"GREEN PRACTICES ON SUSTAINABILITY PERFORMANCE: THE MODERATING ROLE OF " by Mariska Ramadana, Julia Julia et al.
  •  
  •  
 

Abstract

This study analyses the impact of green CEO, green innovation and green investment on the sustainability performance of companies listed in the Sri Kehati Indonesia Index from 2019-2023. Using the panel data regression method in STATA, the results show that green CEO has no proven positive impact on sustainability performance, while green innovation has a negative impact. In contrast, green investment significantly improves sustainability performance. This study also evaluates the moderating effect of absorbed and unabsorbed slack resources. The results show that slack resources do not significantly strengthen the effect between green innovation and sustainability performance. This suggests that slack resources may be less effective in supporting the implementation of green innovation. This study emphasizes the importance of leadership committed to sustainability and strategic investment to improve firms' environmental performance. The findings provide valuable insights for policy makers and business leaders seeking to strengthen sustainability strategies.

References

Afum, E., Y. Li, P. Han, and Z. Sun. 2022. Interplay Between Lean Management and Circular Production System: Implications for Zero-Waste Performance, Green Value Competitiveness, and Social Reputation. Journal of Manufacturing Technology Management, 33 (7), 1213–1231. https://doi.org/10.1108/JMTM-01-2022-0038

Agyabeng-Mensah, Y. et al. 2021. Organisational Identity and Circular Economy: Are Inter and Intra Organisational Learning, Lean Management and Zero Waste Practices Worth Pursuing? Sustainable Production and Consumption, 28, 648–662. https://doi.org/10.1016/j.spc.2021.06.018

Al Amosh, H., S. F. A. Khatib, and H. Ananzeh. 2023. Environmental, Social and Governance Impact on Financial Performance: Evidence from the Levant Countries. Corporate Governance, 23 (3), 493–513. https://doi.org/https://doi.org/10.1108/CG-03-2022-0105

Ali, S. et al. 2022. Green Investment for Sustainable Business Development: The Influence of Policy Instruments on Solar Technology Adoption. Frontiers in Energy Research, 10 (April), 1–16. https://doi.org/10.3389/fenrg.2022.874824

Allevi, E. et al. 2019. Measuring the Environmental Performance of Green SRI Funds: A DEA Approach. Energy Economics, 79, 32–44. https://doi.org/10.1016/j.eneco.2018.07.023

Asadi, S. et al. 2020. Investigating Influence of Green Innovation on Sustainability Performance: A Case on Malaysian Hotel Industry. Journal of Cleaner Production, 258. https://doi.org/10.1016/j.jclepro.2020.120860

Baltagi, B. H. 2005. Econometric Analysis of Panel data. In Xenobiotica, Third, 5 (7). John Wiley & Sons Ltd. https://doi.org/10.3109/00498257509056115

Bassyouny, H., T. Abdelfattah, and L. Tao. 2020. Beyond Narrative Disclosure Tone: The Upper Echelons Theory Perspective. International Review of Financial Analysis, 70, 101499. https://doi.org/10.1016/j.irfa.2020.101499

Block, S. et al. 2024. The Environmental Performance Index, 2024. 1–191. https://epi.yale.edu

Bodhanwala, S., and R. Bodhanwala. 2018. Does Corporate Sustainability Impact Firm Profitability? Evidence from India. Management Decision, 56 (8), 1734–1747. https://doi.org/10.1108/MD-04-2017-0381

Bourgeois, L. J. 1981. On the Measurement of Organizational Slack, 6 (1), Academy of Management. https://doi.org/10.1016/0001-8791(79)90072-1

Brunzel, J. 2021. Making Use of Quantitative Content Analysis: Insights from Academia and Business Practice. Business Horizons, 64( 4), 453–464. https://doi.org/10.1016/j.bushor.2021.02.010

Büyüközkan, G., and Y. Karabulut. 2018. Sustainability Performance Evaluation: Literature Review and Future Directions. Journal of Environmental Management, 217, 253–267. https://doi.org/10.1016/j.jenvman.2018.03.064

Byrne, G. et al. 2021. Towards High Performance Living Manufacturing Systems - A New Convergence Between Biology and Engineering. CIRP Journal of Manufacturing Science and Technology, 34, 6–21. https://doi.org/10.1016/j.cirpj.2020.10.009

Cai, W., and G. Li. 2018. The Drivers of Eco-Innovation and its Impact on Performance: Evidence from China. Journal of Cleaner Production, 176, 110–118. https://doi.org/10.1016/j.jclepro.2017.12.109

