Bigger, urban-located and female-owned firms adopt cleaner liquid waste management practices that positively impact their economic performance, finds this study.
Lokesh Posti, Lecturer, Jindal Global Business School, O.P. Jindal Global University, Sonipat, Haryana, India.
Vaibhav Bhamoriya, Indian Institute of Management Kashipur, Kashipur, India.
Rahul Kumar, Indian Institute of Management Sambalpur, Sambalpur, India.
Rajan Khare, Department of Food Services, University of British Columbia (UBC), Kelowna, Canada.
Waste management is a crucial aspect of sustainable development, but is it economically sustainable for marginalized informal firms? The study tries to answer this question by revisiting the Porter–Wagner dilemma about the association between environmental management (EM) and firm performance (FP). The study looks into the various liquid waste management practices (LWMPs) adopted by them and the overall impact of LWMPs on firms’ economic performance.
The study uses the latest available cross-sectional data source on Indian informal firms by the National Sample Survey Office (NSSO), 73rd survey round 2015–16. First, ordered logistic regression was used to analyse the factors that impact a firm’s adoption of a particular LWMP. Subsequently, to capture the heterogeneity among the firms based on productivity and size, a quantile regression (QR) was employed to analyse the impact of LWMPs on firm productivity. Additionally, the propensity score matching technique was used to address endogeneity concerns.
The authors find that bigger, urban-located and female-owned firms adopt cleaner LWMPs that positively impact their economic performance. Furthermore, the QR analysis observed that the most productive firms could extract higher returns from adopting cleaner LWMPs, indicating the relevance of the Porter–Wagner dilemma, i.e. environmental and economic sustainability are possibly symbiotic, thus having a feedback mechanism.
To the authors’ limited knowledge, this is the first study analysing the relationship between EM and FP among the informal sector firms, which are away from any regulations or obligations. Since sustainability is a two-way process, policies should be devised that incentivise sustainable business practices.
Published in: Management of Environmental Quality
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