Bagadeem, Salim; Siddiqui, Ayesha; Na ula, Sapna A.; Fa han, Najib H. S.; Mag y,
Munee Ahmad
A icle
Impac o i m-speci ic and mac oeconomic de e minan s
on en i onmen al expendi u es: Empi ical e idence om
manu ac u ing i ms
Economies
P o ided in Coope a ion wi h:
MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Bagadeem, Salim; Siddiqui, Ayesha; Na ula, Sapna A.; Fa han, Najib H. S.; Mag y,
Munee Ahmad (2024) : Impac o i m-speci ic and mac oeconomic de e minan s on en i onmen al
expendi u es: Empi ical e idence om manu ac u ing i ms, Economies, ISSN 2227-7099, MDPI,
Basel, Vol. 12, Iss. 7, pp. 1-24,
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Ci a ion: Bagadeem, Salim, Ayesha
Siddiqui, Sapna A o a Na ula, Najib
H. S. Fa han, and Munee Ahmad
Mag y. 2024. Impac o Fi m-Speci ic
and Mac oeconomic De e minan s on
En i onmen al Expendi u es: Empi ical
E idence om Manu ac u ing Fi ms.
Economies 12: 159. h ps://doi.o g/
10.3390/economies12070159
Academic Edi o : An ónio C. Ma ques
Recei ed: 11 Ap il 2024
Re ised: 12 June 2024
Accep ed: 14 June 2024
Published: 25 June 2024
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A ibu ion (CC BY) license (h ps://
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economies
A icle
Impac o Fi m-Speci ic and Mac oeconomic De e minan s on
En i onmen al Expendi u es: Empi ical E idence om
Manu ac u ing Fi ms
Salim Bagadeem 1, Ayesha Siddiqui 2, Sapna A o a Na ula 3, Najib H. S. Fa han 1,*
and Munee Ahmad Mag y 3,4,*
1Facul y o Business S udies, A ab Open Uni e si y, P.O. Box 84901, Riyadh 11681, Saudi A abia
2Depa men o Comme ce, Aliga h Muslim Uni e si y, Aliga h 202002, India
3School o Managemen S udies, Nalanda Uni e si y, Rajgi 803116, India
4School o Li e and En i onmen al Science, Deakin Uni e si y, Melbou ne 3125, Aus alia
*Co espondence: [email p o ec ed] (N.H.S.F.); [email p o ec ed] (M.A.M.)
Abs ac : This esea ch aims o examine he associa ion be ween i m-speci ic and mac oeconomic
de e minan s and en i onmen al expendi u es in he Indian manu ac u ing sec o . Fu he mo e, i
seeks o in es iga e he mode a ion e ec o coun y-le el go e nance and economic de elopmen on
he associa ion be ween mac oeconomic, i m-speci ic, and en i onmen al expendi u es. The cu en
s udy is based on 70 manu ac u ing i ms o he pe iod o 2011 o 2021. The dependen a iable
is en i onmen al expendi u es and he independen a iables a e i m-speci ic and mic oeconomic
de e minan s. The esul s e ealed ha ma ke capi aliza ion and i m size ha e a posi i e and
signi ican impac on en i onmen al expendi u es. On he o he hand, in la ion and he ule o law
nega i ely and signi ican ly a ec en i onmen al expendi u es. Rega ding he mode a ion e ec , he
esul s e ealed ha he ule o law and GDP posi i ely mode a e he associa ion be ween in la ion
and en i onmen al expendi u es. Hence, his esea ch has signi ican implica ions o co po a e
execu i es, inancial expe s, egula o s, and o he in e es ed pa ies.
Keywo ds: i m-speci ic; mac oeconomic de e minan s; economic de elopmen ; en i onmen al
expendi u es; coun y-le el go e nance; mode a ion e ec
1. In oduc ion
The e is g owing in e es among manage s, in es o s, and cus ome s in sus ainable
pe o mance (Wanday and Zein 2022;Yang e al. 2024;Jin e al. 2024). As o Ap il 2019,
he P inciples o Responsible In es men (PRI), suppo ed by he Uni ed Na ions (UN),
had ga ne ed he endo semen o mo e han 2300 in es men managemen i ms. These
i ms collec i ely possess esou ces unde adminis a ion amoun ing o USD 86 illion.
By signing he PRI, hese i ms ha e commi ed o inco po a ing en i onmen al, social,
and go e nance (ESG) disclosu e conside a ions in o hei in es men decision-making
p ocesses (CFA Ins i u e 2019). The in eg a ion o sus ainabili y in o ma ion in o busi-
ness epo ing has been add essed by a ious o ganiza ions, including he Task Fo ce on
Clima e- ela ed Financial Disclosu es (TCFD), he Sus ainabili y Accoun ing S anda ds
Boa d (SASB), he Global Repo ing Ini ia i e (GRI), and he Wo ld Economic Fo um In-
e na ional Business Council. In con as , he In e na ional Financial Repo ing S anda ds
(IFRSs) ha e p ima ily ocused on inco po a ing sus ainabili y in o ma ion in o business e-
po ing (CDP e al. 2020). The sepa a ion o sus ainabili y epo s om inancial epo s by
mos businesses p esen s a signi ican obs acle o comp ehending he ela ionship be ween
inancial pe o mance (FP) and sus ainabili y pe o mance (
Lee e al. 2023;Saini e al. 2022
).
This issue emains a p ominen conce n wi hin he ESG mo emen (Li e al. 2023). Mo e-
o e , he ou b eak o he COVID-19 pandemic and he subsequen implemen a ion o
Economies 2024,12, 159. h ps://doi.o g/10.3390/economies12070159 h ps://www.mdpi.com/jou nal/economies
Economies 2024,12, 159 2 o 24
lockdown measu es caused unce ain y and led o a ious consequences ha ha e dis-
up ed he no mal unc ioning o socie y. This has compelled he banking indus y o make
mul iple adap a ions, pa icula ly conce ning en i onmen al, social, and go e nance (ESG)
s anda ds (El Khou y e al. 2023).
Co po a ions ha e unde aken se e al ini ia i es o mi iga e he ad e se impac s o
clima e change, encompassing conside a ions o en i onmen al p ese a ion, biodi e -
si y conse a ion, sus ainable esou ce u iliza ion, and he dynamic na u e o clima ic
pa e ns (Kedwa d e al. 2022). Mi iga ion, which in ol es a educ ion in emissions, and
adap a ion, which ocuses on p epa edness o ine i able consequences, a e wo c i ical
ac ics employed in he ba le agains clima e change. To mi iga e g eenhouse gas (GHG)
emissions, i is essen ial o implemen modi ica ions in se e al domains, such as land use,
business p ac ices, s uc u es, anspo a ion, and ene gy in as uc u e. In ligh o he
comp ehension o clima ic phenomena and hei associa ed ex eme e en s, he adap a ion
p ocess necessi a es he cul i a ion o esilience and he implemen a ion o disas e manage-
men s a egies (Rolnick e al. 2022). O ganiza ions such as Bi dLi e In e na ional, Wildli e
Conse a ion Socie y, and he Wo ld Wide Fund o Na u e ha e unde aken he ambi ious
goal o es ablishing a plan a ion consis ing o one illion ees. Plan o he Plane has
ini ia ed a ee campaign speci ically dedica ed o his endea o . Addi ionally, Amazon
has alloca ed USD 100 million om i s clima e und ini ia i e o sa egua d, es o e, and
enhance ca bon seques a ion in pea land and we land egions. The und’s es ablishmen
aligns wi h he o ganiza ion’s objec i e o a aining ca bon neu ali y by 2040 (Cohen 2020).
