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Input, Output, and Environmental Management Productivity: Effects on Firm Performance

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Business Strategy and the Environment

Published online on

Abstract

Firms invest considerable resources to control any of their operations that may have environmental impacts in an attempt to reduce such impacts but also generate economic value. Various studies of the basic creation or destruction of monetary value through environmental performance offer contradictory evidence. Therefore, the present study proposes a new definition of environmental management as the transformation of inputs (resources assigned) into outputs (valuable results). Both inputs and outputs should be taken into account to explain financial outcomes; further consideration should also include a third aspect, namely, ‘environmental management productivity’, which describes the relationship between the outputs and inputs of environmental management. Empirical analyses of Spanish firms with a certified environmental management system subject to the European Union's CO2 emissions trading system provide evidence that all three aspects must be considered in combination to achieve a more comprehensive view of the impact of environmental management on financial performance. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment