How Does the Degree of Competition in an Industry Affect a Company’s Environmental Management and Performance?

Abstract

Environmental management, which was recognized as a functional part of corporate management, has recently been recognized as a strategic element of all business activities. It can be defined as a series of management activities to improve environmental performance throughout the business process and simultaneously achieve profitability and sustainability. Accordingly, businesses are now abandoning the existing management philosophy that economic and environmental feasibility are inevitably in conflict and establishing strategies and methods to achieve both. Meanwhile, industry affects the business performance of individual companies. Since the performance of a company tends to be influenced by the intensity of competition in an industry, it is necessary to analyze the structural factors that determine the intensity of competition in an industry in order to predict the future performance of a company. Therefore, we studied how environmental management affects corporate performance given the level of industry competition. The results are as follows. First, environmental management positively impacts corporate performance. Second, a high level of competition within an industry moderates the relationship between environmental management and corporate performance. By verifying the influence of the industry to which a company belongs, that is, the level of competition within the industry, we confirm that a company’s environmental management can be used strategically to gain a competitive advantage. With the finding that the impact of a company’s environmental practices differs by industry in line with the degree of competition, we expect this study to be helpful for future research into strategic ESG activities.

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