The Perceived Relationship between Eco-friendly Business Practices and Firm Performance of SMEs in Vientiane Capital, Lao PDR

Bounmy Inthakesone*; Aliyamone Sipaseuth; Pakaiphone Syphoxay

**Bounmy Inthakesone*, Aliyamone Sipaseuth and Pakaiphone Syphoxay**

Volume4-Issue6
Dates: Received: 2023-06-02 | Accepted: 2023-06-06 | Published: 2023-06-14
Pages: 1017-1029

Abstract

This study investigates the impact of environmental performance on firm profitability in Vientiane Capital, Lao PDR. Data from 419 firms were collected using an e-questionnaire distributed through a Google form. The results indicate a need to increase awareness and acknowledgment of clean activities among surveyed firms. While there is a positive trend towards energy-saving practices and the provision of designated smoking areas, more efforts are required to encourage the wider adoption of reusable practices and prioritize proper waste management. Regression analysis reveals significant impacts on firm profitability, with firms having regulations for environmentally friendly practices, acknowledging clean activities, providing free space for waste sorting or disposal, and having designated smoking areas experiencing notable increases in profitability. However, the impact of energy-saving policies on profitability is not significant, potentially due to insufficient implementation. The study recommends implementing and enforcing effective energy-saving policies, strengthening eco-friendly regulations, encouraging waste management and recycling practices, and catering to customer preferences to enhance firm financial performance. These measures can contribute to a more sustainable and environmentally responsible business landscape in Vientiane Capital, Lao PDR.

FullText HTML FullText PDF DOI: 10.37871/jbres1763

Certificate of Publication

Copyright

How to cite this article

Inthakesone B, Sipaseuth A, Syphoxay P. The Perceived Relationship between Eco-friendly Business Practices and Firm Performance of SMEs in Vientiane Capital, Lao PDR. 2023 June 14; 4(6): 1017-1029. doi: 10.37871/jbres1762, Article ID: JBRES1763, Available at: https://www.jelsciences.com/articles/jbres1763.pdf

Subject area(s)

Environmental Impacts

References

Porter ME. Towards a dynamic theory of strategy. Strategic Management. 1991;12(S2):95-117. doi: 10.1002/smj.4250121008.
Porter ME, van der Linde C. Towards a new conception of the environment-competitiveness relationship. The Journal of Economics Perspectives. 1995;9(4):97-118. doi: 10.1257/jep.9.4.97.
Lefebvre E, Lefebvre AL, Talbot S. Determinants and impact of environmental performance in SMEs. R& D Management. 2003;33(3):263-283. doi: 10.1111/1467-9310.00297.
Eccles RG, Ioannou I, Serafeim G. The Impact of corporate sustainability on organizational processes and performance. Management Science. 2014;60(11):2835-2857. doi: 10.1287/mnsc.2014.1984.
Hadi N. Corporate social responsibility/Nor Hadi. Yogyakarta: Graha Ilmu. 2011.
Bos-Brouwers HEJ. Corporate sustainability and innovation in SMEs: Evidence of themes and activities in practice. Business Strategy and the Environment. 2009;417-435. doi: 10.1002/bse.652.
Cordano M, Marshall RS, Silverman M. How do small and medium enterprises go "Green"? A study of environmental management programs in the US. Wine industry. Journal of Business Ethics. 2010;92:463-478. doi: 10.1007/s10551-009-0168-z.
LNCCI. SMEs in Laos. Retrieved from Lao National Chamber of Commerce and Industry. 2020.
Barbera AJ, McConnell D. The impact of environmental regulations on industry productivity: Direct and indirect effects. Journal of Environmental Economics and Management. 1990;18(1):50-65. doi: 10.1016/0095-0696(90)90051-Y.
Jaffe BA, Peterson RS, Portney RP, Stavins NR. Environmental regulation and competitiveness of US. Manufacturing: What does the evidence tell us? Journal of Economics Literature. 1995;33(1):132-163.
Carrillo-Higueras F, Prajogo D, Smith L. Environmental commitment and its drivers in the Australian wine industry: A behavioural approach. Australasian Journal of Environmental Management. 2018;439-458. doi: 10.1080/14486563.2018.1460630.
Dewiyanti S. Legitimacy theory and its relationship to CSR. 2021.
Dowling J, Pfeffer J. Organizational legitimacy: Social values and organizational behavior. The Pacific Sociological Review. 1975;11(1):122-136. doi: 10.2307/1388226.
Meyer JW, Rowan B. Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology. 1977;83(2):340-363.
DiMaggio PJ, Powell WW. The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review. 1983;48(2):147-160. doi: 10.2307/2095101.
Kenton W. Financial performance. 2022.
Vijfvinkel S, Bouman N, Hessels J. Environmental sustainability and financial performance of SMEs. Zoetermeer: Scientific Analysis of Entrepreneurship and SMEs. 2011;47.
Elsayed K, Paton D. The impact of environmental performance on firm. Structural Change and Economic Dynamics. 2004;16(3):395-412. doi: 10.1016/j.strueco.2004.04.004.
Lai K, Wong CWY. Green logistics management and performance: Some empirical evidence from Chinese manufacturing exporters. Omgea. 2012;40(3):267-282. doi: 10.1016/j.omega.2011.07.002.
Feng T, Wang D. The influence of environmental managemnet systems on financial performance: A moderated-mediation analysis. Business Ethics. 2014;135:265-278. doi: 10.1007/s10551-014-2486-z.
Jayeola O. The impact of environmental sustainability practice on the financial performance of SMEs: A study of some selected SMEs in sussex. International Journal of Business Management and Economic Research. 2015;6(4):214-230.
Weiss J, Stephan A, Anisimova T. Well-designed environmental regulation and firm performance: Swedish evidence on the Porter hypothesis and the effect of regulatory time strategies. Journal of Environmental Planning and Management. 2018;1-23. doi: 10.1080/09640568.2017.1419940.
Saeidi SP, Othman MSH. The moderating role of environmental management accounting between environmental innovation and firm financial performance. Business Performance Management. 2018;19(3):326-347. doi: 10.1504/IJBPM.2018.092759.
Soderholm P, Bergquist AK, Soderholm K. Environmental regulation in the pulp and paper industry: Imapcts and challenges. Forest Policy, Economics and Social Research. 2019;5:185-198. doi: 10.1007/s40725-019-00097-0.
Renatta De Mendonca T, Zhou Y. Environmental performance, customer satisfaction and profitability: A study among large US. Companies. Sustainability. 2019;11(19):5418. doi: 10.3390/su11195418.
Yang Y, Ding L, Li Y. Environmental regulation improves the firm performance in the paper industry in China. The Singapore Economic Review. 2021. doi: 10.1142/S0217590821500788.