In a simila ein, Apple has es ablished a ca bon mi iga ion ini ia i e. The company is
implemen ing a communi y-based app oach o es o ing and sus aining biological sys ems,
speci ically g asslands in Kenya and o e 27,000 ac es o mang o es in Colombia. Apple
aims o a ain ne -ze o ca bon emissions h oughou i s supply ne wo k and p oduc li es-
pans by 2030. This objec i e in ol es a 75% dec ease in emissions, he emaining 25% being
o se by c edi s ob ained om na u e-based solu ions (NBSs) suppo ed by he Clima e
Mi iga ion Fund. Acco ding o Apple (2020), Mic oso has implemen ed a biodi e si y
p ojec in ending o p o ec mo e land by 2025 han he land now u ilized by he co po-
a ion. This will be achie ed h ough s a egies such as land acquisi ion, na ional pa k
de elopmen , and indigenous communi ies’ p ese a ion p ojec s. Fu he mo e, Mic oso
made a commi men o plan 250,000 ees in he yea 2020. This ini ia i e was in addi ion
o he company’s exis ing ow o achie e ca bon nega i i y by 2030 (Smi h e al. 2020).
Besides co po a ions’ global ini ia i es in ackling he impac s o he changing clima e,
co po a e social esponsibili y (CSR) has gained ecogni ion o helping co po a ions ackle
clima e change issues (Bianco 2020;Na ula e al. 2017,2019). In India, o example, co po a e
social esponsibili y (CSR) is unde he pu iew o he Fi ms Ac 2013, which equi es a
ce ain class o i ms o alloca e wo pe cen o hei a e age ne p o i o e he p e ious
h ee yea s o CSR ini ia i es (Saman a a and Dhawan 2020). The companies alling wi hin
he ambi o his ac ha e been ac i ely engaged in a ious ecosys em and biodi e si y
conse a ion e o s o ackle clima e change impac s. Fo ins ance, India Tobacco Company
Limi ed (ITC) (Kolka a, India) has a CSR-based a o es a ion p og am assis ing a me s
o u n hei unp oduc i e land asse s in o p o i able pulpwood plan a ions using clonal
saplings specially de eloped by he ITC R&D Cen e o g ow in ha sh condi ions. ITC is also
ac i ely in ol ed in i s CSR e o s, ocusing on a ious ini ia i es, such as conse ing and
e i alizing wa e bodies by engaging wi h local communi ies, educing CO
2
emissions,
enhancing coas al and ma ine habi a s o suppo na i e biodi e si y, and add essing
human–animal con lic while also imp o ing he well-being o s ay animals in communi y
a eas (Pa il 2022).
Gi en he abo e conside a ions, i is e iden ha companies ha e been alloca ing i-
nancial esou ces owa ds en i onmen al expendi u es and implemen ing e o s o add ess
he consequences o clima e change. En i onmen al expendi u es a e a c i ical ac o ha
i ms e alua e due o i s po en ial o b inging abou a ious ad an ages, such as posi i e
esponses om in es o s and consume s. Ul ima ely, hese ac o s can ha e a signi ican
Economies 2024,12, 159 3 o 24
impac on he inancial pe o mance o an o ganiza ion. In ligh o he es ablished ame-
wo k a ound he co ela ion be ween en i onmen al spending and i m cha ac e is ics,
schola s a e s ill di ided on he connec ion be ween en i onmen al in es men , en i on-
men al expendi u es, and company-speci ic ac o s, such as inancial pe o mance. Based
on p e ailing belie s, i is commonly held ha en i onmen al in es men ep esen s a cos ly
obliga ion o companies, likely diminishing hei o e all p o i abili y (Jin and Xu 2019).
Fundamen alis s claim ha he e is a ade-o be ween en i onmen al conse a ion and
inancial pe o mance. This pe spec i e s ems om he belie ha en i onmen al p o ec ion
necessi a es supplemen a y in es men s ha do no di ec ly con ibu e o inancial gains.
Fo ins ance, when a co po a ion aims o enhance i s p oduc i i y o maximize p o i abili y,
such an inc ease is commonly associa ed wi h en i onmen al conside a ions. In his sce-
na io, he o ganiza ion ei he bea s he expenses associa ed wi h en i onmen al p o ec ion
measu es o eaps he bene i s om such in es men s (Xiao e al. 2019). O sa o (2006)
a gues ha implemen ing co po a e en i onmen al p o ec ion measu es equi es subs an-
ial esou ces o en i onmen al equipmen and he ad ancemen o no el en i onmen al
echnologies, esul ing in inc eased ope a ional cos s.
Taking he abo e in o conside a ion, his s udy a emp s o answe he ollowing ques ions:
•
Wha a e he de e minan s o en i onmen al expendi u es in Indian manu ac u -
ing i ms?
•
Do coun y-le el go e nance and economic de elopmen mode a e he associa ion
be ween i m-speci ic and en i onmen al expendi u es o Indian manu ac u ing i ms?
•Wha is he impac o he COVID-19 pandemic on en i onmen al expendi u es?
The e o e, his esea ch con ibu es o he exis ing li e a u e in se e al ways. Fi s ly,
i aims o unco e en i onmen al spending pa e ns ollowing he implemen a ion o he
Companies Ac (2013) by analyzing a comp ehensi e da ase spanning a decade. Secondly,
acco ding o Ga enholm and Halldó sson (2023) and B odeu e al. (2021), he COVID-19
pandemic caused supply-side dis up ions and a conside able impac on consume spending
(Podda e al. 2022). Thus, he loss o e enue caused se e e inancial s ain o se e al ypes
o businesses, inc easing he need o inancial liquidi y (Fassas e al. 2021). Hence, his
pape makes an e o o in es iga e how he COVID-19 pandemic a ec ed en i onmen al
expendi u es. Thi dly, i b idges a gap in p e ious esea ch, which has p edominan ly
ocused on sus ainabili y disclosu es and co po a e en i onmen al ini ia i es a he han
using seconda y da a. Fou hly, his esea ch examines he mode a ion e ec o coun y-
le el go e nance and economic de elopmen on he associa ion be ween i m-speci ic
and en i onmen al expendi u es, which ep esen a unique con ibu ion o he li e a u e.
Ne e heless, his esea ch also has a ew limi a ions in achie ing i s o e all objec i es,
such as dealing wi h di e se da a, missing da a poin s, and elying solely on a second y
se o da a. To o e come hese limi a ions, u u e esea che s in his ield can inco po a e
addi ional p ima y da a, such as conduc ing ques ionnai e su eys on a ious aspec s o
en i onmen al expendi u e and ela ed indica o s.
