3493 Revisiting the Virtuous Cycles Between Environmental Innovations & Financial Performance of Japanese Automotive, Electronics, & Chemical Manufacturing Industries

Michael Angelo Cortez , College of International Management, Ritsumeikan Asia Pacific University, Beppu, Oita, Japan
Full Papers
  • Cortez.GIN2012.Sweden.pdf (2.1 MB)
  • Justification of the paper:

    Following the literature on the virtuous cycles between environmental innovation and financial performance, I revisit the link by challenging conventional wisdom of the resource-based view perspective and the slack availability of resources.


    In my earlier studies that contrasted the relationships of these constructs for automotive and electronics companies, the virtuous cycles did not appear to hold for longitudinal periods.  Automotive companies seemed to have more virtuous cycles that electronics companies.  Although these industries comprise a majority of the Japanese manufacturing sector and a key contributor to its economy and global production, revisiting the analysis to include the chemical manufacturing industry paints a bigger if not a better picture of sustainable industries from a green supply chain perspective.

    In this study, therefore, I aim to: (1) explore the directional relationships of environmental innovations and financial performance; (2) determine if virtuous cycles exists and if its holds on a longitudinal basis; (3) establish and contrast patterns of construct relationships for the automotive, electronics, and chemical manufacturing companies; (4) and finally, alternatively theorize from a green supply chain perspective.

    Theoretical framework:

    Legitimacy, Resource Based View Perspective, Slack Availability of Resources, Green Supply Chain


    I investigate Nikkei 225 manufacturing companies by performing panel data analysis of comparable data for the last ten years of environmental innovations costs and financial performance of Japanese automotive, electronics and chemical manufacturing companies.  Granger causality tests are performed to establish the existence of virtuous cycles on different and prolonged time periods. 


    Legitimacy plays an important role why Japanese companies invest in environmental innovations.  The expectations of my study point to automotive companies being more susceptible to public perception considering that it is in the end of the green production pipeline. Hence, the stark contrasts of electronics and more so, the seeming insignificance of results for chemical manufacturing could thereby be theorized that start of pipe production may not necessarily benefit from the virtuous cycles yet they contribute to the green supply chain in the eventual attainment of sustainable industries.