Chan, K. H., T. H. Ng, and A. Fadi. 2018. What Do Undergraduates Think about Green Investment? Empirical Evidence from a Developing Nation. Indian Journal of Public Health Research and Development, 9 (11), 1627–1632. https://doi.org/10.5958/0976-5506.2018.01677.7

Chen, Y., and Y. Ma. 2021. Does Green Investment Improve Energy Firm Performance? Energy Policy, 153 (112252). https://doi.org/10.1016/j.enpol.2021.112252

Chien, F. et al. 2023. A Step Toward Sustainable Development: the Nexus of Environmental Sustainability, Technological Advancement and Green Finance: Evidence from Indonesia. Environment Development and Sustainability, 26 (5), 1–22. https://doi.org/10.1007/s10668-023-03424-5

Cho, S. Y., and C. Lee. 2019. Managerial Efficiency, Corporate Social Performance, and Corporate Financial Performance. Journal of Business Ethics, 158 (2), 467–486. https://doi.org/10.1007/s10551-017-3760-7

Dabyltayeva, N., and G. Rakhymzhan. 2019. The Green Economy Development Path: Overview of Economic Policy Priorities. Journal of Security and Sustainability Issues, 8 (4), 643–651. https://doi.org/10.9770/jssi.2019.8.4(8)

Deloitte. 2018. Sustainability and the Board: What Do Directors Need to Know in 2018? Ww2.Deloitte.Com, March, 1–7.

Dillard, J., and E. Vinnari. 2019. Critical Dialogical Accountability: From Accounting-based Accountability to Accountability-based Accounting. Critical Perspectives on Accounting, 62, 16–38. https://doi.org/10.1016/j.cpa.2018.10.003

Edi, Y. Z. Basri, and W. Arafah. 2020. CEO Characteristics, Firm Reputation and Firm Performance After merger and Acquisition. Business: Theory and Practice, 21 (2), 850–858. https://doi.org/10.3846/btp.2020.12782

Falcone, P. M. 2020. Environmental Regulation and Green Investments: the Role of Green Finance. International Journal of Green Economics, 14 (2), 159–173. https://doi.org/10.1504/IJGE.2020.10032078

García-Sánchez, I. M., I. Gallego-Álvarez, and J. L. Zafra-Gómez. 2021. Do Independent, Female and Specialist Directors Promote Eco Innovation and Eco-design in Agri-food Firms? Business Strategy and the Environment, 30 (2), 1136–1152. https://doi.org/10.1002/bse.2676

Ghardallou, W. 2022. Corporate Sustainability and Firm Performance: The Moderating Role of CEO Education and Tenure. Sustainability (Switzerland), 14 (6). https://doi.org/10.3390/su14063513

Gull, A. A. et al. 2023. The Power of the CEO and Environmental Decoupling. Business Strategy and the Environment, 32 (6), 3951–3964. https://doi.org/10.1002/bse.3347

Hambrick, and Mason. 1984. Upper Echelons: The Organization as a Reflection of Its Top Managers. Management, 9 (2), 193–206.

Han, H. 2021. Consumer Behavior and Environmental Sustainability in Tourism and Hospitality: a Review of Theories, Concepts, and Latest Research. Journal of Sustainable Tourism, 2 (7), 1021–1042. https://doi.org/10.1080/09669582.2021.1903019

Han, S. R. et al. 2020. Does the Institutional Environment Influence Corporate Social Responsibility? Consideration of Green Investment of Enterprises—Evidence from China. Environmental Science and Pollution Research, 29, 12722–12739. https://doi.org/10.1007/s11356-020-09559-6

Hart, S. L. 1995. A Natural Resource Based View of the Firm, 20 (4). Academy of Management. https://doi.org/10.2307/258963

Hart, S. L., and G. Dowell. 2011. A Natural-Resource-Based View of the Firm: Fifteen Years After. Journal of Management, 37 (5), 1464–1479. https://doi.org/10.1177/0149206310390219

Hegeman, P. D., and Sørheim, R. 2021. Why Do They Do It? Corporate Venture Capital Investments in Cleantech Startups. Journal of Cleaner Production, 294, 126315. https://doi.org/10.1016/j.jclepro.2021.126315

Hieu, V. M. 2022. Influence of Green Investment, Environmental Tax and Sustainable Environment: Evidence from ASEAN Countries. International Journal of Energy Economics and Policy, 12 (3), 227–235. https://doi.org/10.32479/ijeep.13028

