In addition, as stated by Srivastava (2007), “it is not just about being environmentally friendly; it is about good businesssense and higher profits”. Studies in this area suggest many benefits of implementing sustainable supply chain practices, and the relationship could be non-linear between environmental performance and economic performance, according to Lankoski’s7) model.
H1: Environmental efficiency of the supply chain has a non-linear relationship with firm’s fi4

nancial performance.
b) Operational Sustainability
Operational sustainability is closely related with the production process, new product design
and pollution prevention. Manufacturing firms adopt cleaner process techniques to both respondto the external pressures and improve competitiveness. Managers are more willing to implement
such practices than to cooperate with other entities to achieve sustainability in the supply chain
because it costs less and is less risky. This study hypothesizes that investing to implement sustainable operational practices will enhance environmental performance and financial performance. Specifically, we make the following hypothesis:
H2a: Investments in operational sustainability is positively related to firm’s financial performance.
H2b: Investments in operational sustainability is positively related to firm’s environmental efficiency.

c) Sustainable Products and Services
With all the possibilities and benefits a new product or service could offer to improve sustainability, it is reasonable to say that a firm that cares about its corporate responsibility will put
effort into the development of sustainable products and services. However it is not certain
whether these products have achieved any market success16). According to Peattie and Crane(2005)17), although in the early 1990s “survey evidence from reputable research bodies was cited
as identifying heightened environmental awareness, a growing consumer interest in green products, and a pronounced willingness to pay for green features, … by the mid-1990s new market
research evidence began to emerge which was less unequivocal about the growth of green consumerism.” They concluded that green marketing has been significantly unsuccessful. In addition, even if the function of the green product is not compromised it is difficult for it to replace
the existing one and penetrate the market in a short time. Customers tend to be price-sensitive5and are reluctant to try new things because of the usually higher price and information asymmetry. A business case for sustainable products and services is badly needed. This logic resultsin the following proposition:
H3a: Adopting a new product that addresses the future climate impact is positively related toa firm’s financial performance.
H3b: Adopting a new product that addresses the future climate impact is positively related toa firm’s environmental efficiency.

d) Environmental Supply Chain Management Initiatives
Intuitively we suggest that environmental efficiency, or environmental performance could tosome extent be enhanced by the implementation of sustainable practices. Marketing of green
products develops the customers’ awareness of environmental problems and encourages them tocontribute to the environment by purchasing green products18),19). Other initiatives that aim to
reduce the environmental footprint in the supply chain also contribute to environmental efficiency, thus, we have the following hypothesis:
H4a: Implementation of environmental supply chain management initiatives is positively related to the firm's financial performanceH4b: Implementation of environmental supply chain management initiatives is positively related to firm’s environmental efficiency.

2.

METHODOLOGY(1) Model
In our first regression model, we examine the relationship between sustainable supply chain
performance and firm performance. We use environmental inefficiency scores, investments inoperational sustainability, new environmentally friendly products and environmental supply
6

chain management (SCM) as indicators covering the upstream and downstream supply chain.
The environmental inefficiency score refers to the environmental performance of the focal firm
and the related supply chain. The other three indicators refer to the initiatives or investmentsthat the firm utilizes to improve their sustainable supply chain performance. ROA is an indicatorof the firm’s profitability.
In our second regression model, we examine the relationship between the environmental inefficiency score and the other three independent variables in the first model. We assume that theefforts that firms make will improve their sustainable supply chain performance.

ROA =

+

lnScoSales ++lnSuslnv +(1)

NewPrd +EnvSCM ++lnScoSales =Controls +lnSuslnv +++eNewPrd +EnvSCM +(2)

Controls ++ewhere i and t denote firm and year, respectively. ROA denotes the return on assets of a firm.
lnScoSales denotes the ratio of the natural log value of Scope1, Scope2 and Scope3 GHG emissions of the company divided by revenue. In other words, it reflects the emissions level, or environmental inefficiency, of the supply chain for every unit of revenue. Whereas previous studies have used only Scope1 in the calculation, we extend it to obtain an environmental inefficiency score for the entire supply chain. lnSusInv denotes the natural log value of the amount ofmoney spent by the company on operational environmental and social compliance and otherinternal environmental and social initiatives, as defined by the company. NewPrd is a dummy
variable that indicates whether the company has developed and/or launched products during thecurrent period designed specifically to address future impacts of climate change and/or mitigate
customers' contributions to climate change through reduced GHG emissions. The products may
7

