Understanding the influence of environmental production practices on firm performance: a proactive versus reactive approach

Abstract

Purpose – Exploring ways to sustain competitive positions as well as improve firm performance through environmental production initiatives has been a major preoccupying topic for mostly practitioners and researchers. Despite several studies on the influence of environmental initiatives on firm performance, many questions remain unanswered as to how to further extract more gains from environmental production initiatives. This study, thus, explores environmental production practices impact on firm performance from proactive and reactive perspectives. Design/methodology/approach – The study adopted a survey research design, a quantitative approach and partial least square structural equation modelling (PLS-SEM) technique in making data analysis and interpretations due to its suitability for predictive research models. Findings – The results indicated that proactive environmental production practices positively related with process and environmental performances but negatively associated with financial performance. Although the findings contrast with majority of past findings, they gain the support of other scholars in establishing that early adoption stages of proactive environmental production initiatives strain financial capabilities and thus present a negative relationship. Reactive environmental production practices are positively and significantly related with process, environmental and financial performances. Originality/value – The study is among the first to expose environmental production practices from a proactive and a reactive perspective and in the context of a developing country. As such, the study provides guidance to relevant authorities in further promoting sustainable production practices to preserve the environment by manufacturing safer consumer products through efficient sustainable production processes and practices.