Huang, L., and Z. Lei. 2021. How Environmental Regulation Affect Corporate Green Investment: Evidence from China. Journal of Cleaner Production, 279, 123560. https://doi.org/10.1016/j.jclepro.2020.123560

Huo, C., M. A. Safdar, and M. Ahmed. 2023. Impact of Responsible Leadership on Sustainable Performance: a Moderated Mediation Model. Kybernetes, August. https://doi.org/10.1108/K-03-2023-0342

Indriastuti, M., and A. Chariri. 2021. The Role of Green Investment and Corporate Social Responsibility Investment on Sustainable Performance. Cogent Business & Management, 8 (1), 1960120–1960196. https://doi.org/10.1080/23311975.2021.1960120

Iqbal, Q., N. H. Ahmad, and H. A. Halim. 2021. Insights on Entrepreneurial Bricolage and Frugal Innovation for Sustainable Performance. Business Strategy and Development, 4 (3), 237–245. https://doi.org/10.1002/bsd2.147

Itan, I., L. Laudeciska, H. Karjantoro, and R. Chen. 2023. Corporate Governance and Environmental Disclosure: Assessing The Role of Environmental Performance. Riset Akuntansi Dan Keuangan Indonesia, 8 (2), 132–144.

Ji, X., Y. Su, Y. Zhang, and H. Wang. 2023. Making Our Firm More Sustainable: The Role of CEO Vision Communication of Sustainability on Sustainability Performance. SAGE Open, 13 (4), 1–20. https://doi.org/10.1177/21582440231205861

Jia, Y., A. S. Tsui, and X. Yu. 2021. Beyond Bounded Rationality: CEO Reflective Capacity and Firm Sustainability Performance. Management and Organization Review, 17 (4), 1–38. https://doi.org/10.1017/mor.2021.4

Khalid, S., C. Beattie, J. Sands, and V. Hampson. 2019. Incorporating the Environmental Dimension into the Balanced Scorecard: a Case Study in Health Care. Meditari Accountancy Research, 27 (4), 652–674. https://doi.org/10.1108/MEDAR-06-2018-0360

Khan, M. K., K. Naeem, and M. Xie. 2022. Does Managerial Ability Transform Organization from The Inside Out? Evidence from Sustainability Performance of Financially Constrained Firms in An Emerging Economy. Borsa Istanbul Review, 22 (5), 897–910. https://doi.org/10.1016/j.bir.2022.06.006

Khan, M. et al. 2021. Is There any Difference Between the Theory and Practice for the Association Between Environmental Sustainability and Firm Performance in Pakistan? Business Strategy and Development, 4 (3), 371–382. https://doi.org/10.1002/bsd2.164

Khan, S. Z., Q. Yang, and A. Waheed. 2019. Investment in Intangible Resources and Capabilities Spurs Sustainable Competitive Advantage and Firm Performance. Corporate Social Responsibility and Environmental Management, 26 (1), 285–295. https://doi.org/10.1002/csr.1678

Kraus, S., S. U. Rehman, and F. J. S. García. 2020. Corporate Social Responsibility and Environmental Performance: The Mediating Role of Environmental Strategy and Green Innovation. Technological Forecasting and Social Change, 160 (August), 120262. https://doi.org/10.1016/j.techfore.2020.120262

Leyva-de la Hiz, D. I., Ferron-Vilchez, V., & Aragon-Correa, J. A. (2019). Do Firms’ Slack Resources Influence the Relationship Between Focused Environmental Innovations and Financial Performance? More is Not Always Better. Journal of Business Ethics, 159(4), 1215–1227. https://doi.org/10.1007/s10551-017-3772-3

Li, W. et al. 2021. The Nexus Between COVID-19 Fear and Stock Market Volatility. Economic Research-Ekonomska Istrazivanja, 35 (1), 1765–1785. https://doi.org/10.1080/1331677X.2021.1914125

Lopatta, K., F. Canitz, and S. A. Tideman. 2022. Abnormal CSR and Financial Performance. European Accounting Review, 33 (1), 49–75. https://doi.org/10.1080/09638180.2022.2084134

Lovarelli, D., J. Bacenetti, and M. Guarino. 2020. A Review on Dairy Cattle Farming: is Precision Livestock Farming the Compromise for an Environmental, Economic and Social Sustainable Production? Journal of Cleaner Production, 262 (121409). https://doi.org/10.1016/j.jclepro.2020.121409

Lu, N., and W. Zhou. 2023. The Impact of Green Taxes on Green Innovation of enterprises: a Quasi-natural Experiment Based on the Levy of Environmental Protection Taxes. Environmental Science and Pollution Research, 30 (40). https://doi.org/10.1007/s11356-023-28718-z