2. Li e a u e Re iew and Hypo hesis De elopmen
2.1. Fi m-Speci ic and En i onmen al Expendi u es
Resea ch on company pe o mance has wi nessed a signi ican ans o ma ion in ecen
decades, wi h a shi om ocusing on indus y-speci ic ac o s o i m-speci ic cha ac e is-
ics (Cha zoglou e al. 2018;Ba bosa e al. 2014). Iden i ying i m ea u es has been ecog-
nized as a c ucial indica o o company g ow h and de elopmen (
Cha zoglou e al. 2018
;
Madi inos e al. 2011).
Acco ding o Rugman and Sukpanich (2006), i m-speci ic ad an ages (FSAs) e e o
dis inc capabili ies exclusi e o a pa icula o ganiza ion and de i ed om i s expe ise
in se ice, echnology, ad e ising, o deli e y skills. Consequen ly, FSAs encompass he
ad an ageous aspec s o b and s eng h, company cul u e, echnological knowledge, and
c ea i e abili ies. The ca ego iza ion o FSAs in his esea ch is based on he o igin o
compe i i e ad an age inside a i m’s alue chain, esul ing in wo sepa a e g oupings
Economies 2024,12, 159 4 o 24
(Rugman e al. 2009;Lu and Beamish 2004). As a undamen al d i e o economic alue
gene a ion and compe i i e ad an age, inno a ion plays a pi o al ole in p oducing no el
knowledge asse s.
Due o g owing public conce n o he en i onmen , he go e nmen manda es ha
businesses assume g ea e esponsibili y in add essing en i onmen al issues (Singh e al.
2016;Luo e al. 2024). Fo example, he go e nmen exe s p essu e on companies o
inc ease hei en i onmen al spending (Halle and Mu phy 2012;Kim and Kim 2018).
While companies acknowledge he commendable goal o enhancing he en i onmen ,
hey a e con on ed wi h a p edicamen since in es ing in en i onmen al ini ia i es could
signi ican ly aise hei expenses, including hose ela ed o ma e ials and powe and
pe haps ha e an ad e se impac on he i ms’ p o i abili y (Dechezlep ê e and Sa o 2017;
Chong e al. 2017). Mo eo e , an excessi e alloca ion o esou ces owa ds en i onmen al
expenses could po en ially hinde he i ms’ abili y o in es in inno a i e p ojec s, leading
o a signi ican dec ease in i s o e all e iciency (Yang e al. 2024). Eiada e al. (2008)
asse ed ha he inc easing p essu e on companies o sa egua d he en i onmen could
lead o highe expenses in e ms o capi al and labo , dis ac managemen ocus, and
impede p oduc i e in es men s.
The exis ing body o li e a u e has ye o ex ensi ely add ess he speci ic cha ac e is ics
o i ms and hei in luence on en i onmen al expendi u es. A s udy conduc ed by Kim
and Kim (2018) shed ligh on he unique a ibu es o i ms, p o iding examples o illus a e
his poin . The esea ch and design capabili ies o an en i y enable i o add ess en i on-
men al conce ns e ec i ely, hus enhancing he e iciency o i s en i onmen al expendi u es
(
Li e al. 2021
;Khan e al. 2023). A i m’s esea ch and de elopmen (R&D) capabili ies
se e o alle ia e he ad e se e ec s o en i onmen al expendi u es on i s p o i abili y.
Speci ically, a highe le el o R&D in ensi y co esponds o a educed nega i e impac o
en i onmen al spending on a i m’s e u n on asse s (ROA) (Sa i i e al. 2020;Kim and
Kim 2018).
A s udy examining mic oeconomic issues, including ma ke i al y, e ealed ha
a i m’s en i onmen al pe o mance can nega i ely impac sha eholde alue and he
long- e m iabili y o he business. In his scena io, mo i a ions exis o engaging in
cos -sa ing measu es by aking sho cu s, such as in he con ex o in es men in CER.
Acco ding o Meng e al. (2016), his phenomenon may esul in companies engaging
in en i onmen ally de imen al p ac ices o gene a e inancial gains and ensu e hei
con inued exis ence. The e needs o be mo e esea ch examining i ms’ speci ic impac s on
he en i onmen . The alloca ion o unds has been highligh ed as c ucial in de e mining
an o ganiza ion’s inancial well-being, wi h a pa icula emphasis on i m-speci ic ac o s.
Se e al s udies ha e demons a ed ha inc easing in es men in esea ch and de elopmen ,
indica i e o de eloping echnologically d i en inno a ion capaci ies, can aid o ganiza ions
in di e en ia ing hei inal goods. This di e en ia ion imp o es co po a e pe o mance
and e iciency (Belde bos e al. 2004). Mo eo e , exis ing s udies on ma ke ing li e a u e
sugges ha he augmen a ion o ma ke ing, communica ion, and dis ibu ion- ocused
i m-speci ic ad an ages (FSAs) h ough heigh ened ma ke ing in es men and in ensi y
posi i ely co ela es wi h enhanced o ganiza ional pe o mance in a linea ashion (Holm
and Sha ma 2006;Lee and Rugman 2012).
Based on he abo e a gumen , i is e iden ha he e needs o be mo e schola ly
li e a u e on his c ucial subjec . Some o he p e ious esea ch is shown in Table 1. Con-
sequen ly, u he explo a ion o he opic is impe a i e as i has he po en ial o yield
aluable esea ch insigh s. Ou s udy exhibi s some no able addi ions compa ed o o he
publica ions in he li e a u e. While se e al e e ences examine he co ela ion be ween
en i onmen al spending and company pe o mance, he majo i y ely on subjec i e o qual-
i a i e me hods, such as case s udies. Howe e , we make a delibe a e e o o demons a e
ou hypo heses in an unbiased and me hodical manne by ga he ing and examining eal
da a om manu ac u ing companies. Conside ing he abo e, we p oceeded o analyze he
unde lying assump ions, and he ollowing hypo heses we e o mula ed:
Economies 2024,12, 159 5 o 24
H01. Fi ms’ speci ics ha e a signi ican impac on en i onmen al expendi u es.
H01a. Re u n on ne wo h has a signi ican impac on en i onmen al expendi u es.
H01b. Le e age has a signi ican impac on en i onmen al expendi u es.
H01c. The cu en a io has a signi ican impac on en i onmen al expendi u es.
H01d. Ma ke capi aliza ion has a signi ican impac on en i onmen al expendi u es.
H01e. Fi ms’ size has a signi ican impac on en i onmen al expendi u es.
Table 1. Summa y o some p e ious s udies.
Au ho s’ Names Ti le o he S udy Va iables Used
o Analysis S udy Ou come S udy Geog aphical
Loca ion
(Kim and Kim 2018)
Fi m’s en i onmen al
expendi u es, R&D
in ensi y, and p o i abili y
Re u n on asse s, R&D,
p o i abili y,
en i onmen al
expendi u es
The indings indica e a
de imen al co ela ion be ween
a company’s en i onmen al
spending and i s p o i abili y,
which is in luenced by he
company’s esea ch and
de elopmen (R&D) capaci y as
measu ed by i s R&D in ensi y.