or may not be new to the market. EnvSCM is a dummy variable that indicates whether thecompany has implemented any initiatives to reduce the environmental footprint of its supply
chain. Environmental footprint reductions could be achieved by reducing waste, resource use, or
environmental emissions, or by insisting on the introduction of environmental management systems or other sustainability initiatives in the supply chain. Control variables includes SIZE,lnKL and lnLEFF. SIZE denotes the natural log value of the firm’s total assets. lnKL denotes thenatural log value of the capital-labor ratio, calculated by net fixed assets/ number of employees,
and lnLEFF denotes the natural log value of labor productivity, calculated by Revenue/ # of
employees.

(2) Data
We use a dataset of global firms compiled by Bloomberg professional service. The number ofobservations was 86 between 2005 and 2013, which is relatively small compared to the original
dataset. As this is an industry-specific study, and due to the particularity of our independent variable, we consider this number of observation as valid. Tables 1 and 2 show the descriptive statistics and correlation table respectively in this study.

3.

RESULTS
Table 3 shows the regression results of equations (1) and (2). In specification (4), the coeffi-

cients of lnScoSales and lnScoSalesSq are statistically significantly from zero and both are negative, indicating that the relationship between the environmental inefficiency score and thefirm’s profitability is an inversely U-shaped curve, supporting H1. On the other hand, the coefficients of InSusInv and InSusInvSq are significantly negative and positive, respectively. This isalso a U-shaped curve, partially supporting H2a, indicating the complexity of investing in sustainability. Opposed to our H3a, the coefficient of NewPrd is significantly negative; that is, the8development of a new product that mitigates the future climate impact is found to have a negative relationship with the firm’s profitability at a 10% significance level. Regarding H4a, environmental initiatives in the supply chain turn out to have no significant impact on the firm’s
performance according to our regression results.
The statistically significant negative and positive coefficients of InSusInv and InSusInvSq,
respectively, are found in specification (6), supporting H2b. There is no significant relationshipregarding NewPrd and EnvSCM, thus H3b and H4b are not supported.
The results of our two regression models are surprising, but at the same time indicate that thetask to achieve higher profitability through a sustainable supply chain is not easy. This situationdiffers from firm to firm and no single solution or framework fits all firms.

(1) The Relationship Between Supply Chain Management and Financial Performance
The pattern we found that links the environmental inefficiency score and the firm’s profitability is consistent with the findings in Wagner and Schaltegger’s (2004)12) and Lankoski’s7) studies.
In contrast to the traditional view that there is a trade-off between environmental performanceand economic performance20), we found an encouraging inversely U-shaped curve between thetwo variables (Fig.1). At firs firms can obtain higher profitability by increasing enviromental
efficiency in the supply chain. Following Colby’s (1995) logic5), firms will start by solving theeasier problems, and as the problems become more and more challenging, it is also increasingly
more difficult to obtain profits by improving environmental performance. Hence, the growthrate of ROA decreases all the way to the left in Fig. 1. At some point, the firm reaches its highest ROA. Because the firm has solved most of the easy problems, after this breakeven point it
becomes too costly to improve its environmental performance, and it will suffer from a drop in
profitability if it continues to invest in sustainable supply chain management. The environmental inefficiency score can also reflect the business position of a firm. The higher this score is, themore suppliers it may have. It is reasonable to say that the highest ROA is enjoyed by moder9

ately sized firms, ones with neither too small nor too large number of suppliers.
Another non-linear relationship is found between investments in operational sustainability
and ROA. The shape of the curve here is a U-shaped quadratic function curve. It indicates thatfirms will suffer from a drop in ROA when they first implement operational sustainability strategies, but as these strategies become more sophisticated, the firm can finally enjoy an increasein ROA.
The new product variable has a significantly negative relationship with ROA. This is not consistent with our hypothesis, but it is consistent with some evidence shown in some previous
studies. Mintel’s (1995) report21) recorded only a slight increase in green consumers in 1990.
Wong et al. (1996) stated that green products have achieved limited success22).

