Empirical Evidence on Environmental Performance and Operating Costs

Christian Dreyer, Nadja Guenster and Jakob Koegst
Additional contact information
Christian Dreyer: Finance Center Muenster, University of Muenster, Universitaetsstr, 14–16, 48143 Muenster, Germany
Nadja Guenster: Finance Center Muenster, University of Muenster, Universitaetsstr, 14–16, 48143 Muenster, Germany
Jakob Koegst: Finance Center Muenster, University of Muenster, Universitaetsstr, 14–16, 48143 Muenster, Germany

Sustainability, 2019, vol. 11, issue 13, 1-13

Abstract: Theoretical arguments suggest that better environmental performance can lead to cost advantages through a more efficient use of resources and higher labor productivity. To provide empirical support for these arguments, we investigate how environmental performance affects operating costs using a sample of 785 U.S. firms for the period 2006–2014. We find that better environmental performance is negatively associated with direct production costs, but increases overhead costs. Because direct production costs have a larger impact than overhead costs, aggregate operating costs decline as environmental performance improves. To deal with endogeneity and to interpret the results causally, we use an instrumental variables approach.

Keywords: environmental performance; natural-resource-based view; operating costs; overhead costs; production costs; environmental management systems; resource efficiency (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/11/13/3600/pdf (application/pdf)
https://www.mdpi.com/2071-1050/11/13/3600/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:11:y:2019:i:13:p:3600-:d:244366

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().