Uni ed S a es o Ame ica
(Samsina and
Fi daus 2019)
Is he e a link be ween
en i onmen al
expendi u es, inno a ion,
and e enue in Malaysian
manu ac u ing indus y?
En i onmen al
expendi u es
and inno a ion
The indings unequi ocally
demons a e ha bo h
en i onmen al spending and
inno a ion had a de ini e impac
on he ea nings o companies in
a ious manu ac u ing
indus ies. The indings also
demons a e he p esence o a
ecip ocal co ela ion be ween
inno a ion and
en i onmen al expendi u es.
Malaysia
(He e al. 2018)
A s udy o he in luence o
egional en i onmen al
expendi u es on ai
quali y in China: he
e ec i eness o
en i onmen al policy
En i onmen al
expendi u es and uel
ax policy
The s udy ound a pe sis en
equilib ium connec ion be ween
en i onmen al expendi u es and
he ai quali y index. The
indings no only p o ide
cla i ica ion on he impac o
en i onmen al expendi u es on
ai quali y, bu also o e an
objec i e assessmen o he
success o China’s
en i onmen al policies o
some deg ee.
China
(Luo e al. 2024)
Fo eign sha eholding and
co po a e en i onmen al
expendi u es: e idence
om China
Fo eign in es men s and
en i onmen al
expendi u es
The esul s sugges ha p e-IPO
o eign in es men s ha e a
subs an ial and bene icial
impac , whe eas pos -IPO
o eign in es men s ha e li le o
no in luence.
China
(Wang 2018)
Analysis o he e iciency
o public en i onmen al
expendi u es based on
da a en elopmen analysis
Fiscal spending
en i onmen al p o ec ion
The esul s indica e ha he
iscal expendi u es on
en i onmen al p o ec ion in he
i e p o inces is cha ac e ized
by echnical ine iciency, wi h
he excep ion o Hubei P o ince
in Cen al China. Fu he mo e,
he e a e signi ican a ia ions
among p o inces in e ms o he
poin a which scale
e u n occu s.
China
Economies 2024,12, 159 6 o 24
Table 1. Con .
Au ho s’ Names Ti le o he S udy Va iables Used
o Analysis S udy Ou come S udy Geog aphical
Loca ion
(Wang e al. 2014)
The impac o
en i onmen al
expendi u es on
pe o mance in he U.S.
chemical indus y
En i onmen al
expendi u es and
inancial pe o mance
The indings o his s udy o e
signi ican e idence o a
co ela ion be ween
en i onmen al expenses and
inancial pe o mance. The
esul s indica e ha companies
ha alloca e esou ces owa ds
en i onmen al expendi u es
demons a e highe le els o
e iciency and p oduc ion.
Uni ed S a es o Ame ica
(Le Gallo and
Ndiaye 2021)
En i onmen al
expendi u e in e ac ions
among OECD coun ies,
1995–2017
S a egic in e ac ions,
en i onmen al
expendi u es, economic
and poli ical
con ol a iables
The indings indica e a no able
p esence o subs an ial posi i e
spa ial co ela ion in
en i onmen al spending,
implying ha OECD na ions
ake in o accoun he ac ions o
hei neighbo ing coun ies
when making decisions
ega ding
en i onmen al expendi u es.
OECD coun ies
(Cheng e al. 2024)
The unan icipa ed ole o
iscal en i onmen al
expendi u es in
accele a ing household
ca bon emissions:
e idence om China
Fiscal en i onmen al
expendi u es and
en i onmen al go e nance
The indings indica e ha FEE
had a subs an ial impac on
household ca bon emissions ia
diminishing sa is ac ion wi h
en i onmen al go e nance.
Fu he mo e, ac o s such as
public se ice sa is ac ion,
household income, ene gy
in ensi y, and geog aphy play a
c ucial ole in mi iga ing
he si ua ion.
China
(A jomandi e al.
2023)
En i onmen al
expendi u es, policy
s ingency and g een
economic g ow h:
e idence om
OECD coun ies
En i onmen al policy
s ingency, en i onmen al
GDP and p oduc i i y
The indings indica e ha
go e nmen spending on
en i onmen al p o ec ion has a
majo posi i e impac on he
na ional economy in he sho
un. The analysis demons a es
ha implemen ing s ic e
en i onmen al policies and
inc easing en i onmen al
expendi u es can ha e a
decele a ing e ec on long- e m
‘g een’ GDP and p oduc i i y
g ow h. Howe e , he impac o
egula o y s ingencies is
ela i ely less p onounced.
OECD coun ies
(Basoglu and Uza
2019)
An empi ical e alua ion
abou he e ec s o
en i onmen al
expendi u es on
en i onmen al quali y in
coo dina ed
ma ke economies
To al public expendi u e
inc ease, ecological de ici ,
en i onmen al
expendi u es
The esea ch has e ealed a
co-in eg a ion link be ween
a iables. Panel ARDL esea ch
has e ealed ha o al public
expendi u es con ibu e o he
ecological de ici , whe eas
en i onmen al expendi u es
help educe i . The impac s o
public expendi u es on he
en i onmen a e mul iple. The
size e ec has a de imen al
in luence on en i onmen al
quali y, while he composi ion
e ec , which shi s spending
owa ds en i onmen al
ini ia i es, has a bene icial e ec .
Eu ope
Economies 2024,12, 159 7 o 24
2.2. Mac oeconomic De e minan s, Coun y-Le el Go e nance, and En i onmen al Expendi u es
The mac oeconomic componen s encompass ex e nal aspec s beyond o ganiza ional
managemen ’s pu iew. These componen s encompass ecological, social, and poli ical ac o s,
endo s, compe i o s, and go e nmen ules and egula ions (
Egbunike and Oke ekeo i 2018
;
Madlani e al. 2021). Signi ican economic indica o s encompass he consume p ice index,
unemploymen a e, g oss domes ic p oduc , s ock ma ke index, co po a e ax a e, and
in e es a e (Wo ld Bank G oup 2015;B oads ock e al. 2011). The mac o componen s
unde conside a ion ha e he po en ial o ei he enhance o ad e sely a ec he inancial
and en i onmen al ou lays o an o ganiza ion. Despi e he limi ed a ailabili y o esea ch
on his subjec ma e , ew s udies ha e examined he impac o mac oeconomic condi ions
on ecological expendi u es. Bui and Kapon (2012) employ he objec i e o business in ol e-
men o elucida e he a ionale o a company’s sel - egula ion and olun a y engagemen
in en i onmen al p ojec s. The ela ionship be ween business and socie y is in luenced
by a ious elemen s ha shape an o ganiza ion’s en i onmen al p ac ices, policies, and
asks. These aspec s elucida e he mo i a ions behind co po a ions’ engagemen in socially
esponsible ac s.