(2) The Relationship Between Supply Chain Management and Environmental Efficiency
In specification (6), a U-shaped relationship between the environmental inefficiency score
and investments in operational sustainability is found. The reason is similar to the one mentioned above. At first, investments in operational sustainability are utilized to solve some easierproblems, and rewards are enjoyed in the short term, so the environmental efficiency is improved. However, as the situation becomes increasingly complicated and the number of environmental problems that can be solved with the same amount of money decreases, so do the rewards. At some point the money spent and the rewards received are at breakeven, and this is thelowest point of the environmental inefficiency score. Continuing to invest in operational sustainability may bring no further rewards because it becomes too costly and inefficient. The reward margin of every unit of investment in operational sustainability is smaller than that in other types of investment (e.g., green purchasing, etc.). Continuing to invest in operational sustainability will only lead to a higher opportunity cost and drag down the firm’s environmental
performance.

10(3) Relationship between environmental inefficiency and ROA of companies of 2012
We used the data of 2012 to create the scatter plot that shows the relationship between Environmental Inefficiency Score (x-axis) and ROA (y-axis) and identified the company for every
plot in the picture. Overall we can see an inverted U-shaped relationship in the picture (ignoring
SASOL and CENTRALS ELECTRICAS BRAS-PR B), although it is not very obvious. It is not
surprised that we cannot find those giants in energy and utilities sector here, because most of thecompanies do not disclose all the data we demanded. As a result, it is reasonable to say thatthese companies listed in the picture are pioneers in sustainable supply chain management.
Most of these companies are Europe-based (1 in Switzerland, 4 in Italy, 3 in Spain, 1 in Germany, 1 in Finland and 1 in Austria). Others are from North and South America (1 in US, 3 inBrazil, 2 in Chile and 1 in Colombia), and 1 in South Africa. Among the best 5 performers interm of sustainable supply chain performance, 2 are from Europe, 2 are from South America and1 is from the US. European countries have been leaders in sustainability field for a long time. It
set up the Sustainable Development Strategy in 2001. According to 2009 Review of the EU
Sustainable Development Strategy, “EU has mainstreamed sustainable development into a broad
range of its policies. In particular, the EU has taken the lead in the fight against climate change
and the promotion of a low-carbon economy”. Companies are required to incorporate sustainability into their daily decision making process. In addition, after the oil leak disaster companies
in energy and utilities sector have invested a lot in sustainable activities to save their reputationand to avoid this kind of disaster happens again. As a result, European companies have beencommitted to sustainability, and their suppliers and distributors are mostly self-disciplined,
which makes their sustainable supply chain performance better than other parts of the world.
What surprises us is that South American companies tend to have even better performance
than European companies (Colombia and Brazil ranked 1st and 3rd in terms of sustainable supply chain performance). In traditional opinion, developing countries are less devoted to sustain11

ability compared to developed countries. In order to understand this situation better, we looked
into the CSR report of 2013 of the first ranked company, EMPRESA DE ENERGIA DE BOGOTA (EEB hereafter), Colombia. In their report they stated that they “are committed tostrengthening the value chain in all processes and operations of the organization”. By implementing development and relationship building programs, they help to reinforce the capabilitiesof their suppliers. They analyze the information collected from their suppliers to manage theirfinancial, environmental and social risks. They also supervise the fulfillment of their supplierswith respect to required procedural and technical standards. In 2013, they conducted visits to
subsidiaries and meetings to discuss their goals with suppliers in order to facilitate the implementation of their supply policy. In choosing suppliers, they developed Supplier Profiling Matrix to prioritize suppliers using environmental safety and supply risk criticality criteria. Their
Supply Management Office also developed a performance evaluation tool “that enable us to
produce diagnostics and identify potential gaps for us to bridge by way of programs related to
improvement, relationship building, development and recognition of excellence”. In addition,
they identifies challenges in short term, middle term and long term. We are impressed by theirendeavor in cooperating with partners in the supply chain. Besides environmental aspect, theyalso include financial and social aspect in their supply chain management. Their activities contribute a lot to their superior sustainable supply chain management performance.
Another company that attracted our attention is SASOL LTD, South Africa. It has a muchhigher ROA than any other company in the picture, while its sustainable supply chain performance is worse than most of other companies. We also checked their CSR report of 2013 andfound little information about sustainable supply chain (very limited information is available inwater stewardship part). In their report they stated, “One of the most material challenges facing
Sasol relates to our ability to anticipate and respond to the changing regulatory and policy context, particularly in relation to environmental legislation”. From their statement we could deduce that to a large extent their sustainable activities are motivated by government policy and12regulations. It is almost for sure that this kind of companies’ environmental performance cannot
compare with those that voluntarily pursue sustainability, controlling other factors. Despite thefact that they are not doing that well in terms of sustainable supply chain management, they
have a very high ROA. This phenomenon can be explained by the following reasons. First, ROA
is accounting data, which only reflects historical situation. To take an extreme example, one
company that sacrifices environmental and social benefits to pursue their own profit have a big
chance to enjoy higher ROA in a short term than those that care for the environmental and society, for the reason that to address those problems will cause more costs in production at present.
Second, different from most of the companies that belong to the utilities sector, Sasol belongs tothe energy sector, which tend to have a higher ROA based on our data. We will not further discuss industry characteristics in this study though. Third, customers and stakeholders may notcare about environmental and social issues that much as financial issue in Africa. Companies
lack motivations to pursue sustainability because even they do not do it they can grow to someextent.
In conclusion, we learned from the scatter plot that generally European companies are performing well in terms of sustainable supply chain management. Surprisingly we found SouthAmerican companies perform even better. We analyzed one of their companies’ CSR report andidentified some attributions to their superior performance. Regarding the unusually high ROA
and low efficiency that are obtained by Sasol, we also identified several reasons for that.

