What Makes Environmental Performance Differ between Firms? Empirical Evidence from the Spanish Tile Industry

Abstract

Environmental performance is a matter of major concern both for policy makers and for firm managers. In this paper we interpret firms' environmental performance as their ability to reduce polluting wastes while maintaining observed levels of inputs and desirable outputs. Making use of data envelopment analysis techniques, we compute waste-specific environmental efficiency measures for a sample of ceramic-tile producers located in the eastern Spanish region of Valencia. Our results show that there exists substantial room for improving environmental performance, which would have highly beneficial consequences for the local environment. In a second stage of analysis, we find that affiliation to the regional Technological Institute, ITC, which aims to promote technological innovation within the ceramic-tile industry, improves tile firms' environmental efficiency. In addition, firms located in the local industrial district of the Plana Baixa enjoy what we have broadly defined as ‘environmental spillovers’, which enhance their environmental performance. Also, ceramic-tile firms which outsource the management of wastes show better environmental performance.

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