Se e al s udies ha e been conduc ed o examine he ac o s ha impac co po a e
en i onmen al beha io , including co po a e ecological expendi u es. In a s udy conduc ed
by Mu o ec e al. (2012), a heo e ical amewo k was cons uc ed o examine he impac
o se e al ac o s on en i onmen al spending. The esea che s ound ha legisla ion,
p io en i onmen al expendi u es, cus ome demand o g een echnologies, and business
pe o mance posi i ely in luence en i onmen al expendi u es. Cos a-Campi e al. (2017)
in es iga ed he ac o s in luencing en i onmen al expendi u es ac oss 22 indus ial sec o s
in Spain om 2008 o 2013. The p ima y disco e y o he s udy is ha he managemen
me hod plays a c ucial ole in acili a ing en i onmen al expendi u es. Wang e al. (2015)
ound a posi i e co ela ion be ween he senio i y o managemen and he en i onmen al
beha io o ene gy en e p ises in China. The indings sugges ha uppe managemen
exhibi ed a g ea e unde s anding o and expe ience in en i onmen al ma e s. The da a
we e collec ed h ough ques ionnai es adminis e ed o 60 ene gy en e p ises in China in
2013. Mo eo e , he alloca ion o owne ship (Wang e al. 2019;He e al. 2016), he in luence
exe ed by sha eholde s (Kassinis and Va eas 2006), he a ibu es o he chie execu i e
o ice (Sun and Cahan 2012;Sun and Zou 2021), he size o he i m (Da nall e al. 2010;
Nawaiseh 2015), he in e nal incen i e sys em o co po a e go e nance (Ding e al. 2016), and
egula o y amewo ks (He e al. 2016) a e ac o s ha impac en i onmen al expendi u es.
Signi ican mac oeconomic d i e s in luence i ms’ en i onmen al expendi u es, in-
cluding go e nance, in la ion a e, and GDP. Li e al. (2022) conduc ed a s udy ha ound
ha he p esence o in-house go e nance s uc u es, such as audi commi ees and en i-
onmen al expendi u es, had a de imen al impac on business pe o mance by inc easing
cos s and educing ou comes. Osiichuk e al. (2021) and Van Hoang e al. (2021) high-
ligh he limi ed ocus on he ela ionship be ween in e nal co po a e go e nance and
company pe o mance.
The e is a need o mo e esea ch on he co ela ion be ween he quali y o co po-
a e go e nance and he ansi ion o en i onmen al sus ainabili y inside i ms (Haque
2017). Li e al. (2018) ound ha a chie execu i e o ice (CEO) who wields signi ican
in luence wi hin an o ganiza ion can a o he disclosu e o en i onmen al expendi u es,
pa icula ly conce ning in e nal co po a e go e nance. The componen s o go e nance
encompass a ious aspec s ela ed o he en i onmen , such as he o mula ion o en i-
onmen al policies, he u iliza ion o in e nal assessmen ools such as benchma king and
accoun ing me hods, he es ablishmen o en i onmen al pe o mance objec i es, he public
disclosu e o ecological pe o mance da a (Ha 2005), he comple ion o bo h in e nal and
ex e nal en i onmen al audi s, he p o ision o aining o employees on en i onmen ally
esponsible beha io s, and he in eg a ion o en i onmen al expendi u es in o employee
compensa ion (Da nall e al. 2010). Abaidoo and Agyapong (2021) posi ha a decline
in g oss domes ic p oduc g ow h may no necessa ily ha e a uni o m e ec on all i s
Economies 2024,12, 159 8 o 24
sec o s, including en i onmen al expendi u es, in e ms o hei ul ima e impac on i m
o business pe o mance. Fu he mo e, he p esence o in la ion- ela ed unce ain ies can
signi ican ly diminish o in luence he ex en o which segmen ed ac o s con ibu e o
co po a e pe o mance ola ili y.
Conside ing he abo e li e a u e, limi ed li e a u e is a ailable on his impo an opic,
as shown in Table 1, making i necessa y o u he del e in o he subjec and p o ide some
insigh ul esea ch con ibu ions. Wi h his in mind, he se o hypo heses lis ed below
was es ed.
H02. Mac oeconomic de e minan s ha e a signi ican impac on en i onmen al expendi u es.
H02a. G oss domes ic p oduc has a signi ican impac on en i onmen al expendi u es.
H02b. In la ion a e has a signi ican impac on en i onmen al expendi u es.
H03. Coun y-le el go e nance signi ican ly mode a es he associa ion be ween i m-speci ic and
en i onmen al expendi u es.
H04. Economic de elopmen signi ican ly mode a es he associa ion be ween i m-speci ic and
en i onmen al expendi u es.
2.3. COVID-19 Pandemic and Fi ms’ En i onmen al Expendi u es
The COVID-19 pandemic has exe ed a subs an ial in luence on consume expendi-
u es and has esul ed in dis up ions on he supply side (Ga enholm and Halldó sson 2023;
B odeu e al. 2021). The inancial s ain expe ienced by many businesses as a consequence
o e enue declines has led o an inc eased need o inancial liquidi y (Zhang and Fang
2022;Fassas e al. 2021). The pandemic has had signi ican e ec s on he en i onmen and
he economy, as Ca aka e al. (2020) no ed. The ongoing ansmission o COVID-19 emains
a subs an ial isk o he well-being o he gene al popula ion (Chinazzi e al. 2020) and has
subs an ial ami ica ions o he wo ldwide inancial sys em. The global lockdown due
o he pandemic has led o se e al epe cussions, including labo displacemen , business
closu es, and s ock ma ke down u ns. Based on an analysis conduc ed by he In e na-
ional Mone a y Fund (IMF), he ou b eak o COVID-19 led o a signi ican decline in he
global economy du ing he yea 2020, accompanied by a con ac ion in economic g ow h o
a ound 3%.
The implemen a ion o lockdown measu es led o he global shu down o i ms, esul -
ing in signi ican inancial losses o hese en i ies. Consequen ly, a educ ion in expenses
was obse ed ac oss mul iple sec o s (Dube e al. 2023). One no able consequence was he
loss o employmen oppo uni ies (Sáenz and Spa ks 2020), while he inancial esou ces al-
loca ed by co po a ions o en i onmen al ini ia i es we e been a ec ed (
P iya e al. 2021
).
Despi e he sca ci y o esea ch on he esponse o i ms o en i onmen al expendi u es in
he a e ma h o COVID-19, he e is a p essing need o conduc a s udy in o de o gain
a mo e comp ehensi e unde s anding o his opic. Taking his in o conside a ion, he
ollowing hypo hesis was examined:
H05. The COVID-19 pandemic has a signi ican impac on en i onmen al expendi u es.
3. Resea ch Me hodology
3.1. Sample and Da a
Unlike p io esea ch ha elied on p ima y da a, his s udy elies on inancial and
accoun ing da a collec ed om he P owess IQ da abase (a ailable online a h ps://p owessiq.
cmie.com/, accessed a 1 Ap il 2022). Se e al schola s ha e u ilized he P owess IQ da abase
ex ensi ely o ga he in o ma ion (e.g., Sinha e al. 2021;Fa han e al. 2021;Go ind and
Jain 2018;Singh and Kau 2021). Du ing he concep ualiza ion and s udy design, he
scope o he da a u ilized was de ined o a pe iod o 10 yea s, i.e., 2011–2021. This ime
Economies 2024,12, 159 15 o 24
The esul s in Table 6show ha he e u n on ne wo h has a nega i e signi ican e ec
on en i onmen al expendi u es (p- alue < 0.1). This esul indica es ha when p o i abili y
inc eases by 1 pe cen , en i onmen al expendi u es dec ease by 0.130 uni s. This esul
con adic s he CSR law, which s a es ha Indian i ms ha e o spend 0.02 pe cen o hei
ne p o i on CSR ac i i ies, including en i onmen al ac i i ies.