4.

CONCLUSIONS
Sustainable supply chain management has attracted more attention from both researchers andmanagers. Despite the fact that the significance of this issue is well understood in the field, it
remains unclear whether sustainable supply chain management could bring firms extra profits.
The results of this study are encouraging for managers because they show the linkages between
13

sustainable supply chain management and firm performance. Successful sustainable supply
chain management could lead to an increase in firms’ profitability in the long term, but only iforganizations implement sustainable practices in a coordinated manner. Organizations should
precisely position themselves in the industry and employ the right strategy to allocate resources
to the appropriate place.
According to the results, regarding firm’s financial performance as the dependent variable,
H1 is supported, and a win-win situation is found in environmental efficiency and the firm’s
ROA. H2a is partially supported, implying that investing in operational sustainability is challenging and risky. We also found an opposite result to H3a, indicating that the development andlaunch of a new green product compromises the firm’s ROA. No significant relationship isfound to support H4a. Regarding environmental efficiency as the dependent variable, aU-shaped relationship is found between investments in operational sustainability and environmental efficiency, supporting H2b. No significant relationship is found to support H3b or H4b.
The results suggest that it is not enough to only implement practices successfully, but that it isnecessary to also evaluate the results carefully. The launch of a new product may not bring an
increase in ROA immediately. Appropriate objectives and time to achieve these goals should be
set correctly to obtain the outcomes they may bring.
There are some implications for managers from our analysis. First, as superior environmental
performance in the supply chain could lead to a higher ROA, it is worth implementing sustainable supply chain practices. Note that the more devoted a firm is to sustainable supply chain
management the more difficult it may be for it to benefit from this effort. Thus, firms that wish
to continue to improve their sustainability in the supply chain will need to evolve in an innovative way. Both incremental and radical innovation are needed in order to make money from sustainability.
Second, it is important to make preparations before launching a new environmentally friendly
product or service. Market research is needed to identify the response of customers towards this14

kind of new product, and the part they find the most attractive. Employees need to be mentally
prepared for the change in the company’s culture, and sales and service staff should have theknowledge to market this new product. Also, a long term perspective is necessary to obtain the
rewards from the new product. Kahnemann and Lovallo (1993)23) found that people tend to underestimate the difficulty of tasks and expect results sooner than is reasonable or realistic23). Insufficient time to achieve the goals may create a false impression that sustainable supply chain
management does not work, and that the traditional way of dealing with suppliers brings higher
profitability.
Third, investment in operational sustainability is also necessary for firms that want to growfaster. It not only reduces costs through innovations, but also expands the firm’s competitive
advantage as it differentiates itself from its competitors. The difficulties should be precisely
identified and overcome to successfully lead the firm toward operational sustainability. Allocating resources to improve the sustainable supply chain performance as a whole, instead of focusing on only one or two dimensions is likely to yield better results.
Future research is needed to extend the findings of this study to other industries, and additional indicators are needed to conduct a more comprehensive study. Also, further studies areneeded to understand how to successfully implement sustainable supply chain practices throughpartnerships with other entities in the same chain. We believe that in the future when sustainability of the supply chain becomes more important, Scope 1, 2 and 3 or other similar indicatorsof environmental performance of the firm and its supply chain will be a critical criterion tojudge a firm in terms of sustainability. Finally, we did not examine social responsibility in the
supply chain, and this is an area that future researchers can study.

