Exploring the influence of institutional pressures and production capability on the environmental practices - Environmental performance relationship in advanced and developing economies

This paper investigates the influence of advanced and developing economies on the adoption of environmental practices and the influence of those environmental practices on environmental performance. Furthermore, production capability is investigated as a conditional effect on the relationship between environmental practices and environmental performance. Specifically, using a sample of approximately 450 globally located manufacturing plants, the Resource Based View (RBV), Practice Based View (PBV) and Institutional theory were utilized to develop and test a set of hypotheses surrounding how economy influences the neoteric engagement of environmental practices. Data envelopment analysis was utilized to assign production capability scores to these manufacturing plants and then conditional process modeling was used to assess the relationships among type of economy, level of production capability, adoption of environmental practices and environmental performance. The study finds that there is a stronger positive relationship between developing economies and the neoteric adoption of environmental practices as compared to advanced economies. Results also show higher degrees of production capability had a mixed effect on the relationship between environmental practices and environmental performance. The results draw attention to how PBV and RBV may work together to inform how practices affect performance and how production capability reacts uniquely with environmental practices with different strategic foci. This study is one of the first to address the interplay between type of economy and engagement in environmental practices.