The esul s in Table 6also e eal ha ma ke capi aliza ion has a posi i e and signi -
ican impac on en i onmen al expendi u es, wi h a low coe icien (0.0002). This esul
sugges s ha companies wi h highe ma ke capi aliza ion ypically ha e mo e inancial e-
sou ces. This allows hem o alloca e mo e unds owa ds en i onmen al ini ia i es wi hou
signi ican ly a ec ing hei inancial s abili y. Fu he mo e, companies wi h highe ma ke
capi aliza ion may bene i om economies o scale in hei en i onmen al expendi u es.
They can sp ead he cos s o en i onmen al p og ams o e a la ge base o ope a ions,
making hese ini ia i es mo e cos -e ec i e compa ed o smalle i ms.
Conce ning he size o i ms and hei impac on en i onmen al expendi u es, he
esul s in Table 6 e eal ha a i m’s size posi i ely and signi ican ly impac s en i onmen al
expendi u es a he 0.01 le el, indica ing ha bigge i ms spend mo e on en i onmen al
issues. The eason behind his esul is ha bigge i ms a e well es ablished in he ma ke
and do no su e om any liquidi y o p o i abili y issues compa ed o smalle i ms
ha igh o su i al in he ma ke . Mo eo e , bigge i ms a e conce ned abou hei
epu a ion, and any damage o he en i onmen caused by bigge i ms would nega i ely
a ec hei epu a ion.
Rega ding mac oeconomic a iables, he esul s in Table 6show ha in la ion nega-
i ely and signi ican ly a ec s en i onmen al expendi u es a a 0.01 le el o signi icance.
These esul s indica e ha as he p ices o goods and se ices ise (in la ion inc eases),
companies end o educe hei spending on en i onmen al ini ia i es. This esul could
be explained by he ac ha in la ion leads o highe p ices o aw ma e ials, labo , and
o he ope a ional cos s. Companies acing hese inc eased expenses migh ealloca e hei
budge s, p io i izing essen ial ope a ional expendi u es o e en i onmen al p ojec s, which
a e o en seen as non-essen ial in he sho e m. Fu he mo e, in la ion p essu es can shi
co po a e ocus o sho - e m su i al a he han long- e m in es men s. En i onmen al
expendi u es o en ha e long- e m bene i s, and companies migh de e hese in es men s
un il economic condi ions s abilize.
Conce ning coun y-le el go e nance, he esul s in Table 6 e eal ha coun y-le el
go e nance measu ed by he ule o law has a nega i e impac on en i onmen al expen-
di u es. The basic explana ion o his esul is ha in coun ies wi h a s ong ule o law,
companies migh al eady be incu ing signi ican cos s o comply wi h s ingen en i on-
men al egula ions. As a esul , addi ional olun a y en i onmen al expendi u es migh be
seen as unnecessa y since compliance wi h he law al eady in ol es conside able expense.
As ega ds he mode a ion e ec , he esul s e eal he impac o coun y-le el go e -
nance and economic de elopmen on he associa ion be ween i m-speci ic, mac oeconomic,
and en i onmen al expendi u es. Table 6demons a es ha he ule o law posi i ely mod-
e a es he associa ion be ween in la ion and en i onmen al expendi u es; he in e ac ion
e m is p- alue < 0.05. This esul sugges s ha in con ex s wi h s ong legal amewo ks,
he nega i e impac o in la ion on en i onmen al expendi u es is mi iga ed. In he same
ein, GDP posi i ely and signi ican ly mode a es he associa ion be ween in la ion and
en i onmen al expendi u es. These esul s mean ha he nega i e impac o in la ion
on en i onmen al expendi u es is low in coun ies wi h a highe GDP. In o he wo ds,
in weal hie economies, he ad e se e ec s o in la ion on en i onmen al spending a e
mi iga ed. This esul could be a ibu ed o he ac ha coun ies wi h highe GDP a e
gene ally mo e s able and esilien o economic luc ua ions. This s abili y allows compa-
nies and go e nmen s o plan long- e m in es men s, including in en i onmen al p ojec s,
wi hou being o e ly cons ained by sho - e m in la iona y p essu es. Mo eo e , com-
panies in high-GDP coun ies a e mo e likely o engage in long- e m s a egic planning,
Economies 2024,12, 159 16 o 24
which includes sus ainabili y goals. Such planning can help ensu e ha en i onmen al
expendi u es a e main ained e en du ing in la iona y pe iods.
In o de o measu e he impac a e he en o cemen o he CSR law, which was
en o ced in 2014, a sub-sample was in oduced o analyze he da a om 2015 o 2021. The
law s a es ha businesses mus adhe e o CSR egula ions in acco dance wi h he Fi ms Ac
2013, Sec ion 1. Fi s , companies ha e a ne wo h g ea e han INR 500 c o es annually;
second, businesses gene a e yea ly e enues o a leas INR 1000 c o e; hi d, businesses
ha e a ne income o a leas INR 5 c o e e e y yea . I a company mee s any o hese
c i e ia o h ee yea s in a ow, he CSR law is applied. Hence, he da a om 2015 o 2021
we e analyzed, and he esul s a e p esen ed in Table 7. The esul s in Table 7demons a e
ha he GMM es ima ions e ec i ely o ecas ou comes, indica ing hei esilience and
p ecision due o he ul illmen o GMM assump ions. No ably, he lagged dependen
a iable exhibi s signi icance (wi h a p- alue below 0.05), while he P ob (J-s a is ic) and
AR2 exceed 0.05 ac oss all models.
Table 7. Random e ec model—sub-sample 2015–2021.
(1) (2) (3)
Va iable Di ec E ec Mode a ing E ec —RL Mode a ing E ec —GDP
RONW −0.213 ** 4.524 0.0939
(0.0858) (3.136) (0.306)
LEV 0.374 45.91 * 1.483
(0.913) (25.18) (2.759)
CR −0.980 3.408 −5.858
(1.730) (39.32) (3.882)
MCAP 3.67 ×10−50.000825 0.000383 ***
(5.50 ×10−5)(0.000515) (6.05 ×10−5)
TA 4.417 ** 75.09 ** 12.18 ***
(1.728) (30.32) (3.133)
GDP −4.756 ** 346.3 *** −3.241
(2.002) (96.97) (5.441)
INF 0.597 −157.6 −7.578
(2.110) (104.7) (11.88)
RL −0.224 42.35 *** −0.279
(0.833) (14.21) (1.635)
COVID-19 −2.169 −28.72 *** 0.0324
(6.197) (9.164) (12.59)
RONW*RL −0.0875
(0.0577)
LEV*RL −0.840 *
(0.464)
CR*RL −0.0925
(0.725)
MCAP*RL −1.48 ×10−5
(9.45 ×10−6)
TA*RL −1.326 **
(0.556)
GDP*RL −6.799 ***
(1.870)
INF*RL 2.392
(1.907)
RONW*GDP −0.0385
(0.0448)
LEV*GDP −0.227
(0.385)
CR*GDP 0.558
(0.577)
Economies 2024,12, 159 17 o 24
Table 7. Con .