ACKNOWLEDGEMENT: This study was carried out as part of the SESAMI project inKobe University and was supported by research grant from the Research Institute of Advanced15

Management.
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17

Table 1 Descriptive statistics
variable
Dependent variable
ROA
Independent variable
lnScoSales
lnSusInv
NewPrdEnvSCM
Control variable
SIZE
lnKL
lnLEFF

obs

mean

s.d

min

max

86

0.076

0.037

−0.071

0.208

86
86
86
86

−14.81617.793
0.116
0.709

2.228
2.171
0.322
0.456

−20.381
13.2170.000
0.000−12.399
23.916
1.000
1.000

86
86
86

23.85714.05013.837

1.327
1.289
0.612

21.1808.711
11.88426.497
16.12615.31818

Table 2 Correlation table
ROA
lnScoSales
lnSusInv
NewPrdEnvSCM

ROA
1−0.0041−0.08850.0873−0.2380

lnScoSales

lnSusInv

NewPrdEnvSCM1
0.53550.12360.208710.2380−0.06251−0.1672

1

19

Table 3 Regression result

lnScoSales(1)
ROA
0.0346***(0.0114)(3)
ROA
0.0284(0.0217)0.0724(0.0653)−
0.1269***(0.0475)−0.1490***(0.0195)−0.0257(0.0224)0.2247***(0.0382)
0.4351(0.7116)
No

(2)
ROA
0.0673(0.1532).0010(0.0047)−0.0144(0.1235)0.0006(0.0033)
0.0715(0.0668)−0.1230**(5)lnScoSales(6)
lnScoSales−0.0126(0.0297)−0.0361(0.0225)−0.0015(4)
ROA−0.3550**(0.1621)−0.0113**(0.0049)−0.0733*(0.0364)0.0020**(0.0010)−0.0401*(0.0207)0.0166

0.0641(0.1671)
0.1894−0.4985*(0.2772)
0.0135*(0.0076).0715(0.1627)0.2454(0.0498)−0.1475***(0.0204)
0.0228(06.0338)
0.2169***(0.0461)
0.9813(1.8888)No(0.0279)−0.0266(.0181)−0.2177***(0.0439)0.3096***(0.0751)
2.1190(1.5358)
Yes(0.0262)−0.0254***(0.0166)−0.2207(0.0403)
0.2672***(0.0705)
0.2727(1.8051)
Yes(0.2054)0.0114(0.1347)−0.0950(0.3266)
0.5172(0.5530)-5.5159(11.3944)
Yes(0.2025)
0.0316(0.1316)−0.0538(0.3188)−0.6926(0.5475)-0.1501(11.5022)
Yes

Yes

Yes

Yes

Yes

Yes

Yes

86
2005-2013
0.63

86
2005-2013
0.71

86
2005-201386
2005-201386
2005-201386
2005-2013

0.72

0.78

0.21

0.27

0.01

0.00

0.08

0.05

lnScoSalesSq
lnSusInv

0.0090(0.0146)

lnSusInvSq
NewPrdEnvSCM

lnKL
SIZE
lnLEFF
Constant
Firm
fixed
effectsYear
fixedeffectsobs
year
R-squared
WithinR-squared
OverallR-squared−0.0003(0.0040)

Notes: Columns 1 to 4 shows results of regression model. ***, **, and * denote significances at the 1%, 5%, and
10% level, respectively. Coefficients are without parentheses, and standard errors are in parentheses.

20Better

Worse

Fig.1 Relationship between environmental inefficiency score and ROA

21

Fig.2 Relationship between Environmental Inefficiency Score and ROA in 2012

Acknowledgement

This research is supported by JSPS KAKENHI Grant Number 25285138.

[2014.10.22 1177]

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