Mehraj, D., and S. Kaur. 2022. Green Process Innovations and Firm Marketing Performance in the Emerging Markets. Business Strategy & Development, 5 (2). https://doi.org/10.1002/bsd2.208

Miftahadi, M. F. et al. 2022. Corporate Sustainability for Indonesia’s Sustainable Society. IOP Conference Series: Earth and Environmental Science, 1108 (1), 0–6. https://doi.org/10.1088/1755-1315/1108/1/012027

Paramita, V. S., and A. Ali. 2023. Can Profitability Moderate the Impact of Green Investment, Corporate Social Responsibility, and Good Corporate Governance on Company Value on the SRI-KEHATI Index? International Journal of Finance Research, 4 (4), 320–338. https://doi.org/10.47747/ijfr.v4i4.1604

Pinem, D., and S. Aulia. 2023. The Effect of Corporate Sustainability Performance on the Values of Companies Listed in the Sri Kehati Index. Formosa Journal of Sustainable Research, 2 (3), 713–734. https://doi.org/10.55927/fjsr.v2i3.3073

Prayogo, C. (2019). Inilah Para Pemenang Green CEO Award 2019. Warta Ekonomi.

Putra, A. A., N. F. Mela, and F. Putra. 2023. Green CEO, Managerial Ability and Environmental Performance. Social Responsibility Journal, 19 (4), 666–684. https://doi.org/10.1108/SRJ-01-2021-0031

Raszkowski, A., and B. Bartniczak. 2018. Towards Sustainable Regional Development: Economy, Society, Environment, Good Governance Based on the Example of Polish Regions. Transformations in Business and Economics, 17 (2), 225–245.

Ren, Q., Y. Xu, R. Zhou, and J. Liu. 2020. Can CEO’s Humble Leadership Behavior Really Improve Enterprise Performance and Sustainability? A Case Study of Chinese Start-Up Companies. Sustainability (Switzerland), 12 (8), 1–25. https://doi.org/10.3390/SU12083168

Ren, S., G. Tang, and S. E. Jackson. 2020. Effects of Green HRM and CEO Ethical Leadership on Organizations’ Environmental Performance. International Journal of Manpower, 42 (6), 961–983. https://doi.org/10.1108/IJM-09-2019-0414

Sajko, M., C. Boone, and T. Buyl. 2021. CEO Greed, Corporate Social Responsibility, and Organizational Resilience to Systemic Shocks. Journal of Management, 47 (4), 957–992. https://doi.org/10.1177/0149206320902528

Saunders, Mark N. K, P. Lewis, and A. Thornhill. 2019. Research Methods for Business Students. Research Methods for Business Students, 8 (2).

Sibarani, B. B., and W. Agustina, W. 2023. Carbon Emissions Disclosure and Environmental Performance on Company Value. Indikator: Jurnal Ilmiah Manajemen Dan Bisnis, 7 (2), 98. https://doi.org/10.22441/indikator.v7i2.19595

Siedschlag, I., and W. Yan. 2023. Do Green Investments Improve Firm Performance? Empirical Evidence from Ireland. Technological Forecasting and Social Change, 186 (PB). https://doi.org/10.1016/j.techfore.2022.122181

Silva, S. 2021. Corporate Contributions to the Sustainable Development Goals: An Empirical Analysis Informed by Legitimacy Theory. Journal of Cleaner Production, 292, 125962. https://doi.org/10.1016/j.jclepro.2021.125962

Singh, S. K., M. Del Giudice, R. Chierici, and D. Graziano. 2020. Green Innovation and Environmental Performance: The Role of Green Transformational Leadership and Green Human Resource Management. Technological Forecasting and Social Change, 150 (September 2019), 119762. https://doi.org/10.1016/j.techfore.2019.119762

Solikhah, B., A. Wahyudin, and Subowo. 2020. Carbon Emissions of Manufacturing Companies in Indonesia Stock Exchange: A Sustainable Business Perspective. Journal of Physics: Conference Series, 1567 (4). https://doi.org/10.1088/1742-6596/1567/4/042086

Song, W., and H. Yu. 2018. Green Innovation Strategy and Green Innovation: The Roles of Green Creativity and Green Organizational Identity. Corporate Social Responsibility and Environmental Management, 25 (2), 135–150. https://doi.org/10.1002/csr.1445

Srouji, A. F. et al. 2023. The Impact of Green Innovation on Sustainability and Financial Performance: Evidence from the Jordanian Financial Sector. Business Strategy and Development, 6 (4), 1037–1052. https://doi.org/10.1002/bsd2.296