(1) (2) (3)
Va iable Di ec E ec Mode a ing E ec —RL Mode a ing E ec —GDP
MCAP*GDP −1.67 ×10−5**
(7.27 ×10−6)
TA*GDP −0.993 **
(0.428)
INF*GDP 0.825
(1.976)
Cons an 64.62 −2.008 *** 55.22
(53.87) (724.5) (77.55)
Obse a ions 490 490 490
R-squa ed 0.172 0.239 0.563
p- alue 0.000 0.000 0.000
Hausman (chi-squa e) 48.33 *** 68.25 *** 3.15
B eusch–Pagan LM (chi-squa e) 797.37 *** 802.09 *** 783.54 ***
Numbe o companies 70 70 70
***, **, and * indica e signi icance a 1%, 5%, and 10%, espec i ely.
Rega ding he di ec e ec o i m-speci ic and mac oeconomic a iables on en i on-
men al expendi u es in he sub-sample, he esul s in Table 7show ha e u n on ne wo h,
le e age, cu en a io, and o al asse s ha e he same impac , which means ha he esul s
a e simila o hose o he whole sample, wi h some a ia ions in he coe icien s. On he
o he hand, GDP, he ule o law, and COVID-19 ha e a nega i e impac on en i onmen al
expendi u es. Fu he , in e ms o mode a ion analysis, he esul s e eal ha he ule o
law nega i ely and signi ican ly mode a es he associa ion be ween le e age, o al asse s,
GDP, and en i onmen al expendi u es. These esul s sugges ha in coun ies wi h a s ong
ule o law, he posi i e ela ionship be ween a company’s inancial le e age (deb le els),
o al asse s, and en i onmen al expendi u es is weakened. These esul s could be a ibu ed
o he ac ha in coun ies wi h a obus legal amewo k, companies wi h highe le e age
migh be mo e cons ained in hei spending on en i onmen al ini ia i es. This could
be due o s ic e egula o y o e sigh and mo e s ingen en o cemen o inancial and
en i onmen al egula ions. Companies migh p io i ize compliance wi h inancial egula-
ions o e en i onmen al egula ions. Mo eo e , a s ong ule o law o en means highe
compliance cos s o bo h inancial and en i onmen al egula ions. Companies wi h highe
le e age and la ge asse s migh alloca e mo e esou ces o ensu e compliance, he eby
educing he unds a ailable o olun a y en i onmen al expendi u es. Finally, he esul s
e eal ha GDP nega i ely and signi ican ly mode a es he associa ion be ween ma ke
capi aliza ion, o al asse s, and en i onmen al expendi u es. This indica es ha in coun ies
wi h a highe GDP, he posi i e ela ionship be ween a company’s ma ke capi aliza ion,
o al asse s, and en i onmen al expendi u es is weakened.
4.4. Robus Analysis
To e i y obus ness and add ess any po en ial endogenei y in he andom e ec
model, he s udy also u ilized he gene alized me hod o momen s (GMM). Acco ding o
Roodman (2006), GGM es ima es ackle he p oblem o au oco ela ion and he e oscedas-
ici y. Fu he mo e, one way o o e come endogenei y p oblems is he use o he GMM
es ima ion model. Gup a and Mahakud (2020) a gued ha he gene alized me hod o
momen s is sui able o ackling endogenei y p oblems, i any. The e o e, he decision
was made o employ he gene alized me hod o momen s (GMM). Bo h he sys em and
di e ence GMM es ima o s a e app op ia e o cases including “small T, la ge N” panels,
non-exogenous independen a iables, ixed indi idual e ec s, he e oscedas ici y, and
au oco ela ion (Roodman 2006).
The indings p esen ed in Table 8indica e ha GMM p edic ions a e obus and
p ecise in o ecas ing ou comes, gi en ha he p e equisi es o GMM ha e been sa is ied.
Economies 2024,12, 159 18 o 24
Speci ically, he lagged dependen a iable holds signi icance (wi h a p- alue less han 0.05).
Fu he mo e, he P ob (J-s a is ic), AR1, and AR2 exceed 0.05 ac oss all models. The esul s
o GMM a e qui e simila o he esul s o he andom e ec model, wi h some a ia ions.
The e o e, when in e p e ing he esul s, GMM es ima es we e conside ed.
Table 8. GMM es ima es.
(1) (2) (3)
Va iable Di ec E ec Mode a ing E ec —RL Mode a ing E ec —GDP
L. ENVEXP 0.794 *** 0.827 *** 0.776 ***
(0.00511) (0.00983) (0.00680)
RONW −0.0126 4.943 *** 2.230 ***
(0.00794) (1.023) (0.367)
LEV −0.620 ** 21.09 *** 13.86 ***
(0.247) (5.899) (3.413)
CR −1.070 ** 18.79 ** 58.84 ***
(0.458) (7.799) (13.70)
MCAP 0.000108 *** −0.000140 −0.000288 ***
(4.69 ×10−6)(0.000107) (8.74 ×10−5)
TA 2.612 *** 5.451 10.04 **
(0.234) (6.130) (4.516)
GDP −1.820 *** −36.43 ** −2.746 ***
(0.179) (17.08) (0.186)
INF −0.837 *** −38.94 ** −15.89 ***
(0.0889) (16.32) (5.019)
RL −0.236 * −4.858 1.570 *
(0.142) (3.195) (0.821)
COVID-19 −3.805 *** −3.678 *** −5.441 ***
(0.572) (1.197) (0.539)
RONW*RL −0.0911 ***
(0.0191)
LEV*RL −0.391 ***
(0.110)
CR*RL −0.376 **
(0.144)
MCAP*RL 4.30 ×10−6**
(1.90 ×10−6)
TA*RL −0.0532
(0.115)
GDP*RL 0.652 **
(0.326)
INF*RL 0.728 **
(0.313)
RONW*GDP −0.0425 ***
(0.00699)
LEV*GDP −0.264 ***
(0.0634)
CR*GDP −1.191 ***
(0.261)
TA*GDP −0.115
(0.0862)
MCAP*GDP 7.37 ×10−6***
(1.64 ×10−6)
INF*GDP 0.278 ***
(0.0944)
Cons an 26.06 *** 265.7 −61.54
(7.498) (166.4) (44.06)
Economies 2024,12, 159 19 o 24
Table 8. Con .
(1) (2) (3)
Va iable Di ec E ec Mode a ing E ec —RL Mode a ing E ec —GDP
AR (1) p- alue 0.14 0.133 0.125
AR (2) p- alue 0.337 0.332 0.326
Hansen J-s a is ics 44.60 38.66 52.45
Hansen J-s a is ics (p- alue) 0.446 0.44 0.342
No. o g oups 70 70 70
No. o ins umen s 55 56 66
***, **, and * indica e signi icance a 1%, 5%, and 10%, espec i ely.
5. Conclusions
Wi h he inc easing signi icance o en i onmen al conce ns, bo h he go e nmen and
he public a e demanding ha businesses ake g ea e ac ion o sa egua d he en i onmen .
As a esul , businesses a e acing a g owing push o alloca e mo e unds o en i onmen al
ini ia i es. Despi e eeling obliga ed o alloca e mo e esou ces o en i onmen al ac i i ies,
businesses may be hesi an o expand hei en i onmen al expendi u e due o he signi ican
nega i e impac i has on hei p o i abili y.
This s udy aimed o examine he impac o i m-speci ic and mac oeconomic a iables
on en i onmen al expendi u es. Fu he mo e, i examines he mode a ion e ec o coun y-
le el go e nance and economic de elopmen on he associa ion be ween i m-speci ic and
en i onmen al expendi u es. The cu en s udy is based on 70 manu ac u ing i ms o
he pe iod o 2011 o 2021. The esul s e ealed ha ma ke capi aliza ion and i m size
ha e a posi i e and signi ican impac on en i onmen al expendi u es. On he o he hand,
in la ion and he ule o law nega i ely and signi ican ly a ec en i onmen al expendi u es.
Fu he mo e, he esul s e ealed ha he ule o law and GDP posi i ely mode a e he
associa ion be ween in la ion and en i onmen al expendi u e.
This s udy may be u ilized by en i onmen al manage s and sus ainabili y specialis s
in a i m o es ablish a amewo k a ound he co ela ion be ween en i onmen al spending
and i m cha ac e is ics in helping he i m o ake ca e o en i onmen al conce ns. Ou
s udy will also help business manage s unde s and he undamen al connec ion be ween
en i onmen al in es men , en i onmen al expendi u e, and company-speci ic ac o s, such
as inancial pe o mance and help in le e aging he o e all balance in en i onmen al
expendi u e and i ms’ p o i abili y.
This esea ch also holds heo e ical and p ac ical signi icance as many i ms s i e
o diminish hei wa e consump ion, ca bon oo p in s, packaging was e, and o he en-
i onmen al impac s. Fo ins ance, by educing he amoun o packing ma e ials used,
i is possible o achie e cos sa ings and enhance uel economy. Indian indus ial busi-
nesses, being he p ima y con ibu o s o ca bon oo p in s, should implemen measu es
o minimize was e and lessen hei en i onmen al impac . In addi ion, sus ainable en-
e p ises should gi e p io i y o hei sha eholde s, employees, and he local communi y
in which hey ope a e. Va ious app oaches can be employed o acqui e and e ain such
endo semen s, bu ul ima ely, hey all e ol e a ound ea ing employees equi ably and
demons a ing accoun abili y in local and global communi ies. The e o e, i ms should ex-
plo e al e na e manu ac u ing echniques, p io i izing he communi y’s sa e y. Businesses
should ecognize ha sus ainabili y o e s he chance o uni y a ied ope a ions unde one
comp ehensi e concep and ge espec o doing so.
This esea ch makes se e al no able con ibu ions o he exis ing li e a u e. Fi s ly,
i aims o unco e en i onmen al spending pa e ns ollowing he implemen a ion o he
Companies Ac (2013) by analyzing a comp ehensi e da ase spanning a decade. Secondly,
acco ding o Ga enholm and Halldó sson (2023) and B odeu e al. (2021), he COVID-
19 pandemic caused supply-side dis up ions and a conside able impac on consume
spending. Thus, he loss o e enue has caused se e e inancial s ain o se e al ypes o
businesses, inc easing he need o inancial liquidi y (Fassas e al. 2021). The e o e, he
Economies 2024,12, 159 20 o 24
au ho s made an e o o in es iga e how he COVID-19 pandemic a ec ed en i onmen al
expendi u es. Thi dly, i b idges a gap in p e ious esea ch, which has p edominan ly
ocused on sus ainabili y disclosu es and co po a e en i onmen al ini ia i es a he han
using seconda y da a. Fou hly, his esea ch examines he mode a ion e ec o coun y-
le el go e nance and economic de elopmen on he associa ion be ween i m-speci ic
and en i onmen al expendi u es, which ep esen s a unique con ibu ion o he li e a u e.
Hence, his esea ch seeks o ill his gap in he li e a u e.
Ou s udy exhibi s some impo an addi ions compa ed o o he publica ions in he
li e a u e. While se e al s udies examine he co ela ion be ween en i onmen al spending
and company pe o mance, he majo i y o hem ely on subjec i e o quali a i e me hods,
such as case s udies. Howe e , we made a delibe a e e o o demons a e ou hypo he-
ses in an unbiased and me hodical manne by ga he ing and examining eal da a om
manu ac u ing companies.
Despi e he aluable con ibu ions o his s udy, i is impo an o acknowledge ce -
ain limi a ions. Fi s ly, he measu emen o en i onmen al expendi u e elied solely on
one a iable, sugges ing ha u u e esea ch should explo e he inclusion o addi ional
a iables. Secondly, he e is po en ial o u he in es iga ion by compa ing di e en
sec o s. The e o e, i is ad isable o esea che s o conduc compa isons be ween he
manu ac u ing sec o and o he sec o s.
The ma ke condi ions and compe i i e landscape can be e y di e en o la ge i ms
compa ed o smalle ones. La ge i ms may ha e mo e esou ces and di e en compe i i e
ad an ages, which can lead o di e en s a egies o add essing en i onmen al issues.
Mo eo e , ocusing on he bigges i ms can lead o conclusions ha do no apply o
smalle o mid-sized i ms. The business en i onmen , s a egies, and challenges aced by
la ge i ms can be signi ican ly di e en om hose aced by smalle i ms. Fu he mo e,
ocusing on he bigges i ms may o e look he lessons om i ms ha a e s uggling o
ha e no achie ed simila le els o success, which can p o ide impo an insigh s in o
ma ke dynamics and business s a egies. Thus, u u e esea ch on smalle o mid-sized
i ms is ecommended.
Au ho Con ibu ions: S.B., Concep ualiza ion, Supe ision and Edi ing; A.S., Da a Analysis and
So wa e; S.A.N., Me hodology, Manusc ip edi ing and e iewing; N.H.S.F. Concep ualiza ion,
Me hodology, Da a collec ion and Analysis, Manusc ip w i ing and Edi ing; M.A.M. Concep ual-
iza ion, Me hodology, Manusc ip w i ing and Edi ing. All au ho s ha e ead and ag eed o he
published e sion o he manusc ip .
Funding: The au ho s ex end hei app ecia ion o he A ab Open Uni e si y o unding his wo k
h ough AOU esea ch und No. AOUKSA-524008.
Ins i u ional Re iew Boa d S a emen : No applicable.
In o med Consen S a emen : No applicable.
Da a A ailabili y S a emen : The s udy’s da a will be made publicly a ailable on eques .
Con lic s o In e es : The au ho s decla e no con lic o in e es .
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