Sun, D. et al. 2023. Is Green the Virtue of Humility? the Influence of Humble CEOs on Corporate Green Innovation in China. IEEE Transactions on Engineering Management, 70 (12), 4222–4232. https://doi.org/10.1109/TEM.2021.3106952

Sun, Y., H. Li, K. Zhang, and H. W. Kamran. 2022. Dynamic and Casual Association Between Green Investment, Clean Energy and Environmental Sustainability using Advance Quantile A.R.D.L. Framework. Economic Research-Ekonomska Istrazivanja, 35 (1), 3609–3628. https://doi.org/10.1080/1331677X.2021.1997627

Suparman, M. et al. 2024. How CEO Narcissism Shapes Firm Performance Over Time: Evidence from Indonesia. Jurnal Bisnis dan Akuntansi, 26 (2), 323–344. https://doi.org/10.34208/jba.v26i2.2613

Suryarahman, E., and H. Trihatmoko. 2021. Effect of Environmental Performance and Board of Commissioners on Environmental Disclosures. Assets: Jurnal Akuntansi dan Pendidikan, 10 (1), 1. https://doi.org/10.25273/jap.v10i1.5984

Tariq, A. et al. 2023. Does Green Process Innovation Affect a Firm’s Financial Risk? The Moderating Role of Slack Resources and Competitive Intensity. European Journal of Innovation Management, 26 (4), 1168–1185. https://doi.org/10.1108/EJIM-05-2021-0265

van Zanten, J. A., and R. van Tulder. 2021. Improving Companies’ Impacts on Sustainable Development: A Nexus Approach to the SDGS. Business Strategy and the Environment, 30 (8), 3703–3720. https://doi.org/10.1002/bse.2835

Venugopal, A., S. Nerur, M. Yasar, and A. A. Rasheed. 2023. CEO Personality and Corporate Sustainability Performance. Management Decision, 61 (12), 3691–3716. https://doi.org/10.1108/MD-06-2022-0842

Wicki, S., and E. G. Hansen. 2019. Green Technology Innovation: Anatomy of Exploration Processes from a Learning Perspective. Business Strategy and the Environment, 28 (6), 970–988. https://doi.org/10.1002/bse.2295

Wukich, J. J. 2020. The Impact of CEO Power on Different Measures of Environmental Disclosure: Evidence from U.S. firms. Corporate Ownership and Control, 18 (1, Special Issue), 423–437. https://doi.org/10.22495/cocv18i1siart15

Xie, X., J. Huo, and H. Zou. 2019. Green Process Innovation, Green Product Innovation, and Corporate Financial Performance: A Content Analysis Method. Journal of Business Research, 101, 697–706. https://doi.org/10.1016/j.jbusres.2019.01.010

Xie, Y. 2022. The Relationship Between Firms’ Corporate Social Performance and Green Technology Innovation: The Moderating Role of Slack Resources. Frontiers in Environmental Science, 10 (2019), 1–13. https://doi.org/10.3389/fenvs.2022.949146

Yu, L., H. Li, Z. Wang, and Y. Duan. 2019. Technology Imports and Self-innovation in the Context of Innovation Quality. International Journal of Production Economics, 214, 44–52. https://doi.org/10.1016/j.ijpe.2018.11.023

Zhang, C. et al. 2022. CEO Educational Attainment, Green Innovation, and Enterprise Performance: Evidence from China’s Heavy-Polluting Enterprises. Frontiers in Environmental Science, 1–17. https://doi.org/10.3389/fenvs.2022.1042400

Zhang, X., Y. Song, and M. Zhang. 2023. Exploring the Relationship of Green Investment and Green Innovation: Evidence from Chinese Corporate Performance. Journal of Cleaner Production, 412. https://doi.org/10.1016/j.jclepro.2023.137444

Zheng, S., and S. Jin. 2023. Can Enterprises in China Achieve Sustainable Development through Green Investment? International Journal of Environmental Research and Public Health, 20 (3). https://doi.org/10.3390/ijerph20031787

Zhu, Q., S. Hu, and W. Shen. 2020. Why Do Some Insider CEOs Make More Strategic Changes than Others? The Impact of Prior Board Experience on New CEO Insiderness. Strategic Management Journal, 41 (10), 1933–1951. https://doi.org/10.1002/smj.3183

Download

Plum Print visual indicator of research metrics
PlumX Metrics
  • Usage
    • Abstract Views: 80
    • Downloads: 63
see details

Included in

Accounting Commons

Share

COinS